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At The Indian IPR Front: ‘Ground Control, There’s No Major Storm’

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The incessant pressure of the developing countries on India, from 2005 to date, to include various restrictive conditions in the Indian Patents Act 2005, still continue. This demand spans across the inclusion of even those provisions, which many experts term as TRIPS-Plus, as these are not required by the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. More interestingly, the pressure group also insists on the simultaneous deletion or dilution of some existing important provisions in the statute that guarantee public health interest of the nation.

This pressure is expected to mount in the G20 summit of September 4-5, which is now being held in China.

Refreshingly, on 30 August 2016, just ahead of this summit, the eminent economist Dr. Arvind Panagariya, who is also the incumbent Vice Chairman of Niti Aayog of India, and India’s Sherpa at the G20 summit reiterated, as follows, in an interview to a leading National English Business Daily:

“India has strongly opposed the language of the draft on Intellectual Property Protection (IPR) to be taken up at the upcoming G20 meeting in Beijing.”

In the interview, having re-emphasized the critical point that “there is a certain flexibility that we have under the TRIPS agreement and anything that dilutes that flexibility is not acceptable to India,” Dr. Panagariya clearly reaffirmed, yet again that ‘Indian IPR laws and policies are absolutely TRIPS compliant’.

This statement indeed sends a very positive signal to all on the ground, regarding the robust position maintained by the Government, to ward off any move by the overseas vested business interest to derail the flexibility that Indian well-balanced patent regime offers today, not just for public health, but also to foster innovation ecosystem in the country.

At the same time, India’s Sherpa at G20 summit also reportedly clarified that the IPR framework being proposed at the G20, in its strictest sense, cannot be construed as TRIPS-Plus. Nevertheless, some language used in the proposed G20 draft could be subject to interpretation, and India feels that it should not leave any room for ambiguity that has the potential to stretch this demand further, as we move on.

According to Dr. Panagariya: “Right now, these documents have some language where people in the Department of Industrial Policy & Promotion (DIPP) feel that it impinges a bit. We have to fight it out at the summit.”

The basis of apprehension:

There are many reasons for the recent apprehension that India may buckle under the US pressure to dilute its IP laws and policies. One of the reasons could well be a possibility that India has come to an understanding with USTR in this area.

An interesting article published in the ‘spicyip’ on March 14, 2016 also captured this scenario pretty well. I am reproducing below in verbatim a paragraph of this paper, just as an example:

“Last month, the Indian government privately assured the US-India Business Council (“USIBC’’) that it would not invoke compulsory licensing for commercial purposes, as reported in their submissions (available here) to the United States Trade Representative (“USTR”) for the 2016 Special 301 Review. The USIBIC stated that it would be “further encouraged” if the government of India were to make a public commitment, or a written declaration to only issue compulsory licenses in the event of public health emergencies, and not for commercial purposes. This, in their eyes, would “greatly enhance legal certainty for innovative industries”. While such a private assurance doesn’t give rise to any legal commitments, it may well be indicative of a policy shift.”

Prior to this, among many others, a March 3, 2016 ‘The Wire’ report captioned “India Assures the US it Will Not Issue Compulsory Licenses on Medicines”, also raised the same red flag.

The pressure continues even post engagement:

Be that as it may, America has been, repeatedly, raising its concerns over India’s patent regime, driven by its powerful pharma lobby groups.

To keep the kettle boiling, the Office of the United States Trade Representative (USTR) in its 2016 Special 301 Report released this year on April 12, continued to keep India, along with 11 countries, on the Priority Watch List (PWL) for the current year.

USTR reportedly expressed serious concern about Indian IP policies stating that the regime apparently ‘favor’ indigenous manufacturing or Indian innovators. It also alleged that such direction ‘damages’ the patent infrastructure not just in India, but across the world.

It is believed by many that the Special 301 Report is, in fact, a formal posturing of the country on their unilateral IP related business hurdles for the year, exhibiting the power to implement unilateral trade sanctions when the US demands are not met.

In that context, the 2016 Special 301 Report caught many by surprise, as the Indian ‘IPR Think Tank’ (a body of the Union Government-selected experts) was also working closely with the United States to identify and address their issues of concern, such as, patent system, copyright infringement, trademark and counterfeiting, among others.

At that time, this discussion was possibly in its final stage as, just a month after, on May 12, 2016, the Union Cabinet approved the National Intellectual Property Rights Policy (IPR) of India, as proposed by the ‘Think Tank’, in consultation with, among others, especially the United States, which reportedly expressed its overall satisfaction with the final IPR policy.

Key concerns:

From the pharma industry perspective, the key IP concerns are centered, primarily, in the following three areas, besides a few others:

  • Patentability
  • Compulsory Licensing (CL)
  • Data Exclusivity

I would, therefore, concentrate briefly on these three areas to argue how reasonable is the Indian Patents Act 2005 to create a win-win situation both for the patients and the industry while fostering pharma innovation in the country.

Patentability:

One of their key concerns on patentability, revolves round an important provision in the statute – Section 3 (d).

Pharma Multinational Corporations (MNCs), and their trade associations have been going overboard, since long, to lobby hard to make all concerned believe that section 3 (d) is a stumbling block for pharma innovation, as it does not allow patent protection on known chemical substances lacking any significant improvement in clinical efficacy.

This provision of the statute prevents ever-greening of patents with frivolous incremental innovation. Consequently, it blocks the possibility of pricing such ‘me too’ new molecules, exorbitantly, and persuading the prescribers of the existing molecule switching over to the new brand, backed by contentious marketing campaigns, adversely impacting affordability and access to the majority of the patients in India.

Notwithstanding the shrill voices of vested interests, Section 3 (d) has been upheld by the Supreme Court of India in the famous Glivec case of Novartis against Cipla.

The Submission of the Federation of Indian Chambers of Commerce and Industry (FICCI) to USTR for the Review of ‘2016 Special 301 Report’, categorically also states that the Indian Patent Act prescribes a higher threshold on inventive step for medicines, which is in keeping with the TRIPS Agreement, Paris Convention and the Doha Declaration. Hence, Section 3 (d) is sound in terms of the TRIPS, Public policy and Health policy.

Compulsory License (CL):

Besides the hard fact that India has, so far, granted just one CL in a span of more than the last ten years, the Doha Declaration on the TRIPS Agreement related public health clearly provides the flexibility to all its member states to decide on the necessary grounds for granting CL. It is noteworthy that for public health interest, TRIPS flexibilities for CL has been used even by the developed countries, such as, Canada, United States and Germany, in the not too distant past.

Data exclusivity:

The terminologies ‘Data Exclusivity’ and ‘Data Protection’ are quite often used interchangeably by many, creating a great deal of confusion on the subject. However, in a true sense these are quite different issues having a critical impact on the public health interest of a nation.

In an article published in ‘ipHandbook’, titled “Data Protection and Data Exclusivity in Pharmaceuticals and Agrochemicals”, the author Charles Clift, a former Secretary, Commission on Intellectual Property Rights, Innovation and Public Health, World Health Organization; differentiated these two terminologies as follows:

Data Protection (DP): Protection of commercially valuable data held by the drug regulator against disclosure and unfair commercial use.

Data Exclusivity (DE): A time bound form of Intellectual Property (IP) protection that seeks to allow companies recouping the cost of investment in producing data required by the regulatory authority.

According to Charles Clift, Article 39.3 only articulates widely accepted trade secret and unfair competition law, and is not an invitation to create new IP rights, per se, for test data. Nor does it prevent outside parties from relying on the test data submitted by an originator, except in case of unfair commercial practices.

Some developed countries, such as the United States and the European Union have argued that Article 39.3 of TRIPS requires countries to create a regime of DE, which is a new form of time-limited IP protection. However, it is worth noting that in both these countries DE regime was adopted prior to the TRIPS Agreement. Hence, many experts construe such approaches and pressure, thus created for DE, as ‘TRIPS-Plus’.

In its new IPR Policy, India has successfully resisted the demands of TRIPs-Plus provisions, such as, data exclusivity, patent linkage and patent-term extension.

Even the draft IPR policy had reiterated that India accepts: “Protection of undisclosed information not extending to data exclusivity.”

Any near-term possibility of a change in the statute?

While the new IPR Policy of India focuses on consolidating institutional mechanisms to create a robust IPR ecosystem in the country, besides resolving some pressing issues, such as, expediting approval processes involving patents or trademarks, it does not indicate any possible change in the important provisions in the Patents Act 2005, including the much talked about Section 3 (d) and compulsory licensing, despite concerns expressed by the US and pharma companies.

Moreover, a May 13, 2016 Press Trust of India (PTI) report on the Union Cabinet approval of Indian IPR Policy quoted a Government official, as follows, negating the apprehensions that the government may yield to the pressure of developed countries with regard to its IR regime:

“India will never go beyond its current commitments in the TRIPS. Section 3 (d), patent linkage, data exclusivity and compulsory licensing are red lines.”

On the same day and in the same context, Union Finance Minister Arun Jaitley also reportedly stressed that India’s IPR policies are TRIPS-compliant and encourage invention of life-saving drugs, while at the same time, “we must also be conscious of the need to make it available at a reasonable cost so that drug cost does not become prohibitive as has become in some parts of the world”, he articulated, unambiguously.

Conclusion:

Despite all these developments, reiterations and interpretations, a lurking fear on India’s diluting the current patent regime of the nation was refusing to die down in the country.

Many experts were also quite apprehensive about what would be India’s stand on IP in the G 20 summit on September 4-5, currently being held in China.

Is it, then, just a storm in a tea cup on the ground?

This is not a very easy question to answer, though, as many industry watchers sense. Nonetheless, yet another emphatic statement on the subject coming from a top Government echelon and none other than Dr. Arvind Panagariya, the Vice Chairman of Niti Aayog and India’s Sherpa at G20 summit, possibly sends a clear message, at least for now, to all those holding ground in the Indian IPR front:

‘Ground Control, There’s No Major Storm’.

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. 

After Mollycoddling China Cracks Down on Pharma MNCs…But Why Now?

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In tandem with exemplary growth in the healthcare sector, China has started confronting with some consequential hazards in form of serious regulatory violations involving, besides many others, hospitals, pharmaceutical pricing and food and drug safety, which reportedly include contaminated milk powder and rat meat sold as mutton.

A recent report indicates, there are rampant kickbacks at various stages in the healthcare delivery process. For example, hospitals get kickbacks from drug and device companies, and hospital executives give a portion of these kickbacks to their doctors, involving even the pharma MNCs.

While looking back, in 1997, China took its first healthcare reform measures to mend the earlier not so good practices, when medical services used to be considered just as any other commercial product or services in the country. As a result, staggering healthcare expenses made Chinese medical services unaffordable and difficult to access for a vast majority of the local population.

In April 2009, China, a country with over 1.35 billion population, unfolded a blueprint of a new phase of healthcare reform to provide safe, effective, convenient and affordable healthcare services to all its citizens. An incremental budgetary allocation of US$ 124 billion was made for the next three years to achieve this objective.

The core principle of healthcare reform in China:

The core principle of the new phase of Chinese healthcare reform is to provide basic health care as a “public service” to all its citizens, where more government funding and supervision will play a critical role.

This reform process will ensure availability of basic systems of public health, medical services, medical insurance and medicine supply to the entire population of China. It was also announced that priority would be given to the development of grass-root level hospitals in smaller cities and rural China. The general population will be encouraged to use these facilities for better access to affordable healthcare services. However, public non-profit hospitals would continue to remain one of the important providers of medical services in the country.

Medical Insurance and access to affordable medicines:

Chinese government has planned to set up diversified medical insurance systems to provide basic medical coverage to over 90 percent of the country’s population. In tandem, the new healthcare reform measures will ensure better availability of affordable essential medicines at all public hospitals.

Highly lucrative healthcare business destination:

New Chinese healthcare reform process carries an inherent promise of a large additional spending worth billions of US dollars every year catapulting China as one of the most lucrative healthcare markets of the world.

China’s healthcare spending has reportedly been projected to grow from US$ 357 billion in 2011 to US$1 trillion in 2020.

Consequently, this huge investment has started attracting a large number of global companies of various types, sizes and nationality competing for the right size of their respective pies of profits.

In that process, as the media reports highlight, global pharmaceutical players started fast increasing both their top-line revenue and bottom-line profits from the booming Chinese healthcare market.

Pharma MNCs growing bigger, outpacing local industry:

Another report highlighted, “60% of China’s healthcare stimulus money ended up going to non-Chinese multinationals”. Quoting a recent JP Morgan report the article indicated AstraZeneca, Sanofi, Roche, GlaxoSmithKline, Novo Nordisk, Johnson & Johnson and Pfizer realized over 30 percent growth from their China operations in the early part of 2011.

With the slow down of business in Europe and in the United States, even large global pharmaceutical players like, Bayer, Sanofi, Novartis, Eli Lilly, Novo Nordisk and many more have reportedly invested huge resources for capacity building in sales and distribution channels, local manufacturing and R&D.

Chinese Government woke-up:

Kick starting the reform process and in the face of high level of corruption, Chinese government initiated monitoring the effective management and supervision of healthcare operations of not only the medical institutions, but also the health services, together with basic medical insurance system, in good earnest.

It has been reported, though the public hospitals will receive more government funding and be allowed to charge higher fees for quality treatment, they will not be allowed to make profits through expensive medicines and treatment, which has been a common practice in China.

Violations meted with harsh measures:

Accordingly, with increased vigil in many of these areas since last couple of years, Chinese regulators have started cracking down on the culprits, who are being meted out severe and harsh punishments, consequently.

In 2012, seven public hospital directors were reportedly sent to jails for accepting kickbacks. One corrupt drug regulator was even executed along with two food-company managers involved in a poisoned milk scandal, as the report mentions.

Pharma MNCs targeted for alleged corrupt practices:

As stated above, the new healthcare reform measures include regulation of prices of medicines and medical services, together with strengthening of supervision of health insurance providers, pharmaceutical companies and retailers.

China has now reportedly targeted Multinational Companies (MNCs) for allegedly corrupt practices, including price-fixing, quality issues and consumer rights. This has forced some MNCs to defend their reputations in China where global brands often have a valuable edge over local competitors in terms of public trust.

Recently, in an effort to reduce drug prices, China has initiated probes involving 60 drug manufacturers.

According to a recent report, to make the pricing system for medicines more effective, the regulatory agencies in China are investigating the costs and prices of drug manufacturers including global pharma majors like:

  • GlaxoSmithKline Plc (GSK)
  • Merck & Co.
  • Novartis AG
  • Baxter International Inc.

The regulators are expected to go through the details of 27 companies for costs and 33 companies for pricing, as per the July 2, 2013 statement posted on China’s National Development and Reform Commission’s (NDRC) Evaluation Center of Drug Pricing.

The report highlights that a possible impetus for the NDRC to probe into pricing and costs of domestic and foreign drug companies was the announcement of China’s National Essential Drugs List in March, which increased the items on the list to 500 from 305.

Clampdown on government spending:

To exercise control on public expenditure towards drugs, the government has also reportedly clamped down on drug spending, placing some foreign drug makers’ products under price controls for the first time.

Since 2011, the Chinese Government has reduced the drug prices four times, including 15 percent reduction earlier in 2013, though the price reduction will be as much as 20 percent for the expensive drugs. At the same time, the government has reduced tax rebates on investments.

Mr. Chen Zhu, Health Minister of China has reportedly expressed that healthcare in China is still too expensive and there is still inadequate control over improper use of drugs in the country.

Another report indicates that Nestlé, Abbott Laboratories and Danone are under investigation in China for “monopolistic” pricing.

Crackdown on bribery and kickbacks:

An article in a similar context mentions that the “Chinese police started an investigation into the Chinese unit of the biggest pharmaceutical manufacturers of UK – GlaxoSmithKline and Senior executives at the unit are suspected of ‘economic crimes”.

On the same subject, a different news report also indicates, a senior Glaxo finance executive in Shanghai and employees in Beijing were detained as part of a corruption investigation.

Recently a Chinese Security Ministry official has reportedly said that GlaxoSmithKline (GSK) executives in China have confessed to bribery and tax violations.

The same report quoting the ministry highlighted that the case against GSK involved a large number of staff and a huge sum of money over an extended period of time, with bribes offered to Chinese government officials, medical associations, hospitals and doctors to boost sales and prices. Concerned executives also used fake receipts in unspecified tax law violations.

Interestingly, earlier in 2012, Global CEO of GSK reportedly admitted that the company made “unacceptable” mistakes in “mismarketing” their antidepressants Paxil and Wellbutrin, which were the subject of a US$ 3 billion settlement with the Justice Department of the United States. At that time the CEO was reported to have said “very sorry” for the incident and “determined that this is never going to happen again.” 

Another very recent news highlights that currently China is investigating at least four pharma MNCs as it widens its probe. Chinese enforcers had suggested that these pharma companies were using the same tactics to boost their businesses in the country.

It is now learnt that anti-trust body of China - State Administration for Industry and Commerce (SAIC)  has also visited  Shanghai office of UCB. 

Happening elsewhere too:

Reports of similar alleged malpractices have started surfacing from elsewhere in the world too. For example, in Denmark, a country known for low incidence of corrupt practices, a Norwegian cardiologist was reportedly charged with taking 2 million kronor, or about US$ 350,000, from Merck and Pfizer, despite the fact, Danish law prohibits doctors from accepting money directly from the drug makers. The concerned doctor allegedly used the cash to buy expensive furniture and salmon-fishing holidays in his home country.

Last year, both the Department of Justice and the Securities and Exchange Commission of the United States reportedly charged Pfizer and its subsidiary Wyeth for paying millions of dollars in bribes to officials, doctors and healthcare professionals in Bulgaria, China, Croatia, Czech Republic, Italy, Kazakhstan, Russia, and Serbia during 2001-2007 in violation of the US Foreign Corrupt Practices Act. They had also set hefty fines on the two to settle the charges.

Conclusion:

To effectively address serious and longer term healthcare related issues of the country, the Chinese Government has already started implementing its new healthcare reform measures earnestly. Possibly to maintain equity, stay on course and uproot corrupt practices, they have now started cracking down on the violators in all seriousness, be they are from within the country or beyond its shores.

So far as the pharma MNCs are concerned, such harsh measures are being taken for alleged malpractices probably for the first time ever of this scale and that too with full media glare.

All these measures coupled with pricing pressure and gradual rise of local Chinese players, would make the Chinese market increasingly challenging to  pharma MNCs.

Some global players have already started feeling the scorching heat of tough Chinese measures. But China is too powerful a country and too lucrative a market for any entity to flex its muscle to stall the current juggernaut, at least, till the ‘Dragon’  achieves its objective of bringing down public healthcare expenditure to its expectations…Or is there more to the problem than meets the eye?

Thus, the key question emerges: 

Why has China, after mollycoddling the pharma MNCs for so many years, now started cracking down on them so hard?

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.

Nine Major Challenges Constraining Indian Pharmaceutical Industry From Taking a Quantum Leap

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Among the developing nations of the world, India has already carved out a special niche for itself in many business verticals of the pharmaceutical industry and is currently being recognized as the ‘pharmacy of the world’ for the generic medicines.

Even over seven years after ushering-in of the product patent regime in India in January 2005, domestic pharmaceutical companies keep dominating the Indian market overwhelmingly in all respect. Nonetheless, rejuvenated interest of the global players on India, because of unignorable business potential in the country, can now be quite palpably felt, despite many formidable challenges all around.

In the post product patent regime, though Indian companies have started investing in R&D, the first ‘Made in India’ new and innovative drug is yet to receive marketing approval anywhere in the world, including India. Thus the much needed thrust on innovation should continue unabated.

Unfortunately, despite continuous growth of the Indian pharmaceutical market and that too at a reasonably brisk pace since over decades, quite a large number of small-scale pharmaceutical units were compelled to shut their operations since 2008, just for not being able to adequately cope with the tough business challenges and competitive pressure. As the country moves ahead, these challenges, coupled with fierce competitive pressure, could further escalate, if not attended to with crafty strategies by the individual companies ably supported by the robust healthcare-reform oriented policy measures by the government.

In this article, I shall flag nine such major challenges, not necessarily in the same sequence, that the industry and the government should jointly address to create a win-win situation for all – the industry, patients, government and all other stakeholders.

 I.  High ‘Out of Pocket (OoP)’ expenditure limiting access to medicines:

While India is making reasonably rapid strides in its economic growth, the country is increasingly facing constraints in providing healthcare benefits to a vast majority of its population with ballooning ‘Out of Pocket (OoP)’ expenditure of around 74 percent and 72 percent of which is the cost of medicines (Source: HLEG  Report).

This is mainly because of the following key reasons:

  • Low public spending on healthcare at around just 1.1 percent of the GDP
  • Fragile healthcare infrastructure
  • Very low penetration of health insurance system for all strata of society
  • Poor healthcare delivery system
  • Absence of ‘Universal Health Coverage’

Government Share in Total Healthcare Spend is One of the Lowest in the World 

Country

Brazil

China

Mexico

South Africa

Pakistan

Bangladesh

Sri Lanka

India
% of Healthcare Spend

47

62.5

49

44

33

34

45

29

(Source: data compiled)

Changing disease pattern increases healthcare expenditure, further limiting access

As the disease pattern is undergoing a shift from acute to non-infectious chronic illnesses, requiring longer duration of treatment, OoP expenditure on healthcare will increase even more, bringing greater misery to the population in general and creating even greater access barrier, if no action is taken immediately.

It is worth acknowledging that one finds some good initiatives though, especially for the population Below the Poverty Line (BPL) and hears about the success of ‘Rashtriya Swasthya Bima Yojna (RSBY)’ and other health insurance schemes through rural micro health insurance units. It has been reported that currently around 40 such schemes are active in the country, which is far from enough.

II.  Public and government pressure to make drug prices more affordable:

Pharmaceutical companies in India have been constrained to live with continuing focus of the government and also of the civil society on ‘reasonably affordable medicines’ irrespective of the fact whether they are generic or patented.

The Department of Pharmaceuticals has reportedly started comparing Indian drug prices with their international equivalents in terms of the ‘purchasing power parity’ and ‘per capita income’ and not just their prevailing prices in various developed markets converted into rupees. With such comparisons the government has already started voicing that prices of medicines in India are not the cheapest but on the contrary one of the costliest in the world.

Thus, one of the critical challenges of the Indian Pharmaceutical Industry continues to be delivering affordable medicines for a large section of the population of the country, as expected by the government. Reported high profitability, at least, of the listed pharmaceuticals companies gives an impression to the stakeholders, including the government, that there is a scope for further reduction of pharmaceutical prices in India.

Pharmaceuticals being covered under the ‘Essential Commodities Act’, empower the government to announce the ‘administered price’ for essential medicines. Current debate and deliberations on the New Drug Policy both by the Supreme Court and the Group of Ministers is a case in point.

Be that as it may, the proposed pricing methodology and the span of price control in the long overdue New Drug Policy have just been announced by the Group of Ministers (GoM) on September 27, 2012, which is in line with what I had recommended in my article of May 21, 2012 in this blog.

In my view, the new proposal of the GoM is expected to improve both the availability and affordability of the essential medicines, significantly.

 III.  Inadequate penetration of current health insurance schemes:

Health insurance coverage is still very low in India as compared to, among many other countries, Brazil and South Africa and at-par with our neighboring island state Sri Lanka. The details are as follows:

Country

Brazil

South Africa

Sri Lanka

India
% of Healthcare Spend

21

39

10

10

(Source: data compiled)

Moreover, currently health insurance schemes only cover expenses towards hospitalization. Ideally, medical insurance schemes in India should also cover domiciliary or in-patient treatment costs and perhaps loss of income too, if India wants to bring down the OoP expenditure for its population or at least till such time the ambitious ‘Universal Health Coverage’ project gets translated into reality.

IV. Pricing of Patented Drugs: 

Innovative pharmaceutical products patented in India are expected to facilitate access to latest modern medicines to the country’s population to meet their unmet needs, if available at a reasonably affordable price.

To respond to this important need of the patients, many innovator companies like, Merck, GlaxoSmithKline (GSK) have already announced a differential pricing mechanism for their patented medicines in India.

Recent grant of compulsory license of Bayer’s Nexavar to Natco, among other reasons on pricing issue by the Indian Patent Office, has raised serious concerns among the innovator companies across the world on their Intellectual Property Rights (IPR) in India, but not on their pricing strategy for the country, as of now.

It appears rather impractical to envisage that routine grant of compulsory license by the Indian Patent Office will be able to resolve the critical issue of improving access to patented medicines on a long term basis.  Such decisions may be taken only after exhausting all other access improvement measures.

Moreover, to improve access of such medicines to the common man, the Government of India should have a robust procurement plan for these products, at a well negotiated price, for supply through Government hospitals and dispensaries.

Despite all these, it remains a hard reality that pressure on pricing of patented products, very likely, will continue to pose a challenge in India.

An innovative approach

To effectively address the challenge of pricing of patented medicines in India, Swiss drug major Roche, has reportedly  entered into a ‘never-before’ technology transfer and manufacturing contract for biologics with a local Indian company, Emcure Pharma, for its two widely acclaimed Monoclonal Antibodies’ anti-cancer drugs – Herceptin and MabThera.

The report says that in the past, Emcure had signed licensing deals with US-based bio-pharmaceutical drug maker Gilead Life Sciences for Tenafovir and with Johnson and Johnson for Darunvir. Both are anti-HIV drugs.

In this regard, media reports further indicated that Roche would offer to Indian patients significantly cheaper, local branded versions of these two anti-cancer drugs by early next year. The same news item also quoted the Roche spokesperson from Basel, Switzerland commenting as follows:

“The scope is to enable access for a large majority of patients who currently pay out of pocket as well as to partner with the government to enable increased access to our products for people in need”.

Such ‘out of box’ strategies and initiatives by the global innovator companies could help keeping prices of patented products affordable to the Indian patients, improving their access significantly. 

 V. Fostering innovation and Intellectual Property Rights (IPR):

Innovation:

Many companies expect that ‘tomorrow’ will be a ‘mega today’ and prefer to continue to run their businesses more or less the same way, as what they are currently doing. At the same time the global market keeps sending, in very small measures though, but definite and continuous signals of changes. As we move on, we realize that ‘tomorrow’ will not be a ‘mega today’, just as ‘today’ is not a ‘mega yesterday’. To meet such challenges of change squarely and realistically, one will need to embrace a culture of ‘continuous innovation’ in all the fields of business processes in India.
Therefore, the name of the game, while competing within the globalized economy is “continuous innovation”, which is more than a novel idea or a set of novel ideas. It is, in fact, the process of translating the novel idea/ideas into reality.
Like other industries, the pharmaceutical sector in India will also have to innovate with cutting edge ideas, convert them to implementable business models and processes, which in turn would help these companies to remain competitive in the globalized market place. The innovation, which I am talking about, extends far beyond Intellectual Property Rights (IPR) for a product.
While innovation is an absolute must to remain and grow the business, having patented products and marketing these brands effectively are desirable, but not a ‘must do’ for the Indian pharmaceutical companies, just yet. Unfortunately, not much inclusive innovation is taking place within the industry as of now, which consequently poses a great challenge for a quantum leap of this knowledge based industry of the country.

IPR

From the perspective of the global innovator companies across the world, ‘lack of a robust innovation friendly ecosystem’ in India is still a major challenge. However, home grown companies feel otherwise. This is mainly because, before enactment of the Indian Patents Act (amended) 2005, it was widely reported that mainly for the interest of Public Health and probably also to ensure that the growth of the domestic pharmaceutical industry does not get very adversely impacted, the Parliament of India ensured inclusion of a number of ‘safeguards’ including checks on ‘ever-greening’ of pharmaceutical patents and broader provisions for the grant of ‘Compulsory License’ in the statute.

Such provisions in the Indian Patents Act throw a major challenge to the global innovator companies spreading across the continents to get many of their new molecules patented in India and subsequently launch in the country. 

 VI. Counterfeit Medicines:

India still needs to generate enough credible data to convince itself and then to establish that counterfeit drugs are posing a growing menace to the humanity. All stakeholders should join hands to address this public health issue, leaving aside petty commercial interests, be it generic pharmaceutical companies of India or research based pharmaceutical players across the world.

The other side of the coin is that counterfeit versions of high value and/or high volume brands of the pharmaceutical companies in India are adversely affecting their business performance posing another major challenge. 

 VII.  Talent Pool: 

As we know, access to healthcare comprises not just medicines but more importantly healthcare infrastructure like, doctors, paramedics, diagnostics, healthcare centers and hospitals. In India the demand for these services has outstripped supply. There is a huge short fall in ‘Healthcare Manpower’ of the country as demonstrated in the following table:

Target Actual Shortfall %
Doctors 1,09,484 26,329 76
Specialists 58,352 6,935 88
Nurses 1,38,623 65,344 53
Radiographers 14,588 2,221 85
Lab Technicians 80,308 16,208 80

Source: Rural Health Statistics 2011 in 12th Plan draft chapter

Besides above, other key challenge faced by the pharmaceutical industry in this area is dearth of industry-specific employable work force in important areas like, R&D, clinical research, pre-clinical and clinical studies, manufacturing, quality assurance, besides sales and marketing. 

 VIII.  Requirement of Stringent Regulatory Practices:

In the increasingly globalized economy, strict conformance to high regulatory standards like, Good Manufacturing Practices (GMP), Good Clinical Practices (GCP) and Good Laboratory Practices (GLP) pose another major challenge for the pharmaceutical industry in India.

Those pharmaceutical companies who are involved in manufacturing and export of drugs and pharmaceuticals are required to meet standards set up not only by the Drug Controller General of India (DCGI) and/or the State Drug controllers, but also of the regulatory authorities of the respective countries, where their products will be exported.

 IX.   Ethics and Compliance: 

We have been witnessing for quite some time that ethical concerns related to the pharmaceutical industry, spanning across clinical trials to ethical marketing practices, are hugely bothering a large section of the stakeholders, solely for the interest of the patients.

Such concerns are assuming greater proportion, as the pharmaceutical industry is increasingly facing stringent regulatory and media scrutiny in gradually expanding areas of business operations. Thus, to overcome this challenge, there is a dire need for the industry to move beyond its usual bottom-line centric model to a transparent, comprehensive and implementable ‘Ethics and Compliance Models’, which are well meshed with all other business processes.

The Department of Pharmaceuticals has not delivered yet:

To help the pharmaceutical industry overcoming all the above nine major challenges in India, even the Department of Pharmaceuticals (DoP), considered being the nodal department for the pharma sector does not seem to have delivered, as yet.

In 2008, when the DoP was formed, it was widely expected that the department will be able to address the following key pharmaceutical industry related issues, with an integrated approach, to strike a right balance between the growth fundamentals of the industry and the Public Health Interest:

  • A modern, both growth and access oriented, drug policy and pricing mechanism.
  • Continuous improvement of access to high quality and affordable modern medicines for all.
  • An efficient, transparent and non-discretionary drug price regulatory system.
  • An appropriate ecosystem to encourage R&D and foster pharmaceutical innovation.
  • Addressing the issue of high ‘Out of Pocket (OoP)’ expenditure of the general population towards medicines in particular and healthcare in general together with the Ministry of Health.
  • Facilitating fiscal and tax incentives required by the Micro-Small and Medium Enterprises (MSME) within the pharmaceutical industry of India to help driving their growth.

It is worth mentioning, all these will necessitate a close coordination and integration of work of various departments falling under different ministries of the government, DoP being the nodal department. Unfortunately, this is not happening today, the way it should. 

Conclusion:

If remedial measures are not taken, sooner than later, to overcome these nine major challenges  bothby the pharmaceutical industry and the government working in tandem, it will be difficult for the industry to take a quantum leap in the foreseeable future, as is being envisaged by many.

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.