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Covid 2.0 Rampages India As Top Echelon Policy Makers Ignore Science

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‘India is in the endgame of COVID,’ announced the union health minister of India, just in the last month – March 08, 2021. Although, it was then clearly known to medical fraternity that today’s Covid vaccines won’t be magic bullets against rapidly mutating new Coronavirus. Interestingly, a scientific-data based MIT study, published last year – on July 01, 2020 predicted that India might record the highest ever in the world – 287,000 new Coronavirus cases per day, by February 2021. At that juncture also Covid vaccines were expected to be available in India before that predicted time frame. The MIT study warning received a wide coverage even in India - by almost all news dailies, on that very month of the last year. The national Covid management team did not seem to have taken it seriously, along with others. These include, besides the top echelon of governance – a vast majority of Indians – across the social, political, religious and economic strata.

The fallout of such callousness – both at the individual Covid-appropriate behavior level, as well as Covid governance level, have been more disastrous than what was forecasted even in the above MIT study. The ferocity and scale of the second Covid-19 wave in India did not just overwhelm the nation, but raised grave concern across the world too. On April 22, 2021, India recorded the world’s biggest ever single-day rise with 314,835 new cases of Covid-19, causing death to 2,104 people. The very next day, this number increased to 332,730 new cases with 2263 deaths.

But, the peak of the Covid second wave hasn’t come, just yet. According to a mathematical model developed by a team of scientists from the IIT Kanpur and reported by news media on April 22, 2021, the number of active covid-19 cases in India during the second wave is expected to peak in May. The daily infection count is expected to exceed 350,000 cases. In this article, I shall dwell on three specific areas – acknowledging that the current scenario is the outcome of national misjudgment, if not a humongous misgovernance to prepare India for Covid 2.0:

  • Current struggle of India’s fragile and long-ignored health care infrastructure.
  • Need to neutralize some general misgivings on Covid vaccines and associated dilemmas.
  • Who is equipped to save people, if no external remedial measures remain unavailable for some more time?

India’s fragile and long-ignored health infrastructure can’t take anymore:

Amid this calamity, India has run short of oxygen, hospital beds, important Covid medicines, including Remdesivir. Curiously, reports keep coming incessantly confirm and reconfirm: ‘Ever since the second wave of the pandemic started, the healthcare systems in India have been teetering on the brink, with many hospitals unable to handle the relentless inflow of patients whilst also running short of beds, oxygen cylinders and other essentials.’

Doctors and many health care workers are overwhelmed by the massive scale of the human tragedy and in tears, as they articulate: ‘Many lives could have been saved had there been enough beds, oxygen supplies, ventilators and other resources – if the healthcare system had been better prepared for the second wave.’

The Supreme Court intervened, noting the ‘grim situation’ in the country:

Meanwhile, the Supreme Court of India, reportedly, ‘Suo motu’ (on its own) took note of the grim situation in the country and the havoc caused due to shortage of Oxygen cylinders in hospitals. Consequently, on April 22, 2021, the top court said, ‘it expected the Centre to come out with a “national plan” on the supply of oxygen and essential drugs for treatment of infected patients and method and manner of vaccination against the disease.’  The Delhi High Court also observed, “We all know that this country is being run by God,” coming down heavily on the Centre over the Covid-19 management.

Some Covid vaccine related misgivings and dilemmas:

Many people are raising questions of the efficacy of two currently available Covid vaccines in India – Covishield and Covaxin, especially against our probably ‘desi’ double mutant variety of Covid-19. The trepidation increased manifold when India’s former Prime Minister – Dr. Manmohan Singh got Covid infected after taking two doses of Covaxin. Or, reports, such as: ‘Sri Lanka reports six cases of blood clots in AstraZeneca vaccine recipients, 3 dead.’ Incidentally, these vaccines were made in India. Some may not possibly know that both the issues have been deliberated by the Indian scientists, who haven’t expressed any concern, as yet. This has to be shared with all by all concerned, soon. Let me explore some of these related issues, as follows:

Re-infection after taking Covid vaccines:

Regarding re-infection rate after taking two doses of Covid vaccines, the scientists have now released data establishing that only a very small fraction of those vaccinated with either Covaxin or Covishield, have tested positive. In any case, instances of a few “breakthrough” infections do not undermine the efficacy of the vaccines, they added.

The ICMR has also clarified, “These vaccines definitely protect against disease. However, the immune response begins to develop usually two weeks after every dose and there are variations within individuals, too. Even after the first dose, if exposure to the virus happens, one can test positive.”

Efficacy of Covishield and Covaxin against double mutant strains:

Notably, both – the Indian Council of Medical Research (ICMR) and the Centre for Cellular and Molecular Biology (CCMB) have announced last week that Covishield and Covaxin protect patients even from the ‘double mutant’, B.1.617, variety of Covid-19. Scientists believe that the “double mutant” is responsible for the sudden spike in the number of cases in Maharashtra and other parts of the country. They had earlier feared that this “double mutant” or B.1.617, may escape the immune system and thus vaccines may not offer protection from this strain of the novel coronavirus.

Reported risk of blood clotting with Oxford-AstraZeneca’s Covid-19 vaccine:

No cases of blood clotting have come to light in India. However, a government panel of experts is,reportedly, investigating for any domestic cases of blood clotting, even mild ones, as a side effect of the two COVID-19 vaccines being administered in India. According to India’s leading virologist Gagandeep Kang, “blood clots reportedly caused as a result of Oxford-AstraZeneca’s Covid-19 vaccine amount to a very small risk.”

As reported on April 24, 2021, the United States has also decided to immediately resume the use of Johnson & Johnson’s Covid-19 vaccine, ending a 10-day pause to investigate its link to extremely rare but potentially deadly blood clots. These details, I reckon, need also to be shared with all people, soon, in order to neutralize any doubt on administering Covid vaccines.

Covid vaccine availability and pricing:

Recent media reports highlight, at least six states of India – Andhra Pradesh, Chhattisgarh, Haryana, Maharashtra, Odisha and Telangana – are facing Covid vaccine shortage, as Covid 2.0 overwhelms India. Most of these states have already apprised the Centre of the situation, as the Supreme Court of India also seeks the details from the center about its current status.

As on April 22, 2021, India has administered over 135 million vaccine doses, where each individual will require two doses. Whereas, as published in Bloomberg on April 23, 2021, ‘1 billion Covid-19 vaccines have been administered around the world.’ The good news is, effective May 01, 2021, everyone above the age of 18 years will be eligible to get vaccinated. The Central Government will also lift its singular control on supply and delivery of Covid-19 vaccines in a bid to tackle the massive rise of cases that have crippled the country’s health infrastructure.

That said, the key question that follows – would Covid vaccine manufacturers be able to meet this increasing demand in India, when there already exists more demand than its supply? According to Niti Aayog Covid-19: Vaccine availability will improve by July 2021. The two major vaccine manufacturers in India are also indicating broadly similar time frame.

Meanwhile, amid a deadly second wave of Covid infections, a third Coronavirus vaccine - Russia’s Sputnik V, has been approved for emergency use in India. Incidentally, Sputnik V’s approval came not before India overtook Brazil to become the country with the second-highest number of cases globally. According to its local distributor – Dr. Reddy’s Laboratories, India will start receiving Russia’s Sputnik V vaccine by end May.

Be that as it may, it is still unclear whether enough Covid vaccine doses will be available right from May 1, 2021, to start inoculating all Indians above 18 years of age, across the length and breadth of the country. Besides, SSI’s decision to fix the rate of Covishield vaccine for private hospitals and state governments, has attracted sharp criticism from the Opposition, who argued that there was no logic in charging the state governments a higher price, when the Centre is getting the same vaccine at Rs 150 per dose.

This question surfaces, especially when SII Chief himself acknowledged that they are making profit even with Rs.150/per dose price as the pandemic ravages the nation. A news item of April 24, 2021 also underscores ‘Serum Institute’s Rs.600/dose for Covishield in private hospitals is its highest rate in the world.’ Nonetheless, price sensitivity to Covid vaccines during the pandemic is not specific to India.

Shareholders of Pfizer, J&J, reportedly, are also pushing for detailed COVID-19 pricing strategies of the respective companies, at their annual meetings. Curiously, at the same, yet another report highlights: ‘With the competition struggling, Pfizer’s COVID vaccine sales could hit $24B this year.’ Amazing!

India utterly overwhelmed, angry outbursts of concern beyond its shores:

Witnessing the nature of rampage caused by Covid 2.0 in India, global press blames the Indian top policy makers for utter failure to anticipate and tackle the devastating second wave. For example, The Guardian of the UK flashed a headline on April 21, 2021 – ‘The system has collapsed’: India’s descent into Covid hell.’ It further elaborated: ‘Many falsely believed that the country had defeated Covid. Now hospitals are running out of oxygen and bodies are stacking up in morgues.’ The Times, UK was harsher. It reported, ‘Modi flounders in India’s gigantic second wave.’ It further added: ‘Record levels of infection have put huge strain on the health service and highlighted the perils of complacency in the nationalist government.’

The New York Times reported on April 23, 2021: ‘India’s Health System Cracks Under the Strain as Coronavirus Cases Surge.’ The report also cited examples of ‘recent political rallies held by Mr. Modi that have drawn thousands, as well as the government’s decision to allow an enormous Hindu festival to continue despite signs that it has become a super spreader event.’

Conclusion:

Keeping aside the responsibility, or rather lack of it, of the National Covid governance team, individual Indians – like you and me – can’t in any way shy away from our own responsibility of compliance to Covid appropriate behavior, religiously. We are equally responsible, at least, for our own lives and fate. Even today, many of those who are wearing a face mask, are wearing in the chin – keeping the nose exposed – forget about double masking! Moreover, how many of us were or are eligible for Covid vaccination till date, but did not or could not take?

Curiously, Covid 2.0 is no longer striking mostly the poor urban population, living in slums or hutments, or the migrant laborer. Nor it is attacking mainly the senior citizens or people with co-morbidities. More young people, including children are getting infected in Covid 2.0. In Covid 2.0 – over 90 per cent of Covid new cases concentrate in in high rise and other buildings in major cities, like Mumbai. While urban slums account for just 10 per cent. On April 24, 2021, Bloomberg also reported, ‘India’s Urban Affluent Hit By New Virus Wave After Dodging First.’

Terming Covid 2.0 as concerning and scaring‘, Tata Sons Chairman also said, ‘India needs to get as many different Covid-19 vaccine licenses as possible. And replicate multiple factories on a war footing to ramp up production in order to meet the requirements as the country reels under the devastating second wave of the pandemic.’ It’s incredible, how a small country in the Indian subcontinent – Bhutan with limited resources, got its vaccination plan right and carried out, reportedly, the world’s fastest immunization drive.

Coming back to the last year’s above MIT study forecast for 2021 Covid situation in India. It goes without saying that this one, among several others, was based on credible data. It also brought to the fore the scientific reasons of consequences for not following the norms of Covid appropriate behavior. Looking back and coming back to real life scenario of date, one thing becomes crystal clear. When science is ignored, both at the highest echelon of national governance where the buck stops – or at the individual, social, religious or political level – it is virtually inevitable that a disaster would strike. And in most cases, it will strike hard – very hard. Much beyond what a human can withstand to survive. We have choice for survival – even in today’s frightening scenario. Let’s individually and collectively behave, as the science demands. Life and livelihood are important – for all of us.

By: Tapan J. Ray    

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

 

Drug Pricing: Why Justify On R&D Cost Rather Than Precise ‘Customer Value’?

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While looking around, it won’t be difficult to spot many types of steep-priced highly innovative products, where high costs aren’t justified by high R&D expenditure, but for unique ‘customer value’ offerings. Many consumers evaluate those and decide to settle for one, instead of opting for cheaper variants – delivering the basic customer requirements in that product class or category. Although, both pharma and electronic goods belong to high tech-based knowledge industries, similar examples are in plenty of the latter, but hardly any in pharma.

Agreed that pharma is a highly regulated industry, unlike electronic goods. But so are banks, financial services, airlines, telecommunication, among many others. Interestingly, all these industries are building great brands without talking about their investment costs in R&D, while doing so.

In this article, I shall focus on – despite facing a formidable headwind, mostly for the same, pharma industry, in general, continue to lack in two critical areas of brand building. But, before doing that let me quote from some recent research papers wondering, how is this situation continuing unchanged, despite all concerned being aware of it.

Two opposing views:

Just to recap, let me put below, two diametrically opposing views that continue to clash with each one, since long:

  • New and innovative drug costs being excessive, globally, lowering their prices will not harm the progress of innovation.
  • Drug industry argues, any restriction of free pricing of innovative drugs, will seriously jeopardize innovation of newer medicines and treatments.

So much of divergence in the views of two key partners within the industry, can’t just continue any longer, without a serious intervention of governments across the world, including the United States.

Pharma does want to talk about ‘Cost & Value of Medicines’. But…

It’s not that pharma doesn’t want to talk about ‘Value of Medicines,’ but not, apparently, to create an ‘emotional connect’ with its stakeholders, including the patients. It appears, more as a general justification for the high cost of new drugs. For example, a pharma trade association’s communication, after acknowledging ‘that many are struggling to access the medicine they need,’ says upfront: ‘Discussions about costs are important.’ It follows a series of much-repeated common justifications, which are no- brainer, such as:

  • Medicines Help Patients Avoid Expensive Hospital Services,
  • Developing New Treatments and Cures is a Complex and Risky Undertaking,
  • Medicines are Transforming the Treatment of Devastating Diseases.

But, the reality is, these justifications are not working on the ground, as these are not quite in sync with ‘customers’ value’ expectations, both from the company as well from the brand. Moreover, instead of establishing an ‘emotional connect’, this approach probably is further alienating many stakeholders, as several governments are now broaching the issue of price control, or some other mechanism to set drug prices.

Pharma marketers need to be eclectic:

Instead of keep following the age-old marketing and communication models, young pharma marketers need to be empowered to be eclectic. They should look around and try to fathom how is ‘marketing,’ as a business domain, changing in other fast-growing industries, and act accordingly. As pharma is a high-tech knowledge industry, let me draw examples from other similar industries, such one that innovates and manufactures electronic products.

Unlike any high-priced, high-tech electronic product companies, such as Google, Apple or Microsoft – pharma marketing communications are more like ‘justification’ centric, for charging high prices for medicines. This approach, apparently, is not just a bit defensive, but virtually negative. Whereas, unlike drug manufacturers, the above tech companies are constantly focusing on the following two areas, for creating a robust ‘corporate brand’ that infuses consumer-trust in each of their products:

  • Establishing ‘emotional connects’ with customers
  • Focusing on the total value of unique value offerings, rather than the high cost of innovation to justify high prices

Let me deliberate briefly on each of the above two.

The importance of establishing ‘emotional connects’ with customers:

With the penetration of technology, almost in every household, with a varying degree, though, access to a gamut of information becomes increasingly easy, so are the options available to customers. This is impacting almost every industry, including pharma and healthcare.

Thus, for corporate performance excellence, customers are now creating a space for themselves at the core of the pharma business strategy. Consequently, a need arises for the pharma marketers to enhance end-to-end customer experience. Besides, brand value offerings, this includes both short and long-term customer service offerings to ensure an ongoing emotional connect with customers, for more intense and longer-lasting engagement with trust, both on the ‘corporate brand’ and also on individual products.

Therefore, creating effective ‘emotional connects’ with customers are assuming a cutting-edge strategic importance – in multiple facets of pharma business. More ‘emotionally connected’ customers also act as a force-multiplier to enhance corporate reputation. Although, it mostly happens through word of mouth, in recent days, value added omnichannel communication by respective companies, is playing a crucial role for success in this area.

In the good old days, reaching patients or patient groups directly, would have been a challenging proposition. Most communications on products, diseases and treatments, used to be through healthcare providers. But, this is no longer so, especially in the digital world, that opened a new spectacle of opportunities for crafting patient-centric strategies – as patients become more digital-savvy, too.

Focus on brand value offerings, not on cost of innovation to justify high prices:

To dwell in this area, a series of questions that one may possibly encounter, such as: ‘How do you define value? can you measure it? What are your products and services actually worth to customers?’ Way back, these points were deliberated in the article – ‘Business Marketing: Understand What Customers Value,’ published in the November-December 1998 issue of the Harvard Business Review (HBR). It said: ‘Value in business markets is the worth in monetary terms of the technical, economic, service, and social benefits a customer company receives in exchange for the price it pays for a market offering.’ From this paper let me pick up just two critical components of value, as follows, for better understanding:

  • Value in monetary terms: Such as, dollars per unit
  • Value for a customer: What the person gets in exchange for the price it pays

Nevertheless, the important point to note: As ‘market offering has two elemental characteristics: its value and its price, raising or lowering the price of a market offering does not change the value that such an offering provides to a customer. Rather, it changes the customer’s incentive to purchase that market offering.’

When applied in the pharma perspective:

When the above concept of value is applied in the pharma industry perspective, it vindicates an important. Which is, tangible value offerings of an exclusive, high-priced patented products, and the same in its off-patent low-priced avatar remains unchanged, regardless of significant change in its monetary value per unit. However, unlike a patent protected drug, options for generic equivalents will be many, with differing prices.

This brings out another important facet of ‘value’. As the above HBR paper states, considerations of value take place within some context. Even when no comparable market offerings exist, there is always a competitive alternative. For example, in the pharma business, one possible competitive alternative for patented products could well be – when the Government decides to issue a Compulsory License (CL) for make the product available at a cheaper price to patients.

The name of the new game:

Thus, for an exclusive new drug, instead of focusing on cost of innovation to justify high prices, a sharp focus on ‘total value offering’ of the brand would possibly be the name of the new game. It will entail persuading the ‘connected customers’ to realize the total value of both the tangible and intangible cost of each benefit that the product offers, rather than simply the cost of a pill. In doing so, a pharma marketer and his entire team, must have an accurate understanding of what its customers value, and also, would value. This calls for a painstaking research, and a mammoth real time data analysis.

Developing a unique ‘Customer Value’ model:

As the above HBR article reiterates, ‘customer value’ models are not easy to develop. Unfortunately, pharma’s ‘value delivery system’ is still tuned to a self-serving mode and not ‘customer value’ centric.Thus, marketers may wish to note some key points in this regard, as below:

  • Many customers understand their own requirements, but do not necessarily know what fulfilling those requirements is worth to them.
  • This leaves an opportunity to demonstrate persuasively, the total ‘customer value’ that the new brand provides, and how it fulfills their requirements.
  • The strategy makers would have to necessarily generate a comprehensive list of ‘customer value’ elements, based on robust data, on an ongoing basis.
  • The acquired insight on – what customers value, and would value, to gain marketplace advantages over competitors, would form the core of the business strategy.

The next stage would be a pilot study to validate the model and understand the variations, if any, in the estimates. It is also vital to note that an improvement in some functionality may appear important, but may not necessarily mean that customers are willing to pay for it. The aim should always be delivering superior value, and get an equitable return for it. Thus, enhancing end-to-end customer experience in this effort, becomes a critical ingredient to brand success.

Conclusion:

After the article – ‘Business Marketing: Understand What Customers Value,’ published in the November-December 1998 issue of the Harvard Business Review (HBR), in June 2000, a similar article was published in the ‘McKinsey Quarterly.’ The paper titled, ‘A business is a value delivery system,’ also emphasized the importance of a clear, well-articulated “value proposition” for each targeted market segment.

This means a simple statement of benefits that the company intends to provide to each segment, along with the approximate price the company will charge for each of those. The paper also underlined, the strength of the buying proposition for any customer is a function of the product value minus the price. In other words, the ‘surplus value’ that the customer will enjoy, once that product is paid for.

Over a period of time, high prices of new and innovative drugs are attracting negative headlines, like - ‘High cost of hepatitis drug reflects a broken pricing system.’ This continues, despite high decibel justification of the ‘exorbitant’ cost of innovation. Undaunted, Big Pharma and its large trade associations remain reluctant to jettison their old advocacy toolkit.

They seem to be still on a – ‘Listen and believe what we are saying’ mode. This is vindicated by the December 14, 2019 report that revealed: ‘The Pharmaceutical Research and Manufacturers of America, the drug industry’s top lobbying group, filed a lawsuit this week against the state of Oregon, claiming two laws it passed requiring greater transparency of drug prices are unconstitutional.’

Continuation of such approaches, on the contrary, is further alienating many stakeholders, especially the patients and the governments. Thus, time appears more than ripe today to focus more on delivering measurable ‘surplus value’ of new products, to well engaged and connected patients, both globally and locally.

By: Tapan J. Ray   

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

Pharma’s Perception Management

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An intriguing input-output relationship in the pharma industry has remained baffling, since the last several years, where increasing financial inputs are resulting in diminishing productivity output. More disturbing is, this input-output relationship has now reached a new low, with their individual swings moving in the diametrically opposite directions – as numerous reports of 2019 point out. The deteriorating situation of this magnitude would make many to feel sad, especially those who were or are intimately associated with this industry, for quite a while.

Strikingly, the trend encompasses even the largest – and one of the most influential pharma markets of the world – the United States. Which is why, the subject assumes greater importance. As one can witness today, regardless of the outcome, most American drug companies and their increasingly resourceful trade associations, reportedly, keep unleashing political, non-political and financial capital to influence pharma related policies in different countries. In tandem, they also try to create a favorable public perception in areas of vested interest, in many important markets, including India. These efforts cost money, and tons of it.

This process is not new, though, and was there in the past, as well. It also yielded results at that time, unlike what is happening today. This was mostly because of less public awareness on health-related issues, and a better general perception of the industry. Curiously, despite a sharp diminishing return, the same process is being followed, even today, with a lot more inputs and internal hype. Ironically, the snowballing effect of pharma’s ‘perception challenge’ is now all pervasive. It is visible even in the most market driven and business-friendly countries, like America. They have a requisite talent pool, financial resources and other wherewithal to manage perception – the best possible way. Then why it’s not happening?

To make it happen, I reckon, the core purpose of pharma business should be to delight the patients – more of them – the better. With a similar vision, the drug industry could achieve what it wanted to in the past, also making a good profit, unlike what has been openly expressed in the recent years. This article would, therefore, explore the reasons behind it’s not happening now, through the prism of perception management. However, before examining that, let me give examples of the quantum of financial inputs that the pharma industry constituents are using today to achieve its lobbying goals, vis-a-vis, its declining public perception, as we see in 2019. 

Pharma lobbying expenses are shooting north:

According to the Bloomberg report of January 23, 2019, the main trade group of the pharma industry in America – Pharmaceutical Research and Manufacturers of America (PhRMA), spent a record high amount of USD 27.5 on lobbying in a single year – 2018. This was quoted from the public disclosure reports. Although this was the highest for PhRMA to date, ‘the pharmaceutical industry has upped its spending over the last few years, as it faces immense pressure over high drug prices from the public, Congress and the Trump administration,’ – the news highlighted.

Another article, published in The Guardian also indicated: ‘Pharmaceutical companies spend far more than any other industry to influence politicians.’ It further added, hundreds of millions of dollars flow to shape laws and policies that keep drug company profits growing. One more article highlights, the wide reach of pharma industry money can be traced among people and groups who are in a position to influence drug policy – think tank that has received funding from a major pharmaceutical lobby, and doctors who accepted payments from drug companies.

Moreover, Kaiser Health News (KHN) analysis also found that such money reaches even patient groups for supporting the industry whenever required. The analysis detected ‘about half of the groups representing patients have received funding from the pharmaceutical industry.’

Globally, the general interest of the public on the affordability of quality drug treatment package that pharma companies offer, is fast increasing. Recognizing this fact, the entire approach of pharma lobbying appears blatantly self-serving.

Whereas pharma’s lobbying output is diving south:

The governments in many countries can now make it out, even when this is done covertly – keeping the so called ‘patient groups’ and ‘doctors’, as mentioned above, in the forefront. As many can clearly decipher the core purpose behind such stealth approaches of pharma players, the productivity or output of pharma lobbying is going south in a bottomless pit, as it were. Still, to reduce stakeholder pressure on drug pricing, its apparently getting more intensive, across the world and particularly in America.

The Bloomberg report of January 23, 2019, captures how this situation, on the contrary, is bringing public, government and opposition leaders together on the reduction of drug prices. The news underscores: ‘One of the few issues that unites President Donald Trump and the Democrats newly in charge of the U.S. House of Representatives is reducing the price of prescription medicine. Both sides will be looking for accomplishments to tout at a time when the pharmaceutical industry has become a target of public ire.’

Regardless of these developments, the age-old pharma lobbying approach remains unchanged. There doesn’t seem to be much visible interest, either, for a radical and innovative ‘perception management’ approach to salvage the situation.

Pharma’s ultimate goal has to change to delighting customers – the best possible way, where the quantum of profit earned will be a measure of customer satisfaction. This is what the management guru Peter Drucker said, long ago. Since, this is not happening, both patients’ and public perception on the industry, is getting from bad to worse, which has been captured in the 2019 Gallup poll.

2019 Gallup Poll: Big pharma sinks to the bottom of U.S. industry rankings:

The September 03, 2019 issue of Gallup carried the headline - Big pharma sinks to the bottom of U.S. industry rankings while announcing ‘American’s Views of U.S. Business, Industry Sectors, 2019.’ Being more specific, it said, ‘The pharmaceutical industry is now the most poorly regarded industry in Americans’ eyes, ranking last on a list of 25 industries that Gallup tests annually.’

Elaborating it further, the author stressed, Americans’ net ratings for the pharmaceutical industry have never been lower since Gallup first polled on industries in 2001. Over the past 19 years, few industries have been rated lower than the pharmaceutical industry’s current – 31 net rating. These include the federal government and the oil and gas, real estate, and automobile industries.

The age-old process of pharma lobbying is not working anymore:

‘Lobbying’ is the term that is more frequently used in the United States and the Western countries. In India, similar campaigns are called ‘Advocacy’, by pharma trade associations. These activities are carried out by concerned individuals or companies, industry associations, paid employees – hired for this purpose, or by any other interested groups. But, everybody’s common goal is primarily aimed at influencing government policies, or mold top influencers’ opinion in favor of business – overtly or covertly.

That traditional mindset of pharma lobbying is no longer working, came to the fore some time back. The October 28, 2016 articles, published in the CNBC, cautioned with a headline – ‘A warning for Big Pharma: Lobbying won’t work anymore.’

The article candidly suggested to big pharma players: ‘If you try to use the same old lobbying and crony networks to get your way, it won’t work. Not anymore. And here’s a special warning call just for Big Pharma: You need to change your public relations and marketing strategies now, or die. The good news is, unlike so many other industries, the drug companies have a very effective way out of this mess.’ Making no bones about it the author said, ‘no industry seems more clueless right now than Big Pharma.’

Acknowledging that: ‘Several reports say the Big Pharma lobbying group known as PhRMA is looking to spend as much as $300 million and pull out lots of other stops in order to defend higher prescription drug costs.’ The paper emphasized: ‘this is a battle the drug giants can’t win.’ This is because: ‘Public and political sentiment against expensive medicines and companies that charge those prices is at a fever pitch.’ This, I reckon, is changing the old paradigm of pharma lobbying.

Managing public perception – the new ballgame to influence policies:

Thus, the bottom line to note, today’s public policies are increasingly driven by public sentiments, their needs, aspirations and demand. Thus, the old, and the virtually counterproductive system of lobbying with lawmakers and some key opinion leaders, often including a few media friends, has to change. Even the covert ways of achieving it, under the guise of some trendy events or seminars, hyped by the best communication and PR professionals, are also not yielding commensurate results.

The first task will, therefore, be to come out of this decade old self-created imbroglio, as the pharma’s topmost head honchos will hopefully realize that the name of today’s  game is ‘managing public perception’ of the pharma industry. This would simultaneously necessitate replacing the self-serving goals with the ones that would delight the customers – genuinely – sans façade of any kind.

Pharma’s reputation to be on par with the tobacco industry?

According to ZS: ‘Recent polls and surveys demonstrate that the pharmaceutical industry’s reputation continues to be plagued by negative perceptions.’ It further adds: ‘Many consumers still consider pharma’s reputation to be on par with the tobacco industry, positioning one product category that treats cancer just above a product category that causes it.’ It appeared in the Aug 01, 2017 issue of ZS, titled ‘Reputation Is Paramount, So What’s Holding Pharma Companies Back?’

Is reputation mostly driven by perception?

The reputation or image of a person, an organization or any industry is generally a matter of perception of individuals, formed based on multiple reasons. As Edward de Bono - Physician, author, and originator of the term lateral thinking had put it – ‘Perception is real even when it is not reality.’ Accepting this dictum, even more profound is what he said further - ‘You can analyze the past, but you need to design the future.’

It’s critical to understand the process of ‘perception,’ as out of so much available information, only some are selectively received, organized and interpreted to develop individual perception. More important is the fact that perceptions often become strong inputs to take individual decisions, actions or to express views.

‘Designing the future’ from the pharma industry perspective:

To design an inclusive model of the pharma industry future, the first requirement will be establishing a ‘true connect’ between the industry and the public, based on the latter’s expectations, aspirations, needs and demands, from the industry. This new process being far from self-serving in nature, needs to be steered by ‘perception management’ experts, based on credible data pool – and not by the gut feelings of the hard-core lobbyists or self-styled advocacy experts.

The reformed industry objective – ‘delight the customers while making money’, will form the core of this new ‘perception management’ model. This would entail fleshing out – step by step, the blueprint of its action plan, while pharma should be seen by all to walk the talk.

Creating a positive perception for pharma:

As described in the book ‘Getting Ahead,’ creating a positive perception would prompt taking four basic steps, each of which will help enhance the current view that others have and improve any negative opinion that exists.

Taking a cue from what the author suggests, the first step is to discern how pharma industry is generally perceived by others. Each and every industry practice affecting its stakeholders, particularly patients, is being observed, analyzed and directly affects how others perceive the industry. The author further adds, ‘inaccurate perceptions show you how easy it is for others to incorrectly perceive you.’

The second step is also equally important, as it involves knowing, without any bias, how the industry is ‘actually’ perceived and why – mainly based on consumer feedback, collected and analyzed on a scientific platform.

The third step may involve an intensive internal brainstorming of scale, to zero-in to how the pharma industry would ‘want’ it to be perceived and capture the same in an easy to understand format for all, after pilot testing it.

And the fourth step is most challenging that will help determine how to replace the current perception with the most desirable one.

Conclusion:

As rising drug prices increasingly becoming a major political and public talking point, pharmaceutical groups in America are, reportedly, splurging heavily to influence public opinion and policy. With a spending of roughly USD 280 million, it featured at the top spot among lobbying spenders in 2018 – - with no other industry coming close. However, when one looks at the outcome of such spending either in the American political sphere or within the government, one can find what even President Trump is saying - ‘One of my greatest priorities is to reduce the price of prescription drugs.’ Similarly, when it comes to the public – the Gallup Poll 2019 points out:‘The pharmaceutical industry is now the most poorly regarded industry in Americans’ eyes, ranking last on a list of 25 industries that Gallup tests annually.’

The old industry practices - “from generating the highest drug costs in the world to spending massive amounts on lobbying politicians to the industry’s role in the U.S. Opioid crisis,” are no longer yielding results, due to a radical change in public perception of the drug industry. Even the most powerful current political personality and one of the most business-friendly politician – President Trump, can’t risk ignoring it.

If at all, the drug industry and its trade associations are trying to mold a favorable public opinion with such heavy spending, those efforts are also not working at all. Pharma’s public image crash comes, as the general population strongly dislike, disapprove or remain indifferent on various drug-related issues or methods and processes that the industry follows to earn huge money – even at the cost of patients’ health interests. As a result, a strong negative perception of pharma is created that often indirectly impacts many policy decisions.

So far, pharma hasn’t succeeded in achieving one of its key lobbying goals by managing public perception, effectively. To make it happen, its predominating self-serving interest, that is progressively alienating the public, must be jettisoned, forthwith. The time is ripe to create a new, strong and sustainable public perception for the industry, even in India, by managing customer perception, while making them feel genuinely delighted with company’s products and service offerings. With these contemporary inputs, conducive government policies facilitating a strong business performance, will surely be the most cherished output.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

Are Cancer Patients Victims of Pharma’s Payment to Doctors – For Prescriptions?

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In pharma industry, people of all socioeconomic backgrounds have no other choice but to visit doctors, to seek their expert advice for medical treatment. Patients expect them to prescribe the right and most affordable medicines for desired relief. Ironically, it appears to be the general industry practice to favorably influence the prescribing decision of doctors of all kinds of drugs, irrespective of any tangible product superiority, and price. This practice has been a decade old general concern of many that still continues unabated, especially in India.

There is nothing wrong, though, in pharma companies’ influencing doctors with unique product and associated service offerings over others, intended to benefit patients. However, when any marketing activity goes against the general patient interest, or may be construed independently as short-changing patients, must not be condoned, the least by any government.

This article will discuss how this menace is not sparing even those cancer patients who can’t afford expensive drugs but want to survive. I shall start with an overall perspective and sign off with the prevailing situation in India.

Are such practices transparent?

Obviously not, as these take place under several benign names and guise, and is an open secret to almost all stakeholders, including many patients. In several countries, India excluded, the government or the legal systems have intervened to make the drug marketing process more transparent, often with strong punitive measures. Curiously, adequate space is constantly being created by some players to hoodwink all these.

Today, one can, at best put two and two together to get a feel of what could possibly be the reality. It still remains a challenge to exactly quantify as to what extent it is going on, and with what impact on common patients, who mostly pay out of pocket to purchase medicines. But the good news is, studies on this particular subject has commenced, a few examples of which I shall in this article.

Some common influencing tools:

Pharma companies’ influencing tools for favorable doctors’ prescriptions are, apparently, directly proportional to a doctor’s prescription generating capacity. Once a doctor is influenced by such mechanism, high product price becomes irrelevant, even for those who find the drug difficult to afford.

The form of influence varies from gifts carrying different price tags, advertising in specific souvenirs or journals, sponsoring medical symposia of doctors’ choice, to arranging company’s own ‘Continuing Medical Education (CME)’ programs in exotic places, with travel, boarding and lodging expenses paid by the company, sometimes including their spouses. Hefty speaking, consulting fees and research grants may also be among these influencing tools. All are commonly done through a third party to avoid easy detection.

Some evidences of drug companies’ payment to doctors:

May 02, 2017 edition of the Journal of American Medical Association, published a couple of survey findings that can be summarized, as follows:

  • About half of U.S. doctors received payments from the pharmaceutical and medical device industries in 2015, amounting to USD 2.4 billion
  • Such payments and gifts very likely encourage doctors to prescribe pricey brand-name drugs and devices pushed by sales representatives.
  • Chances of receiving a general payment depended on the doctor’s specialty — 61 percent of surgeons got a payment, compared with 48 percent of primary care doctors.
  • Pharma companies earned more than USD 60 billion in 2010 for brand-name drugs included in the study. Generic drugs are 80 to 85 percent less expensive, which means hospitals can save lots of money, if doctors start prescribing generics instead of brand-name drugs.
  • Doctors at academic medical centers were more likely to prescribe cheaper generic drugs than expensive brand-name drugs after their hospitals adopted rules that restricted pharmaceutical sales visits, the researchers said.
  • “Many doctors would say they can’t be bought for the low amounts we’re talking about, but the amounts actually aren’t that low. Many, many doctors are getting thousands of dollars. It’s hard to imagine that is not influential,” the article underscored.

Quantification of increased prescription:

Another interesting study analyzed the prescription pattern of cardiologists who were taken out for a meal by sales representatives of Pfizer or AstraZeneca– makers of two expensive branded cholesterol-lowering statins, Lipitor and Crestor. They found that payment to physicians increases prescribing of the focal drug by 73 percent.

It is noteworthy,during the time period examined, which was between 2011 and 2012, there were several equivalent, lower-cost generic statin drugs available in the market. The paper’s findings confirm the general belief that drug companies’ business practices do influence doctors prescribing behavior while treating patients, in favor of the high-cost targeted brands.

Any relationship between soaring cancer drug price and pay for prescriptions?

Dr. Peter Bach at the Memorial Sloan-Kettering in New York City, with the help of a ‘cancer drug price chart from 1965 to 2016 period, established that treatment cost with cancer drugs is soaring. In another article, on the same issue, Dr. Bach commented: ‘Market pricing does not ensure access to new innovation.’ He reiterated:‘Profit maximizing price is not welfare maximizing. This is a policy failure, not a market failure.’

So far so good. However, everybody was surprised when on October 02, 2018, The New York Times reported about the same Memorial Sloan-Kettering that: ‘Dr. Craig B. Thompson, the hospital’s chief executive, resigned in October from the board of Merck. The company, which makes the blockbuster cancer drug Keytruda, had paid him about $300,000 in 2017 for his service.’

The same report further detailed: ‘Dr. Thompson, 65, received $300,000 in compensation from Merck in 2017, according to company financial filings. He was paid $70,000 in cash by Charles River in 2017, plus $215,050 in stock.’ This does not seem to be a solitary example from this hospital, as ‘another article detailed how a hospital vice president held a nearly $1.4 million stake in a newly public company as compensation for representing Memorial Sloan Kettering on its board.’

The question that arises now, how would such behavior of doctors adversely impact cancer patients’ health-interest? This was evaluated in an interesting article, as below.

Evaluation of association between industry payment to doctors and their prescribing practices:

Financial relationships between physicians and the pharmaceutical industry are common. This was analyzed in detail with deft and expertise in yet another very recent research paper titled, ‘Evaluating the Strength of the Association Between Industry Payments and Prescribing Practices in Oncology,’ published in the ‘The Oncologist’ on February 06, 2019. Two critical findings of the study may interest many, which are:

  • The association between industry payments and cancer drug prescribing was greatest among physicians who received payments consistently (within each calendar year).
  • Receipt of payments for compensation purposes, such as for consulting or travel, and higher dollar value of payments were also associated with increased prescribing.

Its implication on cancer patients:

To ascertain its implication on cancer patients by combining records of industry gifts with prescribing records, the study identified:

  • The consistency of payments over time, the dollar value of payments, and payments for compensation as factors.
  • This is very likely to strengthen the association between receiving payments and increased prescribing of that company’s cancer drug.

The outrageous cost of cancer treatment with innovative drugs:

As I said in my previous articles, new cancer drugs are increasingly becoming more innovative with greater efficacy. The fact that the 2018 Nobel Prize in Physiology or Medicine was awarded to James P. Allison and Tasuku Honjo “for their discovery of cancer therapy by inhibition of negative immune regulation,” provides a testimony to the high quality of innovation involved in the discovery and development of cancer therapy.

This progress is excellent, unquestionably! But who is getting benefitted by these innovative cancer medicines? The headline of the article, titled ‘The Nobel Prize is a reminder of the outrageous cost of curing cancer,’ published by the Vox Media Vox Media on October 02, 2018, captures the prevailing reality, succinctly. Articulating, ‘The Nobel Prize is a reminder of the outrageous cost of curing cancer,’ the author further elaborates the point. The paper underscores, for the first time ever, we’re living in a moment when many of our most promising medical advances, such as cancer immunotherapy, are far out of reach for the vast majority of people who could benefit from them.

Innovative cancer drugs are pricey only for the high cost of innovation? 

Let me deliberate this point based on data. Quite expectedly, pharma industry never accepts that prescriptions are bought. But, when get caught, they retort that these are some aberrations, keeping their much-publicized argument unchanged in support of jaw dropping cancer drug prices. They argue, innovative drugs are brought to market after incurring R&D expenditure of over a billion dollars, if not more.

The Vox article quotes the CEO of Novartis, the maker of the immunotherapy drug Kymriah, saying that the R&D costs of the drug were about USD 1 billion. But many experts don’t buy this argument. The article echoed one such expert - Ezekiel Emanuel, a professor of medical ethics and health policy at the University of Pennsylvania’s Perelman School of Medicine.

The professor countered by saying: ‘That’s certainly a big investment, but it is much less astounding when compared with the drug’s anticipated revenue. Based on Kymriah’s list price, treating just 2,700 patients would allow Novartis to recoup its entire investment. Even with significant discounts for many patients, it wouldn’t take many treatments to turn a considerable profit.’

According to researchers at the University of Pennsylvania, the total cost for removing, reprogramming and infusing the cells into each patient is less than USD 60,000—just one-sixth of the USD 373,000 price tag. Production costs do not seem to be driving the stratospheric drug prices, the researchers commented.

Has any remedial action been taken by the industry or the doctors?

Except one report, I reckon, this practice continues virtually unabated, even today.

‘The above conflicts at Memorial Sloan Kettering, unearthed by The New York Times and ProPublica, have had a rippling effect on other leading cancer institutions across the country’, commented ProPublica on January 11, 2019. It reported: ‘The cancer center will now bar top officials from sitting on outside boards of for-profit companies and is conducting a wide-scale review of other policies.’

Further, Dana-Farber Cancer Institute in Boston and Fred Hutchinson Cancer Research Center in Seattle, both of whose executives sit on corporate boards, are among the institutions reconsidering their policies on financial ties, the article said.

Conclusion:

Although, in many countries, at least, some action has been taken by the governments to curb such practices by framing appropriate laws, in India it is virtually free for all types of situation, as prevailing in this area.

A recent news report aptly summarized the Indian situation. It highlighted: “While Prime Minister Narendra Modi recently mocked doctors in a public interaction in London for going on foreign trips sponsored by pharma companies, his government has been unsuccessful in bringing in a law to punish pharma companies that bribe doctors. The Uniform Code of Pharmaceutical Marketing Practices (UCPMP), prepared by the pharmaceuticals department (DoP) to control unethical marketing practices in pharma has been in the work since December 2014, six months after the current government came to power. More than three years later, the code is stuck in the Niti Aayog after the law ministry rejected DoP’s draft.”

With the above global and local perspective, I reckon, even if some changes take place in the developed world, India is unlikely to fall in that category, any time soon. Consequently, a large number of Indian patients may continue to fall victims of common pharma practice – pay to doctors for prescriptions. It doesn’t seem to matter even for cancer drugs.

By: Tapan J. Ray     

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Creating ‘Shared Value’ in Pharma – The Way Forward

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Many Pharmaceutical companies, both global and local, are struggling with a plethora of critical challenges. With the industry reputation diving south successful navigation through this headwind has become an onerous task, more than ever before.

Under this backdrop, the article, titled “Creating Shared Value” of Michael Porter and Mark Kramer, published in the Harvard Business Review (HBR) in its January – February 2011 issue, becomes very relevant to analyze the situation.

The paper says: “Companies are widely thought to be prospering at the expense of their communities. Trust in business has fallen to new lows, leading government officials to set policies that undermine competitiveness and sap economic growth. Business is caught in a vicious circle. A big part of the problem lies with companies themselves, which remain trapped in an outdated, narrow approach to value creation.”

The authors also articulated that pharma players, generally focus on optimizing short-term financial performance, overlooking the greatest unmet needs in the market as well as broader influences on their long-term success. They questioned: “Why else would companies ignore the well-being of their customers and the economic distress of the communities in which they produce and sell?”

Porter and Kramer advised the companies to bring business and society back together – redefining their purpose as creating “shared values”. It means generating economic value in a way that also produces value for society by addressing its challenges.In this article, I shall explore in this area.

Not CSR or Philanthropy, its engaging business as business, for social progress:

Creation of “Shared values” for a business is quite different from “Philanthropy” or “Corporate Social Responsivity (CSR)”. Philanthropy usually involves ‘donations to worthy social causes’ and CSR is primarily directed at compliance with community standards and good corporate citizenship. Whereas the creation of “shared value” means integrating societal improvement into economic value creation, making social improvement as an integral part of with a business model.

To create “shared values”, it is imperative for business organizations to create “social value” through active participation in addressing the social issues and needs related to the business. Or in other words, the creation of “shared values” would entail striking a right balance between “social value” and the “business value.”

An article titled “What Is the Social Value of Pharmaceuticals?”, published by FSG on February 13, 2014 dwells on the business relevance of creation of “social value” in the pharma industry. It writes,creation of “social value” corresponds to effecting positive change along the major societal challenges, such as affordable health care, by working more in collaboration with other stakeholders to address the needs of the underserved through commensurate value creation. This entails engagement of a business as a business, not as a charitable donor, nor through public relations, for social progress.

A resolution to create “shared value” in the pharma industry:

An interesting article, featured in SFGATE of the San Francisco Chronicle on July 11, 2018, elucidated that the reputations of drug makers have taken a hit over the past few years as the public and politicians have called out the companies for high prescription drug prices that even Americans are facing. Recently, President Donald Trump, reportedly, singled out the top pharma companies of the world  for raising the list prices on some of its prescriptions.

Possibly it’s a sheer coincidence, but on the same day, an intent of creating “shared values” with the society got reflected in the statement of the president of the Novartis Institutes for Biomedical Research. The officialexplained, why his company has a ‘contract with society’. He admitted that: The cost of health care, which has been rising has left many on the hook for a larger amount of their prescription drug cost that can place a big burden on patients in many countries, including the United States.

Consequently, the pressure from the people who need medications is now on the pharmaceutical companies for doing right, he added. Thus, Novartis feels:”We have a contract with society, and society is our shareholder. A company like ours exists to have a definitive impact on life threatening diseases, to keep people alive and healthy for a long, long time, full stop” – the official concluded.

A laudable intent, but is it credible?

The concept of pharma having a contract with the society ‘to keep people alive and healthy for a long, long time,’ is laudable, but is it credible? This question arises because, just before public articulation of this intent, the same company, reportedly, entered into USD 1.2-million contract with President Trump’s lawyer, Michael Cohen, allegedly, to provide access to the US President.

The exact reason for the same is being investigated by competent authorities, including the US Senators. However, another report highlighted, “Novartis is among the drug companies that has put through significant price increases for its products since Trump took office in 2017 – in some cases more than 20 percent.”

Another  repot of July 09, 2018, quoting a tweet of the US President, poured more cold water on the warm intent of pharma’s ‘contract with the society.’ According to this article President Trump tweeted: “Pfizer & others should be ashamed that they have raised drug prices for no reason. They are merely taking advantage of the poor & others unable to defend themselves, while at the same time giving bargain basement prices to other countries in Europe & elsewhere. We will respond!”

Consistently declining pharma’s image and public trust:

Many believe that due to such hyperbolic statements and conflicting actions of pharma, over a long period time, are driving down the public image and trust on the industry, in general, from deep to deeper level, which has not found its bottom, just yet.

The reality gets reflected in various well-recognized polls, conducted even in the top pharma market of the world, which is also one of the richest nations, globally. August 2017 Gallup Poll on ‘Business and Industry Sector Ratings,’ features pharma industry at the very bottom of the ranking, just above the Federal government.

The concern gets reverberated in the February 03, 2017 article titled, ‘How Pharma Can Fix Its Reputation and Its Business at the Same Time,’ published in the Harvard Business Review (HBR). The paper observes that the worrisome mix of little growth potential and low reputation prompts the pharma players, among other actions, developing new treatments for neglected populations, and pricing existing products at affordable levels – avoiding corruption and price collusion.

How will “shared value” creation help pharma?

The process of creating “shared values” will involve creating “social value” with all sincerity and a clearly defined purpose. Its outcome should be measurable, and the impact felt by the society. In tandem, striking a right balance between “social value” and the “business value” would call for a metamorphosis in the concept of doing business.

There aren’t too many examples of creation ‘shared values’ by pharma companies, yet. However, to illustrate this point, let me quote one such that was originated from India, which I had the privilege to observe closely. This initiative is ‘Arogya Parivar (healthy family) of Novartis in India.

‘Arogya Parivar’ is a ‘for-profit’ social initiative developed by Novartis to reach the under-served millions living at the bottom of the pyramid in rural India. As Novartis claims, since its launch in 2007, ‘Arogya Parivar’ is proving to be both a force for improving health in rural communities and a sustainable business. ‘Arogya Parivar’ is a commercially-viable program and began returning a profit after 30 months with sales increasing 25-fold, since launch. After successful implementation of this initiative in India, the company has created similar programs in Kenya, Indonesia and Vietnam, according to Novartis.

Conclusion:

The concept of ‘shared values’ emphasizes that business success of a company is closely related to the progress, development and wellbeing of the society where it transacts the business. This can be achieved by striking a right balance between the social need and the business need. In the pharma space too, the value creation in the business value chain may need to be redesigned to meet the ‘social value’. This happened as in the case of ‘Arogya Parivar’ initiative of Novartis in India.

Creating robust business models based on ‘shared values’, in sync with the business-specific needs of the society can help make more profit in areas where there is none, at present. It will also facilitate achieving additional growth of the organization and improve long-term competitiveness.

Consequently, pharma can earn recognition of the society as a powerful contributor for containing suffering and even death of many ailing patients, by increasing access to affordable medicines for those who need these most. This, in turn, would help pharma companies to improve their public image and reputation. Let me hasten to add that provided, of course, no countermeasures are taken by them, surreptitiously, as I have discussed above.

The good news is, some pharma players have already initiated action in this direction. Thus, I reckon, many of them would soon realize that creating ‘shared value – based’ business models are the way forward for sustainable business excellence.

By: Tapan J. Ray 

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Why Branded Generics Promise High Quality For Patients?

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Why most branded generic drugs don’t carry any stigma of quality, even when these are manufactured by small companies? The corollary to it is, why non-branded generics always carry a general stigma of inferior quality, even when produced by large Indian pharma companies?

While pondering over the answers to these questions, several other related facts also float at the top of mind, simultaneously, such as:

1. Just as many non-branded generics don’t go through the regular drug quality scrutiny of the regulators, branded generics are no different in this regard.

2. A large number of both branded and non-branded generics gets manufacturing approval by various State Drug Authorities.

3. The process of regulatory approval is exactly the same for both branded and non-branded generics. Even for branded generics regulatory approvals come only in the generic names and not with the brand names.

4. One can find hundreds of varieties of both branded and non-branded generics of the same molecules or of similar fixed dose combinations in the market.

5. Reports of substandard drugs of both non-branded and branded generics are also not significantly different.

6. Legal measures of reasonably stringent punishment in the country are no different between branded and non-branded generics.

This list is not exhaustive. Nevertheless, in this scenario, it is intriguing to fathom the reason of so much of contempt for non-branded generics within the industry, supported by a section of the media. This disgust gets invariably well-displayed as and when any serious discussion revolves around non-branded cheaper generic drug prescriptions in India.

Is it just a perception or based on solid facts?

This is a million-dollar question, but the optics is interesting. This also gets reflected in the recent media report on February 26, 2018. It writes, ‘The central government’s National Health Protection Scheme (NHPS) is going to put all of its focus on quality generic medicines, and not just the branded generic medicines, said Union Chemical and Fertilizer Minister Ananth Kumar while addressing a closed-door session with chief executives (CEOs) of pharmaceutical companies in Bengaluru on February 15.”

Curiously, in his statement the Minister also used the term ‘Quality’ only against non-branded generics and not against branded generics. Does it mean anything? If it does, is that just a perception or based on solid facts?

In this article, I shall try to assess why is this generally negative perception against cheaper non-branded generics gaining strength among many of us?

A general impression:  

An often-repeated fascinating argument is, branding of a generic drug is important as it will ensure high product quality. This reasoning persists, regardless of the fact that the Drug Controller General of India (DCGI) often makes public announcements to the contrary, as happened even recently.

Risks of NSQ drugs don’t lie solely on non-branded generics:

According to the ‘National Drug Survey, 2014-16’, conducted in association with the National Institute of Biologicals, out of the 47,012 samples tested from the country, 13 samples (0.0245 percent) were ‘Spurious’ and 1,850 samples (3.16 percent) were found ‘Not of Standard Quality (NSQ)’.

The data on 1,850 NSQ samples showed that these were from 569 manufacturing units. Of these, 10 percent of manufacturing units were responsible for about 50 percent of NSQ samples. Further, one third of total NSQ samples were from 22 manufacturing units.

Further, quoting the survey carried out through the National Institute of Biologicals, a September 04, 2017 media report also articulated: ‘During its recent survey, the drug regulator found well-known drug manufacturers failing quality tests. In the survey, samples tested from top drug companies were found not to be of standard quality.’

The names of some of these large drug manufacturers in India, including the multinationals, along with their smaller counterparts, appeared in the Public Notice of July 21, 2017 of the Central Drugs Standard Control Organization (CDSCO) of India. Thus, the risks of NSQ medicines can’t possibly be attributed solely to the small time non-branded generic drug manufacturers. This public notice is expected to draw attention of many stakeholders.

More facts:

On April 22, 2017, the Central Drugs Standard Control Organization (CDSCO) reported that popular branded drugs like D-Cold Total, Cetrizine, Combiflam, Panza-40 tablets, Ibuprofen, and antibiotics with ciprofloxacin, ofloxacin, Amoxycillin, Ciprofloxacin have tested sub-standard. Before this, media reports of July 8, 2016 highlighted, “The DCGI has again found Sanofi’s popular painkiller drug, Combiflam, of sub-standard quality, in its latest test last month. It had found the same defect in the medicine in February and April, too.’

Conclusion:

Considering these facts, it is difficult to comprehend why branded generic drugs, irrespective of who manufacturers, will be of high quality perceptually – always. Conversely, non-branded generic drugs, even when manufactured by a reputed manufacturer, say for example – Cipla, are perceptually no good for patients, in terms of quality standard.

Nevertheless, the hard facts indicate, quality is a general issue both for branded and non-branded generic drugs in India, and not particularly for the later one.

This brings me back to where I started from: Do Branded Generics Promise High Quality for Patients? To find the right answer to this question, one should look at the scientific data on the same – sans any perception. Otherwise, it becomes ‘your view’ versus ‘my view’ sort of a mindless, though a highly passionate debate.

I shall refrain from being judgmental in this area. The readers may wish to ponder over it, seriously, and arrive at a well-considered inference on the very basis of this discourse – from the patients’ perspective.

By: Tapan J. Ray  

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

High Innovation-Cost Makes Cancer Drugs Dear: A Fragile Argument?

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Cancer is a major cause of high morbidity and mortality in India, just many other countries, according to a report of the World Health Organization (W.H.O). While deaths from cancer worldwide are projected to continue to rise to over 1.31 million in 2030, the Indian Council of Medical Research (ICMR) estimates that India is likely to have over 1.73 million new cases of cancer and over 8,80,000 deaths due to the disease by 2020 with cancers of breast, lung and cervix topping the list.

 Cancer treatment is beyond the reach of many:

Despite cancer being one of the top five leading causes of death in the country, with a major impact on society, its treatment is still beyond the reach of many. There are, of course, a number of critical issues that need to be addressed in containing the havoc that this dreaded disease causes in many families –  spanning across its entire chain, from preventive measures to early diagnosis and right up to its effective treatment. However, in this article, I shall focus only on the concern related to affordable treatment with appropriate cancer with medicines.

To illustrate this point, I shall quote first from the address of the Chief Minister of Maharashtra during inauguration of Aditya Birla Memorial Hospital Cancer Care Center on November 26, 2016. He said: “Cancer is the dreadful disease of all the time and for Maharashtra it is a big challenge as we are infamously at number two position in cancer cases in the country as after Uttar Pradesh, most cases are found here.” Incidentally, UP is one of the poorest state of India.

Underscoring that the biggest challenge before the technology is to bring down the cost of the cancer treatment and make it affordable and accessible for all, the Chief Minister (CM) further observed, “although, technological innovation has increased in last one decade, the accessibility and affordability still remain a challenge and I think, we need to work on this aspect.”

A new cancer drug launch vindicates the CM’s point:

The Maharashtra CM’s above statement is vindicated by a national media report of September 13, 2017. It said, Merck & Co of the United States have launched its blockbuster cancer drug ‘Keytruda’ (pembrolizumab) in India, around a year after its marketing approval in the country. Keytruda is expected to be 30 percent cheaper, compared to its global prices, costing Rs 3,75,000 – 4,50,000 to patients for each 21-day dose in India.

The point to take note of, despite being 30 percent cheaper, how many Indian patients will be able to afford this drug for every 3 weeks therapy? Doesn’t it, therefore, endorse the CM’s above submission? Well, some may argue that this exorbitant drug price is directly linked to high costs for its innovation and clinical development. Let me examine this myth now under the backdrop of credible research studies.

Cancer drugs are least affordable in India – An international study:

On June 6, 2016, by a Press Release, American Society of Clinical Oncology (ASCO) revealed the results of one of the largest analyses of differences in cancer drug prices between countries worldwide. The researchers calculated monthly drug doses for 15 generic and eight patented cancer drugs used to treat a wide range of cancer types and stages. Retail drug prices in Australia, China, India, South Africa, United Kingdom, Israel, and the United States were obtained predominantly from government websites. The study shows that cancer drug prices are the highest in the United States, and the lowest in India and South Africa.

However, adjusting the prices against ‘GDPcapPPP’ – a measure of national wealth that takes into consideration the cost of living, cancer drugs appeared to be least affordable in India and China. The researchers obtained the ‘GDPcapPPP’ data for each country from the International Monetary Fund and used it to estimate the affordability of drugs.

Why are cancer drug prices so high and not affordable to many?

The most common argument of the research based pharma companies is that the cost of research and development to bring an innovative new drug goes in billions of dollars.

The same question was raised in a series of interviews at the J.P. Morgan Healthcare Conference, published by the CNBC with a title “CEOs: What’s missing in the drug pricing debate” on January 11, 2016, where three Global CEOs expressed that the public is getting overly simple arguments in the debate about drug pricing. All three of them reportedly cited three different reasons altogether, as follows:

  • Eli Lilly CEO said, “Some of the noise you hear about drug pricing neglects the fact that we often must pay deep discounts in a market-based environment where we’re competing in many cases against other alternative therapies, including those low-cost generics.”
  • Pfizer CEO took a different approach by saying, “if you look at the market, about a decade ago, 54 percent of the pharmaceutical market was genericized; today 90 percent is genericized.”
  • However, as reported by CNBC, Novartis CEO Joseph Jimenez, focusing on innovation and in context on cancer drugs, argued “innovation has to continue to be rewarded or we’re just not going to be able to see the kind of breakthroughs that we have seen in cancer research, specifically regarding the uses and benefits of the cancer-fighting drug Gleevec. We continued to show that the drug was valuable in other indications in cancer and so we needed to be reared for that innovation and we’re pricing according to that.”

Is drug innovation as expensive and time intensive as claimed to be?

An article titled, “The high cost of drugs is the price we pay for innovation”, published by the World Economic Forum (WEF) on March 28, 2017 reported, “15 spenders in the pharmaceutical industry are investing about US$3 billion in R&D, on average, for each successful new medicine.”

The November 18, 2014 report on the ‘Cost of Developing a New Drug,’ prepared by the Tufts Center for the Study of Drug Development also announced: “The estimated average pre-tax industry cost per new prescription drug approval (inclusive of failures and capital costs) is: US$ 2,558 million.”

Not everybody agrees:

Interestingly, Professor of Medicine of Harvard University – Jerry Avorn questioned the very basis of this study in the article published in the New England Journal of Medicine (NEJM) on May 14, 2015. It’s not just NEJM even the erstwhile Global CEO of GSK – Sir Andrew Witty had questioned such high numbers attributed to R&D cost, around 5 years ago, in 2013. At that time Reuters reported his comments on the subject, as follows:

“The pharmaceutical industry should be able to charge less for new drugs in future by passing on efficiencies in research and development to its customers. It’s not unrealistic to expect that new innovation ought to be priced at or below, in some cases, the prices that have pre-existed them. We haven’t seen that in recent eras of the (pharmaceutical) industry, but it is completely normal in other industries.” Quoting the study of Deloitte and Thomson Reuters on R&D productivity among the world’s 12 top drugmakers that said the average cost of developing a new medicine, including failures, was then US$ 1.1 billion, Witty remarked, “US$ 1 billion price-tag was one of the great myths of the industry.”

A decade after Sir Andrew’s comment, his view was virtually corroborated by yet another research study, published this month. The study reemphasized: “The Tufts analysis lacks transparency and is difficult to judge on its merits. It cannot be properly analyzed without knowing the specific drug products investigated, yet this has been deemed proprietary information and is governed by confidentiality agreements.” I shall discuss this report briefly, in just a bit.

The latest study busts the myth:

The latest study on the subject, titled “Research and Development Spending to Bring a Single Cancer Drug to Market and Revenues After Approval”, has been published in the ‘JAMA Internal Medicine’ on September 11, 2017. It busts the myth that ‘high innovation-cost makes cancer drugs dear,’ providing a transparent estimate of R&D spending on cancer drugs. Interestingly, the analysis included the cost of failures, as well, while working out the total R&D costs of a company.

The report started by saying: “A common justification for high cancer drug prices is the sizable research and development (R&D) outlay necessary to bring a drug to the US market. A recent estimate of R&D spending is US$ 2.7 billion (2017 US dollars). However, this analysis lacks transparency and independent replication.”

The study concludes: “Prior estimates for the cost to develop one new drug span from US$ 320.0 million to US$ 2.7 billion. We analyzed R&D spending for pharmaceutical companies that successfully pursued their first drug approval and estimate that it costs US$ 648.0 million to bring a drug to market. In a short period, development cost is more than recouped, and some companies boast more than a 10-fold higher revenue than R&D spending—a sum not seen in other sectors of the economy. Future work regarding the cost of cancer drugs may be facilitated by more, not less, transparency in the biopharmaceutical industry.” The researchers also established that ‘the median time to develop a drug was 7.3 years (range, 5.8-15.2 years).’

“Policymakers can safely take steps to rein in drug prices without fear of jeopardizing innovation”:

NPR – a multimedia news organization and radio program producer reported: In an invited commentary that accompanies the JAMA Internal Medicine analysis, Merrill Goozner, editor emeritus of the magazine Modern Healthcare, noted that “the industry consistently generates the highest profit margins among all U.S. industries.” Goozner argues that the enormous value of patent protection for drugs far outweighs the inherent riskiness of pharmaceutical research and development, and agrees with the study authors when he writes: “Policymakers can safely take steps to rein in drug prices without fear of jeopardizing innovation,” NPR wrote.

Conclusion:

So, the moot question that surfaces: Is Pharma innovation as expensive and time consuming as claimed to be? If not, it further strengthens the credibility barrier to Big Pharma’s relentless pro-innovation messaging. Is the core intent, then, stretching the product monopoly status as long as possible – with jaw dropping pricing, unrelated to cost of innovation?

Further, incidents such as, shielding patent of a best-selling drug from low priced generic competition, by transferring its patents on to a native American tribe, probably, unveil the core intent of unabated pro-innovation messaging of major global pharma companies. In this particular case, being one among those companies which are seeking to market cheaper generic versions of this blockbuster eye drug, Mylan reportedly has decided to vigorously oppose such delaying tactic of Allergan before the Patent Trial and Appeal Board.

As a cumulative impact of similar developments, lawmakers in the United States are reportedly framing new laws to address the issue of high drug prices. For example, “California’s Senate Bill 17 would require health insurers to disclose the costs of certain drugs and force pharmaceutical manufacturers to detail price hikes to an agency for posting on a government website. The proposal would also make drugmakers liable to pay a civil penalty if they don’t follow its provisions.”

The myth of ‘high innovation-cost makes cancer drugs dear’ will go bust with such revelations, regardless of the blitzkrieg of self-serving pro-innovation fragile messaging.  Alongside, shouldn’t the Indian Policy makers take appropriate measures to rein in cancer drug prices, being free from any apprehension of jeopardizing innovation?

By: Tapan J. Ray 

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

Improving Patient Access To Biosimilar Drugs: Two Key Barriers

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Novel biologic medicines have unlocked a new frontier offering more effective treatment for a host of chronic and life-threatening diseases, such as varieties of cancer, rheumatoid arthritis and diabetes, to name just a few. However, these drugs being hugely expensive, many patients do not have any access, or adequate access, to them. According to the Biosimilar Council of GPhA, only 50 percent of severe Rheumatoid Arthritis patients receive biologic medicines, even in the United States, Europe and Japan, leave aside India.

Realizing the gravity of this situation, a need to develop high quality, reasonably affordable and similar to original biologic brands, was felt about ten years ago. These were intended to be launched immediately after patent expiry of the original biologic. Such medicines are termed as biosimilar drugs. It is worth noting, even biosimilar drug development involves complex manufacturing processes and handling, while dealing with derivatives of highly sensitive living organisms.

The regulatory approval process of these drugs is also very stringent, which demands robust clinical data, demonstrating high similarity, both in effectiveness and safety profile, to original biologic brands, known as the reference product. The clinical data requirements for all new biosimilars include data on patients switching from the originator’s brand, and also between other biosimilars. Clinical evidences such as these, are expected to provide enough confidence to physicians for use of these products.

An article published in the PharmaTimes magazine in January 2016, reiterated that over the last couple of years, a wealth of supporting data has been published in medical journals and presented at global congresses, including real-world data of patients who have been switched to the new drug from the originator. This has led to a positive change in physician and patient attitudes towards biosimilars.

The good news is, besides many other regulated markets, as of May 2017, five biosimilar drugs have been approved even by the US-FDA, and several others are in the pipeline of its approval process.

That said, in this article I shall mainly focus on the two key barriers for improving patient access to biosimilar drugs, as I see it.

Two major barriers and their impact:

As I see it, there appear to be the following two key barriers for more affordable biosimilar drugs coming into the market, improving patients’ access to these important biologic medicines:

  • The first barrier involves fierce legal resistance from the original biologic manufacturers of the world, on various grounds, resisting entry of biosimilar varieties of their respective brands. This compels the biosimilar drug manufacturers incurring heavy expenditure on litigation, adding avoidable cost. A glimpse of this saga, we are ‘privy’ to witness even in India, while following Roche versus Biocon and Mylan case related to ‘Trastuzumab’. This barrier is one of the most basic types, that delays biosimilar drug entry depriving many new patients to have access to lower priced effective biologic for the treatment of serious diseases.
  • The other major barrier that exists today, involves ‘interchangeability’ of original biologic with biosimilar drugs. It simple means that in addition to being highly similar, a biosimilar drug manufacturer would require producing indisputable clinical evidence that it gives the same result for any given patient just as the original biologic. We shall discuss the reason behind this regulatory requirement later in this article. However, this is an expensive process, and the absence of it creates a barrier, making the physicians hesitant to switch all those existing patients who are on expensive original biologic drugs with less expensive available biosimilar alternatives.

The first or the initial barrier:

The first or the initial barrier predominantly involves patent related legal disputes, that can only be settled in a court of law and after incurring heavy expenditure towards litigation. Provided, of course, the dispute is not mutually resolved, or the law makers do not amend the law.

An interesting case in India:

Interestingly, in India, a similar dispute has knocked the doors of both the high court and the Competition Commission of India (CCI). From a common man’s perspective, it appears to me that the laws under which these two institutions will approach this specific issue are seemingly conflicting in nature. This is because, while the patent law encourages no market competition or a monopoly situation for a patented product, competition law encourages more market competition among all related products. Nonetheless, in this specific case CCI is reportedly investigating on the alleged ‘abuse of the regulatory process’, as it has opined ‘abuse of regulatory process can constitute an abuse of dominance under the (CCI) Act.’                                                                                            

The second barrier:

I am not going to discuss in this article the relevance of this barrier, in detail. Nevertheless, this one is also apparently equally tough to comply with. The very fact that none out of five biosimilar drugs approved in the United States, so far, has been considered ‘interchangeable’ by the US-FDA, vindicates the point.

That this specific regulatory demand is tough to comply with, is quite understandable from the requirements of the US-FDA in this regard, which goes as follows:

“To support a demonstration of interchangeability, the data and information submitted to FDA must show that a proposed interchangeable product is biosimilar to the reference product and that it can be expected to produce the same clinical results as the reference product in any given patient. Also, for products that will be administered more than once, the data and information must show that switching a patient back and forth between the reference product and the proposed interchangeable product presents no greater risk to the patient in terms of safety or diminished efficacy when compared to treating them with the reference product continuously.”

The reasoning of innovative biologic drug makers:

On this subject, the stand taken by different innovative drug makers is the same. To illustrate the point, let me quote just one of them. It basically sates, while biosimilar drugs are highly similar to the original medicine, the patient’s immune system may react differently due to slight differences between the two medicines when they are alternated or switched multiple times. This phenomenon, known as immunogenicity, is not a common occurrence, though. But there have been rare instances when very small differences between biologic medicines have caused immune system reactions that changed the way a medicine was metabolized, or reduced its effectiveness.

It further reiterates, the US-FDA requirements to establish ‘interchangeability’ between a biosimilar drug and the original one, or between biosimilars may seem like nuances, but are important because ‘interchangeability’ allows pharmacists to substitute biosimilars without consulting the doctor or patient first.

It may, therefore, indicate to many that innovative biologic drug manufacturers won’t want substitution of their expensive biologic with more affordable biosimilar drugs, on the ground of patient safety issues related to immunogenicity, though its instances are rather uncommon.

Some key players in biosimilar drug development:

Having deliberated on the core subject of this article, let me now very briefly name the major players in biosimilar drug development, both in the developed world, and also in India.

The first biosimilar drug was approved by the US-FDA in 2006, and the product was Omnitrope (somatropin) of Novartis (Sandoz). It was the same in the European Union (EU), as well. Subsequently, many other companies reportedly expressed interest in this field, across the globe, including Pfizer, Merck, Johnson and Johnson, Amgen, AbbVie, Hospira, AstraZeneca and Teva, among many others.

Similarly, in India, the major players in this field include, Biocon, Sun Pharma, Shantha Biotech, Dr. Reddy’s Lab, Zydus Cadila, Panacea Biotech and Reliance Life Sciences.

As featured on the Amgen website, given the complexity and cost of development and manufacturing, biosimilars are expected to be more affordable therapeutic options, but are not expected to generate the same level of cost savings as generics. This is because, a biosimilar will cost US$100 to US$200 million and take eight to ten years to develop. Whereas, a small molecule generic will cost US$1 to US$5 million and take three to five years to develop.

The market:

According to the 2017 report titled “Biosimilar Market: Global Industry Analysis, Trends, Market Size & Forecasts to 2023” of Research and Markets, the market size of the global biosimilar market was valued over US$ 2.5 billion during 2014, and it surpassed US$ 3.30 billion during 2016. The global biosimilar market is projected to surpass US$ 10.50 billion by 2023, growing with a CAGR between 25.0 percent and 26.0 percent from 2017 to 2023.

According to this report, gradually increasing awareness, doctors’ confidence and the lower drug cost are expected to boost the demand and drive the growth of the global biosimilar market during the forecast period. Segments related to diabetes medicine and oncology are expected to attain faster growth during the forecast period. Patent expiry of several blockbuster drugs is a major basic factor for growth of the global biosimilar market, as it may encourage the smaller manufacturers to consider producing such biologic drugs in those segments.

Conclusion:

Biosimilar drugs are expected to benefit especially many of those patients who can’t afford high cost biologic medicines offering better treatment outcomes than conventional drugs, in the longer term. These drugs are now being used to effectively manage and treat many chronic and life-threatening illnesses, such cardiac conditions, diabetes, rheumatoid arthritis, psoriasis, multiple sclerosis, Crohn’s disease, HIV/AIDS and cancer.

However, improving patient access to high quality biosimilar drugs, at an affordable price, with increasing competition, could be a challenge, as two key barriers are envisaged to attain this goal. Overcoming these meaningfully, I reckon, will involve choosing thoughtfully a middle path, creating a win-win situation, both for the patients, as well as the industry.

Adequate competition in the biologic drug market is essential – not only among high-priced original biologic brands and biosimilars, but also between biosimilar drugs. This is so important to increase patient access to biologic drugs, in general, across the world, including India.

The current situation demands a sense of urgency in searching for a middle path, which may be created either through a legal framework, or any other effective means as would deem fair and appropriate, without compromising with patient safety, at least, from where it is today.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.