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Pharma’s Perception Management

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

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

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

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

Pharma lobbying expenses are shooting north:

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

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

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

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

Whereas pharma’s lobbying output is diving south:

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

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

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

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

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

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

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

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

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

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

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

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

Managing public perception – the new ballgame to influence policies:

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

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

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

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

Is reputation mostly driven by perception?

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

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

‘Designing the future’ from the pharma industry perspective:

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

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

Creating a positive perception for pharma:

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

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

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

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

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

Conclusion:

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

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

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

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

By: Tapan J. Ray

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

 

Innovation: Is Big Pharma Talking Differently?

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“Nearly 2 billion people have no access to basic medicines, causing a cascade of preventable misery and suffering. Good health is impossible without access to pharmaceutical products.” The World Health Organization’s (WHO) ‘Access to Medicine’ report on ‘Ten years in public health 2007–2017’ made this observation.

It also reemphasized: “A significant proportion of the world’s population, especially in developing countries, has yet to derive much benefit from innovations that are commonplace elsewhere.” Despite this, continued lobbying of many pharma companies for TRIPS-plus measures and legislation, the breaching of laws or codes relating to corruption and unethical marketing, and several blatant instances of company misconduct continues, even today.

In the midst of this situation, has Big Pharma started thinking differently about the purpose of innovation? I shall try to explore the ground reality in this article.

The argument of Big Pharma:

In response to the above observation or anything akin to that, Big Pharma has counter arguments, which are rather contentious, as many believe. They generally say, it is the responsibility of the different governments to alleviate health misery of the citizens, and not theirs. In tandem, they keep repeating the same old argument, underscoring lower prices of innovative drugs would lead to lower profit generation, significantly slowing down the process of innovation.

Drug innovation follows an arduous path and an expensive process: 

Big Pharma wants people to comprehend about what it entails in the journey of discovering a New Molecular Entity (NME) and converting it to a safe and effective medicine.

For example, in its booklet Bayer explained: ‘it takes about ten to twelve years to develop a new drug. during this time, highly qualified scientists from a variety of disciplines work on filtering out a suitable active ingredient from an enormous number of compounds. Between 5,000 and 10,000 compounds are rigorously studied in numerous laboratory tests and the best ones further optimized. out of four or five drug candidates that are then tested on humans in clinical studies often only one substance is approved and becomes available to physicians and patients.”

The entire process reportedly takes around 14 years, and according to a 2016 study by the Tufts Center for the Study of Drug Development - developing a new prescription drug, which gains marketing approval, is estimated to cost drug manufacturers USD 2.6 billion. Besides, a new analysis conducted at Forbes finds that getting a single drug to market may involve an expenditure of USD 350 million before the medicine is available for sale. It concludes, large pharmaceutical companies that are working on dozens of drug projects, spend USD 5 billion per new medicine.

Drug innovation is only for those who can afford:

As is being witnessed by many, Big Pharma always tend to argue that high R&D costs drive new drug prices up in pharma. Moving a step further, that drug innovation is for only those patients who can afford, was justified even by the CEO of a major constituent of Big Pharma. An article published in Forbes Magazine on December 05, 2013 wrote: “At the Financial Times Global Pharmaceutical & Biotech Conference this week, Bayer AG CEO, Marijn Dekkers, is reported to have said that Bayer didn’t develop its cancer drug, Nexavar (sorafenib) for India but for Western patients that can afford it.”

How strong is the justification for high new drug cost?   

Instead of believing the pharma argument on its face value, it will be worthwhile to go for a dip-stick analysis. One such analysis, titled “Pharmaceutical industry profits and research and development”, published by the USC-Brookings Schaeffer Initiative for Health Policy on November 17, 2017, presents some interesting facts.

It says, the pharmaceutical industry is a high-fixed-cost and low-marginal-cost industry. This means, as the authors explain, that the cost of bringing a new drug to market is very high and the process is risky, while the cost of producing an extra unit of a product that is on the market is frequently “pennies a pill”. It also, indicates, though there is a disagreement about the exact cost of bringing a new drug to market, there is general recognition that the process costs run a fewhundreds of millions of dollars per new drug. Thus, innovative drugs are supposed to be somewhat more expensive to many patients. But how much – is the question to ponder, I reckon.

An example of a new drug pricing:

Let me choose here, as an example, the pricing of one of the most contentious, but undoubtedly a breakthrough medicine – Sovaldi (Sofosbuvir) of Gilead. Sofosbuvir was discovered in 2007 – not by Gilead Sciences, but by Michael Sofia, a scientist at Pharmasset. The drug was first tested on human successfully in 2010. However, on January 17, 2012 Gilead announced completion of the acquisition of Pharmasset at approximately USD 11.2 billion.

Subsequently, on December 06, 2013, US-FDA approved Gilead’s Sovaldi (Sofosbuvir) for the treatment of Chronic Hepatitis C. Sovaldi was priced at USD 1,000 a day in the U.S., costingUSD 84,000 for a course of treatment. That Gilead can’t justify the price of its hepatitis C therapy – Sovaldi, was highlighted in an article with a similar title, published in the Forbes Magazine on June 17, 2014.

It is worth mentioning that Sovaldi costs around USD 67,000 for a course of therapy, in Germany. Whereas, it costs round USD 55,000 in Canada and the United Kingdom (UK). Gilead has accepted an altogether different pricing strategy for Sovaldi in some other countries, such as India and Egypt.

When the above concept is used to explain Sovaldi pricing:

The above Forbes paper explained its pricing by saying: “Add in other therapies that supplement Sovaldi, and now you’re talking about USD 100,000 or so to treat a single patient. To use Sovaldi to treat each of the 3 million hepatitis C patients in the United States, it would cost around USD 300 billion, or about the same amount we annually spend for all other drugs combined.”

Let me now put a couple of important numbers together to get a sense of the overall pricing scenario of a new drug. The New York Times (NYT) reported on February 03, 2015: “Gilead Sciences sold USD 10.3 billion of its new hepatitis C drug Sovaldi in 2014, a figure that brought it close to being the best-selling drug in the world in only its first year on the market.”

Against its just the first-year sale, let me put the cost of acquisition of Sovaldi at USD 11.2 billion, an expenditure of USD 350 million before the medicine is available for sale as calculated in the Forbes articleand the cost to manufacture a pill of Sovaldi at around USD 130. This reinforces the point, beyond any doubt how ‘outrageous’ its pricing is.Even Gilead’s CEO admitted to failures in setting price of Sovaldi at USD 1,000-A-Pill, said another article on the subject. More important is, the costs to Gilead for Sovaldi acquisition and launch were virtually recovered in just a little over a year, but Sovaldi’s original price tag remains unaltered.

Is the Big Pharma talking differently now?

It appears that some constituents of Big Pharma have now started talking differently in this regard, publicly – at least, in letters, if not in both letter and spirit. Be that as it may, one will possibly be too naïve to accept such sporadic signals coming from pharma, as a shift in their fundamental thought pattern on drug innovation as a profit booster. Being highly optimistic in this area, I would rather say that these are early days to conclude that Big Pharma has really accepted the reality that – drug innovation is only meaningful, if it reaches those patients who need them the most.

Changing…not changing…or early days?

Let me explain this point with examples of changing…not changing…orearly days.

Changing?

On July 24, 2018 during an interview to Pharm Exec the head of the sub-Saharan African region for Roche made some key points, such as:

  • Groundbreaking innovation in medical science is only meaningful, if it reaches the patients who need it.
  • Access to healthcare is a multidimensional challenge and key to addressing the barriers, is really understanding them
  • Need to create a new business model that can sustainably – and this is very important – create access for patients.

Not changing?

When one Big Pharma constituent is showing some change in its approach on the purpose of innovation, another constituent is trying to make the entry of cheaper biosimilar drugs even tougher. This creates yet another doubt – both on safety and efficacy of biosimilars, as compared to much higher priced off-patent original biologic drugs.In August 2018, Pfizer reportedly called for US-FDA guidance on ‘false or misleading information’ about biosimilars, citing some of the following examples from other Big Pharma constituents, such as:

  • Genentech’s “Examine Biosimilars” website, which states that “the FDA requires a biosimilar to be highly similar, but not identical to the existing biologic medicine.” Pfizer argues that Genentech’s omission of the fact that an approved biosimilar must have no clinically meaningful differences from its reference product is a failure to properly communicate the definition of a biosimilar.
  • Janssen Biotech’s patient brochure for brand-name Remicade, which states that a biosimilar works “in a similar way” to a biosimilar without clarifying that the biosimilar must have the same mechanism of action as the originator. Pfizer also takes issue with the brochure’s suggestion that no infliximab biosimilar has been proven to be safe or effective in a switching study.
  • Amgen’s April 13, 2018, tweet that states that patients may react differently to biosimilars than to reference products. Pfizer also points out an Amgen YouTube video that implies that switching to a biosimilar is unsafe for patients who are well controlled on a current therapy.

Interestingly, on July 20, 2018 Pfizer announced that the US-FDA has approved Nivestym (filgrastim-aafi), a biosimilar to Neupogen (filgrastim) of Amgen, for all eligible indications of the reference product. This is the fourth US-FDA approved Pfizer biosimilar drug, the marketing and sales promotion of which expectedly, I reckon, will be no different from other biosimilars.

Early days?

Yes, it appears so. These are early days to draw any definitive conclusion on the subject.

Conclusion:

W.H.O observed in its above report that the ‘overall situation is somewhat improving’. It was also corroborated in the ‘2016 Access to Medicines Index’, which gave high marks to those companies that negotiated licenses for antiretrovirals and hepatitis C medicines through the Medicines Patent Pool (MPP). MPP was set up in 2010 as a public health organization supported by the United Nations to improve access to HIV, hepatitis and tuberculosis treatments in low- and middle- income countries.

It could well be, on the purpose of drug innovation some new realization has dawned, at least, on some few global pharma majors. However, it is still difficult to fathom its depth, at this point of time. There is no conclusive signal to believe that the Big Pharma is now thinking differently on the subject, not just yet.

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.

Big Pharma: Now A ‘Chink in Its Armor’?

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Emerging trends bring to the fore a possible ‘Chink in the Armor’ of the ‘Big Pharma’, despite a number of recent belligerent moves.

One such move I had deliberated in my earlier blog post. There I mentioned that 2014 report on ‘International Intellectual Property (IP) Index’ of the US Chamber of Commerce’s Global Intellectual Property Centre (GIPC) highlights India’s featuring at the bottom of 25 countries on Intellectual Property (IP) protection. Accordingly, the US Chamber having put forth a set of recommendations reportedly urged the US Trade Representive (USTR) to classify India as a ‘Priority Foreign Country’. This nomenclature is usually attributed to the worst offenders of ‘Intellectual Property Rights (IPR)’, which could culminate into trade sanctions.

The move attempts to dissociate IPR from ‘access to medicines’:

Though the methodology and alleged biases of this report were the topics of raging debates, according to USTR, this move of the US Chamber of Commerce is reportedly just against the IP regime in India and ‘not about access to medicines.’

This clarification is indeed bizarre, as most of the issues related to creation of intense political pressure from overseas for stringent IP regime in a country, such as India, revolve around access to patented medicines. The twin issue of IP and ‘access to patented medicines’ can hardly be separated.

Same old contentious example of ‘Glivec Access Program’:

The example of ‘Glivec Access Program’ does not appear to have many takers within the experts either for well-argued reasons.

Even then, to substantiate the point that the IP issues in India are not related to ‘access to patented medicines’, the US Chamber of Commerce states, yet again:

“In the case of Glivec, Novartis provided the leukemia drug to 95 per cent of patient population for free. The annual cost for Glivec generic treatment is approximately three to for times the average annual income in India”.

It is worth noting that the Swiss drug-maker Novartis reportedly gave the same example while defending the patent protections of Glivec before the Supreme Court without success. The apex judiciary ultimately dismissed the case last year.

Post Glivec judgment, the same ‘patient access program’ was debates in television programs too. However, its relevance for enhancing access could not be established in either of these two high profile public deliberations, as there were hardly any takers.

That said, I do not have any inkling, whether the protagonists of this much-touted “Glivec Access Program” would at anytime, in future, be able to establish their claim beyond any reasonable doubt that, ‘95 percent of the total patients population suffering from chronic myeloid leukemia receive Glivec free of cost from Novartis’.

Visible ‘Chink in its Armor’:

Not so long ago, 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.”

In tandem various other tough uttering, well crafted by the global communication agencies of ‘Big Pharma’, followed on the same IPR related issues, projecting its tough monolithic dimension.

However, after keenly watching a good number of much contentious moves being taken on IP and various other related areas by its lobby groups, both in India and overseas, it appears that all constituents of the ‘Big Pharma’ are not on the same page for all these issues, clearly exposing the ‘Chink in its Armor’, as it were.

Let me now give some examples, spanning across various issues, to vindicate this point:

I. Differences on ‘public disclosure of all Clinical Trial data’:

As discussed in my blog post earlier, The Guardian reported an incident on the above issue in July 2013. The article stated that the global pharmaceutical industry has “mobilized” an army of patient groups to lobby against the plan of European Medicines Agency (EMA) to force pharma companies publishing all Clinical Trial (CT) results in a public database for patients’ interest.

Important global pharma industry associations strongly resisted to this plan. The report indicated that a leaked letter from two large pharma trade associations, the Pharmaceutical Research and Manufacturers of America (PhRMA) of the United States and the European Federation of Pharmaceutical Industries and Associations (EFPIA), had drawn out the above strategy to combat this move of EMA.

The Chink:

However despite this grand strategy, some constituents of Big Pharma, such as, Abbott, GlaxoSmithKline (GSK), Johnson & Johnson decided to disclose the results of all applicable/covered clinical trials, regardless of outcome, in a publicly accessible clinical trials results database.

II. Differences on ‘leaked pharma lobbying plan against South African draft IP Policy’:

February 3, 2014 issue of ‘The Lancet’ states, among other issues, the draft IP policy of South Africa seeks to address patent ever-greening, a contentious strategy in which drug firms tweak formulations to extend the 20-year life of a patent.

The leaked 9 page document of the PR firm, Public Affairs Engagement (PAE), titled, ‘Campaign to Prevent Damage to Innovation from the Proposed Draft National IP Policy in South Africa’, was reportedly prepared for ‘Pharmaceutical Researchers and Manufacturers of America (PhRMA)’ based at Washington DC and the lobby group representing research-based pharmaceutical companies in South Africa – ‘Innovative Pharmaceuticals Association of South Africa (IPASA)’.

The Chink:

As deliberated in my earlier blog post, when the above lobbying plan was leaked out, Swiss drug maker Roche and Denmark’s Novo-Nordisk reportedly resigned from the IPASA. Both the companies said that neither do they support this campaign nor have they given any approval to it and hence they are resigning from IPASA. However, the above report quoting IPASA states, “IPASA maintains that the departure of Roche and Novo-Nordisk did not weaken the association’s position.”

III. Other recent major differences within ‘Big Pharma’ constituents:

The Chink:

A. Merck Sereno:

Indian pharma regime may appear to be not encouraging or protecting innovation to the US Chamber of commerce, but one of the oldest constituents of the ‘Big Pharma’ – Merck Sereno has reportedly articulated quite a different take on this score.

In an interview to ‘The Economic Times’, Stefan Oschmann, member of the executive board and CEO, Merck, Germany made some very important observations on:

Patentability:

“Some of the strategies used in the past were developing 20 products and slightly differentiating them. That doesn’t work anymore. This industry has to do its home work.” He added that it makes little sense to adopt a confrontationist attitude towards sensitive issues.

Access:

Oschmann said, “Companies are rightly or wrongly criticized in spending all their money on 20 percent of the richest people of the world and neglecting the rest of the population. This is changing.”

Pricing:

He would not criticize governments such as India for trying to protect consumers from spiraling health-care costs. “Pricing and tier-pricing are worth looking into”.

Governments across emerging markets have been trying to find a way to the same challenges of increasing access to affordable healthcare. Oschmann feels, “This is legitimate to any government. What matters is rules are transparent, fair and non-discriminatory. Rules shouldn’t be used as a tool for industrial policy to only foster local industry.”

Another Chink:

B. GlaxoSmithKline:

Another icon in the global pharmaceutical industry Sir Andrew Witty, the CEO of GlaxoSmithKline, reportedly commented a few months ago on the following, with a pragmatic approach to the situation:

Pricing:

“I think it is wholly reasonable for a country that is having a tremendous growth with challenges has to think about pricing. I don’t think that it is a ridiculous proposition. Of course it hurts the period you go through that price adjustments, there are alternative ways to achieve and having a good dialogue may create positive ways to do it.”

Patented medicines:

“I am not one of those CEOs who is gonna stand here and say that you have to have a same approach as you have in other country. India is a very unusual country. It starts from different place than a Britain or a France or a USA, therefore we have to think about what is the right way for India to balance its needs.”

IP:

Sir Andrew emphasized, “And the key to that isn’t to get rid of patents; the key to that is to fix the R&D and manufacturing processes. And that’s what we’ve got to realize in the world we are going to be living in the next 30 or 40 years; companies cannot just turn up and have any price they want. Companies will have to come with a competitive and efficient business model, which will bring real innovation to the people.”

Conclusion: 

Culling all these important developments together, while traveling back in recent times, it does appear, whether the issues are on IP, access or even pricing of medicines, seemingly overpowering might (or may just be simple bullying tactics) of US Chamber of commerce is drowning some very important ‘Big Pharma’ constituents’ voices and numbing many others, despite a visible ‘Chink in its Armor’.

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.

Big Pharma Demands Transparency, Keeping their ‘Black-Boxes’ Tight and Safe?

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Pharmaceutical Industry across the globe wants absolute transparency in all government laws, policies, guidelines, transactions and overall governance. They also expect the trade environment should be predictable, non-manipulative and business-friendly. These expectations are indeed well justified and deserve whole-hearted support from all concerned.

However, when similar expectations of transparency are voiced by stakeholders in the Big Pharma business operations, that will have direct or indirect impact on public health interests, one would mostly encounter a well guarded, mammoth and impregnable ‘Black Box’, wearing a ‘Top Secret’ label, with all relevant information kept inside.

Such areas of stakeholders’ interests on Big Pharma could well be related to details, like for example:

  • Actual break-up of R&D expense details,
  • Transparency in all clinical trials data for experts review,
  • Patented products’ pricing rationale,
  • Enormous total costs of lobbying and related expenses at the global level,
  • Marketing spend on doctors and other decision makers, directly or indirectly, just to name a few.

Mounting curiosity:

Continuation of such opaque practices for a long time, in turn, sparks the curiosity of the intelligentsia to know more in details, especially, about the areas as stated above.

Various research studies are now coming up, with huge revelations and strong findings in these areas. All of these together indicate, it is about time for the global pharma to also demonstrate transparency in their respective business practices and corporate governances, without further delay.

If it does not happen, probably respective governments in various countries will start acting on these areas of opaque self-serving pharma business practices, with the enactment and more importantly, stricter enforcement of requisite laws and policies. President Obama Administration in the United States has already initiated some important actions in these areas with proposals and laws, like for example,  the “Physicians Payment Sunshine Act’ .

The ‘Power Game’:

An interesting article of May 3, 2013 highlighted that the global pharmaceutical industry exerts incredible influence over the prescription medicines across the globe. This power, as many will know, flows from robust political contacts and influences over various important government agencies administrating the entire healthcare system, executed immaculately by expensive lobbying and PR campaigns by their globally integrated trade bodies.

Similar powerful influences also get extended to doctors and the people who matter to further their interests. These well crafted plans are reportedly executed through sponsored or paid opinion-modifying articles, ‘advertorials’, DTC advertisements (wherever legally permitted) and well-organized, seemingly third party, speeches to push the envelopes further.

Most probably, keeping such ongoing practices in mind and coming under intense media pressure, the Medical Council of India (MCI) on December 10, 2009 amended the “Indian Medical Council (Professional Conduct, Etiquette and Ethics), Regulations 2002″ for the doctors in India. Unfortunately, its implementation on the ground is rather tardy.

The above article also stated, “In fact, in the United States the industry contributes heavily to the annual budget of the U.S. Food and Drug Administration (FDA), which is charged with regulating drugs and devices made by those same companies.”

Avoidable Expenditures:

The paper indicates that in the United States alone the industry associations:

  • Have 1,100-plus paid lobbyists on Capitol Hill,
  • Allocated US$ 188 million annual lobbying budget
  • Doles out around US$ 14 million to political candidates every year

The report also comments, ‘Drug companies spend substantially more on marketing than they do on research and development.’

Influencing opinion against patients’ interest?

The article in the ‘drugwatch’ also states:

“Doctors are persuaded by the pharma companies to attach their names (ghost writing), against financial considerations, to favorable article on a particular drug ensuring that it is published in a well reputable medical journal.”

The author continues that ‘Ghost writings’ are being used to promote numerous drugs to influence concerned stakeholders.

In 1998, a study of the prestigious New England Journal of Medicine found that ‘out of 75 published articles, nearly half were written by authors with financial conflicts. And, worse than this, only two of the articles disclosed interests.’

Richard Smith, former editor of the British Medical Journal, was quoted saying, “All journals are bought – or at least cleverly used – by the pharmaceutical industry.”

Striking facts:

Following are some striking facts as reported in the article, as mentioned above:

“Advertising instead of research: For every US$ 1 spent on “basic research,” Big Pharma spends US$ 19 on promotions and advertising.

Distribution of free drug samples: The United States has 1 pharmaceutical sales representative for every 5 office-based physicians.

Sponsorship of symposiums and medical conventions: Drug and medical device makers spend lavishly on doctors, including covering meals, travel, seminars and conventions that may look more like vacations.”

Pressure on publications:

The paper highlights that large global pharma majors may even pull its advertisements out, if the concerned medical journal will question the accuracy of an ad. Such types of threats have very serious effects on these journals in running their businesses without getting lucrative advertisement dollars from the drug manufacturers.

Making drugs looking good:

The same article highlights:

“Quite often the academics and scientists are hired hands who supply human subjects and collect data according to the instructions from their corporate employers. Sponsors keep the data, analyze, write the papers and decide whether and when and where to submit them for publication. Drug companies have discovered ways to stage-manage trials to produce predetermined outcomes that will put their products in the best light.”

With this strategy even a bad drug can allegedly be made looking good by doing many things, like for example:

  • Comparing them to a placebo
  • Comparing them to a competitor’s medication in the wrong strength
  • Pairing them with a drug that is known to work well
  • Shortening a trial before any bad results surface
  • Testing in groups too small to provide valid evidence

Pay-for-delay deals:

A recent report titled, “Top twenty pay-for-delay drugs: How Industry pay-off delay generics” highlights that ‘Pay-for-delay deals’ have forced patients in the United States to pay an average of 10 times more than necessary for at least 20 blockbuster drugs.

Key findings of the analysis on the impact of pay-for-delay deals are as follows:

  • This practice has held back generic medicines used by patients with a wide range of serious or chronic conditions, ranging from cancer and heart disease, to depression and bacterial infection.
  • These payoffs have delayed generic drugs for five years, on average, and as long as nine years.
  • These brand-name drugs cost 10 times more than their generic equivalents, on average, and as much as 33 times more.
  • These patented drug companies have made an estimated US$ 98 billion in total sales of these drugs while the generic versions were delayed.

Citing example, the paper says, a pay-for-delay deal kept a generic version of the breast cancer drug Tamoxifen off the US market for nine years, while Pfizer made $7.4 billion in sales of its cholesterol-lowering drug Lipitor (atorvastatin) in 2012 alone.

The point to ponder yet again is, why such practices are being surreptitiously carried out for years sacrificing patients’ interest and without the regulators’ strong interventions, in general?

French Government has initiated a probe:

The French Competition Authority is reportedly expected to publish a report on the findings of its inquiry, initiated in February 2013, into the costs and pricing of medicines in France. The report will also look at whether industry practices are interfering with the market entry of generic drugs, including distribution arrangements between drug manufacturers, wholesalers and pharmacists.

An appreciable initiative in America, but why not in India?

There is still a simmering hope. As indicated above, President Obama’s Affordable Care Act reportedly requires that from September 2013, pharmaceutical companies will need to collect data and openly report information on payments, investment interests, ownership and items of value given to doctors and hospitals. Very unfortunately, the Department of Pharmaceuticals of the Government of India has not taken any such steps, as yet, despite the situation turning grave in the country.

The power of pharma lobby in the US:

According to a recent NYT report, in the United States, government health programs are forbidden from rejecting new drugs on cost grounds.

When the issue of drug prices came up as part of President Obama’s ‘Affordable Care Act’ debate, it was summarily rejected in Congress. Simultaneously, a move toward comparative-effectiveness studies, putting rival drugs or treatments through trials to determine which work better, was also decried.

The report highlights, the mere suggestion of the US government throwing its weight around on drug prices stirs up talk of ‘socialism’. The pharma lobby doesn’t have to look far for support in fighting that idea. In the US, the so-called ‘free market’ is trusted to regulate drug prices, despite the reality that the healthcare market is far from transparent, ‘with byzantine pricing mechanisms and costs that vary wildly region-by-region, pharmacy by pharmacy and even patient-by-patient’.

The usual supply/demand/pricing relationships do not apply to drug prices at the consumer level in the US too, just as it has been proved in India. 

A large part of creation of this environment is attributed to pharmaceutical and other health-products firms, who reportedly spent a total of US$ 250 million on lobbying last year. 

Big Pharma keeps failing credibility tests:

This happened very recently, when The Guardian in July 2013 reported, the pharmaceutical industry has “mobilized” an army of patient groups to lobby against plans to force companies to publish secret documents on drug trials. This is related to the news that the European Medicines Agency (EMA) could force drug companies to publish all Clinical Trial (CT) results in a public database.

The above report says, while some pharma players agreed to share data, important global pharma industry associations have resisted this plan of the EMA. The report continues, a leaked letter from two large pharma trade associations, the Pharmaceutical Research and Manufacturers of America (PhRMA) of the United States and the European Federation of Pharmaceutical Industries and Associations (EFPIA), have drawn out a strategy to combat calls by drug regulators to force companies to publish all CT results.

The strategy reportedly shows how patient groups, many of which receive some or all of their funding from drugs companies, have been drawn into this battle by these Big Pharma lobby groups.

The e-mail reportedly seen by ‘The Guardian’ was from Richard Bergström, Director General of EFPIA, addressed to directors and legal counsel at Roche, Merck, Pfizer, GSK, AstraZeneca, Eli Lilly, Novartis and many smaller companies.

The e-mail leaked by an employee of a pharma company describes a four-pronged campaign that starts with “mobilizing patient groups to express concern about the risk to public health by non-scientific re-use of data”.

Translated, as ‘The Guardian’ reported, “that means patient groups go into bat for the industry by raising fears that if full results from drug trials are published, the information might be misinterpreted and cause a health scare.”

This appears to be another classic case of vested interests working against patients’ interests.

Global lobbying started taking the center stage in India too:

With the above back-drop and lobbying scandals reportedly being surfaced in many other countries, it is about time that India puts its acts together with India-specific stricter disclosure policies, including R&D, Clinical Trials (CTs), Patented Products Pricing, Marketing Practices and Trade Lobbying.

Interestingly, to influence Government policies India’s top lobbying spenders in 2012 (US$ million) were reported as follows:

1 US Chamber of Commerce

136.3
2 National Association of Realtors

41.5
3 Blue Cross / Blue Shield

22.5
4 General Electric

21.1
5 American Hospital Association

19.2
6 National Cable & Telecom. Association

18.9
7 Pharmaceutical Research & Mfrs. of America (PhRMA)

18.5
8 Google

18.2
9 Northrop Grumman

17.5
10 AT&T

17.4
11 American Medical Association

16.5
12 Boeing

15.6

Source: The Center for Responsive Politics (Economic Times, June 4, 2013)

According to the latest lobbying disclosure reports filed with the US Senate and the House of Representatives, at least two dozen American companies and industry associations are reportedly lobbying hard with the US lawmakers on issues in India, which include:

  • Intellectual Property (IP)
  • Patent
  • Market access

Another recent report comments as follows:

“The US Chamber of Commerce has become a portal for dubious reports that claim India’s intellectual property regime is worse than China’s. Such “research” by paid lobbyists and disseminated through the halls of US Congress…”

Hefty fines for illegal practices, yet Black Box remains tight and safe: 

In December 2010, Healthcare advocacy group Public Citizen published a report that, for the first time, documented all major financial settlements and court judgments between pharmaceutical manufacturers and the federal and state governments of the United States since 1991.

It says, almost US$ 20 billion was paid out by the pharmaceutical industry to settle allegations of numerous violations, including illegal, off-label marketing and the deliberate overcharging of taxpayer-funded health programs, such as Medicare and Medicaid.

Three-fourths of the settlements and accompanying financial penalties had occurred in just the five-year period prior to 2010. There has been no indication that this upward trend is subsiding.

10 Largest Settlements and Judgments on Big Pharma mis governance:
(Period: Nov. 2, 1010 – July 18, 2012)

Company Amount    US$ Million Year Reasons
1. GlaxoSmithKline 3, 000 2012 Unlawful promotion, kickbacks, concealing study data, overcharging government health programs
2. Abbott  1,500 2012 Unlawful promotion, kickbacks
3. Johnson & Johnson 1,200 2012 Unlawful promotion
4.  Merck 950 2011 Unlawful promotion
5. Ranbaxy 500 2012 Poor manufacturing practices, falsifying data on FDA applications.
6. Johnson & Johnson 327 2011 Unlawful promotion
7. Boehringer Ingelheim 280 2011 Overcharging government health programs
8. Mylan’s Dey Pharma unit 280 2010 Overcharging government health programs
9. Elan 203 2010 Unlawful promotion, kickbacks
10. Johnson & Johnson 158 2012 Unlawful promotion

Conclusion:

All such expenditures, including expensive lobbying and court settlement charges for illegal business practices, as mentioned above, I reckon, are wasteful and avoidable. These are mostly outcomes of self serving measures, shorn of public health interest, 

If all these costs are eliminated and actual R&D expenses are reflected, in a transparent manner, there could be significant reduction in the costs of newer innovative drugs, extending their access to billions of patients, across the world.

Thus to help evaluating the innovative drugs with greater transparency, there is an urgent need for the Big Pharma to set examples by voluntarily disclosing the secrets hidden within the ‘Black Boxes’, as deliberated above. These disclosures should be made to the independent experts and the respective Governments under appropriate statutes.

Expectations of transparency in Governance should not, therefore, be restricted just to Government laws, policies and decisions, the industry should reciprocate it too, in equal measures.

To be patient-centric, transparency in governance needs to be a two-way traffic, where pharma industry should volunteer to be an integral part, sooner than later. Otherwise it may be too late for them to avoid harsh interventions of the respective regulators, as the intense pressure from intelligentsia, civil society and media, keep mounting.

That said, the question lingers:

When the ‘Big Pharma is rightly demanding transparency in all areas of public discourse, why are they so reluctant in making their intriguing ‘Black Boxes’ transparent, that too only in areas of public health interest, for fair experts review?

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.

Hysteria on Corporate Lobbying in India

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The ‘hysteria’ on ‘Corporate Lobbying’ influencing the key policy decisions of India, reverberated in the corridors of power of the Indian Parliament last week with consequent media attraction and triggering a raging public debate.

On Monday, December 10, 2012 the Upper House of the Indian Parliament reportedly expressed itshuge concern over a lobbying disclosure in the United States related to a contentious government policy decision India.

Taking part in the debate a distinguished Member of the Parliament and an eminent lawyer Mr.Ravishankar Prasad reportedly articulated, “Lobbying is illegal in India and is a kind of bribe. If Wal-Mart has said that hundreds of crores of rupees were spent on India, then it is a kind of bribe.Government should tell who was given this bribe.”

Responding to the opposition demand on this subject, the Government has already ordered a judicial probe on this allegation.

Corporate Lobbying:

The term ‘Lobbying’ has been defined  as “a form of advocacy with the intention of influencing decisions made by the government by individuals or more usually by Lobby groups; it includes all attempts to influence legislators and officials, whether by other legislators, constituents, or organized groups”.

April 21, 2012 edition of ‘The Economist’ in an article titled. “The Chamber of Secrets - The biggest business lobby in the United States is more influential than ever”, reported that ‘Americas first chamber of commerce was founded in Charleston in 1773.

Many a times the key issues of corruption, morality and ethics are being used with ‘lobbying’ activity. However, following two different perceptions remain generally associated with this terminology:

  • Corporates or people with mighty socioeconomic power, by themselves or through their industry bodies, corrupt the laws to serve a self-serving agenda by bending or deflecting them away from general fairness to majority of the population. 
  • It gives an opportunity to defend minority interest against corruption and tyranny of the majority.

An article published in the ‘The Washington Post’ on August 14, 2011 argued that “Blame for financial mess starts with the corporate lobby” in America.

In a recent book titled, “Time to Start Thinking – America and the Specter of Decline”, the author described how the big money in America has almost completely bought over the political process along with a pen picture of the organized lobbying group continuing to wield their mighty power despite reported ban of this activity in the ‘White House’ by President Barrack Obama.

Lobbying is legal in many countries:

It is worth mentioning that lobbying is a legal activity in many countries, such as, the United States of America, Europe and Canada. In the US, many Indian companies, including the government of India have been lobbying since so many years to present their cases and argument with the American law and policy makers.

When President Obama came to power in the US, it was reported: ‘one of the first acts of the Obama administration in office was to have an executive order which prohibited the Obama Administration either from hiring lobbyists – those who had lobbied within two years of joining the administration or allowing people who had left the Obama administration to service lobbyists for two years. The idea is that you want to break the chains where there is undue influence of special interest groups upon the government’.

‘Disclosure’ required in the US:

In the US, lobbying being recognized as a legitimate business activity, the companies are required to inform all such activities through quarterly disclosure reports to the US Senate.

In America, in 2012 alone and only in Washington DC there were  reportedly 12,016 active registered lobbyists, who spent a whopping US$ 2.45 Billion for lobbying activities . Similarly, as per publishedreports, there are currently an estimated 15,000 individual lobbyists and 2,500 lobbyist organizations in Brussels to seek favorable business decisions through the legislative process of the European Union.

It has been reported that in the U.S. lobbying is a huge and established industry. This is quite contrary to Indian situation, where lobbying has not been legalized and the activity, going by general perception, ‘smacks of illegal gratification and is ravished by corruption scandals like 2G scams”.

 Indian corporates also lobby in the US:

Records with the US House of Representatives reportedly show that around 27 Indian companies have spent money on lobbying in the US. Some examples are as follows:

  • Reliance Industries (RIL): Unspecified issue
  • Tata Sons:
  • Ranbaxy Lab,
  • The National Association of Software and Service Companies (Nasscom )
  • Wipro
  • Gems and Jewellery Export Promotion Council, among others.

 Some sensational recent reports:

Following are some sensational recent reports on Corporate Lobbying:

The ‘Pharma Letter’ in its in its March 29, 2012 edition reported that “New research reveals that the pharmaceutical industry lobby is spending more than 40 million Euros (US$ 53.5 million) annually to influence decision making in European Union.”

Back home ‘Live Mint  (The wall Street Journal)’ reported on October 6, 2011 as follows:

“Wal-Mart has disclosed earlier, “discussion related to India FDI (Foreign Direct Investment)” as one of the issues in its lobbying with the US lawmakers in the first two quarters of 2011, during which it spent nearly US$ 4 million on various lobbying activities.”

On December 13, 2012, ‘The Telegraph‘ reported that in a recent regulatory disclosure in the United States, Walmart has stated that it spent US$ 25 million in the last four years on lobbying for, among other its hopes for “enhanced market access for investment in India”.

Not legalized in India:

As stated above, though Lobbying is considered a legal business activity in many countries, in India it is still not considered as a legally and recognized business activity. However, many industrial sectors have formed their respective associations primarily for lobbying with the government, which is generally termed as ‘advocacy’.

A recent article published in the India Law Journal titled, ‘Corporate Lobbying and Corruption-Manipulating Capital’ articulates that “lobbying is the preferred means for exerting political influence in developed countries and corruption the preferred one in developing countries. However, lobbying and corruption are symbiotic in nature as both are ways of obtaining help from the public sector in exchange for favors.”

The article further states that corporate lobbying or advocacy has expanded in India mostly as intensive briefings and presentations to the ministers and senior bureaucrats, though it is not yet recognized in a statutory or non-statutory form in the country.

Thus, right from the debate on Bofors Guns to the telephone tapes of high profile lobbyist Niira Radia related to 2G telecom scam and then Tatra trucks scam of the Indian Army and now on Walmart debate in the Parliament, one gets a clear feel that corporate lobbying falls in a grey zone under the Indian law.

Difference between ‘Lobbying’ and ‘Advocacy’:

According to the article titled, ‘Lobbying and Advocacy—Similarities and Differences, published by Charity Lobbying for the Public Interest’, when nonprofit organizations advocate on their own behalf, they seek to positively affect majority of the society, whereas lobbying refers specifically to advocacy efforts that attempt to influence policy or legislation of a country by interested groups, irrespective of its best outcome to the society.

More debate:

In a very recent reported debate published on December 15, 2012 titled, “Is lobbying an acceptable business practice? “, one distinguished professional said, ‘While lobbying can be considered routine, the response to it should not be, as it can be deeply harmful to our country’.

In the same debate, another equally distinguished person commented, ‘Lobbying may be a legitimate activity subject to strict regulatory oversight in the US. But in India, it a sophisticated alibi for the more brazen bribe-giving, what with cash still ruling the roost with its subterranean links lubricating all sections of the economy.”

More controversy:

Not so very long ago, some consumer activists from the civil society vehemently protested against the ‘Intellectual Property Conferences’ held in India, which were allegedly sponsored by some interested groups in a guise to influence the policy makers and the judiciary of India.

It was widely reported that the consumer activists viewed these IP summits, organized by the George Washington University Law School of USA as ‘attempts to influence sitting judges on patent law enforcement issues that are pending in Indian courts.’

In a letter dated February 26, 2010 addressed to Shri Anand Sharma, Minister of Commerce and Industry of India, over 20 NGOs demanded transparency and more information on such meetings and wanted the government of India ‘to put a stop to such industry sponsored lobbying with Indian judges and policymakers to promote their own requirements for intellectual property and to lobby for either law amendments or even to plead their cases currently pending before, various courts and the Indian Patent Office.”

In raising their concerns, the civil society groups argued that the posture adopted by the lobbyists and their supporters is to “force India to adopt greater standards” of IP protection “beyond the mandatory levels” required by the WTO, which may ‘go against public health interest of India’.

 The need for a middle path:

 In the current volatile scenario, it is quite reasonable to expect that lobbying activities in India, especially after the current uproar in the Parliament, may come under greater scrutiny both by the media and the government. The intervention of the courts against ‘Public Interest Litigation  (PIL)’ cannot also be ruled out.

However, it is also believed by many that long-term interest of India is expected to ultimately prevail in this closely watched raging debate with the acceptance of a middle path.

A strong argument in favor of lobbying/advocacy:

As stated above, there is also a strong argument in support of lobbying or advocacy, based on the following grounds:

  • In a democratic country like India, people from across the spectrum, including the industries and its associations, should have the right to convey their views to policy makers.
  • Lobbying should be regarded as a “fundamental basis to express a point of view”, industry included.
  • Trying to influence the government is a natural process by all, including the civil society, other stakeholders and the industry alike.

 Regulating lobbying activities – An option:

Considering the fast changing environment and arising out of some recent very sensational lobbying related financial/policy scams in India, as mentioned above, the moot question, as is being raised by many across the country is: “Should the government regulate lobbying activities in the country with appropriate regulations?”

Surrogate lobbying:

The instances of ‘surrogate lobbying’ by the industries with funds coming from various parts of the world are also being raised by the civil society, media and recently by the Government. The contentious issue became the subject of a heated debate related to ‘Kudankulam Nuclear Power Plant’ in Tamil Nadu.

In February 2012, Prime Minister Manmohan Singh’s reportedly charged that foreign NGOs for stoking protests with foreign funds at the ‘Kudankulam Nuclear power Plant’ for vested interests and ordered further investigation by the Ministry of Home Affairs to track the trails of funds.

As a result of all these developments, the Government is reportedly becoming increasingly more vigilant against direct or indirect ‘foreign hand’ through surrogate lobbying in the policy related issues of the country, against majority interest of the society. The ‘Walmart saga’ is a case in point, at this stage.

Industry observers have opined, probably many other forms of surrogate lobbying are currently operational in India, which needs to be thoroughly probed and in case of any illegal activity, the perpetrators must be brought to justice, sooner than later, whether it is related to ‘Kundamkulam Nuclear Power Plant’ or any other .

Examples of political fall-out of lobbying activities:

On June 1, 2012, FiercePharma  reported as follows:

“The cat is out of the bag so to speak with the disclosure of memos today detailing the level of drug industry support for passage of President Obama’s prized healthcare reform”

It continued to state, “Big Pharma came around to support the original bill, trading about $80 billion in additional taxes and some price rebates to federal programs for an expanded pool of insured.”

Back home in India, The Outlook Magazine reported on June 6, 2010 on the political fall-out of lobbying related to 2G telecom spectrum allocation scam in India as follows:

“Since Outlook  published extracts from the CD of Radia’s phone conversations (submitted to the court) taped by the I-T department and put the 140 conversations up on its website, there has been a raging debate on what they tell us about the role of lobbyists in the 2G spectrum allocation scam, how the media interplays in such a system, and how our political class and retired bureaucrats are more often than not willing partners in the game.”

“These debates do not detract from the aim of punishing the guilty behind the 2G scam; rather they raise disturbing questions we all have to answer. Who is this woman who can speak to the “highest and mightiest” in this country in this way? From where does she draw her power? And what does it tell us about our society? When ‘Outlook’ asked her, whether she would like to give her version of these recent events, Radia SMSed back: “No. Thank You.” This is her story..”

Conclusion:

Despite a long history of regulated and legalized lobbying in the US, there are still severe criticisms even in that country about the way lobbying activities have worked there in the past so many decades. India has plenty to learn from such experiences.

In the prevailing situation within India many experts often question, whether the economic/ other critical policy decisions of the country are mostly based on what the local population would require or depend on the money power of vested interests or business houses within and outside the country to influence such decisions.

To eliminate any possibility of illegal gratification, directly or indirectly or in any other manner or form, the process of lobbying or advocacy should be made absolutely transparent for all through appropriate rules and regulations, legally acceptable lobbyists and an appropriate disclosure mechanism for all such related expenses, just as exists in the United States of America.

In absence of these transparent and robust measures, lobbying or advocacy will continue to be perceived not just as an illegitimate activity, but also an ignoble and dubious profession in the eyes of majority living in India.

The fantastic vocabulary of ‘Good Governance’ should not be used just for others to practice. It is a time to ‘walk the talk’ for all stakeholders, including the government to douse histrionics of various kinds like, what happened last week on ‘Corporate Lobbying in 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 and also do not contribute to any other blog or website with the same article that I post in this website. Any such act of reproducing my articles, which I write in my personal capacity, in other blogs or websites by anyone is unauthorized and prohibited.

Should India follow the US way to regulate all types of lobbying in the country?

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Currently, India is one of the fastest-growing economies of the world along with China. Even during the recent global financial meltdown process both India and China could register a very impressive average GDP growth of around 7% consistently during the last so many years. This growth is over three times more than that of the developed countries like the US, which has been growing just around 2% in the recent years.

India growth story, I reckon, is now attracting a large number of companies across the industries from all over the world including India to lobby hard and participate in the process of spectacular growth across many industry sectors. Such lobbying activities in India are expected to increase by manifold in the years ahead.

As per newspaper reports the large corporations involved with these activities, besides pharmaceuticals, include the world’s largest retailers, the coffee shop giants, financial services, insurance companies and technology majors in addition to chemicals, telecom, defense and aerospace giants.

Currently, many US-based companies, as reported in the lobbying disclosure reports filed by them with the US Senate, are lobbying for various issues ranging from facilitating the market access to easing of foreign direct investment caps in retail, insurance and other financial services sectors in India to facilitate their business expansion in the country.

Indian Pharmaceutical sector is becoming more and more attractive to many:

Keeping pace with other high growth industries of the country, Indian Pharmaceutical Market (IPM) with the current domestic turnover of around US$ 12.1 Billion has been registering a scorching pace of CAGR growth of around 15%, since over a decade. The domestic pharmaceutical industry now caters to about 20% of global requirements of high quality and affordable generic medicines of all types.

IPM is, therefore, a global success story and India has already established itself as a major force to reckon with, especially in the development and manufacturing of high quality generic pharmaceuticals, as well as in Contract Research and Manufacturing Services (CRAMS), in the pharmaceutical industry of the world.

IPM is creating newer jobs:

As per reports, in roughly around 20,000 pharmaceutical organizations and its ancillary units over one million people are currently employed by the Industry. As mentioned above, though India has globally established itself as a producer of high-quality medicines available at reasonable prices, predominantly due to a very high of around 80% ‘Out of Pocket’ expenses towards healthcare in India, ‘common man’ still finds it extremely difficult to bear the cost of illness. Such critical public health interests India can ill afford to ignore.

Spectacular progress of the Indian Pharmaceutical Industry:

India, during its independence on August 15, 1947 inherited the patent system of its British colonial masters. Drugs and Pharmaceuticals used to be largely imported from the developed world in that period with local production being absolute minimal.

This abysmal trend and pattern of the IPM of pre-independent India took another 20 years to make any significant change worth mentioning. It will be quite difficult even for the staunchest skeptics to brush aside the fact that the Indian pharmaceutical industry started blossoming since 1970, mainly due to abolition of product patent act and government encouragement with various fiscal and tax incentives paving the way for the emergence of a vibrant high quality drug manufacturing sector in the country. However, that was the need of the 70’s and certainly not for now.

It is good to know that so far as national self-sufficiency in pharmaceuticals is concerned, as per Indian Drug Manufacturers Association (IDMA), it is far above 70% despite many tough challenges.

Patent regime of many ‘developed economies’ had a stormy beginning:

While deliberating on product patents, it should be noted that in many industrial nations of the world, the protection of inventions through patents started taking place in around the last 40 years.

For example, pharmaceuticals product patents in Switzerland came into effect only since 1978. History tells us that at the fag end of the 19th century the pharmaceutical industry in Switzerland fought vehemently against the enactment of a patent law to be able to imitate foreign drugs, such as Aspirin of Bayer. Mainly because of this reason, at that time, Germany used to consider Switzerland a ‘state of robber barons’. Similarly, France used to be known as a ‘country of counterfeiters’.

Some historians have written that exactly in the same way like India, as mentioned above, the economies of Korea, Taiwan and the ‘land of the rising sun’ – Japan were able to thrive in their formative years due to absence of patent protection in those countries.

Young India is possibly crossing, if not has already crossed that stage much sooner than many others.

Innovation is the ‘Wheel of Progress’ of any nation:

However, it is an undeniable fact that ‘innovation’ is the wheel of progress of any nation. Without innovation, it is virtually impossible for any country to make significant economic progress. The Prime Minister of India has thus termed the current decade of 2010 as the ‘decade of innovation’ for India.

It has been well established by now that ‘Technology Transfer’ from the developed nations not only brings profit to those countries from patent protection and shields them from low-cost competition, but also helps the developing nations to add requisite speed to their growing economy.

However, most developing nations want access to such technological innovations at an affordable and lesser cost without any possible future risk of oligopoly and ‘technological recolonisation’.

New Product Patent regime in India came much after China and Brazil:

India signed the WTO agreement to become its member in January 1, 1995 and following a 10-year transition period, on January 1, 2005 the country amended its national patent legislation to usher in the product patent regime. The lose knots, if any, in the amended Patents Act of India are widely expected to get strengthened as the domestic innovators will feel the need for the same and possibly not due to any extraneous pressure.

Compared to India, product patent came much earlier in China and Brazil. China enacted its first patent law on March 12, 1984. However, it provided little protection to pharmaceutical and chemical inventions.  In 1992, China amended the 1984 patent law in compliance with an agreement between China and the United States, as well as to join the WTO. Similarly, the new patent law came into force in Brazil way back on October 6,1999, which also has the provision of issuing Compulsory Licenses (CL).

International independent domain experts feel that it will take some more time for India to gauge the real benefits of product patents for the country.

Public interest for ‘Health and Nutrition’:

The philosophy of India since decades has been to ‘promote the principle of relying on one’s own strength’, especially in the critical and a very sensitive areas of public interest for ‘Health and Nutrition’. Many independent experts in this field both from India and abroad have opined that India seems to be following this path without compromising on its TRIPS compliance status. However, there are some dissenting voices in this area, who feel that a more rigorous and robust patent regime in India is in the best interest of the country.

Should the government regulate lobbying activities?

Considering the fast emerging environment, as mentioned above and arising out of some recent very sensational lobbying related financial/policy scams in India, the moot question, as is being raised by many across the country is: “Should the government regulate the lobbying activities in India?”.

Even in the Pharmaceutical Industry, some instances of lobbying activities carried out both within and outside India, had led to raging debates and controversies.

To cite an example, not so very long ago, some consumer activists from the civil society vehemently protested against the ‘Intellectual Property Conferences’ held in India, which were allegedly sponsored by some interested groups in a guise to influence the policy makers and the judiciary of India.

It was widely reported that the consumer activists viewed these IP summits, organized by the George Washington University Law School of USA as ‘attempts to influence sitting judges on patent law enforcement issues that are pending in Indian courts.’

In a letter dated February 26, 2010 addressed to Shri Anand Sharma, Minister of Commerce and Industry of India, over 20 NGOs demanded transparency and more information on such meetings and wanted the government of India ‘to put a stop to such industry sponsored lobbying with Indian judges and policymakers to promote their own requirements for intellectual property and to lobby for either law amendments or even to plead their cases currently pending before, various courts and the Indian Patent Office,”

In raising their concerns, the civil society groups argued that the posture adopted by the lobbyists and their supporters is to “force India to adopt greater standards” of IP protection “beyond the mandatory levels” required by the WTO, which may go against public health interest in India.

Lobbying activities are expected to gain further momentum:

It is quite logical to expect that lobbying activities in such and many other areas both ‘for’ and ‘against’ are expected to gain momentum in the times to come. However, it is widely believed that long-term interest of India is expected to ultimately prevail in this closely watched ball game.

Lobbying is legal in many countries like the US with the government ground rules firmly in place:

We all know that in many countries like the US, lobbying is a legal activity. Many Indian companies, including the government of India have been lobbying in the US since so many years to present their cases and argument with the American law and policy makers.

When President Obama came to power in the US, it was reported: ‘one of the first acts of the Obama administration in office was to have an executive order which prohibited the Obama Administration either from hiring lobbyists – those who had lobbied within two years of joining the administration or allowing people who had left the Obama administration to service lobbyists for two years. The idea is that you want to break the chains where there is undue influence of special interest groups upon the government’.

However, there are no government ground rules still in place for lobbying in India either for the local or the global companies and their lobbyists, across the industry sectors.

Surrogate lobbying:

It was discussed somewhere about ‘surrogate lobbying’ in many industries from various parts of the world. I have really no idea about what these are and the legality of such activities without appropriate well-drafted government specified disclosures in place, for public interest.

Conclusion:

Be that as it may, in the US such activities are required to be intimated to the US senate by the companies concerned and their lobbyists highlighting their activities in form of a quarterly disclosure reports detailing not only the issues, but also the concerned government departments and institutions and the related expenses.

Let me hasten to add that despite a long history with regulated and legalized lobbying in the US, still there has been severe criticism in that country of the way lobbying has worked there in the past so many years. India has plenty to learn from such experiences.

Thus, as a part of following the global ‘public interest best practices’, a large section of the civil society in India has been voicing in so many ways, mainly after the recent financial and policy related mega scams, that it may be a good idea, if the government also puts system driven adequate checks and balances in place for lobbying activities in India, sooner.

It is believed by many that such regulations will ensure perfectly legal lobbying initiatives in India always maintain complete transparency and follow appropriate processes/procedures of disclosures to maintain a right balance between long-term public interest and the growing requirements of a healthy business ecosystem to accelerate the inclusive economic growth of the nation.

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.