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The Stakeholder-Mix Has Changed, But Pharma Marketing Has Not

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“We try never to forget that medicine is for the people. It is not for profit. Profits follow, and if we have remembered that, they never fail to appear.”

In 1952, George Wilhelm Herman Emanuel Merck, the then President of Merck & Co of the United States said this. He was then aptly quoted on the front cover of the ‘Time Magazine’, epitomizing his clear vision for the company: “Medicine is for people, not for the profits”.

The globally acclaimed Management Guru – Peter F. Drucker had also clearly articulated in his management classics that, “Profit is not the purpose of business and the concept of profit maximization is not only meaningless, but dangerous.” He further said, “There is only one valid purpose of a business, and that is to create a customer” 

As this is an ongoing process, in the pharma perspective, it may be construed as ensuring access to new drugs for an increasing number of patients.

It really worked: 

In those days, driven by such visionary leadership, the pharma used to be one of the most respected industries and Merck topped the list of the most admired corporations in America. It is clear that pharma leadership at that time wanted to make ‘inclusive growth’, both in the letter and spirit, as an integral part of the organizational progress, moving with time.

Thus, it worked. The sales and marketing growth of the global drug industry at that time was not lackluster, either, in any way. The R&D pipeline of the drug companies used to be also rich, with regular flow of breakthrough new products too. 

Straying away from ‘inclusive’ to ‘self-serving’ strategies:

Much water has flown down the bridges, since then, so is the change in the public and other stakeholders’ perception about the pharma industry, in general. 

Sharply in contrast with George W. Merck’s (Merck & Co) vision in 1952 that “Medicine is for people, not for the profits”, in December 2013 the global CEO of Bayer reportedly proclaimed in public that: “Bayer didn’t develop its cancer drug, Nexavar (sorafenib) for India but for Western Patients that can afford it.” 

It appears that the focus of the pharma industry on ‘inclusive growth’ seems to have strayed away to ‘self-serving growth’, with the passage of time. As a result, a large majority of the new stakeholders started harboring a strong negative feeling about the same industry that continues its active engagement with the very same business of developing new drugs that save many precious lives. 

Granted that the business environment has changed since then, with increasing complexities. Nonetheless, there does not seem to be any justifiable reason for straying away from ‘inclusive growth’ strategies.                                         

As are regularly being reported, both in the global and local media, mindless arrogance on fixing exorbitant high new drug prices severely limiting their access, unabated malpractices in drug marketing and escaping with hefty fines, releasing only favorable clinical trial data, just to mention a few, are giving the industry image a strong tail spin.

Stakeholders changed, but pharma marketing did not:

Keeping the same strategic direction and pace, overall pharma brand marketing strategy also continued to be increasingly ‘self-serving’, and tradition bound. Success, and more success in building relationship with the doctors, whatever may be the means, is still considered as the magic wand for business excellence, with any pharma brand. Thus, since over decades, building and strengthening the relationship with doctors, continue to remain the primary fulcrum for conceptualizing pharma marketing strategies. 

It does not seem to have not dawned yet for the pharma marketers, that over a period of time, the market is undergoing a metamorphosis, with several key changes, and some of these would be quite disruptive in the traditional pharma marketing ball game. Consequently, the above key the fulcrum of pharma marketing is also gradually shifting, slowly but surely.

In this article, I shall deliberate only on this area.

A new marketing paradigm:

The key customer in the pharma business is no longer just the doctors. That was the bygone paradigm. The pharma stakeholders’ mix is no longer the same as what it used to be. 

The evolving new paradigm constitutes multitude of important stakeholders, requiring a comprehensive multi-stakeholder approach in modern day’s pharma marketing game plan.

Patients, governments, policy influencers, health insurance providers, hospital administrators, social media, and many others, have now started playing and increasing role in determining the consumption pattern of pharma brands, and their acceptability. More importantly, these not so influential stakeholders of the past, are gradually becoming instrumental in building overall pharma business environment too. This necessitates customized engagement strategy for each of these stakeholders, with high precision and relevance.

Changing mindset is critical: 

An effective response to this challenge of change, calls for a radical change in the marketing mindset of the top pharma marketers. The most basic of which, is a strong will to move away from the age old ‘one size fits all’ and ‘self-serving’ initiatives with some tweaking here or there, to a radically different ‘inclusive marketing’ approach.  In this game, both the types and the individual customer concerned, would occupy the center stage for any meaningful interactions on the brands and associated diseases, besides many other areas of relevance.

Multi-stakeholder – Multi-channel approach:

For a multi-stakeholder customized engagement, innovative use of multiple channels would play a crucial role, more than ever before.

Availability of state of the art digital tools, would facilitate crafting of comprehensive marketing strategies, accordingly. For example, for the doctors, some companies are moving towards e-detailing.

As I discussed in my article in this Blog titled, “e-detailing: The Future of Pharmaceutical Sales?” on September 13 2013, this modern way of interaction with the doctors is fast evolving. E-detailing is highly customized, very interactive, more effective, quite flexible, and at the same time cost-efficient too. Live analytics that e-detailing would provide instantly, could be of immense use while strategizing the game plans of pharmaceutical marketing.

A feel of the changing wind direction:

A relatively new book titled, “Good Pharma: How Marketing Creates Value in Pharma”, published in March 2014, and written by Marcel Corstjens, and Edouard Demeire, well captures some of the key changes in the pharma industry with a number interesting examples. 

The above book seems to somewhat respond to Ben Goldacre’s bestselling book ‘‘Bad Pharma: How Drug Companies Mislead Doctors and Harm Patients’, which I discussed in this blog on October 15, 2012.  It made some important observations in many areas of pharma business. I am quoting below just a few of those incoming changes to give a feel on the urgent need of recasting the marketing models of the pharma industry:

On emerging markets’ like India:

“Emerging markets should not be seen as low-hanging fruits. Their prevalence of diseases may not be the same, the stakeholders may be very different. In addition, the healthcare infrastructure is often not very sophisticated, and these markets can be rather volatile and difficult to predict. It’s not a sure bet; you have to invest. … Companies need to commit seriously to building a heavily localized approach that is substantiated by a global reputation.” This is perhaps not happening in India, to a large extent, as I reckon.

On personalized Health Care (PHC): 

The new drugs brought to market by the pharma companies are not just expensive, but often work only for small segments of the patient population. In India this situation mostly leads to very high out of pocket expenditure, which often is wasted for the drug not working on the patient. Thus, the regulators and payers in the developing countries are setting the threshold for higher reimbursement. The authors observed that PHC is now being put forward as the industry’s best bet for satisfying stricter effectiveness criteria, not only by developing new drugs, but also by investing in the magical trio of the future: “drug-biomarker-diagnostic. In that case, pharma marketing would need to undergo a significant change, starting from now.

On ‘Category captains’:

The book also says, “The most financially successful companies in the past 20 years has been Novo-Nordisk. They have specialized in diabetes, they’re extremely good at that. Roche specializes in oncology. The larger the company, the more ‘captive’ areas they can have. The success of Novo-Nordisk, a relatively small company, proves firms of all sizes have a chance to compete, as long as they stick closely to their strengths. When this happens in a much larger scale, pharma marketing would also be quite different and more focused.

Many pharma companies are still avoiding to change, successfully. For example, as announced on May 31, 2016, Intercept Pharma of the United States announced its new liver disease drug with a hefty price tag of US$ 70,000 a year. According to the report, the company said, prices are justified by a drug’s level of innovation and cost savings for the healthcare system. This justification has now become very typical in the pharmaceutical world, which has been facing barrage of criticisms, including from Capitol Hill, about too-high drug prices.

However, as we move on, the writing on the wall seems to be very clear on the sustainability of health care business, the world over.

Conclusion:

Finally, the question arises, would the traditional approach still be good enough to achieve the desired sales and marketing objectives, any longer?

No, probably not, I reckon. With changed mindsets, ‘getting under the skin’ of each stakeholder, separately, would assume key importance. It would play a key role, while devising each component of any cutting-edge pharma sales and marketing strategy, tactic, and task.

The shift from the old paradigm, signals towards a total recast of pharma marketing to make it more ‘inclusive’, and not just ‘self-serving’. Newly crafted commensurate grand marketing plans and their effective implementation should satisfy the needs and wants of all stakeholders, simultaneously. Singular focus on building, or further strengthen the relationship with prescribing doctors, won’t be adequate enough, anymore.

Thus, the name of the new pharma ballgame would again be ‘inclusive marketing for inclusive growth’.

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.

The Recent Ban On Irrational FDCs: History Repeats Itself

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The recent regulatory ban on a large number of irrational Fixed Dose Combination (FDC) drugs is not a new incident in India. A similar mega ban was announced even before, about nine years ago. Intriguingly, the saga continues, for various reasons, without any tangible outcome for the patients on the ground.

On March 11, 2016, the latest ban, again on a large number of irrational FDCs, was notified. It caused a flutter and an immediate sharp adrenaline rush to the impacted drug companies and was soon followed by an interim stay order, again by an honorable High Court of the country.

Thus, when I connect the past dots with the latest one, on mega ban of irrational FDCs in India, a similar sequence of events gets unfolded, following each of such ban notifications of the Government.

Looking back, 294 FDCs were banned by the DCGI in 2007. At that time too, the important issue of patients’ health, safety and economical interest, got converted into a legal quagmire. Many adversely affected FDC drug players chose to go to the court of law to protect their business interest, and also successfully managed to obtain a ‘Stay’ order from the Madras High Court.

Consequently, those 294 irrational FDCs, banned by the Union Ministry of Health on health and safety grounds, continued to be promoted, prescribed and sold to patients across India, without any hindrance, whatsoever.

The matter continues to remain sub judice, as we deliberate the issue here. Thus, whether the recent gazette notification on the ban of irrational FDCs would immediately be implemented, unlike the past ban, or the history would repeat itself, is indeed a big question mark, at this juncture.

Would this ban have similar outcome?  

As discussed, close to a decade after the serious legal fall-out of the ban of 294 irrational FDCs in 2007, another mega ban of 344 irrational FDCs has been announced by the Government, through a Gazette Notification dated March 11, 2016. Some well known brands, such as, Corex, Phensedyl, Crocin Cold and Flu, D-Cold Total, Nasivion and Vicks Action 500 Extra, among others, reportedly come under this ban now. Here is the complete list of 344 banned FDCs.

According to the Government, the reason for banning these drugs is that ‘they involve risk to humans and safer alternatives were available.’

Nevertheless, manufacturers of some of these mega brands have again obtained an interim injunction on the ban for their respective products, from the Delhi High Court.

Sometime during the day, i.e. on March 21, 2016, the honorable Delhi High Court is expected to take up this patient-centric issue. It apparently smacks a blatant self-serving interest of the concerned irrational FDC manufacturers, that defeats the core purpose and value of pharma products for their users.

Like most other issues, the Court directive on this issue, as well, would ultimately prevail, without any shade of doubt.

Is it a ‘bolt from the blue’ for the pharma industry? 

Many industry watchers feel that this recent ban has not come as a ‘bolt from the blue’ for the pharma players, at all, as is being claimed by a section of the pharma industry. Even the Union Ministry of Health has, reportedly, clarified the following points on the recent notification:

  • “We have tried to bring objectivity to the issue by roping in the best of scientists to study the effects of these FDCs.”
  • “Show cause notices were also issued to more than 344 companies and they were given time to make further representations after the expert committee gave their recommendations. Some of them did not even care to respond. Everybody was given ample opportunity. After that, the move was initiated. It was done after much examination.”
  • “It is necessary and expedient in the public interest to regulate by way of prohibition of manufacture for sale, sale and distribution for human use, of the said drugs in the country.”

It is worth noting, at least, one of these well known pharma brands was, reportedly, banned in one of our neighboring countries – Sri Lanka, in 2012, for wide-spread drug misuse, long after its marketing approval in the country.

Some key events leading to the recent ban: 

Besides the above articulation by the Union Ministry of Health, it is worth noting, especially, the following key developments to ascertain, whether this ban came suddenly to the irrational FDC manufacturers, and without any prior warning or appropriate communication:

  • The issue of manufacturing licenses being granted by some states for FDCs without prior approval of Central Drugs Standard Control Organization (CDSCO), was first discussed by the Drugs Technical Advisory Board (DTAB) in the year 2000, though without any major tangible outcome till 2007. 
  • In 2007, Government banned 294 FDCs, and the consequent court proceedings had ‘Stayed’ this ban.
  • Expressing huge concern on pharma malpractices related to irrational FDCs, the Parliamentary Standing Committee on Health and Family Welfare in its 59th report (2012) also had flagged this issue. The lawmakers observed in the report that manufacturing licenses for large numbers FDCs were being issued by the State Drug Authorities, without prior approval of the Central Drugs Standard Control Organization (CDSCO), in violation of rules. The committee also noted that multiple FDCs, which are available in India had been rejected by the drug regulators in Europe, North America, and Australia, while for many others never had marketing approval applications submitted outside India (Section 7 of [6]).
  • Subsequently, in June 2013, CDSCO  announced the “Policy Guidelines for Approval of Fixed Dose Combinations (FDCs) In India.”
  • According to CDSCO, just 1193 FDCs were approved by the DCGI, since 1961 till November, 2014. Thus, all drug manufacturers should clearly know, which FDC has been approved by the DCGI, and when, leaving no scope for any ambiguity in this area. Thus, there should be no problem in total conformance to the above ‘FDC Policy Guidelines’ by these drug producers.
  • In the same year – 2013, a public notice was also, reportedly, issued, calling all those drug players manufacturing FDCs to apply with the requisite fee, in the prescribed form to the DCGI office, providing the required details.  
  • In 2014, a six-member committee, chaired by Prof. (Dr.) Chandrakant Kokate, Vice Chancellor, KLE University, Jawaharlal Nehru Medical College, Belgaum, Karnataka, was formed to expedite the review process of the applications. 
  • The Kokate Committee has, reportedly, reviewed about 6,600 FDCs, so far, and classified them under four categories – irrational, require further deliberations, rational and require additional data generation. 
  • According to a report, 963 FDCs were found under the irrational category, providing reasons in detail for each. 
  • In 2016, the Government finalized its action, based on the Report of Kokate Committee and also the response received (or still not received despite requests) from the concerned FDC manufacturers.
  • The March 11, 2016 Gazette Notification banned 344 ‘irrational’ FDCs, ruffling many feathers, but understandably to protect patients’ health interest.
  • On March 14, 2016, in response to an appeal against this ban through a writ petition, first by Pfizer, the Delhi High Court reportedly granted the company a stay, pending the next court hearing on March 21, 2016. Subsequently, several such stay orders by the honorable Delhi High Court have been issued with the same date of hearing. 
Adverse health and economic impact on patients:

Besides serious health risks, the patients also suffer from a huge adverse economical impact, in rupee value terms, by consuming much avoidable irrational FDC formulations, which are generally more expensive than single ingredient drugs, if taken separately at times of necessity or convenience.

The ban of 344 FDCs is estimated to cover over 2,500 brands, in different therapy categories, including chronic diseases, where medicines are taken for a long period of time. Thus, a large number of patients were consuming these irrational formulations for a long period of time without any inkling of their necessity and more importantly serious adverse health impact that these irrational FDCs could cause.

To quantify how much have the patients collectively spent on these banned medicines, in the rupee value terms, I shall quote from the estimates of one of the well reputed and much quoted pharma retail audit and market research organization of India – AIOCD Pharmasofttech AWACS Pvt. Ltd.

According to its report of March 13, 2016, Indian Pharmaceutical Industry would lose Rs. 3,838 Crore (MAT), which is 3.1 percent of the turnover of the Indian Pharmaceutical Market (IPM), when calculated based on the retail sales of these FDCs in the last 12-month period.

Paraphrasing the same finding, one can logically conclude that Indian patients withstood an adverse economic impact of Rs. 3,838 Crore in a 12-month period, by spending on these unnecessary and irrational FDCs of dubious value, besides health risks. 

To my surprise, some of the MNC pharma players contribute a major chunk to this avoidable expenditure of the patients, besides associating and avoidable health risks.

Quoting similar credible data, it is also possible to give company-wise break-up in this area, which, in my view, may not be meaningful here.

Two Critical issues to address:

Although, a lot of water has since flown down the bridges, a large number of irrational FDCs are still in the market, exposing patients to possible health hazards and economical hardship.

In this blog, I discussed this core issue in two of my articles, one on July 15, 2013 titled, “FDC Saga: Defiant Manufacturers, Sloppy Regulators and Humongous Inaction”, and the other on May 18, 2015 titled, “Booming Sales Of Unapproved Drugs: Do We Need ‘Safe In India’ Campaign For Medicines?”.

I reckon, the following two would still remain the critical issues, which need to be addressed, expeditiously, once and for all, for patients’ sake: 

  • Stringent compliance with the latest CDSCO requirements by all the manufacturers of FDCs in India must be ensured. Any non-conformance should attract strong punitive measures, through a transparent process.
  • Whether such drugs are being widely misused, creating a grave risk for health and other safety hazards, must be ascertained periodically, based on credible data.
An important example:                         

Just the other day, Reuters reported that one of the largest pharma companies operating in India, was selling a FDC of the antibiotics cefixime and azithromycin, without approval of the DCGI.

Interestingly, this particular FDC has reportedly not received marketing approval in the major global pharma markets, such as, the United States, the United Kingdom, Germany, France or Japan.

After the ban of this irrational FDC, the company was compelled to stop manufacturing and sales of this powerful antibiotic cocktail that poses huge health risk to patients.

This Reuters report also states, the drug ‘had been promoted and administered as a treatment for a broad array of illnesses, including colds, fevers, urinary tract infections, drug-resistant typhoid and sexually transmitted diseases.’ It also found chemists who were selling the drug to prevent post-operative infection and for respiratory problems.

Many doctors and health experts have been saying that the spread and misuse of antibiotic combinations may be contributing to antibiotic resistance in India.

FDC approval must be hard evidence-based:

Since all pharmaceutical products, whether available as a single ingredient, or FDC formulations, are globally considered as ‘Evidence-Based Medicines’. Such evidences are established through robust, stringent and well regulated clinical trials for obtaining marketing approval from the drug regulators, unlike most ‘traditional medicines’.

Following this well-established global norm, and as recommended by even the World Health Organization (WHO), all irrational FDCs must be identified through a transparent and medical science-based process, and banned forthwith by the Government.

Establishing safety and efficacy for all FDCs through clinical trials, just like any other single ingredient drug, introduced for the first time in India, whenever it happens or had happened in the past, inadvertently or otherwise, should be a ‘must happen’ regulatory requirement, for all time to come.

Profit making interest through introduction of a plethora of irrational FDCs, should never be allowed to overshadow patients’ health and economical interest.

The bogey of even ‘25 to 30-year-old FDCs’ now being banned: 

Some section of the industry is also raising this point, vociferously, protesting against the bans of their respective old and top-selling FDC brands, which have now been considered by the Government as irrational, and questioning: ‘why now?’

This point is irrelevant, as not taking action ever, against a wrong doing allowed over a long period time, does not make an irrational FDC formulation a rational one, for all time to come.

Moreover, this recent action of the drug regulator can not be considered as unique either. With the advancement of medical science, in the past years too, the DCGI issued banned notifications, covering many old FDCs, considering those ‘irrational combinations’ at a given point of time, such as, analgin + pitofenone, vitamins B1 + B6 + B12, cyproheptadine + lysine, just to name a few.

Conclusion:

As is known to many, pharmacovigilance is still at a very nascent stage in India. Consequently, ‘Adverse Drug Reactions (ADR)’ or ‘Adverse Drug Events’ reporting are still abysmally poor in the country. No information on ‘Adverse Drug Events’, as claimed by the manufacturers of these irrational FDCs, should, therefore, in no way mean that these drugs are safe and efficacious and beyond any reasonable doubt.

Although the laxity of the drug regulator in this area can’t also be condoned, in any way, the enormity of the risks posed by irrational FDCs to the innocent patients, is indeed mind boggling.

If the manufacturing and sale of all irrational FDCs are not legally stopped, even after a long and rigorous scientific and medical scrutiny by the experts, the patients in the country would, unfairly, continue to remain exposed to huge health and economic risks, without any fault of theirs. This is exactly what happened in 2007 also, when, after the stay order of the ban notification for 294 irrational FDCs by the honorable Madras High Court, all those FDCs continued to be promoted, prescribed and sold to patients across India, unhindered… but at whose cost?

Yet again, the gazette notification of the Government on the recent ban on 344 FDCs, has gone for judicial scrutiny, at least, for some money spinning key brands of the large pharma players.

This time, however, there is one significant difference, the Government seems to be far more assertive and committed to ensure that only safe medicines are available in the market, despite reported intense advocacy by the industry. This commitment on the part of the Government is also evident from the media report that the (DGCI) has again sent a new list of additional 1,200 FDCs for a probe to the panel, which recommended the ban of 344 irrational FDCs in the last week, and that too, after the court stay order on the latest ban.

Further, a senior a senior official in the Health Ministry has, reportedly, reiterated that the Government will stand firm on its decision, and will support the ban with robust data, in the Delhi High Court.

Would history repeat itself, this time now? We, at least, would get a sense of it, as the proceeding of the honorable Delhi High Court commences today, on this issue.

Either way, it will possibly send a clear signal, whether the triumph of commercial profit motive with irrational FDCs would continue, unabated, over patients’ health, safety and economic interests, at least in the foreseeable future. 

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.

 

2015: Pharma Industry Achieved Some, Could Achieve Some More

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Wish You And All Your Near And Dear Ones Peace, Happiness, Good Health And Prosperity in The Brand New Year 2016 

The year 2015 witnessed several noteworthy developments in the pharma industry, just as many other years before. That said, in my view, a few of these happenings were much more impactful, and probably took place for the first time ever, in the year just gone by.

Obviously, one such major development is the overall serious adverse impact on the image of the pharma industry, in general. 

During 2015, the image of the pharma industry got further tarnished by reports of high-profile alleged drug price manipulations. This avoidable saga culminated with the arrest of a pharma Chief Executive Officer (CEO) in the United States, amid a federal investigation, in December 2015.

However, I am not going to dwell on this issue in this article. Instead, I shall select some key strategic pharma business areas, which contribute to the largest chunk of the total overall cost, incurred by the global pharma industry, every year. These areas, as I see, are:

  • Drug discovery research
  • Sales and Marketing
  • Supply Chain
  • Development of new drug delivery systems
  • Patients care and engagements

I have put all these points in the above order, just for the convenience of my discussion in this article. 

With a few examples, I shall give my perspective on these areas of the global pharma industry, dividing them broadly into the following two sub-categories: 

  • Areas where the industry could have done a lot better
  • Areas where the industry made significant progress
The Pharma industry strategy continues to remain broadly traditional:

Pharma sector is globally considered as an industry, which appears to be more comfortable in maintaining and harnessing its traditional approaches, in almost all its field of activities. Although, some tweaking has certainly been taking place, which are primarily to automate or digitalize the same process, aimed at adding more speed together with virtually real time monitoring of operations.

Let me hasten to add here that, some major and newer types of modern tech based collaborative initiatives with large companies outside the pure pharma space, have also been reported, during the year.

I shall deliberate on both these areas, one after another, hereunder. 

A. Areas where the industry could have done a lot better:

Drug discovery research:

With the increasing impact of patent cliff and low productivity in drug discovery research, coming alongside big ticket generic threats, many pharma players seem to be still tweaking with its traditional blockbuster drug discovery model, in 2015.

Slightly changing from this traditional strategic focus, many of them have now started focusing more on ‘Orphan Drug’ research, though with indication of a life threatening disease with low prevalence, intending to go whole hog for very high pricing of these drugs.

By gradually adding more indications, these innovator companies plan to make the ‘Orphan drug’ molecule a money churning blockbuster drug. As a result, the number of venture capitalists, who invest in the early stages of such drug development, has increased significantly in 2015.

According to reports, over 40 percent of all approved orphan drugs are meant for high risk cancer sub-categories with low prevalence rate. Although these drugs are for lifetime treatment, the medicines are frightfully expensive, costing between US$200,000 and US$300,000 per year, for each patient. 

Intriguingly, still a very few drug companies are externalizing drug discovery research or even considering on a large scale, the use of the ‘Open Source’ drug discovery model, which is currently widely used in the Information Technology (IT) industry, as one of the main platforms to get new products.

Sales and Marketing:

Similarly, in the pharma sales and marketing space, there has been no game changing developments, during the last year.

Although, some initiatives that can at best be termed as tweaking on the traditional pharma methods, were visible, especially in the fields of digital marketing and e-detailing. The good old and much tried traditional tools, such as, Medical Representatives’ (MR) product detailing to individual doctors or a large number of ‘medical seminars’/ ‘continuing medical education’ events, of varying scale and dimensions, arranged for the medical practitioners, still ranked at the very top of this domain. 

Here, again, no signs of a paradigm shift were visible to me during the year, nor do I reckon, any game changer is likely to surface, any time soon.

Supply chain:

The immense importance of ‘Supply Chain’ in the overall pharma business does not appear to have been properly understood by the drug companies up until 2015. This has been well vindicated by various credible studies. I would refer below just two of those: 

The Chief Supply Chain Officer Report of September 2014, highlighted that just 39 percent of pharmaceutical respondents see the ‘Supply Chain’ as an equally important part of business success as R&D or sales and marketing. Whereas, 68 percent of consumer packaged goods’ respondents believe that leveraging the true potential of this domain, is one of the key requirements for business excellence.

This is noteworthy, as even ‘The McKinsey report’ of September 2013 stated that supply chains now account for around 25 percent of pharmaceutical costs. The annual spending on it is so staggering of around US$230 billion that even minor efficiency gains in this area could free up billions of dollars for investments elsewhere.

Instead of following its traditional approaches, if the pharma sector adopts even straightforward advances, well established in other industries, the total costs could fall by US$130 billion, ‘The McKinsey report’ estimates. 

Ideally, pharma ‘Supply Chain’ should be considered not just a means of getting the products at the right place, at the right time and in the right quantities, but also as a means of delivering additional value to the customers. This can be achieved with radical strategic intervention in this space with the application of the state of art technology, which was still broadly lacking in 2015. 

B. Areas where the industry made significant progress: 

In this section, by citing examples on two other important strategic business areas of the pharma industry, where significant progress has been reported during 2015, I would try to drive home my point. These two areas are new drug delivery systems and patient care/engagement.

New drug delivery systems:

On the development of new drug delivery systems, some interesting collaborative arrangements have been reported in 2015. As illustrative examples, I would cite just the following two: 

A. “Smart Inhaler”

I have picked up this important area of a new drug delivery system, out of many, as it fascinates me immensely. Here again, I would illustrate my point with just two examples – out of several others, as hereunder:

1. On December 2, 2015, the British drug major GlaxoSmithKline (GSK) reportedly entered into a technology deal with Wisconsin-based Propeller Health. Under this collaboration, Propeller will create a custom sensor for GSK’s Ellipta inhaler. The Propeller platform combines sensors, software, and care team services to improve patient outcomes by providing more insightful and efficient care. GSK is the second largest pharmaceutical company to partner with Propeller Health, which in December 2013 announced a deal with Boehringer Ingelheim to develop a custom sensor for BI’s Respimat device.

2. In September, 2015, Teva Pharmaceuticals reportedly acquired Cambridge, Massachusetts-based Gecko Health Innovations, a smart inhaler company.

Gecko’s main product is a platform for chronic respiratory disease management that also combines a sensor device that connects to most inhalers, a data analytics platform, an accessible user interface, and behavioral triggers to help asthma and COPD patients manage their condition, more effectively.

B. Sanofi and Medtronic strategic alliance in diabetes to improve patient experience and outcomes

Although not many large scale commercial ‘drug discovery’ initiatives based on the ‘Open Source’ model is still not known to me, in the ‘new drug delivery system’ area, a major global strategic alliance, between Sanofi and Medtronic in the diabetes therapy area, has been reported based on this model. This alliance is aimed at improving patient experience and outcomes for persons with diabetes, around the world. 

As I mentioned, the alliance structured as an ‘Open Innovation’ model, will initially focus on the following key priorities:

  • Development of drug-device combinations
  • Delivery of care management services to improve adherence and simplify insulin treatment
  • Help people with diabetes better manage their condition

Patient engagement and care:

Quite encouragingly, in the ‘patient engagement and care’ area too, some of the global pharma majors have taken notable tech-based strides during 2015. Some of these laudable ventures are as follows:

A. Novo Nordisk and IBM partner to build diabetes care solutions on the Watson Health Cloud

According to a Dec. 10, 2015 ‘Press Release’, Novo Nordisk and IBM Watson Health agreed to work together to create diabetes solutions, built on the Watson Health Cloud.

Under this agreement, by harnessing the potential of the Watson Health Cloud, Novo Nordisk aims to further advance its offerings to people living with diabetes and also their health care professionals.

B. Sanofi collaborates with Google to Improve diabetes health outcomes

Less than a couple of months before the Novo Nordisk – IBM partnership agreement, by a Press Release of August 31 2015, Sanofi and Google announced their collaboration to improve care and outcomes for people with type 1 and type 2 diabetes.

According to the release, this collaboration will explore how to improve diabetes care by developing new tools that bring together many of the previously siloed pieces of diabetes management and enable new kinds of interventions. This includes health indicators such as blood glucose and hemoglobin A1c levels, patient-reported information, medication regimens and sensor devices. 

Is the word “Innovation” also being used as a façade?

This important, though contentious issue, is being raised by many today, globally.

In my view, global pharma even in 2015, continued making the mistake of repeatedly highlighting, with high decibel sound bytes that the stakeholders do not understand the value, importance and necessity of innovation, which in any case is far from the truth. Nevertheless, It kept using, rather more misusing, this important word too often to cover up any action of theirs that faced government, general public or media scrutiny.

Additionally, many pharma players seemingly continued to remain contented with a very narrow definition of the word ‘innovation’, limiting its application mostly in the traditional space of drug discovery. While at the same time, many other smarter and more astute innovators, especially in the IT world, besides Google, IBM and Apple, started stepping into the vast healthcare arena, which otherwise could possibly have become pharma’s expanded market.

A am quoting below the names of just five of these amazing innovators, from the published data, just to give you a feel of this interesting area of ‘innovation’ in the health care arena:

  • Medivation: For finding the value of treatments that others ignored
  • Beijing Genomics Institute: For making DNA sequencing a mass-market
  • Medisafe: For using wireless and cloud technology to improve drug adherence
  • Ginger.IO: For harnessing behavioral data to save lives
  • Setpoint Medical: For creating a built-in pain-relief platform 
Epilogue:

Overall, the year 2015 was a mixed bag for pharma. Many pharma players, I reckon, displayed their self serving intent in a more glaring manner. Several captains of this industry generally talked all right things, which are music to many ears, but mostly acted quite differently, going against the public health interest, as reported by the global media.

Many pharma companies continued trying to woo the media cleverly during the year. Some of them, reportedly, even sponsored trips of a few Indian journalists to their respective overseas headquarters. As I understand, many newspaper readers too, had noticed the small print disclosures in this regard, at the bottom of their stories on those companies, written on the return.  I have no intention to be judgmental on such trips. Nevertheless, the global media, including the Indian media, by and large, reported all such deeds, with as much detail as possible, without slightest hesitation.

Encouragingly, a few global pharma majors, such as, Sanofi, Novo Nordisk, GlaxoSmithKline and AstraZeneca challenged this contusing status quo in 2015. They seem to dare to chart into the much uncharted frontier to squarely face the challenge of the changing demands of the changing world order. Probably not so much by trying to change others, but mostly by changing themselves. 

It appears, at least, the likes of the above global players have started accepting the new expectations of the aspiring customers and their fast transforming mindsets, including, the tougher governments enacting contemporary laws and regulations in many countries. In tandem, the exorbitantly high cost and usually low profile advocacy initiatives of drug companies seem to becoming lesser and lesser productive, as evident by the increasing number of avoidable issues that the pharma industry is now facing. Added to all this, a modern and major force-multiplier, in the form of social media, has now started unleashing its unfathomable power of shaping laws, regulations and even public opinion.

I wish this wind of change gaining more speed in 2016, and in that process, ushers in the long awaited dawn of a new paradigm. A paradigm of justice and equity in health care for all, across the world, and especially to my own country – India.

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.

Marketing Off-label Use of Drugs: A Path Much Abused?

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As many would know, prescribing any medicine for disease conditions that are not approved by the drug approving authorities while granting its marketing approval, is generally termed as ‘off-label’ use of drugs.

It is also a usual practice in most of the regulated markets of the world that once the drug regulators give marketing approval of a medicine, which is indication-specific, physicians are free to prescribe these as they deem necessary. However, the drug manufacturers can seek prescription support from the doctors only for the indications as approved by the appropriate government authorities.

Even the USFDA had articulated, “the best way to address any concerns that the information about those (off-label) uses is not reaching medical practitioners is to get those uses in the labeling. We believe that the risks of allowing drug companies to distribute journal articles and other information about off label uses far outweigh any benefits.”        

Since long, most of the drug regulators across the world, including the Drug Controller General of India (DCGI) have prohibited the sales promotion for unapproved uses of drugs to doctors. Nevertheless, the practice continues ignoring its serious consequences.

Monitoring of ‘off-label’ use is challenging: 

Monitoring of off-label use of medicines is quite challenging too by the drug regulators, especially in India, where post marketing surveillance is generally just on paper.

In this regard, a recent research study that I shall refer to below in this article, has quite appropriately suggested, “Future electronic health records should be designed to enable post market surveillance of treatment indications and treatment outcomes to monitor the safety of on and off-label uses of drugs.”

As India intends to move towards the ‘Digital’ space, this suggestion would be quite implementable by the DCGI, as the ‘Smart Cities’ start coming up.

Some examples of extensive off-label usages: 

According to the study done by a team of experts in medical information – Iodine, using the top drugs by number of monthly prescriptions, the following is a list of 4 medications with surprising off-label uses:

Drug Approved Indication Off-label Indication
Abilify (Aripiprazole) Schizophrenia, Bipolar Disorder, Major Depressive Disorder (adjunctive), Autism-related Irritability, Agitation associated with Schizophrenia or Bipolar Mania, other Insomnia
Lyrica (Pregabalin) Management of: neuropathic pain associated with diabetic peripheral neuropathy, post herpetic neuralgia, fibromyalgia, neuropathic pain associated with spinal cord injury; adult patients with partial onset seizures (adjunctive) Anxiety
Namenda (Memantine) Moderate to severe dementia of the Alzheimer’s type ADHD, OCD
Synthroid (Levothyroxine) Low thyroid hormone levels, some types of goiters, management some types of thyroid cancers Depression

Off-label use and increasing risks of drug safety: 

In its November 02, 2015 online issue, JAMA Internal Medicine published an article titled, “Association of Off-Label Drug Use and Adverse Drug Events (ADE) in an Adult Population.” The objective of this study was to monitor and evaluate off-label use of prescription drugs and its effect on ADEs in an adult population.

This particular study assumes importance, as off-label use of prescription drugs without strong scientific evidence has been identified as an important contributor to preventable Adverse Drug Events (ADEs), especially in children. However, despite concerns in this regard, no systematic investigation on the effects of off-label drug use in adult populations is being performed, regularly.

The detail analysis of this study reveals that not only is the benefit of off-label prescription is uncertain, but the risks of ADEs could make the ‘risk-benefit ratio’ quite unfavorable. So much so that in a large number of cases, no drug treatment will be a much better option.

According to the authors, the risk for ADEs grew as the number of prescription drugs the patient used increased. For example, patients using eight or more drugs had more than a 5-fold increased risk for ADEs compared with patients who used one to two drugs.

The study involving 46,021 adult patients, receiving 151,305 prescriptions between January 2005 and December 2009 was done in Canada. Of those prescriptions, more than 10 percent were prescribed for off-label use. Interestingly, out of that group, more than 80 percent prescriptions were for off-label uses without any robust scientific evidence supporting the use.

Based on the findings the researchers concluded that off-label use of prescription drugs is associated with ADEs.

The article suggested:

  • Caution should be exercised in prescribing drugs for off-label uses that lack strong scientific evidence.
  • Future electronic health records should be designed to enable post market surveillance of treatment indications and treatment outcomes to monitor the safety of on and off-label uses of drugs.

Pharma industry strongly opposes off-label use, when it suits them:

Interestingly, pharma industry vehemently opposes off-label use of drugs, when it suits them.

To give just a couple of examples, recently a new law that permits prescribing of drugs for off-label uses in France has reportedly been strongly opposed by the pharmaceutical industry in Europe.

Pharma trade associations argue, “the above move of France is directly in opposition to European Union’s laws that prohibit member states from supporting off-label use for economic purposes, and is a trend that undermines the current regulatory framework and could put patients’ health at risk.”

Besides France, they have also submitted a complaint against Italy to the European Commission over the country’s new off-label rules.

Common methods followed for off-label marketing:

The other side of the story is that, reportedly many pharma companies continue promoting off-label uses of drugs aggressively, for significant commercial gains.

According to ‘The Centers for Medicare & Medicaid Services (CMS) – a federal agency within the United States Department of Health and Human Services, some of the off-label drug promotion methods of the pharmaceutical companies are as follows:

• Paying incentives to sales representatives based on sales for off-label use

• Paying kickbacks to physicians to prescribe drugs for off-label use

• Disseminating misleading posters promoting off-label use

• Paying physicians:

- To pretend to be the authors of articles about off-label uses when the articles were actually written by manufacturers’ agents

- To serve as members of “advisory boards” promoting off-label use

- To travel to resort locations to listen to promotions about off-label use

- To give promotional lectures in favor of off-label use to fellow practitioners

• Publicizing studies showing efficacy of off-label uses, while suppressing studies showing no efficacy.

Even the Uniform Code of Pharmaceutical Marketing Practices (UCPMP) of the Government of India does not allow such sales and marketing practices. But these all continue to happen, unabatedly.

A path much abused?

Although most of the drug companies publicly advocate self regulation to avoid unethical marketing practices, the situation on the ground is much different, across the world. 

The following are just a few examples of serious business consequences faced by some of the well-known global pharma and biotech majors, besides many others, from the United States Department of Justice, for alleged off-label promotion of drugs: 

  • On November 4, 2013, Johnson & Johnson (J&J) was asked to pay more than US$ 2.2 billion to resolve criminal and civil liability arising from allegations relating to the prescription drugs Risperdal, Invega and Natrecor, including promoting for uses not approved as safe and effective by the USFDA and payment of kickbacks to physicians and to the nation’s largest long-term care pharmacy provider.  
  • On July 30, 2013, Wyeth Pharmaceuticals Inc., a pharmaceutical company acquired by Pfizer, Inc. in 2009, agreed to pay US$490.9 million to resolve its criminal and civil liability arising from the unlawful marketing of the prescription drug Rapamune for uses not approved as safe and effective by the USFDA. 
  • On December 19, 2012, Amgen Inc. pleaded guilty and paid US$762 million to resolve criminal liability and false claims allegations.
  • On July 2, 2012 GlaxoSmithKline LLC (GSK) pleaded guilty and paid US$3 billion to resolve its criminal and civil liability arising from the company’s unlawful promotion of certain prescription drugs, its failure to report certain safety data, and its civil liability for alleged false price reporting practices. This resolution is the largest health care fraud settlement in the US history and the largest payment ever by a drug company, so far. 
  • On May 7, 2012, Abbott Laboratories Inc. pleaded guilty and agreed to pay US$1.5 billion to resolve its criminal and civil liability arising from the company’s unlawful promotion of the prescription drug Depakote for uses not approved as safe and effective by the USFDA.  This resolution is the second largest payment by a drug company and includes a criminal fine and forfeiture totaling US$700 million and civil settlements with the federal government and the states totaling US$800 million.  Abbott also was reportedly subjected to court-supervised probation and reporting obligations for Abbott’s CEO and Board of Directors.
  • On October 21, 2011, Pfizer Inc. agreed to pay US$14.5 million to resolve false claims allegations related to its marketing of the drug Detrol. 
  • On June 10, 2011, Novo Nordisk was asked to pay US$25 million to resolve allegations of off-label promotion of Novoseven.
  • On September 30, 2010, Novartis agreed to pay US$422.5 million to settle criminal and civil investigations into the marketing of the anti-seizure medicine Trileptal and five other drugs. The government accused Novartis of mislabeling, paying illegal kickbacks to health care professionals through speaker programs, advisory boards, entertainment, travel and meals. 

Hence, it appears that the path followed by many pharma players to inform the doctors about the judicious off-label use of drugs only in circumstances where approved treatments have failed, is being much abused. 

A conflict of interest? 

Many doctors believe that there is also a distinct upside for off-label use of drugs, as flexibility of a physician to prescribe drugs off-label offers important advantages too, especially in circumstances where approved treatments have failed. This is indeed true and indisputable.

However, the reality is, many pharma industry, in general, actively encourage off-label use of drugs for commercial benefits through expanded use of their respective brands.

Aggressive drug promotion for various off-label uses, reportedly being so widespread and indiscriminate, many physicians can’t even remember the approved indications of drugs. Hence, they do not necessarily go for off-label use only when approved treatments have failed.  In this context, on November 23, 2015, ‘The Wall Street Journal (WSJ)’ in an article titled, “Risk of Off-Label Uses for Prescription Drugs” reported as follows:

“A 2009 study published in the journal Pharmacoepidemiology and Drug Safety found that 1,199 physicians in a national survey were able to identify the FDA-approved indication of 22 drugs only about 55% of the time. The physicians surveyed included primary-care doctors and psychiatrists.” 

On the other hand, the patients generally expect that the prescribed drugs will be safe. They want to administer evidence based approved medicines. Some of them have even started expressing that these evidences must also be disclosed to them.

Hence, there seems to exist a clear conflict of interest in this matter between the patients, drug manufacturers and perhaps the doctors, as well.

Conclusion:

The magnitude of general off-label use of drugs is reportedly increasing and is likely to increase further, exposing patients to increased risks of ADEs.  Although the business consequences of getting engaged in this unwanted process indiscriminately could at times be quite adverse, in the balance of probability between slim chances of getting caught, and expected creamy return, many pharma players continue to feel that this risk is worth taking.

Therefore, the moot question that needs a pragmatic answer is, for patients’ safety, when the global and local pharma majors talk about prescriptions of only impeccable evidence based medicine, do they walk the talk?

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.

 

Is Drug Price Control The Key Growth Barrier For Indian Pharma Industry?

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The corollary of the above headline could well be: “Are drug price hikes the key growth driver for the Indian Pharmaceutical Market (IPM)?”

Whenever the first question, as appears in the headline of this article: “Is drug price control a key barrier to growth of the IPM?”, is asked to the pharma players, irrespective of whether they are domestic companies or multinationals (MNCs), the answer in unison would quite expectedly be a full-throated ‘yes’. Various articles published in the media, including some editorials too, also seem to be on the same page, with this specific view. 

Likewise, if the corollary of the above question: “Are drug price hikes the key growth driver for the IPM?”, is put before this same target audience, most of them, if not all, would expectedly reply that ‘in the drug price control regime, this question does not arise at all, as IPM has been primarily a volume driven growth story.’ This answer gives a feel that the the entire or a major part of the IPM is under Government ‘price control’, which in fact is far from reality

Recently, a pharma industry association sponsored ‘Research Study’, conducted by an international market research organization also became quite vocal with similar conclusion on drug price control in India. This study, released on July 2015, categorically highlights ‘price control is neither an effective nor sustainable strategy for improving access to medicines for Indian patients’. The report also underscores: “The consumption of price-controlled drugs in rural areas has decreased by 7 percent over the past two years, while that of non-price controlled products has risen by 5 percent.”

I argued on the fragility of the above report in this Blog on September 7, 2015, in an article titled, “Drug Price Control in India: A Fresh Advocacy With Blunt Edges”.

Nonetheless, in this article, going beyond the above study, I shall try to put across my own perspective on both the questions raised above, primarily based on the last 12 months retail data of well-respected AIOCD Pharmasofttech AWACS Pvt. Ltd. 

Pharma product categories from ‘Price Control’ perspective:

To put this discussion in right perspective, following AIOCD-AWACS’ monthly pharma retail audit reports, I shall divide the pharma products in India into three broad categories, as follows:

  • Products included under Drug Price Control Order  2013 (DPCO 2013), which are featuring in the National List of Essential Medicines 2011 (NLEM 2011) 
  • Products not featuring in NLEM 2011, but included in Price Control under Para 19 of DPCO 2013
  • Products outside the ambit of any drug price control and can be priced by the respective drug manufacturers, whatever they deem appropriate

The span of price controlled medicines would currently be around 18 percent of the IPM. Consequently, the drugs falling under free-pricing category would be the balance 82 percent of the total market. Hence, the maximum chunk of the IPM constitutes of those drugs for which there is virtually no price control existing in India.

According to the following table, since, at least the last one-year period, the common key growth driver for all category of drugs, irrespective of whether these are under ‘price control’ or ‘outside price control, is price increase in varying percentages: 

Value vs Volume Growth (October 2014 to September 2015):

Month DPCO Product      Gr% Non-DPCO Products Gr% Non-NLEM Para 19 Gr% IPM
2015 Value Volume Value Volume Value Volume Value Volume
September 2.8 1.2 10.9 1.1 11.5 9.0 9.9 1.4
August 3.3 (2.7) 14.5 2.4 15.2 13.7 13.0 1.6
July 5.1 (0.6) 14.2 4.1 11.8 9.9 12.9 3.3
June 5.6 (0.1) 16.2 6.2 14.6 11.7 14.8 5.0
May 5.3 (0.3) 12.1 3.4 7.2 4.3 11.0 2.6
April 11.1 5.3 18.4 9.6 11.9 9.6 17.2 8.7
March 17.6 9.5 21.7 13.0 15.6 13.2 20.9 12.2
Feb 13.9 7.6 20.0 10.1 14.4 9.9 18.9 9.6
Jan 6.9 1.8 14.0 3.7 NA NA 12.7 3.3
2014    
December 8.0 0.7 14.8 3.2 NA NA 13.6 2.7
November 3.1 (3.4) 12.6 0.3 NA NA 10.9 (0.4)
October (2.4) (5.7) 6.8 (1.7) NA NA 5.2 (2.6) 

Source: Monthly Retail Audit of AIOCD Pharmasofttech AWACS Pvt. Ltd 

Does ‘free drug-pricing’ help improving consumption?

I would not reckon so, though the pharma industry association sponsored above study virtually suggests that ‘free pricing’ of drugs would help improve medicine consumption in India, leading to high volume growth.

As stated earlier, the above report of IMS Health highlights, “The consumption of price-controlled drugs in rural areas has decreased by 7 percent over the past two years, while that of non-price controlled products has risen by 5 percent.”

On this finding, very humbly, I would raise a counter question. If only free pricing of drugs could help increasing volume growth through higher consumption, why would then the ‘price-controlled non-NLEM drugs under para 19’, as shown in the above table, have generally recorded higher volume growth than even those drugs, which are outside any ‘price control’? Or in other words, why is the consumption of these types of ‘price controlled’ drugs increasing so significantly, outstripping the same even for drugs with free pricing?

The right answers to these questions lie somewhere else, which I would touch upon now.

Are many NLEM 2011 drugs no longer in supply?

DPCO 2013 came into effect from from May 15, 2013. Much before that, NLEM 2011 was put in place with a promise that all the drugs featuring in that list would come under ‘price control’, as directed earlier by the Supreme Court of India.  Even at that time, it was widely reported by the media that most of the drugs featuring in the NLEM 2011 are either old or may not be in supply when DPCO 2013 would be made effective. The reports also explained its reasons. 

To give an example, a November 6, 2013 media report stated: “While the government is still in the process of fully implementing the new prices fixed for 348 essential medicines, it has realized that most of these are no longer in supply. This is because companies have already started manufacturing many of these drugs with either special delivery mechanism (an improved and fast acting version of the basic formulation) or in combination with other ingredients, circumventing price control.”

Just to give a feel of these changes, the current NLEM 2011 does not cover many Fixed-Dose Combinations (FDC) of drugs. This is important, as close to 60 percent of the total IPM constitutes of FDCs. Currently, FDCs of lots of drugs for tuberculosis, diabetes and hypertension and many other chronic and acute disease conditions, which are not featuring in the NLEM 201, are very frequently being prescribed in the country. Thus, the decision of keeping most of the popular FDCs outside the ambit of NLEM 2011 is rather strange.

Moreover, a 500 mg paracetamol tablet is under price control being in the NLEM 2011, but its 650 mg strength is not. There are many such examples.

These glaring loopholes in the NLEM 2011 pave the way for switching over to non-NLEM formulations of the same molecules, evading DPCO 2013. Many experts articulated, this process began just after the announcement of NLEM 2011 and a lot of ground was covered in this direction before DPCO 2013 was made effective.

Intense sales promotion and marketing of the same molecule/molecules in different Avatars, in a planned manner, have already started making NLEM 2011 much less effective than what was contemplated earlier. 

Some examples:

As I said before, there would be umpteen number of instances of pharmaceutical companies planning to dodge the DPCO 2013 well in advance, commencing immediately after NLEM 2011 was announced. Nevertheless, I would give the following two examples as was reported by media, quoting FDA, Maharashtra:

1. GlaxoSmithKline (GSK) Consumer Healthcare having launched its new ‘Crocin Advance’ 500 mg with a higher price of Rs 30 for a strip of 15 tablets, planned to gradually withdraw its conventional price controlled Crocin 500 mg brand costing around Rs 14 for a strip of 15 tablets to patients. GSK Consumer Healthcare claimed that Crocin Advance is a new drug and therefore should be outside price control.

According to IMS Health data, ‘Crocin Advance’ achieved the fifth largest brand status among top Paracetamol branded generics, clocking a sales turnover of Rs 10.3 Crore during the last 12 months from its launch ending in February 2014. The issue was reportedly resolved at a later date with assertive intervention of National Pharmaceutical Pricing Authority (NPPA).

2. Some pharmaceutical companies reportedly started selling the anti-lipid drug Atorvastatin in dosage forms of 20 mg and 40 mg, which are outside price control, instead of its price controlled 10 mg dosage form.

Why DPCO 2013 drugs showing low volume growth?

From the above examples, if I put two and two together, the reason for DPCO 2013 drugs showing low volume growth becomes much clearer.

Such alleged manipulations are grossly illegal, as specified in the DPCO 2013 itself. Thus, resorting to illegal acts of making similar drugs available to patients at a much higher price by tweaking formulations, should just not attract specified punitive measures, but may also be construed as acting against health interest of Indian patients…findings of the above ‘research report’, notwithstanding, even if it is accepted on its face value.

In my view, because of such alleged manipulations, and many NLEM 2011 drugs being either old or not in supply, we find in the above table that the volume growth of ‘Price Controlled NLEM drugs’ is much less than ‘Price Controlled non-NLEM Para 19’ drugs. Interestingly, even ‘Out of Price Control’ drugs show lesser volume growth than ‘Price Controlled non-NLEM Para 19 drugs’.

Government decides to revise NLEM 2011:

The wave of general concerns expressed on the relevance of NLEM 2011 reached the law makers of the country too. Questions were also asked in the Parliament on this subject.

Driven by the stark reality and the hard facts, the Union Government decided to revise NLEM 2011. 

For this purpose, a ‘Core Committee of Experts’ under the Chairmanship of Dr. V.M Katoch, Secretary, Department of Health Research & Director General, Indian Council of Medical Research (ICMR), was formed in May 2014.

The minutes of the first and second meetings of the ‘Core Committee of Experts’, held on June 24, 2014 and July 2, 2014, respectively, were also made public. 

On May 5, 2015, the Union Minister for Chemicals and Fertilizers Ananth Kumar said in a written reply to the ‘Lok Sabha’ that “The revised NLEM would form the basis of number of medicines which would come under price control.” This revision is taking place in the context of contemporary knowledge of use of therapeutic products, the Minister added.

Would pharma sector grow faster sans ‘price control’?

If ‘drug price control’ is abolished in India, would pharma companies grow at a much faster rate in volume with commensurate increase in consumption, than what they have recorded during ‘limited price control’ regime in the country? This, in my view, is a matter of conjecture and could be a subject of wide speculation. I am saying this primarily due to the fact that India has emerged as one of the fastest growing global pharmaceutical market during uninterrupted ‘drug price control regime’ spanning over the last 45 years.

Nevertheless, going by the retail audit data from the above table, it may not be necessarily so. The data shows that volume growth of ‘out of price control’ drugs is not the highest, by any measure. On the contrary, it is much less than ‘price controlled drugs under para 19 of DPCO 2013′, which are mainly prescribed for non-infectious chronic diseases on a large scale.

I am referring to AIOCD-AWACS data for just the last 12 months, because of space constraint, but have gone through the same for the entire DPCO 2015 period, till September’15. The reason for my zeroing in on DPCO 2015 is for the three simple reasons:

- The span of price control in this regime is the least, even lesser than DPCO 1995, which was 20 percent. 

- It is much more liberal in its methodology of ‘Ceiling Price (CP)’ calculation, over any other previous DPCOs

- It has also a provision, for the first time ever, of automatic price increases every year for price controlled drugs, based on WPI.

A safeguard for patients?

Medicines enjoy the legal status of ‘essential commodities’ in India. Thus, many believe that ‘drug price control’ is a ‘pricing safeguard’ for Indian patients, especially for essential medicines and ‘out of expenses’ for drugs being as high as over 60 percent.

In the prevailing health care environment of India, the situation otherwise could even be possibly nightmarish. The key reason for the same has been attributed to ‘market failure’ by the Government, for most of the pharmaceutical products, where competition does not work. I discussed this issue in my article titled, “Does ‘Free-Market Economy’ Work For Branded Generic Drugs In India?” of April 27, 2015, in this Blog.

In India, ‘drug price control’ has successfully passed the intense scrutiny of the Supreme Court, along with its endorsement and approval. Any attempt of its retraction by any Government, without facing a tough challenge before the Apex Court, seems near impossible.

Conclusion: 

The fundamental reasons for overall low volume growth, or in other words, price-increase driven value growth of the IPM, I reckon, lie somewhere else, which could be a subject matter of a different debate altogether.

As I said in the past, IPM grew at an impressive speed consistently for decades, despite ‘drug price control’, and grumbling of the industry for the same. This high growth came from volume increase, price increase and new product introductions, the volume growth being the highest.

Most of the top 10 Indian pharma players, came into existence and grew so fast during the ‘drug price control’ regime. The  home-grown promoter of the numero-uno of the IPM league table, is now the second richest person of India. These are all generic pharma companies.

Generally speaking, Indian pharma shares even today attract more investors consistently than any other sector for such a long time. Granted that these companies are drug exporters too, but they all gained their critical mass in partly ‘price controlled’ Indian market. The criticality of the need for consistent growth in the domestic market, by the way, still remains absolutely relevant to all the pharma players in India, even today, despite…whatever.

Growth oriented overall Indian pharma scenario remaining quite the same, ‘drug price control’ with a current span of just around 18 percent of the IPM, can’t possibly be a growth barrier. Otherwise, how does one explain the highest volume growth of ‘price controlled non-NLEM drugs’, which is even more than ‘out of price-control drugs’?

Be that as it may, in my view, implementation of public funded ‘Universal Health Care (UHC)’ by the Indian Government, in any form or calling it by any other name, can possibly replace DPCO. Similar measures have been adopted by all the member countries of the ‘Organization for Economic Co-operation and Development (OECD)’ in this area, though following different paths, but nevertheless to attain the same goal.

Lamentably enough, the incumbent Government too has not ‘walked the talk’ on its number of assurances related to this core issue of health care in India.

Still, the hope lingers!

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.

 

Indian Patents Act To Prevail Undiluted…Finally

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Curiously enough, what a little birdie told me just a couple of weeks ago, very similar to that I read in various media reports even less than a week later.

It was related to a somewhat trepidatious national policy in the making on Intellectual Property Rights (IPR) in India.

One major apprehension, besides a few others on this IPR Policy, was flying all over and nettling many. It was regarding the possibility of tweaking or dilution of the Indian Patents Act by the Government, coming under strong external pressure and also to get support on India’s food security in the World Trade Organization (WTO).

Probably to douse this simmering fire of trepidation, well calibrated, unambiguous and reassuring narratives on the subject were unfolded recently by the Government, that too in a quick succession, which were somewhat as under.

On July 20, 2015, at an event organized by the Federation of Indian Chambers of Commerce and Industry (FICCI), the Commerce and Industry Minister Nirmala Sitharaman reiterated that:

  • India’s IPR laws are quite in compliant with the TRIPS (Trade Related Aspects of Intellectual Property Rights) agreement.
  • There is no need for apprehension in any corner of the world as to what India’s patent regime is like.

The Minister also indicated at the same event that following a transparent process of drafting…and redrafting; the final blue print of the IPR policy has now been circulated to all concerned ministries for inter-ministerial consultations. After completion of that process soon, her Ministry would submit the final version to the Cabinet for approval.

It is now anticipated that by the end of this year the first ‘IPR Policy’ of India would be operational.

The creeping angst for a possible twitching in the country’s otherwise robust Patents Act, was mostly originated from a pointed recent utterance of Prime Minister Modi on this issue that we shall quickly explore in this article.

Another stronger assertion:

Immediately thereafter, while commenting on a related article published in an Indian business daily dated July 24, 2015, Minister Nirmala Sitharaman reasserted the following points even more emphatically and virtually in so many words:

  • India’s IPR laws are fully compliant with international obligations under the TRIPS agreement. This includes the Patents Act, 2005, whose provisions have time and again stood the test of judicial scrutiny.
  • There is no question of permitting ‘evergreening’ of patents, or of realigning our IPR laws to comply with US laws.
  • There is no question of sacrificing our IPR laws to get support from a particular country even on food security.

A brief background:

In October 2014, almost immediately after Prime Minister Modi’s return to India from the United States, the the Department of Industrial Policy and Promotion (DIPP) formed a six-member ‘Think Tank’, chaired by Justice (Retd.) Prabha Sridevan, to draft the ‘National IPR Policy’ and suggest ways and legal means to handle undue pressure exerted by other countries in IPR related areas.

The notification mandated the ‘Think Tank’ to examine the current issues raised in such reports and give suggestions to the ministry of Commerce & Industry as appropriate.

However, the domestic pharma industry, many international and national experts together with the local stakeholders, continue to strongly argue against any fundamental changes in the prevailing robust patent regime of India.

Taking quick strides, on December 19, 2014, the Think Tank’ released its first draft of 29 pages seeking stakeholders’ comments. According to Minister Nirmala Sitharaman, “Different people, countries, including the United States and other organizations have already given their inputs on the draft policy.”

The new policy would focus on stronger enforcement of IPR by increasing the manpower in IP offices and reducing pendency of IPR filings. It aims at bringing clarity to the existing laws and making changes wherever required to safeguard the interests of Indian industry and patent holders worldwide.

I reviewed this subject in my blog post of January 19, 2015 titled, New “National IPR Policy” of India – A Pharma Perspective.

Most recent apprehension:

The most recent spark for the speculation of a possible dilution in the Indian Patents Act 2005, came from the April 24, 20015 media report that quoted Prime Minister Modi expressing his intent on the issue, seemingly going overboard, as follows:

“India’s patent laws should be brought on par with global standards to make Asia’s third largest economy a hub for outsourced creative services.”

The basic purpose of making such an apparently ambiguous statement may be construed as an attempt to attract more Foreign Direct Investments (FDI) for the country.

Whatever it may be, this announcement of the Prime Minister sent a strong signal to many as an impending major shift in his Government’s thinking to move away from an otherwise robust and a decade old IPR regime in India, undoubtedly under intense external pressure.

The above pronouncement from an otherwise tough minded Prime Minister came as a bolt from the blue, as it were, to many stakeholders. This is mainly because; India has so far been maintaining in all forum that its IPR regime is fully TRIPS compliant and garnered enough international support from the experts in this area, including Nobel Laureates.

The Prime Minister made his intent even stronger, when he further elaborated his argument as under:

“If we don’t work towards bringing our intellectual property rights at par with global parameters, then the world will not keep relations with us. If we give confidence to the world on IPR, then we can become a destination globally for their creative work.”

Some American Government agencies reportedly lapped up Prime Minister Modi’s statement as they openly commented as follows:

“The United States also welcomes April 2015 statements made by Prime Minister Modi recommending that India align its patent laws with international standards and encourages India expeditiously undertake this initiative”

Intriguing comment:

Prime Minister Modi’s comment in this regard that “India needs to bring its patent laws on par with global standards,” comes of rather intriguing to many domain experts, as TRIPS agreement is the only universally accepted ‘Global Standard’ for IPR. Even the new Government has reiterated that Indian patent regime is fully TRIPS compliant.

India welcomes and encourages innovation:

With the enactment of Patents Act 2005, India has demonstrated that Intellectual Property Rights (IPR) and pharma patents in particular, help fostering innovation and is critical in meeting unmet needs of the patients.

However, the moot question still remains, what type pharmaceutical invention, should deserve market exclusivity or monopoly with overall freedom in pricing, keeping larger public health interest in mind.

There are still some loose knots in the process of speedy resolution of all IP related disputes and creation of a desirable ecosystem for innovation in the country, that the new IPR Policy is expected to effectively address, soon.

Two fundamental changes that the US is looking for:

Leaving aside the peripheral ones, the following two are the center pieces where the United States would want India to dilute its Patents Act 2005 considerably:

  • Patentability for all types of innovation, including ‘me-too’ ones and evergreening of patents, which would delay entry of affordable generic drugs.
  • “Compulsory Licensing (CL)” provisions, other than during natural calamities.

The status today: 

Though the Prime Minister has not further spoken on this subject publicly, from the recent statements of the Union Minster of Commerce and Industry it seems rather clear that for greater public health interest, India has decided to keep its Patents Act undiluted, at least, for now.

The Union Government has distinctly explained its stand in the following two areas:

I. No…No, to ‘Evergreening’ of patents in India:

In line with this thinking, for quite sometime a raging global debate has brought to the fore that there are quite a large number of patents on drug variants that offer not very significant value to the patients over the mother molecules, yet are as expensive, if not more than the original ones.

In common parlance these types of inventions are considered as ‘trivial incremental innovations’ and described as attempts to ‘evergreening’ the patents.

A paper titled, “Pharmaceutical Innovation, Incremental Patenting and Compulsory Licensing” by Carlos M. Correa argued as follows:

“Despite decline in the discovery of New Chemical Entities (NCEs) for pharmaceutical use, there has been significant proliferation of patents on products and processes that cover minor, incremental innovations.”

The study conducted in five developing countries – Argentina, Brazil, Colombia, India and South Africa has:

  • Evidenced a significant proliferation of ‘evergreening’ pharmaceutical patents that can block generic competition and thereby limit patients’ access to medicines.
  • Found that both the nature of pharmaceutical learning and innovation and the interest of public health are best served in a framework where rigorous standards of inventive steps are used to grant patents.
  • Suggested that with the application of well-defined patentability standards, governments could avoid spending the political capital necessary to grant and sustain compulsory licenses/government use.
  • Commented, if patent applications were correctly scrutinized, there would be no need to have recourse to CL measures.

Indian Patents Act under its section 3(d), discourages the above practices for public health interest. This particular provision, though absolutely TRIPS compliant is not followed in the developed markets, predominantly for commercial reasons. Hence the mounting pressure is on India for its major dilution.

II. Compulsory License (CL) provisions would stay to prevent misuse and abuse:

This is another major safeguard provision for the patients against abuse and misuse of patents, including obscene price tags of patented drugs, non-working of patents as a commercial strategy, limited availability, besides extreme urgency and some other situations. Though TRIPS very clearly allows all such provisions, India has so far granted just one CL.

With these India has amply demonstrated that CL provisions are important safeguards for the country and not for abuse or misuse by any one, including the Government. Moreover, it has to pass the acid test of rigorous judicial scrutiny that includes the Supreme Court of India.

Despite all these, more scares are being created around CL provisions in India than what is the reality in the country.

Various safeguards and deterrents against misuse and abuse of patents are absolutely essential for public health interest. Hence there is naturally no question of going back from such provisions in the statute.

It is worth noting, if Indian Patent regime is not TRIPS compliant, why hasn’t any country complained against India to the World Trade Organization (WTO) for having all these provisions in the Indian Patents Act, as yet?

India shows the new IPR way:

According to available reports, the following countries are coming closer to the Indian pharma patent regime:

  • Argentina has issued guidelines to reject ‘frivolous’ patents
  • Peru, Columbia and some other South American countries have placed curbs
  • Philippines has similar provisions
  • South Africa is contemplating to incorporate such steps
  • Australia is deliberating on making the law tougher

Positive reverberations in the domestic pharma sector:

Home grown pharma players seem to be visibly happy too, as the overall stand of the Government in this regards is getting clearer.

This in many ways gets vindicated, when a promoter, chairperson and managing director of a mid-size Indian Pharma and Biotech company, with high media visibility, reportedly comments on the finalization of Indian IPR Policy as follows:

“There is a need to protect interest and disallow monopolies like big pharma or big companies/corporates that want to invest and take advantage of the Indian market.”

Concerns of some ‘Who’s Who’:

The following is just an example of such concern:

On February 10, 2015,  the Nobel Laureate in Economics – Joseph E. Stiglitz, made the following comment in an article published in ‘The World Opinion Page’ of ‘Project Syndicate’:

“If the Obama administration succeeds in forcing India to strengthen its patent laws, the change would harm not only India and other developing countries; it would also enshrine a grossly corrupt and inefficient patent system in the US, in which companies increase their profits by driving out the competition – both at home and abroad. After all, generic drugs from India often provide the lowest-cost option in the US market once patent terms have expired.”

As things stand today, it would not be unreasonable to conclude that the Nobel Laureate Joseph E. Stiglitz’s worst apprehension on the Indian Patent regime, in all probability would not come true.

Conclusion:

For quite some time, Indian Government has been under intense nagging from the United States, other developed countries, many drug MNCs and the pharma lobby groups lavishly funded by them; to effect major changes in the Patents Act of the country that currently denies unreasonable commercial exploitations, in many ways. Section 3(d) of the statute is just one of the key examples.

The browbeaters of such ilk keep pontificating the importance of ‘innovation’ and that too with a condescending undertone, as if the Indian Government is blissfully ignorant about it.

They allegedly want the Government to dilute the robust safeguard provisions of Indian Patents Act, trying to unfairly tilt the balance of justice in their favor. Consequently, it would go against the patients’ health interest by considerably delaying entry of cheaper generic equivalents, of ‘me-too’ type of inventions, in the country.

Despite initial apprehensions based on the possible misconstrued observation of the Prime Minister Modi on this issue, clear and unambiguous recent assertions of the Government on the patent regime of India, especially in the ‘count-down’ days of the new IPR Policy announcements, is reassuring. It goes without saying, this cannot happen without the benediction of India’s all-powerful Prime minister.

As stated in the draft document, let us hope that the new IPR Policy would help establishing a dynamic, vibrant and balanced intellectual property system in India, to foster innovation and creativity in a knowledge economy and accelerate economic growth, employment and entrepreneurship.

Under this backdrop, it now emerges almost indubitably that Indian Patents Act 2005 would continue to prevail undiluted much to the dismay of its fiercest critics…Finally?

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.

Union Budget Proposal 2015-16 of India : Is Pharma Industry Now Out of Focus?

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Budget Expectations:

Overall expectations of the Pharma Industry in India from the Union Budget perspective was very modest this year. The key areas were as follows:

- To encourage  innovation, in-house R&D exemption limit was expected to be raised from 200 percent to 250 percent

- Excise duty rationalization was expected on:

Formulations (5 percent)
API (10 percent)

- A reduction of MAT (20 percent) was expected on SEZ

Union Budget Proposals:

Status quo

Impact:

In view of this scenario, there has been virtually no sector-specific direct impact of the Union Budget 2015-16 on the Pharma Industry. This critical sector seems to be out of focus of the Government from the budget perspective, at least for now.

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.

Cheaper Drugs: Happy Patients: Angry Industry

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Recent price reductions of a number of cardiovascular and diabetes drugs falling outside the National List of Essential Medicines 2011 (NLEM 2011), have attracted fury of the pharma industry . By a notification dated July 10, 2014, the National Pharmaceutical Pricing Authority (NPPA) has invoked Para 19 of the DPCO 2013 for these price changes, the implications of which would indeed be far reaching.

NPPA has now decided to examine inter-brand price variation for single ingredient formulations in eight therapeutic groups, which, besides cardiovascular and diabetic drugs, would include, anti-cancer, HIV/AIDS, anti-TB, anti-malaria, anti-asthmatic and immunological (sera/vaccines). In these therapy areas, the Maximum Retail Price (MRP) of the brand(s) exceeding 25 per cent of the simple average price of all in the same molecular category having 1 percent or above market share, would be capped at the 25 per cent level.

Pharma industry, in general, feels that this ‘unwelcoming decision’ of the NPPA, which allegedly goes beyond the scope and spirit of DPCO 2013, would invite great uncertainty in its business environment.

On the other hand, many consider this price reduction as a ‘Good Omen’ for millions of patients suffering from related life-long ailments. They argue, the purpose of this ‘Bitter Pill” of the NPPA, is to send a clear message to the pharma industry to shape-up with responsible drug pricing.

The new Minister’s recent statement:

It may not be a bad idea to take into consideration the above notification of the NPPA in the light of what the new minister of Chemicals and Fertilizers – Mr. Ananth Kumar said on May 28, 2014. According to media report, the Minister expressed his intent as follows:

“… As far as branded medicines of multinational pharmaceutical companies are concerned, we will talk to all of them and try to bring down prices of essential drugs for poor by 25-40 per cent… The pharmaceutical industry is very important for the health of the country, he added…our main mission will be to ensure the availability of all necessary medicines at affordable prices, especially for poor across the country.”

It is, therefore, quite possible that the NPPA’s decision on price reduction of cardiovascular and diabetes drugs has the Minister’s concurrence.

Industry’s key concern:

This recent decision of the NPPA has reportedly angered the industry, as the Drug Price Control Order 2013 (DPCO 2013) clearly articulates two basic criteria for drug price control in India, as follows:

1. Span of price control:

This was re-defined (from DPCO 1995) on the ‘essentiality criteria’ of the drugs, which in turn is based on the National List of Essential Medicines 2011 (NLEM 2011)

2. Methodology of price control:

This was re-defined (from DPCO 1995) with a clear departure from ‘Cost-Based Price Control’ to the ‘Market-Based Price Control’.

The industry alleges violation of these criteria for the recently announced price reduction of a number of diabetic and cardiovascular drugs, as those do not fall under NLEM 2011.

Price variation is of no-use to patients for prescription drugs:

As the prices of non-scheduled formulations are not fixed by the NPPA, which can virtually be launched at any price to the market, there has been a huge variation of prices between the branded generics within the same chemical entity/entities. Following is a quick example:

Molecule Disease MRP of Lowest Price Brand MRP of Highest Price Brand
Telmisartan 10’s Hypertension Rs. 25 Rs. 385
Glimeperide 10’s Diabetes Rs. 40 Rs. 133 (Brand Leader)

From this chart, one may be able to fathom some basis in the NPPA’s argument that similar price variations in many branded-generics are of no-consequence for prescription drugs, as doctors decide the medicines that a patient would take. If doctors were influenced to prescribe high priced medicines, the patients would require paying more for those drugs, further increasing their Out of Pocket (OoP) expenses. It is also not uncommon that highest price brands are category-leaders too, as indicated in the table above.

Key lacunae in DPCO 2013:

  •  NLEM 2011 does not cover many combinations of TB drugs, a large number of important drugs for diabetes and hypertension, which I shall deliberate in just a bit.
  • Many other critical life saving medicines, such as, anti-cancer drugs, expensive antibiotics and products needed for organ transplantation have been left out of price control. In fact, the prices of a number of these drugs have reportedly gone up after the notification of DPCO 2013.
  • The government has now reportedly admitted in an affidavit filed before the Supreme Court that the market value and share of medicines covered by new DPCO 2013, as ‘Essential Drugs’, is a meager 18 per cent of the Indian Pharmaceutical Market (IPM).
  • As a result, DPCO 2013 based on NLEM 2011 undermines the entire objective of making essential drugs affordable to all.
  • All these lacunae in the current DPCO 2013 calls for a major revision of NLEM 2011. The Union Health Ministry has reportedly initiated steps to revise the list considering the existing market conditions and usage of drugs by the patients.

Invocation of a ‘Safeguard Provision’ in DPCO 2013:

Probably anticipating this scenario, a key safeguard provision was included in Para 19 of DPCO 2013, which reads as follows:

“Fixation of ceiling price of a drug under certain circumstances:

Notwithstanding anything contained in this order, the Government may, in case of extra-ordinary circumstances, if it considers necessary so to do in public interest, fix the ceiling price or retail price of any Drug for such period, as it may deem fit and where the ceiling price or retail price of the drug is already fixed and notified, the Government may allow an increase or decrease in the ceiling price or the retail price, as the case may be, irrespective of annual wholesale price index for that year.”

It now appears, NPPA could realize the key limitations of DPCO 2013, which was put in place rather hastily, in course of its implementation for over one year. Consequently, the patients’ long standing plight with high drug costs for many common life style diseases that are not featuring in NLEM 2011, prompted the the drug regulator in its above notification to bring 108 non-scheduled formulation packs of diabetic, cardiac and other drugs under Para 19 of DPCO 2013, catalyzing an outcry within the pharmaceutical industry in India. Out of these 108 formulation packs, 50 come under anti-diabetic and cardiovascular medicines.

Many important drugs are outside NLEM 2011:

Following is an example of the important cardiovascular and anti-diabetic drugs, which are not featuring in the NLEM 2011 and have now been brought under Para 19 of DPCO 2013:

Sitagliptin, Voglibose, Acarbose, Metformin hcl, Ambrisentan, Amlodipine, Atenolol, Atorvastatin, Bisoprolol, Bosentan,  Gliclazide, Glimepiride, Miglitol, Repaglinide, Pioglitazone, Carvedilol, Clopidogrel, Coumarin, Diltiazem, Dobutamine, Enalapril, Rosuvastatin, Simvastatin, Telmisartan, Terazosin, Torasemide, Trimetazidine and Valsartan, Enoxaparin, Eplerenone, Esatenolol, Fenofibrate, Heparin, Indapamide, Irbesartan, Isosorbide, Ivabradine, Labetalol, Levocarnitine, Lisinopril, Metolazone, Metoprolol, Nebivolol, Nicorandil, Nitroglycerin, Olmesartan, Prasugrel, Prazosin, Propranolol, Ramipril.

More reasons for industry outcry:

As reported in the media, the industry outcry reportedly highlights, besides what I have cited above, the following:

  • The price control order under Para 19 has been notified without any prior consultation with the industry.
  • The manner and method in which this unilateral decision has been taken is untenable.
  • The NPPA’s reasoning, about exploitative pricing by the industry as the reason for such a move, is incorrect given that every product category (in consideration) has approximately 30-70 brand options across price ranges for physicians and patients to choose from. The premise that products are not accessible due to affordability is misplaced. (The above table explains this point).
  • Disease environment was same when the government had cleared the policy and no “extraordinary circumstance” has emerged since then for the regulator to invoke Para 19 in public interest.
  • NPPA has exceeded its brief and gone into policy-making.

NPPA’s rationale for invoking Para 19 of DPCO 2013:

On the other hand, following reasons were cited by the NPPA for taking this decision:

  • The aim of DPCO 2013 is to ensure that essential drugs are available to all at affordable prices. The Supreme Court of India vide its Order dated November 12, 2002 in SLP no. 3668/2003 have directed the Government to ensure that essential and life saving drugs do not fall outside the ambit of price control, which has the force of law.
  • The Ministry of Chemicals and Fertilizers has delegated the powers in respect of specified paragraphs of the DPCO 2013, including paragraph 19, to be exercised by the NPPA on behalf of the Central Government in public interest.
  • There exist huge inter-brand price differences in branded-generics, which is indicative of a severe market failure as different brands of the same drug formulation identical to each other vary disproportionately in terms of price.
  • The different brands of the same drug formulation may sometimes differ in terms of binders, fillers, dyes, preservatives, coating agents, and dissolution agents, but these differences are not significant in terms of therapeutic value.
  • The main reason for market failure is that the demand for medicines is largely prescription driven and the patient has very little choice in this regard.
  • Market failure alone may not constitute sufficient grounds for Government intervention, but when such failure is considered in the context of the essential role that pharmaceuticals play in the area of public health, such intervention becomes necessary. This assumes greater significance, especially when exploitative pricing makes medicines unaffordable and beyond the reach of most, putting huge financial burden in terms of out-of-pocket expenditure on healthcare.
  • There is very high incidence of diabetes in the country, which affects around 61 million persons and the figure is expected to cross 100 million by 2030 as per the projection of the International Diabetes Federation; and it is estimated that every year nearly 1 million people in the country die due to diabetes and hypertension.
  • The drug regulator categorically mentions that In accordance with the guidelines issued by the NPPA, after approval of the ‘Competent Authority’, these price fixations of non-scheduled formulations under Para 19 of DPCO 2013 have been made.

Constituents of the same Ministry with conflicting view points:

Though both NPPA and the Department of Pharmaceuticals (DoP) come under Mr. Ananth Kumar, the new Minister of Chemicals and Fertilizers, both these constituents seem to have conflicting views on this important issue.

The pharma industry reportedly has sought the DoP’s intervention in this matter. The DoP, in turn, is learnt to have requested for the opinion of the Ministry of Law on using ‘Para 19′ provision in favor of public interest by the NPPA, invoking the power assigned to the drug regulator.

Another route for the industry is to legally challenge the said notification of the NPPA. However, one should keep in mind that a PIL is still pending before the Supreme Court questioning the validity DPCO 2013.

The arguments for and against:

Taking all the above points into consideration, the following two important areas of debate have now emerged on this NPPA notification, both in favor and also against:

A. Nothing has materially changed since DPCO 2013 was put in place:

Industry sources highlight that he following two points, that triggered NPPA’s invoking Para 19, have been there for a long time, including the period when the National Pharmaceutical Pricing Policy 2012 (NPPP 2012) was formulated:

-       Huge price differences among various branded generics of the same molecule

-       Cardiovascular ailments and diabetes have assumed endemic proportion

The other group counters that, if mistakes were made while formulating the NPPP 2012 because of intense pressure from vested interests in the erstwhile regime, why corrective actions can’t be taken now?

B. NPPA has exceeded its brief:

Industry sources question, how could NPPA possibly issue such notification of price reduction for non-scheduled formulations, as it is not a policy maker?

Others counter with equal zest: Of course NPPA is not a policy maker, it is a drug price regulator… And as a price regulator, it has implemented Para 19 of DPCO 2013 in the right earnest with the requisite powers conferred on it.

The impact:

According to published data, after the latest price revisions of diabetic and cardiovascular drugs, around 21 per cent of the anti-diabetic drug market faces the ceiling price, while the total market of cardiovascular medicines under price control is now estimated at around 58 per cent, with an overall adverse impact of reportedly Rs 550 Crore on the Indian Pharmaceutical Market. Overall price reduction for these two categories would range between 5 and 35 per cent, the average being around 12 per cent.

MNCs seem to have been hit harder:

An additional bad news for the MNCs is that the scope of Para 19 has now gone beyond the generic space and included even patented product.

For the first time a patented product Sitagliptin has been brought under the purview of Drug price Control order. This decision could give an unprecedented handle to the NPPA to regulate prices of even patented drugs through invocation of Para 19 of DPCO 2013 in future.  Moreover, many high-priced branded generics of MNCs are brand leaders too. Thus, in a relative yardstick, invocation of Para 19 would hit the MNCs harder, creating an uncertainty in their business environment.

Conclusion:

Drug prices are cheapest in India in dollar terms, claims the pharma industry. Does this claim hold much water? May be not, because it should be realistically seen in terms of Purchasing Power Parity (PPP) and Per Capita Income in India. In that sense many would argue that drug prices in India, on the contrary, are not cheaper at all.

Moreover, it is important to take into cognizance the huge inter-brand price differences in branded-generics due to a flawed system, as patients have no role to play in choosing a drug (within the same molecule) that they would need to buy. It is the doctor who is the sole prescription decision maker, where price, per se, may not play a very significant role.

In a situation like this, despite the anger of the industry, many would ponder whether or not NPPA’s engagement and reasoning, on behalf of the Government, to bring some sense in the madness of drug pricing in India be just wished away?

Cheaper medicines in general and generic drugs in particular, would always make the patients and the payor happy, leaving the industry mostly angry.

Keenly observing the recent series of events and taking note of a number of highly credible viewpoints, besides a couple of seemingly spoon-fed, ill-informed and run-of-the mill type editorials, this is about time for the stakeholders to judge without any bias what is right for the country, its people and of course the business to work out a win-win solution, dousing the likes of ‘Fire in The Blood‘, once and for all.

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.