Tag Archives: Malpractices

UCPMP: Vacillating Between ‘The Perfect’ And ‘The Real’ World?

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In the ‘perfect world’ one takes ‘perfect decisions’, while in the ‘real world’ one takes a ‘real decision’ – as the saying goes. In tandem, a raging debate continues on what is ‘perfect’ and what is ‘real’, in the world we live in today. This may cause a dilemma to many, which seems to be all pervasive today. Understandably, many critical industry practices and processes are also a part of this quagmire. The pharma industry, the world over, including India, is no exception, where such dilemma and debates span across virtually all the business domains of the industry.

However, in this article, I shall focus only on one specific issue – alleged pharma marketing malpractices that continue unabated, regardless of severe punitive measures in many cases, from several parts of the world. Has it then become a universal ‘culture’ in this area? For greater clarity, let me start the ball rolling by trying to understand the line that differentiates ‘the perfect world’ norms from ‘the real world’ ones.

Understanding the ‘line’ between the ‘Perfect World’ and the ‘Real World’:

I reckon, in ‘the perfect world’ people develop ideal values, ethical standards and practices. The social, business and economic environments also encourage and promote an uncompromising value system that culminates into perfect and desirable behavioral traits for all. Consequently, there are no grey areas in the ethics and value judgement, especially regarding what is ‘right’ and what is ‘wrong’.

Whereas, in ‘real world’, the surrounding social, business and economic environment usually encourages and promotes self-serving interests, mostly from the shelter of ‘perfect world,’ as we shall see later. There also appears to be a flexibility in the overall value system – drawn around different guidelines, for preferred behavior and practices in most spheres of life. Consequently, one can spot many grey areas in that space, which are subject to different interpretation by different people. ‘Exceptions’ to the preferred behavior are also many.

As construed by many, one contemporary and broad example could perhaps be, the ethics, values and governance – enshrined in the Indian Constitution, arguably belong to the ‘perfect world.’ The same for ‘the real world’ is, what the majority of the population, including those who are governing the country demonstrate through words, deeds and action on the ground.

Living in ‘the real world’ – most expect others to practice ‘the perfect world’ norms:

Although, most people, including several different entities, actually prefer to live in ‘the real world,’ following commensurate practices and exceptions – generally expect others to practice ‘the perfect world’ norms – following commensurate ethics and values. Governments usually, try to exhibit that they want all citizens to be in ‘the perfect world’. However, under pressure of different nature, their policy enforcement arms keep maintain the status-quo of ‘the real world.’

Let me illustrate this point from the Indian perspective, with some recent examples related to the prevailing Uniform Code of Pharmaceutical Marketing Practices (UCPMP) in the country. Here itself, we shall find, even the Government machinery vacillating between the both worlds.

Government vacillating between ‘both worlds’:

A recent media report related to the ongoing allegation on pharma marketing malpractices in India raised a controversy. It reported, on January 13, 2020 – ‘PM Modi warns pharma companies not to bribe doctors with women, foreign trips and gadgets,’ during his meeting with the senior officials from top drug-makers. This move was, reportedly, triggered by the report of “Support for Advocacy and Training to Health (SATHI)” – an NGO.

Prior to this, on May 03, 2018, it was also widely reported, “Prime Minister Narendra Modi recently opened a Pandora’s box by condemning the allopathic doctors of the country during an interaction called ‘Bharat ki Baat, Sab ke Saath’ with the diaspora in London. The PM condemned the Indian doctors on charges of corruption and malpractice. He emphasized on the doctor-industry nexus and shared concerns on the fallout of such a relationship.”

The above statements, as reported, reflect deep anguish of the Prime Minister for violation of ethics and values in pharma marketing practices – as expected in the ‘Perfect World.’ Following this outburst at the top echelon of the country’s governance hierarchy, the logical general expectation is, commensurate action by the Department of Pharmaceuticals (DoP), at least, to contain those contentious practices.

But, the Government seems to be vacillating: 

Instead, just after a few weeks from what was quoted in the above January 2020 report – on February 09, 2020 another media report highlighted something that confirms vacillation of the Indian Government from ‘the perfect world’ to ‘the real world’, albeit too frequently, on this issue.

Despite UCPMP being in force for all drug companies to abide by, voluntarily, since January 2015, the situation in this area hasn’t improved a bit, which the DoP also seems to be well aware of. The obvious question, therefore, that follows: Is the DoP on the same page as PM Modi?

Interestingly, despite the PM’s assertion in this regard, the DoP Secretary, reportedly, kept playing the same old tune even after 5 years of the UCPMP’s unsuccessful implementation. He again repeated: “We have strictly instructed all the stakeholders to follow the code voluntarily. If not complied seriously, the department will bring in stricter regulations at the time to come and also think about making it mandatory for effective compliance.” This threat, from the ‘perfect world’ perspective, continues with the ‘real world’ understanding for action.

The possible reason for the above vacillation:

Many consider, intense lobbying by the pharma associations as the possible reason for vacillation of the Government. This is vindicated by another report of January 17, 2020 that claimed, a powerful Indian industry association has sought multiple tweaks in the current UCPMP – meant for voluntary implementation by the drug industry in India. Two of these, among several others, were reported as follows:

  • Relaxed rules for the distribution of free samples.
  • Permission for doctors to work at pharmaceutical companies.

As reported, this proposal of the industry has been floated among pharmaceutical companies, for comments. ‘Once approved by all member companies, it will be sent to Department of Pharmaceuticals secretary P.D. Vaghela.’ However, it appears, there doesn’t seem to be anything new in it, as news archives reveal, similar proposals were submitted by the Indian drug industry associations, in the past, as well.

At this stage, let me hasten to add that the above January 2020 report, quoting the Indian PM’s anguish, was denied by a domestic industry association by a statement.

The first report was denied – albeit vaguely – by an industry association:

Curiously, the January 2020 report was denied by the domestic Industry Association - Indian Pharmaceutical Alliance (IPA) by releasing a statement. It said, the meeting convened by the Prime Minister Narendra Modi with the healthcare industry on January 01, 2020 was to discuss future road map for growth of the industry.

It further emphasized, the focus of the discussion was to promote research and development, build an innovation ecosystem, improve access to high-quality medicine and strengthen global competitiveness of the industry. The purpose was to take the industry to the next level and leverage opportunities going forward in the pharmaceutical sector. “There was no discussion on uniform code of pharmaceutical marketing practice in the meeting,” the statement added.

However, this statement appears rather vague to many, as it doesn’t emphatically deny that the PM did not say or mean those words, regardless of the context. Neither, the PMO, reportedly, has done so, as yet.

Probably because of this reason, another news article reported on January 15, 2020 that the Indian Medical Association, the country’s largest body of doctors, urged Prime Minister Narendra Modi to “prove, deny, or apologize (for)” the purported statement attributed to him asking pharmaceutical companies ‘not to bribe doctors with foreign trips, gadgets and women.’ I am still not aware of any response from the PMO on the same. Hence, some people find the industry association’s statement, especially considering the core issue under discussion today, albeit vague.

Some key findings on UCPMP:

Be that as it may, as I indicated in one of my previous articles in this blog, a survey report by Ernst and Young titled, “Pharmaceutical marketing: ethical and responsible conduct”, was released in September 2011 on the UCMP and MCI guidelines. It highlighted some of the following points:

  • More than 50 percent of the respondents are of the opinion that the UCPMP may lead to manipulation in recording of actual sampling activity.
  • Over 50 percent of the respondents indicated that the effectiveness of the code would be very low in the absence of legislative support provided to the UCPMP committee.
  • 90 percent of the respondents felt that pharma companies in India should focus on building a robust internal control system to ensure compliance with the UCPMP.
  • 72 percent of the respondents felt that the MCI did not stringently enforce its medical ethics guidelines.
  • Just 36 percent of the respondents felt that the MCI’s guidelines would have an impact on the overall sales of pharma companies.

Although, this report may be a bit dated, its key findings don’t seem to have changed much as on date. It is also worth noting that there are umpteen examples of similar malpractices in the pharma industry, globally.

Conclusion:

“Compared to a strictly controlled manufacturing environment, the marketing environment for the pharmaceutical industry in India is less regulated, but will move towards greater regulation in times to come”, predicted ‘The Global Guide to Pharma Marketing Codes,’ a few years ago. The situation remains unchanged.

Alongside controversy over pharma firms allegedly ‘bribing’ medical professionals, the Alliance of Doctors for Ethical Healthcare (ADEH), a network of doctors from across the country has demanded that the UCPMP framed five years ago be made mandatory, as another media report highlighted on January 21, 2020.

But the reality is, the Government wants the drug industry to follow ‘the perfect world’ ethics and values in marketing practices to safeguard patients all round interest. Whereas, the drug industry wants the policy makers to appreciate the business compulsions of ‘the real world’ and introduce exceptions to the rules.

Both the stances are unlikely to meet a common ground, because general population expects the Government to adhere to ethics and values of ‘the perfect world’, in health care. Whereas, in public, pharma industry leaders often take vows of practicing so, but seem to act differently in ‘the real world’ situation, expanding the credibility gap.

In the perceivable future, it appears unlikely that the Government’s ‘perfect world’ expectations, and the ‘real world’ actions of most pharma players will be in sync with each other. Unless, of course, either the Government moves away from ‘the real world’ marketing ethics and values – safeguarding patient interest, to meet ‘real world’ expectations of the industry, or make pharma players to fall in line with ‘the perfect world’ expectance, by making the UCPMP mandatory.

Is the question, therefore, how to take a ‘perfect world’ decision for the people’s health interest, in the ‘real world’ of the pharma industry? Till this issue is resolved, UCPMP will continue to exist, but no more than a ‘toothless tiger’, as it were.

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.

 

 

Continues ‘The Cat And Mouse Game’ In Pharma Business?

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Many are already aware of the critical factors that make generic drugs so important for patients – virtually for all. These don’t just facilitate greater access to health care – offering affordable alternatives to high-priced off-patent innovative drugs. This is as relevant in the largest pharma market in the world – the United States (US), just as in India. Let me illustrate this point with two examples – one from the US and the other from India.

According to US-FDA, ‘9 out of 10 prescriptions filled, are for generic drugs’ in the United states, as off-patent branded generic drugs cost more than their generic equivalents. The US drug regulator explains, ‘Increasing the availability of generic drugs helps to create competition in the marketplace, which then helps to make treatment more affordable and increases access to healthcare for more patients.’

However, unlike the US, there prevails a unique perception difference even within generic drugs – between branded and unbranded generics. The Indian Survey, undertaken to review and analyze various facts on branded and equivalent unbranded generic medicines, found a huge difference in prices between them in the country. Interestingly, as the researchers also noted, although, more consumers want an economical alternative to high priced branded generics, most physicians do not prefer unbranded generic medicines.

There is another important point worth noting regarding India made generic drugs. Although, Indian pharma sector caters to around 40 percent of generic demand in the US, as IBEF reports, many Americans nurture serious apprehensions on the quality of generic drugs manufactured even by India’s top drug companies. 

This is quite similar to apprehension that exists in India between the quality branded and unbranded generic medicines in India. The only difference is – the above perception in India is not based on impartial and credible scientific studies, whereas it is not so in America. The New York Times report, published on May 11, 2019 vindicates this point. It questioned: “Americans Need Generic Drugs. But Can They Trust Them? The fake quality-control data, bird infestations and toxic impurities at the overseas plants that could be making your medication.” Incidentally, there aren’t any such large-scale accusations regarding dubious quality of drugs manufactured by Big Pharma. 

On the other hand, big pharma players have long been accused of drug price gouging or price-fixing of life-saving drugs, primarily to maximize earnings by ‘extending’ product patent-life. Curiously, in recent times, even the generic drug players are being accused of following a similar practice. Thus, in this article, I shall explore how generic drug players are also trying to hoodwink measures to bring down the drug price, either through price control or through the encouragement of intense competition – playing a ‘cat and mouse game’, as it were, whenever an opportunity comes. If it continues and probably it will, what is the way ahead? Let me begin by recapitulating a historic pace-setting move in the global generic market by an Indian drug player.

A historic pace-setting move by an Indian generic drug player:

Being a major exporter of generic drugs in many developed, developing and even poor countries around the world, India is often termed as ‘the pharmacy of the world.’ That apart, a historical move in this space, by a top domestic player – Cipla, earned global accolades, at the turn of this new millennium. In 2001, Cipla slashed the price of its triple-therapy drug ”cocktails” for HIV-AIDS – being sold by MNCs, ranging from USD 10,000/ USD 15,000 a year to USD 350 a year per patient to a doctors’ group working in Africa.With the generic industry’s focus on a deeper bottom line, the scenario has changed now. Finding ways and means for the price increase, evading both competitive pressure and also drug price control, as in India, has turned into a ‘cat and mouse game’, as it were.

Generic drug pricing – ‘a cat and mouse game?’

Pricing pressure, especially for generic drugs, from patients, payers, politicians and governments, is gradually becoming more intense. More the pressure greater is the effort of affected players to come out of it, in any way –akin to a ‘cat and mouse game’, as it were. Although, it has recently started in the USA, the same exists in India, since 1970, when the first drug price control was introduced in the country. Intriguingly, in the midst of this toughest ever drug price control, phenomenal rise of almost all top Indian companies, including the top ranked company in the Indian pharma market commenced – from scratch. Nonetheless, to get a feel of how is this game being played out, let me start with the Indian scenario.

How this game is played in India to evade price control:

Instead of taking a deep dive into the history of drug price control in India, let me give a bird’s eye view of a few mechanisms, out of many, used to evade price control, since it commenced. The idea is to give just a feel of how this ‘cat and mouse game’ game pans out, with a few of such examples in a sequential order, since 1970, as much as possible, by:

  • Including price decontrolled molecule in the FDC formulations.
  • Replacing a price-controlled molecule by a similar decontrolled one, keeping the brand name unchanged, when the number of controlled molecules came down.
  • Making a major shift towards selling more of higher-priced decontrolled molecules, jettisoning low priced controlled molecules.
  • Resorting to vigorous campaigns, when the government started encouraging prescription of low-priced generic molecules, to ensure further shift to branded FDC prescriptions, alongside image enhancement of branded generics over equivalent unbranded ones. Its outcome is visible in the above Indian Survey on the image of branded and unbranded generics.

Has Indian pharma industry succeeded in this game?

It appears so and gets reflected in the CAGR of the industry. According to IBEF, “The country’s pharmaceutical industry is expected to expand at a CAGR of 22.4 per cent over 2015–20 to reach US$ 55 billion.” I underscore, this is value growth.

Thus, the point, I reckon, that the government should ponder: How both can happen, at the same time – price control is bringing down drug prices, extending real benefits to patients on the ground, and at the same time the industry is recording an impressive growth rate in value terms?  Whatever it means, let’s now try to explore, how such ‘cat and mouse game’ is being played to increase generic drug prices in the United States.

How similar game is played in the US to increase generic drug price:

On May 10, 2019, international media reported that ‘44 US states announced a lawsuit alleging an anti-competitive conspiracy to artificially inflate prices for more than 100 drugs, some by more than 1,000 percent.’ This lawsuit is based on an investigation involving a number of generic drug companies. The process, which took five-years to complete, accused twenty generic drug players. Teva Pharmaceuticals USA, whose parent company is based in Israel was, reportedly, named as the ringleader of the price-fixing. The company raised prices of around 112 generic formulations.

Other companies, reportedly, named in the complaint, include Pfizer, Novartis subsidiary Sandoz, Mylan, and seven Indian drug companies, including Lupin, Aurobindo, Dr. Reddy’s, Wockhardt, Taro Pharmaceutical Industries (a subsidiary of Sun Pharma) and Glenmark. Some of the 15 senior company executives who were individually named in the lawsuit for their involvementin this alleged “multibillion-dollar fraud ”belong to Teva, Sandoz and Mylan.

The ‘cat and mouse game’ in this case is slightly different. Instead of government price control, the US drug regulator encouraged intense generic competition to bring down the price. When the priced did not come down as expected, the State of Connecticut, reportedly, began investigating select generic drug price increases in July 2014. Subsequently, other states also joined the investigation, and uncovered the reason for prices not coming down.

According to the complaint, between July 2013 and January 2015, Teva significantly raised prices on approximately 112 different generic drugs. Of those 112 different drugs, Teva had colluded with its competitors on at least 86 of them. The complaint noted: “Teva had understandings with its highest quality competitors to lead and follow each other’s price increases, and did so with great frequency and success, resulting in many billions of dollars of harm to the national economy over a period of several years.” In this way, the impact of intense competition on drug prices, was made ineffective.

Not the first time, it was detected:

The 2019 anti-trust lawsuit against the generic drug makers may be ‘the biggest price-fixing scheme in the US history’, but not the first lawsuit of this kind in America. A similar lawsuit for illegal price-fixing against six generic companies, was filed by the states in 2016, as well, which is still being litigated. The 2019 case is a sweeping version of the same and is the result of a much wider investigation. It indicates, instead of taking corrective measures, the ‘cat and mouse game’ still continues. However, almost all the companies have vehemently denied this allegation.

Is this game existential in nature of the business?

One may well argue that such ‘cat and mouse game’ with the government is existential in nature, for the generic drug business. When price control or intense market competition brings down the price to such a level, it becomes a matter of survival of most businesses. There doesn’t seem to remain enough financial interest for them to remain in the market. If and when it happens, causing shortage of cheaper generic drugs, patients’ health interest gets very adversely affected. It also prompts the manufacturers to find a way out for the survival of the business. This is understandable. But it needs to be established, supported by scientific studies.

An off the cuff solution:

A general and off the cuff solution to the above issue would naturally be, there should be a right balance between affordability of most consumers and the business interest of the drug makers. This broad pointer is also right and understandable. But again, no one knows the expected upper limit of the generic drug profit margin for their manufacturers – where hardly any breakthrough and cost-intensive R&D is involved. Equally challenging is to know – below what margin, generic players, by and large, loose interest in this business?

What do some available facts indicate?

According to the year-end report of the Pharmaceutical Export Promotion Council (Pharmexcil) the total pharma exports from India has been pegged at USD 19.14 billion for 2018-19. This represents a growth of 10.72 per cent over USD 17.28 billion in thelast year. It further reported, “The top 25 export destinations contribute 76.52 per cent of the formulation exports amounting to USD 10.38 billion. Among these, the US continues to be the largest export destination with over 38.62 per cent of the total generic exports to that country at USD 5.24 billion.” Does it mean business as usual, despite ‘price-fixing’ law suits in the US, since 2016?

Similar impression one would probably get from the Indian scenario, as well. Notably, despite price control, which is continuing since last five decades, the growth rate of the Indian pharma market, which is dominated by branded generics, remains very impressive.According to the January 2019 report of IBEF: “The country’s pharmaceutical industry is expected to expand at a CAGR of 22.4 per cent over 2015–20 to reach USD 55 billion.” So also the same game, probably!

Conclusion:

It appears, there is certainly a huge reputation or image crisis for the generic drug industry, as such, due to such alleged delinquencies. However, from the business perspective, the manufacturers are still having enough leeway to move on with similar measures, supported by fresh thinking. At the same time, it seems unlikely to have any form of drug price control in the United States, at least, in the foreseeable future. Nevertheless, price pressure due to cut-throat competition could even be more intensive, as it gets reflected even in the US-FDA statements.

Nearer home, the Indian generic drug business has been hit with a double whammy – allegations for dubious drug quality standards, on the one hand, and price manipulation on the other, besides dented reputation and image – widening trust gap with patients and governments.

Moreover, unlike the best export market even for generic drugs – the United States, India has been following some patchy policy measures for health care, as a whole. The drug price control system is one such. Till a holistic policy on health care is put in place for all, backed by an effective monitoring system, The Indian price control system may remain like a ‘maze’, as it were, with several ways to hoodwink it.

Hence, the ‘cat and mouse game’, albeit in a different format, is likely to continue, until one gets caught, or till all concerned puts their act together – putting patients at the center of the core business strategy.

By: Tapan J. Ray    

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

Creating A ‘Virtuous Cycle’ Through Patient Reach and Care

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As many would know, in the strategic marketing process of any product including patented and generic drugs crafty product differentiation plays a critical role.

This strategic process of creating a competitive edge with unique product differentials is necessary. It helps perceiving a product more attractive to the target audience, against its competitors. When done effectively, the product fetches a greater share of mind for usage, achieving higher levels of top of mind recall, and, of course, a price premium.

In pharma, the traditional brand differentiation revolves around delivering cutting-edge values, skimming through the intrinsic product features and benefits. In India, which is predominantly a branded generic market, the local pharma marketers almost routinely keep trying to toe this line.

As I said before, some of them often vehemently argue in favor of maintaining a status quo in this area. It could probably be due to professional discomfort in venturing out of their respective comfort zones.

In the current pharma marketing environment, especially in India, finding the right answer to a not-so-easy-to-reply question may trigger a disruptive change in the traditional, or virtually routine marketing practices. This is widely considered a prevailing normal of date, and generally includes ‘features and benefits oriented product differentiation.’

In this article, I shall dwell on this important area, picking a thread from this simple, but a difficult-to-answer question.

The question:

This question goes like this: ‘How does a pharma marketer conceptualize product features and benefits oriented differential values, when there are virtually no clinically significant differentials between the competing products?’ There would possibly be no credible answers, justifying this practice.

Are branded generic sales mostly driven by contentious factors?

This query is more relevant in a branded generic market, such as India. Yet, pharma marketers keep following routinely the traditional methods in this area. As many say, actual product sales are driven by mostly by those critical factors, which are contentious and are being fiercely debated within the country, even today.

Pharma needs more extrinsic differentiation rather than intrinsic:

In the midst of an evolving new value expectation of pharma consumers, the market access strategy of the industry marketers must also evolve, keeping at least a step ahead of the former. This would help in delighting the customers, by offering them something meaningful, well before they start expecting the same. Thus, it makes me believe, a time has come to make the extrinsic factors, such as patient experience or delight, the center piece of product differentiation, weaving around its intrinsic qualities.

Many global companies have already started acting in this area – creating a whole new experience of care and relief for the patients, with new marketing models delivering differential product values to the target groups. Similar steps can successfully be taken even where there are no clinically significant differentials between the competing products.

Greater participation of consumers in treatment choices:

The information revolution in the world, mainly empowered by the Internet-based platforms – social or otherwise, is enabling many consumers to be partners in the disease treatment choices along with the doctors. In India too, it has started happening – slowly, but surely.

Those consumers, both in urban and mostly in the rural India, who won’t have any direct access to such information, ‘word of mouth’ enlightenment received from others would have a somewhat compensatory effect. Thus, the patients and their near and dear ones will have multiple treatment choices to choose from. In my view, this situation would gain a critical mass – much faster than what the current trend suggests. There won’t be any surprises, if this change assumes a snowballing effect, with modern technology being the key catalyst.

The current attitude could be counterproductive:

In this dynamic situation, any arrogance or ignorance of pharma marketers nurturing a seemingly ‘perennial’ conviction that ‘Indian pharma market and the patients are different’, could indeed be grossly counterproductive. This group of people seems to form a majority, today.

However, it is great to notice that some young Indian pharma professionals with an agile mindset and cerebral power, are thinking differently. They are not just keenly observing the ‘dots’, but also capturing, connecting and mapping the changing needs of the patients.

Their fingers are always on the pulse – concentrating more on strategizing extrinsic differentiation of products rather than remaining in the cocoon of the intrinsic ones. This quest to create an unchallenged and difficult to match market-space, will be essential in gaining the competitive cutting edge, as we move on.

Creating a virtuous cycle:

The focus of a pharma player in creating an extrinsic product differential edge, in pursuit of delivering the value of unique consumer experience, would in turn help enhancing the company reputation. This would, consequently, add value in creating an extrinsic product differential edge – thus, completing a ‘Virtuous Cycle’. It is generally caused by ‘complex chains of events that reinforce themselves through a feedback loop.’

A study on the ‘Impact of Corporate Reputation on Brand Differentiation’, has also established the ‘influence of company reputation, or what is often referred to as corporate reputation on branding strategy and producing intangible asset for different industries…’ This study is considered a pioneering attempt to measure the impact of corporate reputation on brand differentiation strategy.

Conclusion:

Today, especially in the marketing process of branded generic drugs, Indian marketers keep following a system that creates a sequence of reciprocal cause and effect, in which different elements of this overall activity intensify and aggravate each other, leading inexorably to a worsening of the situation. The Oxford dictionary defines this situation as a ‘Vicious Cycle.’

It’s not quite easy to come out of it, extricating the involved players from caustic remarks and allegations of indulging into contentious sales activities, if not blatant ‘marketing malpractices’. Nevertheless, breaking this mold is a ‘must do’ requirement, as many industry watchers believe.

This is because, if one wants to build a company for sustainable business excellence, it has to follow the principles of a ‘Virtuous Cycle’. Otherwise, it could threaten the very survival of the business, as we have witnessed several such instances in India, involving pharma companies. Several global pharma players are now trying hard to create a ‘Virtuous Cycle’, through well-researched strategic initiatives of patient reach and care.

To face this challenge of change squarely, Indian pharma marketers may also wish to focus on extrinsic differentiation of products, rather than intrinsic ones, as is mostly being done today, routinely. This course correction, I reckon, would play a ‘make or mar’ role in the pharma business, eventually. The passion to create a relatively unchallenged and difficult to match market space around patients, will be essential in gaining the requisite competitive advantage – giving shape to the much desired ‘Virtuous cycle’, as we move on.

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.

Should ‘Pharma Marketing’ Be In The Line of Fire?

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Close to half a century ago, Peter Drucker – the Management Guru wrote: As the purpose of business is to create customers, any business enterprise has two basic functions: marketing and innovation. Drucker’s concept is so fundamental in nature that it will possibly never change, ever.

That innovation is the lifeblood of pharma industry is well-accepted by most people, if not all. However, when similar discussion focuses on pharma marketing, the industry virtually exposes itself in the line of fire, apparently from all directions. This trend, coupled with a few more in other areas, is making a significant dent in the reputation of the pharma industry, triggering a chain of events that create a strong headwind for business growth.

The consequences of such dent in pharma reputation get well-reflected in an article titled “How Pharma Can Fix Its Reputation and Its Business at the Same Time,” published in the Harvard Business Review (HBR) on February 3, 2017. The author observed:

“This worrisome mix of little growth potential and low reputation is the main explanation for why investors are increasingly interested in how pharma companies manage access-to-medicine opportunities and risks, which range from developing new treatments for neglected populations and pricing existing products at affordable levels to avoiding corruption and price collusion.”

On the above backdrop, this article will try to explore the relevance of Drucker’s ‘marketing’ concept in the pharma business – dispassionately. Alongside, I shall also deliberate on the possibility of a general misunderstanding, or misinterpretation of facts related to ‘pharma marketing’ activities, as these are today.

Communicating the intrinsic value of medications:

Moving in this direction, let me recapitulate what ‘pharma marketing’ generally does for the patients – through the doctors.

Despite being lifeblood that carries the intrinsic value of a medication from research lab to manufacturing plants and finally to patients, ‘pharma marketing’ is, unfortunately under incessant public criticism. It continues to happen, regardless of the fact that one of the key responsibilities of pharma players is to disseminate information on their drugs to the doctors, for the benefits of patients.

One may justifiably question any ‘marketing practice’ that is not patient-friendly. However, the importance of ‘marketing’ in the pharma business can’t just be wished away – for patients’ sake.

Way back in 1994, the article titled, “The role and value of pharmaceutical marketing” captured its relevance, aptly articulated:

“Pharmaceutical marketing is the last element of an information continuum, where research concepts are transformed into practical therapeutic tools and where information is progressively layered and made more useful to the health care system. Thus, transfer of information to physicians through marketing is a crucial element of pharmaceutical innovation. By providing an informed choice of carefully characterized agents, marketing assists physicians in matching drug therapy to individual patient needs. Pharmaceutical marketing is presently the most organized and comprehensive information system for updating physicians about the availability, safety, efficacy, hazards, and techniques of using medicines.”

The above relevance of ‘pharma marketing’, whether globally or locally, remains unchanged, even today, and would remain so, at least, in the foreseeable future.

It’s a serious business:

As many would know, in many respect ‘pharma marketing’, especially of complex small and large molecules, is quite a different ball game, altogether. It’s markedly different from marketing activities in most other industries, including Fast Moving Consumer Goods (FMCG), where customers and consumers are generally the same.

In contrast, in prescription drug market customers are not the consumers. In fact, most consumers of any prescription medicine don’t really know much, either about the drugs or their prices. They get to know about their costs while actually paying for those directly or indirectly. Healthcare providers, mostly in those countries that provide Universal Healthcare (UHC) in any form, may also be customers for the drug manufacturers. Even Direct to Consumer (DTC) drug advertisements, such as in the United States, can’t result into a direct choice for self-medication, other than Over the Counter (OTC) drugs.

Additionally, pharma market is highly regulated with a plethora of Do’s and Don’ts, unlike most other industries. Thus, for the drug manufacturers, medical professionals are the real customers, whereas patients are the consumers of medicines, as and when prescribed by doctors.

With this perspective, ‘Pharma marketing’ assumes a critical importance. It is too serious a strategic business process to be jettisoned by any. There exists a fundamental responsibility for the drug manufacturers to communicate important information on various aspects of drugs to individual physicians, in the interest of patients. This has to happen, regardless of any controversy in this regard, though the type of communication platforms, contents used and the degree of leveraging technology in this process may widely vary from company to company.

Assuming that the marketing practices followed by the industry players would be ethical and the regulators keep a strict vigil on the same, effective marketing of a large number of competing molecules or similar brand increases competition, significantly. In that process, it should ultimately enable physicians to prescribe drugs that will suit each patient the most, in every way. There can’t possibly be any other alternative to this concept.

A common allegation:

Despite these, a common allegation against ‘pharma marketing’ keeps gathering momentum. Reports continue pouring in that pharma companies spend far more on marketing drugs than on developing them. One such example is a stinging article, published by the BBC News on November 6, 2014.

Quoting various published reports as evidence, this article highlighted that – 9 out of 10 large pharma players spend more on marketing than R&D. These examples are generally construed as testimony for the profiteering motive of the pharma companies.

Is the reason necessarily so?

As any other knowledge-based industry, effective communication process of complex product information with precision, to highly knowledgeable medical professionals individually, obviously makes pharma marketing cost commensurately high. If the entire process of marketing remains fair, ethical and patient centric, such costs may get well-neutralized by the benefits accrued from the medicines, including lesser cost of drugs driven by high competition.

Further, a successful pharma marketing campaign is the ultimate tool that ensures a reasonable return on investments for further fund allocation, although in varying degree, to offer more new drugs to patients – both innovative and generics.

Marketing decision-support data generation is also cost-intensive:

Achieving short, medium and long-term growth objectives are as fundamental in pharma as in any other business. This prompts that investments made on ‘pharma marketing’, fetch commensurate returns, year after year. To succeed in this report, one of the prime requirements is to ensure that the content, platform and ultimate delivery of the product communication is based on current and credible research data having statistical significance.

With increasing brand proliferation, especially in competing molecules or branded generic market, arriving at cutting-edge brand differentiation has also become more challenging than ever before. Nevertheless, identification of well-differentiated patient-centric product value offerings will always remain ‘a must’ for any persuasive brand communication to be effective.

It calls for generating a vast amount of custom made decision-support data on each aspect of ‘pharma marketing’, such as target market, target patients, target doctors, competitive environment, differential value offering, and scores of others. The key to success in this effort is to come out with that ‘rare commodity’ that separates men from the boys. This is cost intensive.

What ails pharma marketing, then?

So far so good –  the real issue is not, therefore, whether ‘pharma marketing’ deserves to be in the line of fire. The raging debate on what ails ‘pharma marketing’ should primarily focus on – how to ensure that this process remains ethical and fair, for all.

Thus, when criticism mounts on related issues, it may not necessarily mean that ‘marketing’ is avoidable in the pharma business. Quite often, critics do mix-up between the crucial ‘importance of pharma marketing’ and ‘malpractices in pharma marketing.’ Consequently, public impressions take shape, believing that the pharma marketing expenses are generally higher due to malpractices with profiteering motives.

As a result, we come across reports that draw public attention with conclusions like: “Imagine an industry that generates higher profit margins than any other and is no stranger to multi-billion dollar fines for malpractice.”

A similar article published ‘Forbes’ on February 18, 2015 also reiterates: “The deterioration of pharma’s reputation comes from several sources, not the least of which is the staggering amount of criminal behavior that has resulted in billions of dollars’ worth of fines levied against the industry.”

One cannot deny these reports – lock, stock and barrel, either. Several such articles named many large pharma players, both global and local.

Conclusion:

In my view, only pharma marketers with a ‘can do’ resolve will be able to initiate a change in this avoidable perception. No-one else possibly can do so with a total success in the foreseeable future – not even the requirement of a strict compliance with any mandatory code having legal teeth, such as mandatory compliance of the Uniform Code of Pharmaceutical Marketing Practices (UCPMP) that the Indian Government is currently mulling.

I guess so because, after a strong deterrent like mandatory UCPMP is put in place, if reports on marketing malpractices continue to surface, it will invite more intense public criticism against ‘pharma marketing’ – pushing the industry’s reputation further downhill, much faster.

Be that as it may, it’s high time for all to realize, just because some pharma players resort to malpractices, the ‘pharma marketing’ process, as such, doesn’t deserve to be in the line of fire – in any way.

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.

 

Déjà Vu In Pharma Industry

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It’s happening in the West, and is equally widespread in the Eastern part of the globe too, though in different ways and forms, as both the national and international media have been reporting, consistently. The phenomenon is all pervasive, and directed towards stalling almost all possible future laws and policies that a large section of the pharma industry sees as a potential apocalypse for their business models.

It has a wide reach and covers, for example, the policy-decision makers or possible policy-decision makers in the near future, other policy influencers, many hospitals, and the final interface with the patients – the prescription decision makers.

Although, it affects health care as a whole, in this article I shall focus just on the pharma industry.

Looking West:

While looking at the West, I would cite a recent example from the United States. It’s yet another déjà vu for the western pharma industry.

On August 26, 2016, ‘The Los Angeles Times’ in an article titled, “Drug companies spend millions to keep charging high prices” stated, “Of roughly US$ 250 million raised for and against 17 ballot measures coming before California voters in November, more than a quarter of that amount – about US$ 70 million – has been contributed by deep-pocketed drug companies to defeat the state’s Drug Price Relief Act.”

The Drug Price Relief Act of California, is aimed at making prescription drugs more affordable for people in Medi-Cal and other state programs by requiring that California pays no more than what’s paid for the same drugs by the Department of Veterans Affairs of the United States. It would, in other words, protect state taxpayers from being ripped off.

The report also quoted Michael Weinstein, President of the AIDS Healthcare Foundation saying that industry donations to crush the Drug Price Relief Act “will top US$ 100 million by the election, I’m quite certain of it.” He further added, “They see this as the apocalypse for their business model.”

Looking East:

While citing a related example from the eastern part of the globe, I shall draw one from nearer home – India, as China has already been much discussed on this matter. This particular media report on a wide-spread pharma industry practice, though took place in a different form, as compared to the United States, belongs to the same genre, and captures yet another déjà vu involving the pharma players operating in the eastern world, similar to what’s happening in the west.

India:

On August 30, 2016 a report published in ‘The Economic Times’ titled, “Pharma cos offer freebies to doctors, violate code: MP” quoted a serious allegation of a Rajya Sabha Member of the Parliament on this issue. The MP claims, he has evidence of four drug companies’ recently bribing doctors across India to push their products. These four companies include both large Indian and multinational pharma players, and two out of these four features, among the top five companies of the Indian Pharma Market (IPM).

The lawmaker further said, “I am waiting for the minister’s response on this issue. Nothing has come so far. We also have the names of the doctors who have taken bribes, which we will release eventually,”

Another September 06, 2016 report, published by the same business daily in India, categorically mentioned that TOI has documents to establish that one of these companies took hundreds of doctors from across India to places like Vancouver, Amsterdam, Oslo, Venice, New York, Boston, Brussels and Moscow. The documents reportedly include email exchanges between the company executives, city-wise lists of doctors with ‘legacy codes’, names of spouses, passport copies and visa copies, and show how the company has spent several millions of rupees in taking doctors and sometimes even their spouses, ostensibly to attend medical conferences.

Other NGOs have also reportedly submitted proof of the same to the Government for remedial measures in India, against such gross ongoing unethical practices in pharma marketing.

It is worth mentioning here that all these expenses are part of the marketing budget of a company and the sum total of which is built into the ‘retail price to the patients’ of the respective drugs, even in India.

Two broad processes for the same goal:

Thus it emerges, very broadly, there are two key processes followed by many in the pharma industry to achieve the same goal of increasing profit. These are as follows:

  • Marketing malpractices in various forms to influence prescription decision
  • Arbitrary increase of drug prices, for both branded and generic medicines

The justification:

Many global pharma majors still keep justifying, though the number of its believers is fast dwindling, that the high new drug prices have a linear relationship with the cost of new drug innovation. Even for argument’s sake one nods in favor, the critical question that needs to be answered is, if this is the basic or primary axle on which the wheel of innovation moves, won’t affordability and access to drugs for a significant number of the population be seriously compromised?

If not, why is this furor, across the world, is fast assuming a snowballing effect? Why are even the generic drug prices going up steeply even in the United States, where some of the largest Indian drug manufacturers are being questioned for the same by the competent authorities of the country?

I deliberated on a similar subject in my article titled, “The Next Frontier: Frugal Innovation For High-Tech Drugs”, published in this Blog on May 20, 2016.

Marketing malpractices:

Laws are fast catching up to book the offenders resorting to pharma marketing malpractices in most of the countries of the world, including China. This is vindicated by the fact that global pharma players are now paying billions of dollars a fine, in various countries, especially in the West.

Just as no criminal law can totally eliminate any crime, anywhere in the world, despite a heavy dent in pharma’s reputation related to this area, many companies still continue to indulge in such malpractices, blatantly, and even with some brazenness.

India:

Unfortunately, in India, the inertia to catch the bull by the horn and lack of governance in this regard continues, making patients pay a heavy price. As the above media report indicates, both MNCs and the local players indulge into this deplorable activity almost without any inhibition. As many industry watchers believe, some companies have started hiring these services through professional third parties just to create a facade for taking the high moral ground, as and when required, both with the government and also other stakeholders.

Initiating a step in this direction, on December 12, 2014, the DoP announced details of the ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’, which became effective across the country from January 1, 2015. The communique also said that the code would be voluntarily adopted and complied with by the pharma industry in India for a period of six months from the effective date, and its compliance would be reviewed thereafter on the basis of the inputs received.

UCPMP, though not a panacea, was aimed at containing pharma marketing malpractices in India. However, as happened with any other voluntary pharma marketing code, be it of a global drug major or their trade associations, similar non-compliances were detected even by the DoP with voluntary UCPMP.  This gross disregard to the code, apparently prompted the DoP contemplating to make the UCPMP mandatory, with legal implications for non-compliance, which could possibly lead to revocation of marketing licenses.

In this context, it is worth recapitulating that the Union Minister of Chemicals and Fertilizer – Mr. Ananth Kumar, in his reply in the Indian Parliament, to a ‘Lok Sabha Starred Question No: 238’ on the UCPMP based on the inputs received, also had admitted:

“The Government had announced Uniform Code for Pharmaceutical Practices (UCPMP) which was to be adopted voluntarily w.e.f. 1st January, 2015 for a period of six months and has last been extended up to 30.06.2016. After reviewing the same it was found that the voluntary code was not working as expected. The Government consulted the stakeholders, including NGO’s / Civil Society members and after examining their suggestions it is now looking into the viability of making the Code Statutory.”

This seems to be yet another assurance, and expression of a good intent by the Union Minister. The fact today is, after extending the UCPMP in its original form up to June 30, 2016 with four extensions and despite the Government’s public admission that it is not working, by a circular dated August 30, 2016, the Government has informed all concerned, yet again, that voluntary UCPMP has now been extended ‘till further orders’.

This not only creates public apprehension on the DoP’s true intent on the subject, but also gives enough room for speculation regarding behind the scene power play by the vested interests to keep a mandatory UCPMP, having sufficient legal teeth, away, as long as possible. Are these forces then also visualizing its enforcement as an apocalypse for their business models in India too?

Thus, the possibility of containing pharma marketing malpractices in India is still charting in the realm of the decision makers’ assurances and no further.

Arbitrary drug price increases:

Arbitrary price increases of important drugs are drawing increasing public ire in the West, the latest being a 400 percent price increase of generic EpiPen of Mylan. This is now being considered yet another business malpractice in the pharma industry, as whole.

No robust regulatory or legal measure is now being followed in the West to contain the drug over pricing public health menace. Thus, it is increasingly assuming a critical political significance today to win over the voters, especially in the forthcoming Presidential election of the United States.

Thus, as reported by Reuters, on September 02, 2016, Hillary Clinton announced that, if elected, she would create an oversight panel to protect the consumers of the United States from large price hikes on longer-available, life-saving drugs and to import alternative treatments if necessary, adding to her pledges to rein in overall drug prices.

She would give the ‘Oversight Panel’ an aggressive new set of enforcement tools, including the ability to levy fines and impose penalties on manufacturers when there has been an unjustified, outlier price increase on a long-available or generic drug.

On September 08, 2016, reacting to these proposed measures articulated by Hilary Clinton, the global CEO of the world’s largest pharma player reportedly commented, as expected, that it “will be very negative for innovation.”

Nonetheless, the bottom-line is, even in the United Sates, a transparent mechanism to deal with arbitrary price increases of the existing important medicines, still charts in the realm of several assurances of the probable decision makers, just as it is India to effectively deal with pharma marketing malpractices.

A global CEO’s lone voice stands out:

In this context, I would start with yet another example of astronomical price increase of a widely used anti-diabetic product, besides EpiPen of Mylan. According to Dr. Mayer Davidson, Professor of Medicine at the Charles R. Drew University of Medicine and Science in Los Angeles, who has carefully tracked the rapid and repeated increases, from 2011 to 2013 the wholesale price of insulin went up by as much as 62 percent in the United States. Whereas, from 2013 to 2015 the price jumped again, from a low of 33 percent to as much as 107 percent.

In the midst of this scary situation, a solitary and apparently a saner voice from the global pharma industry stands out. According to an article published in the Forbes Magazine on September 06, 2016, Brent Saunders, CEO of Allergan, ‘explicitly renounced egregious price increases.’ Saunders also said that the industry needs to ‘end its addiction to price hikes far in excess of inflation, often taken several times in a single year.’ While outlining his company’s “social contract with patients,” Saunders vowed that Allergan would:

  • Limit price increases to single-digit percentages, “slightly above the current annual rate of inflation,” net of rebates and discounts.
  • Limit price increases to once per year.
  • Forego price increases in the run-up to patent expiration, except in the case of corresponding cost increases.

Though this seems to be a lone voice in the pharma industry, it makes the CEO stand much taller than his peers.

India:

On this score, India has already put in place the ‘National Pharmaceutical Pricing Authority’ to regulate the drug prices of primarily those falling under the ‘National List of Essential Medicines (NLEM)’. However, it is a different matter that as per its own public admission, NPPA is still unable to strictly enforce these price controls, with significant incidences of non-compliance. Therefore, the net benefits to the patients in India for having this mechanism, is indeed arguable.

The core issue:

All that we witness in this area are mostly assurances, promises and good intent on the part of various Governments of different political dispensation, over the last several decades. The same indifference to public health care, in general, continues. Nothing seems to be working effectively in the public health care space of the country, even today. A large section of patients, bearing the tough burden of the highest out of pocket health expenditure in India, are under significant consequential stress of all kinds.

An important part of this scenario is well-captured in the statement of the erstwhile Secretary of the Department of Pharmaceuticals (DoP) – V K Subburaj at an event in New-Delhi on April 19, 2016, when he said, “In the entire world, I think our drug control system probably is the weakest today. It needs to be strengthened.”

Is it a legacy? Possibly yes. But, who will fix it, and what steps are we taking now for its satisfactory resolution?

The core issue in the pharmaceutical arena is, therefore, about striking an optimal balance between drug profitability and patient affordability, to avoid any adverse impact on access to drugs for a large majority of population in the world.

Conclusion:

Thus, it appears to me, if those who now decide for the people’s health interest, also refuse to wake up from deep slumber and remain as indifferent as before, soon we may hear or read or experience yet another or more of similar deplorable developments, having serious adverse repercussions on the patients.

Interestingly, despite such incidents, pharma stocks remain generally unaffected and buoyant. Its overall trend continues heading north, factoring-in that no implementable Government action is forthcoming, for obvious reasons. Consequently, pharma business remains as robust as ever, but the patients continue to suffer increasingly more.

Pharma industry in general, has been seriously attempting to wash its hands off for this scary emerging situation, since long. It blames the governments for trying to throttle the money spinning business with ‘unnecessary’ regulations, as discussed above, for something that is only the state responsibility, as they perceive. The governments, in turn, blame the industry and try to regulate it more strictly. Invariably, the patients in need of right and affordable medical care get caught in this cross-fire – some succeed to overcome the health crisis, but mostly exposing themselves to huge financial uncertainty in the future, many others can’t.

When the business continues to flourish with current business ‘practices’, why would the pharma players bother about rapidly tarnishing industry reputation, and public outcry? Does it really matter at all on the ground, for running a money spinning business machine, especially when there exists a fair chance of stalling the new laws and policies, with deep pockets, as alleged by many?

In this scenario, what else a common man would do while falling seriously ill, except praying to the almighty for divine care and blessings for a speedy recovery, along with possibly lamenting, it’s déjà vu in the pharma industry?

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. 

Against Pharma Marketing Malpractices: A Gutsy Step

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January 7, 2016 edition of ‘The Financial Times (FT)’ reported that responding to escalating pressure on the drug industry, related to its ‘Conflict of Interest’ with the doctors and other related professionals, GlaxoSmithKline (GSK) has decided taking a very unorthodox step.

According to this news report, GSK has decided not to promote its brands by making payments to doctors in any form. The company also strongly expressed its belief that to refurbish the dented image of the industry, in general, its competitors, as well, would start following the same steps, sooner than later.

Whatever it may be, GSK has apparently decided to avoid the above ‘conflict of interest’ and not to ride on the trendy wave for drug promotion, any longer.

Although, many restrictions have already been put in place by different countries, to curb these practices to the extent required, many pharma companies always find effective ways to circumvent those restrictions, as many report highlights.

In this scenario, GSK has taken a bold and calculated decision to swim against the tide. Respecting public outcry and sensitiveness on the subject, it has decided against engaging paid physician speakers, as an integral of the brand marketing strategy, any longer. More importantly, this decision of the company is absolutely voluntary, transparent, and its faithful implementation level can also be monitored externally. 

The consequences of this ‘Conflict of Interest’: 

Available reports indicate that the consequences of alleged marketing malpractices of any kind, attract some serious financial consequences for the pharma players, provided of course, if one gets caught, especially in the United States or Europe.

A February 24, 2014 article highlights that in the last few years alone, pharmaceutical companies have agreed to pay over US$13 billion to resolve only U.S. Department of Justice allegations of ‘fraudulent marketing practices’.

Dwelling on the subject, a November 6, 2014, BBC News commented, “Imagine an industry that generates higher profit margins than any other and is no stranger to multi-billion dollar fines for malpractice.”

It is worth noting, all those pharma players paying hefty fines due to alleged marketing misadventures of humongous proportion, also prominently display their well-crafted code of ethics of pharma marketing practices in their respective websites, vowing for strict voluntary adherence. Nevertheless, the (mal)practice goes on, unabated.

Did a recent deterrent work in America? 

Despite recent enactment of “Physician Payments Sunshine Act”, such practices of pharma companies continue unabated even in the World’s largest pharma market – the United States.

As is known by many, the ‘Physician Payments Sunshine Act’ is a healthcare law enacted in the United States in 2010 to increase transparency of financial relationships between health care providers and pharmaceutical manufacturers.

This Act requires manufacturers of drugs, medical devices and biologicals that participate in US federal health care programs to submit annual data on payment and other transfers of value that they make to physicians and teaching hospitals. The data submission period is followed by 45 days for physicians to review their ‘Open Payments’ data and dispute errors before the public release.

On July 1, 2015, ‘ProPublica’ – an independent, non-profit newsroom that produces investigative journalism in the public interest, published an article titled, “Dollars for Docs: How Industry Dollars Reach Your Doctors.” Quoting the public database, it reported that in 2014, 1,630 pharma companies in the United States disclosed a hefty total payment of US$ 3.53 billion to 681,432 doctors. The maximum total payment received by a single doctor during this period was US$ $43.9 million. 

Published names of ‘Top 20 Companies’: 

According to ‘ProPublica’, the money that the following 20 companies spend on interactions with doctors in the United States, excluding research and royalties, is as follows:

  • Pfizer: $30M,
  • Janssen Pharmaceuticals: $20.5M
  • Astrazeneca Pharmaceuticals: $19.1M
  • Forest Laboratories: $17.2M
  • Allergan: $15.5M
  • Otsuka America Pharmaceutical: $15M
  • Sanofi and Genzyme: $14.6M
  • AbbVie: $13.5M
  • Genentech: $12.9M
  • Intuitive Surgical: $12.8M
  • Novo Nordisk: $12.4M
  • Depuy Synthes Sales: $12M
  • Bristol Myers Squibb: $11.9M
  • Eli Lilly: $11.7M
  • Teva: $11.6M
  • Novartis: $11.5M
  • Boehringer Ingelheim: $10.8M
  • Stryker: $10.3M
  • Merck Sharp & Dohme: $10.3M
  • Takeda: $9.68M
GlaxoSmithKline not featuring in the list: 

Interestingly, I could not locate GlaxoSmithKline (GSK) featuring in this specific list of the top 20 companies in the United States. Some industry watchers comment that this could well be an outcome of other unorthodox measures taken by GSK earlier to revamp its reputation, dented by the widely reported Chinese bribery scandal and also a huge settlement of US$3 billion with the Government of the United States, for alleged marketing malpractices. Whatever it is, GSK has now initiated some tangible policy decisions in this regard, unlike most of its counterparts.

Alleged pharma malpractices are rampant in India too:

Frequent reports of Indian media have already triggered a raging debate in the country on the same subject. It has also been reported that a related case is now pending before the Supreme Court against a Public Interest Litigation (PIL) for the hearing.

On May 08, 2012, the ‘Department Related Parliamentary Standing Committee on Health and Family Welfare’ presented its 58th Report to both the Lower and the Upper houses of the Indian Parliament. The committee, with a strong indictment against the Department of Pharmaceuticals (DoP), observed that the DoP should take decisive action, without any further delay, in making the ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’ mandatory, so that effective checks could be ensured on ‘huge promotional costs and the resultant add-on impact on medicine prices’.

Unfortunately, nothing substantive has happened on the ground regarding this issue as on date, excepting announcement of voluntary implementation of the DoP’s ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’, effective January 1, 2015 for six months for its assessment. Thereafter, the date extension process on the voluntary implementation of the UCPMP has become a routine exercise for the DoP, on the pretext of continuing discussion on the subject with the pharma trade associations and other stakeholders.

Nevertheless, incidences of alleged marketing malpractices are still unfolding today and getting dragged into the futile public debate. In a situation like this, I reckon, the Government is expected to play a more proactive role by all, instead of maintaining the status quo, any longer.

‘Voluntary practice’ concept alone, has not worked, anywhere:

Strong internal and external business performance pressures, while navigating through turbulent business environment with strong headwinds, could temporarily unnerve even the seasoned managers with nerves made of steel, as it were. It has been happening all the time, now more frequently, despite having stringent ‘voluntary pharma marketing practices’ codes in place, for many different reasons.

This  has been vindicated by a recent research published by ‘PLOS Medicine’ on January 26, 2016.

The study states that European Union law prohibits companies from marketing drugs off-label. However, in the United Kingdom (UK), as in some other European countries, but unlike the United States, pharma industry self-regulatory bodies are tasked with supervising compliance with marketing rules. The objectives of this study were to characterize off-label promotion rulings in the UK compared to the whistleblower-initiated cases in the US and also) shedding light on the UK self-regulatory mechanism for detecting, deterring, and sanctioning off-label promotion.

The paper provided credible evidence of the limited capacity of the UK’s self-regulatory arrangements to expose marketing violations. It recommended that the UK authorities should consider introducing increased incentives and protections for whistleblowers combined with US-style governmental investigations and meaningful sanctions.

Thus, all-weather ‘voluntary practice of ethical pharma marketing code model’ alone, is either failing or has failed, almost everywhere in the world. GSK’s is a novel, but solo attempt and may not necessarily be imbibed by others.

Appropriate regulations and robust laws, instilling not just the ‘fear of God’ to the violators, but also promising justice to all, would always be a strong deterrent in those trying situations, especially in countries like, India, unless of course, any person or a legal entity is a hardcore manipulator with its key focus just on profiteering.

Restoring tarnished image:

GSK has taken the above bold step to restore its tarnished image, after receiving body blows related to several scandals, as it were. Commendably, it did not continue doing the same, unlike many others. Instead, the leadership of the Company demonstrated sensitivity to public outrage.

GSK won’t be a solitary example of pharma marketing malpractices. There are other large drug companies too, who even after meeting with similar public disgrace, keep charting the same old path to maximize brand sales by paying for the doctors, either directly or in several other forms, as many reports have alleged.

To offset all such marketing related expenses, and thereafter earn a huge profit, many of them keep the new drug prices exorbitantly high, adversely impacting the access of those drugs to many of those, who need them the most. This is besides taking hefty annual increases on existing brand pricing, even when inflation is very low to moderate.

Access to drugs for all needy patients is ‘Government responsibility’: 

To justify access barrier to high priced drugs for a large number of patients globally, most pharma players and their trade associations have a ready answer in their advocacy toolkit. It says, ensuring access to drugs for all needy patients is the responsibility of the Government, not of the drug companies.

As a result, the trust deficit between the pharma industry and the general public is increasing, further denting its image. At present, when many national Governments are initiating action or are contemplating to do so, to contain such insensitive practices, the industry probably would require to pause for a while, take a step back and ponder – what next? 

Restoring the tarnished image of the drug industry is a challenging ball game, far beyond the capabilities of even the richest pharma associations of the world, and their over-paid lobbyists. Crafty creation of any facade to hoodwink all, is no longer working to achieve their self serving purposes. Today, the public, in general, seems to understand much more about their reasonably affordable healthcare needs and wants, than what these trade associations’ possibly think about them.

Otherwise, why would Hillary Clinton ‏@HillaryClinton – one of the strongest contenders for American Presidency this time, would tweet on January 28, 2016 addressing her voters and admirers with the following vow:

“We will go after pharmaceutical companies that gouge patients with pricing. They are wrong, and we will stop them.”

My experience tells me that astute pharma CEOs, by and large, still command much higher credibility than their trade associations. Thus, the top leadership of the respective organizations would require taking the ‘image revamping exercise’ in their own hands, directly. It is essential to publicly demonstrate that most of them are aligned and in sync with the emerging new paradigm of changing aspirations, needs and wants of the patients and other key stakeholders. Future business excellence would demand inclusive growth. GSK is just an example of a CEO’s bold response to address this challenge of change – ‘a small step but a giant leap’ in this direction.

Conclusion:

In my view, all these contentious practices are basically being prompted by the strong intent of most of the pharma CEOs to ‘play safe’, in order to deliver expected shareholder value.

Any unorthodox approach to rebuild the tarnished image is usually risky, generally frowned upon and discouraged by the industry. Other vested interests often join them too. All these retarding forces express grave apprehensions on any fresh look by a company to mend fences with its key stakeholder – the patients and the public, in general. 

The recent GSK example is no exception. Apprehensions have already been expressed, whether this untested fresh thinking, against a widely perceived corrupt practice of paying physician speakers for indirect brand promotion would really be able to boost its image, without cutting into revenue. Some would take a step further and question, would a rejuvenated image ultimately fetch expected growth in sales revenue and profit? 

Only time will tell us the consequences of this uncommon and unorthodox decision taken by a courageous leader in the pharma industry.

In India, even the Government seems to have gone into a deep slumber on this issue. Despite reported discussions with the stakeholders several times, Government’s UCPMP still remains voluntary, with the DoP holding the same old ground, where it started from on January 1, 2015. It is difficult to fathom, whether intense industry lobbying is influencing a long overdue decision in favor of the patients’ overall interest.

However, there is good news also. According to a February 6, 2016 media report, ‘The Medical Council of India (MCI), for the first time ever, is set to notify specific punishments for errant doctors based on the value of favors or freebies received from drug players, under the Indian Medical Council (Professional Conduct, Etiquette and Ethics) (Amendment) Regulations, 2015. 

That apart, to revamp its dented image, the decision of GSK against paid physician speakers as an integral part of brand promotion, is not just a gutsy step with a sharp focus on restoring business ethics and values, but more laudably a voluntary one. Would others follow it too, including 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.

Does The Attempt To ‘Debunk Five Big Myths About Big Pharma’ Not Reconfirm The Truth?

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Late last week while returning to India, to my pleasant surprise, I bumped into a longtime overseas friend and his wife working in the pharma industry. Incidentally, they were also traveling in the same flight with a plan to spend their vacation in India.

We both were immensely delighted spotting each other, and were trying to catch up with plethora of subjects at a break-neck speed and mostly with child-like zest. As a result, we were jumping from one topic to another, keeping many loops of discussion unknowingly incomplete.

One such rapid-fire colloquy got almost permanently interrupted with the final boarding announcement. It happened, just when he was referring to busting of some “myths about Big Pharma” by the global CEO of one of the Big Pharma constituents, recently. The article, he said before we got up, was published in the May edition of Forbes Magazine.

As I had missed this curious narrative during my recent relatively long overseas travel commitments, yesterday in Mumbai I did trace that out with the help of our “Google Guru” and went through the content of the article with interest.

‘Debunking Five Big Myths About Big Pharma’:

In the May 19, 2015 issue of Forbes Magazine, I came across an Op-Ed, titled “Debunking the Five Big Myths About Big Pharma”, written by Mr. John Lechleiter, President, Chairman and CEO of Eli Lilly and Company, whom I immensely respect as an icon of the global pharma industry.

The author in his article identified the ‘Five Myths’ as follows:

Myth1: Pharmaceutical companies exaggerate the costs of developing new medicines to justify high prices.

Myth 2: Industry does not develop most new medicines; they come from government and university laboratories.

Myth 3: Prescription medicines are the main driver of health-care cost increases.

Myth 4: Public and private health-care payers must accept and pay whatever prices drug companies charge for medicines.

Myth 5: Government-controlled pricing of medicines in other countries explains their lower health-care costs.

The article is indeed interesting, as it raises more questions than answers. This is mainly because, ‘the debunking of the Five Myths’ was done using the same old fragile arguments much often repeated by the international ‘Big Pharma Trade Associations’ and by some others as well, whom many call privately as their ‘poodles’, although I am not very sure about that.

The reason and time for ‘debunking’:

In the above Op-Ed John Lechleiter forcefully asserts:

“The Big Five Myths’ about this industry routinely poison debates, obscure genuine problems, and distort policy recommendations on healthcare. These myths have been all over the public arena again recently, and it’s time to confront them systematically.”

“The First Big Myth”:

As stated above, the Eli Lilly Chief described the first ‘Big Myth’ of ‘Big Pharma’ as follows:

“Pharmaceutical companies exaggerate the costs of developing new medicines to justify high prices.”

Arguments behind debunking the ‘Big Myth 1’:

The Chief debunked the first ‘Big Myth’ with the following argument:

“In fact: The research and development (R&D) expenditures of this industry are staggering – and since they are matters of public record there is no way and no need to exaggerate them.”

Raises more questions than answers:

Just to illustrate my point, that this article raises more questions than answers, I shall, try to explain the so called ‘debunking’ of this first of the ‘Five Big Myths’ of ‘Big Pharma’, as penned by Lechleiter.

The author seems to have missed the core narrative behind the so-called ‘Myth’ – lock stock and barrel. Whether deliberately or not, I can’t really figure that out.

The reason behind high costs of patented drug:

Even if for the arguments sake, what the author has said is accepted as a gospel truth while ‘debunking Myth 1’, experts’ discourses on the facts behind high costs of patented drugs do not just focus just on the ‘R&D Costs’, it also seriously points towards abnormally high ‘Marketing Costs’, which in many instances several times more than the ‘R&D Costs’.

Some hard facts:

An article of 6 November 2014 of BBC News, titled “Pharmaceutical industry gets high on fat profits” written by Richard Anderson, Business reporter, BBC News highlights:

Drug companies justify the high prices they charge by arguing that their Research and Development (R&D) costs are huge. On average, only three in 10 drugs launched are profitable, with one of those going on to be a blockbuster with US$1bn-plus revenues a year. Many more do not even make it to market.

But as the table below shows, drug companies spend far more on marketing drugs – in some cases twice as much – than on developing them… and besides, profit margins take into account R&D costs.

World’s largest pharmaceutical firms
Company Total revenue ($bn) R&D spend ($bn) Sales and marketing spend($bn) Profit ($bn) Profit margin (%)
Johnson & Johnson (US) 71.3 8.2 17.5 13.8 19
Novartis (Swiss) 58.8 9.9 14.6 9.2 16
Pfizer (US) 51.6 6.6 11.4 22.0 43
Hoffmann-La Roche (Swiss) 50.3 9.3 9.0 12.0 24
Sanofi (France) 44.4 6.3 9.1 8.5 11
Merck (US) 44.0 7.5 9.5 4.4 10
GSK (UK) 41.4 5.3 9.9 8.5 21
AstraZeneca (UK) 25.7 4.3 7.3 2.6 10
Eli Lilly (US) 23.1 5.5 5.7 4.7 20
AbbVie (US) 18.8 2.9 4.3 4.1 22
Source:GlobalData

The article states that in 2013, US giant Pfizer, the world’s largest drug company by pharmaceutical revenue, made an eye-watering 42 percent profit margin. The same year, five other major pharmaceutical companies made a profit margin of 20 percent or more – Hoffmann-La Roche, AbbVie, GlaxoSmithKline (GSK) and Eli Lilly.

Why does the drug industry spend more on marketing than on R&D?

Thus, one most persistent question that is being raised by the stakeholders is: Why does the drug industry spend more on marketing than on R&D?

Quoting these facts, a November 6, 2014 article of ‘FiercePharma’, titled “New numbers back old meme: Pharma does spend more on marketing than R&D”, also pointed out that even John Lechleiter headed Eli Lilly’s marketing spending clocked US$5.7 billion, compared with US$5.5 billion for R&D. That’s a difference of 7 percent.

High marketing expenditure and increasing marketing malpractices:

Interestingly there appears to be a curious coincidences between fines paid by ‘Big Pharma’ related to alleged marketing malpractices and spiraling marketing expenditure.

As I indicated earlier in my Blog Post of December 29, 2014, the following are a few recent examples of just the last three years to help fathom the enormity of the problem on this issue and also to vindicate the point made above:

  • In March 2014, the antitrust regulator of Italy reportedly fined two Swiss drug majors, Novartis and Roche 182.5 million euros (U$ 251 million) for allegedly blocking distribution of Roche’s Avastin cancer drug in favor of a more expensive drug Lucentis that the two companies market jointly for an eye disorder.
  • Just before this, in the same month of March 2014, it was reported that a German court had fined 28 million euro (US$ 39 million) to the French pharma major Sanofi and convicted two of its former employees on bribery charges.
  • In November 2013, Teva Pharmaceutical reportedly said that an internal investigation turned up suspect practices in countries ranging from Latin America to Russia.
  • In May 2013, Sanofi was reportedly fined US$ 52.8 Million by the French competition regulator for trying to limit sales of generic versions of the company’s Plavix.
  • In August 2012, Pfizer Inc. was reportedly fined US$ 60.2 million by the US Securities and Exchange Commission to settle a federal investigation on alleged bribing of overseas doctors and other health officials to prescribe medicines.
  • In April 2012, a judge in Arkansas, US, reportedly fined Johnson & Johnson and a subsidiary more than US$1.2 billion after a jury found that the companies had minimized or concealed the dangers associated with an antipsychotic drug.

Where does most of the marketing expenditure go?

On February 11, 2015, an article published in the ‘The Washington Post’ titled, “Big pharmaceutical companies are spending far more on marketing than research”, stated:

“Most of this marketing money is directed at the physicians who do the prescribing, rather than consumers.”

The HBO video that had gone viral:

The HBO Video with a dash of characteristic British humor of “John Oliver: Marketing to Doctors (HBO)” captures the essence of the issue. Many readers much have watched this video earlier. Nevertheless it helps understanding the point.

Some people associated with the industry did attempt nitpicking on this video and quite understandably; they did not find many takers.

Conclusion:

As deliberated above, I submit with humility that there are ample hard facts, which would debunk even more forcefully, the ‘debunking of the remaining so called four myths’ as was elucidated in the Forbes Magazine article authored by well-respected John Lechleiter, the President, Chairman and CEO of Eli Lilly and Company.

This seemingly well-timed article from the global pharma icon, though with disappointedly fragile content, I reckon, would not be able to evoke the desired response from its target audience. On the contrary, it carries the risk of being construed as no more than a half-hearted attempt of defending the indefensible and in that process reconfirming the truth, camouflaged in the paper as ‘myths’.

By: Tapan J. Ray

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

Pharma Outlook 2015: A Glimpse Of Some Drivers and Barriers

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Looking ahead, the brand new year 2015 appears quite interesting to me both from the global and also from the local pharmaceutical industry perspective. In this article I shall try to give a glimpse of some of the important drivers and barriers for success of the industry as the year unfolds, based on recent and ongoing developments.

Let me start with the global outlook of 2015, where in the midst of all gloom and doom of the past years, I notice formation of a distinct and new silver lining, mainly due to the following two reasons:

1. Record number of new drugs approval in 2014 spanning across10 therapy areas:

As indicated in its website, USFDA has approved 41 novel medicines in 2014, which is 14 more than the previous year and is the second highest after 1996 that witnessed 53 approvals. Many of these new drugs are with blockbuster potential.

According to another report, the European Medicines Agency (EMA) has also recommended 82 new medicines in 2014, which though includes generic drugs in its list. However, this number too shows an increase from 79 in 2013 and 57 in 2012.

According to January 02, 2014 report from Forbes, very interestingly, infectious diseases dominated with 12 approvals (27 percent), cancer with 8 approvals (18 percent), followed by rare diseases with 5 (11 percent). Just two of these new approvals are for Hepatitis treatment and the rest are for bacterial, fungal, viral, and parasitic infections.

AstraZeneca received the highest number of 4 approvals followed by Eli Lilly with 3.

2. Patent expired blockbuster drugs in 2015 would have low generic impact:

Though drugs worth sales turnover of US$ 44 billion would go off patent in 2015, patent expiries will have minimal impact on the top line as 2015 sales will grow close to four times that of patent losses. Following are the top 10 drugs among those:

No. Brand Company Disease Sales2013 (US$ Bn) Patent Expiry
1. Lantus Sanofi Diabetes 7.9 Feb 2015
2. Abilify Otsuka/Bristol-Myers Squibb Schizophrenia/ Other neurological conditions 7.8 April 2015
3. Copaxone Teva Multiple sclerosis 4.33 Sept 2015
4. Neulasta Amgen Infection reduction in cancer patients on chemotherapy 4.4 Oct 2015
5. Tracleer Actelion Pulmonary arterial hypertension 1.57 Nov 2015
6. Namenda Actavis Alzheimer’s disease 1.5 April 2015
7. Avodart/Jalyn GSK Benign prostatic hypertrophy 1.34 Nov 2015
8. Zyvox Pfizer Gram-positive bacterial infections 1.35 May 2015
9. AndroGel Abbvie Low testosterone  1.03 Early 2015
10. Synagis AstraZeneca Monoclonal antibody to prevent respiratory syncytial virus infection in infants  1.1 Oct 2015

(Compiled from FiercePharma data)

As a significant number of these drugs are biologics, such as Lantus, Abilify, Neulasta and Synagis, the generic impact on those large brands, post patent expiry, would be minimal, at least, for several more years.

However, Lantus sales could soon be impacted, as its biosimilar versions from Boehringer Ingelheim and Eli Lilly have already received approval in Europe, and may be launched in the United States, as well.

Biosimilar versions of other drugs that will go off patent in 2015, do not seem to be anywhere near launch soon to make immediate dent in the sales of the original biologics. I had deliberated on various possible reasons for delay in biosimilar entry, especially in the US, in my earlier blog post of August 25, 2014, titled “Scandalizing Biosimilar Drugs With Safety Concerns”

Taking all these into consideration, EvaluatePharma has estimated that out of patent expiry related sales turnover of US$44 billion, just around US $16 billion would get impacted in 2015 by their generic equivalents.

Global market outlook 2015:

According to IMS Health, spending on medicines will reach nearly $1,100 billion in 2015 with a growth rate of 3-6 percent over the last five-year period.

According to EvaluatePharma, the overall outlook of the global pharma industry in 2015 and beyond is expected to be as follows:

  • A dozen products launched in 2015 are forecast to achieve blockbuster sales by 2020
  • Drugs treating high cholesterol and heart failure will dominate the field with a combined 2020 sales forecast of US$8 billion
  • Sovaldi and its combination product Harvoni will take the number one worldwide seller spot with forecasted sales of $15.3 billion in 2015
  • Patent expiries will have minimal impact on the top line as 2015 sales will grow close to four times that of patent losses
  • Financing climate appears friendly and deals will continue at a steady pace but M&A activity unlikely to match the frenzy of 2014

Moreover, Oncology therapy area brings a huge promise with novel immuno-oncology drugs. As Reuters have reported, Merck & Co’s Keytruda and Bristol-Myers Squibb’s Opdivo, which work by blocking a protein called Programmed Death receptor (PD-1), are the first in a coming wave of immuno-therapies that analysts believe could generate annual sales of more than US$30 billion a year.

Indian pharma industry outlook 2015:

Indian pharmaceutical industry, dominated by branded generic drugs, is estimated to register a turnover of around US$ 33.8 billion with an average growth of 10.3 percent in 2014 – 2018 period, according to Deloitte. Increasing number of diagnosis and treatment of chronic ailments, fuelled by ascending trend in the per capita income, would be the key factors to drive this double-digit growth rate.

In 2013-14, pharma exports of the country with a turnover of US$ 14.84 billion grew at a meager 1.2 percent, which is the slowest growth in nearly the last 15 years. Pharmexcil attributed its reason to USFDA related regulatory issues and increasing global competition. India still stands exposed in this area, unless meaningful corrective measures are taken forthwith. It is worth noting, although India exports drugs to over 200 countries in the world, the United States (US) alone accounts for about 25 percent of India’s pharma exports.

Key issues and challenges in ‘The Exports Front’:

Generic drugs currently contribute over 80 percent of prescriptions written in the US. Around 40 percent of prescriptions and Over The Counter (OTC) drugs that are sold there, come from India and account for around 10 per cent of finished dosages in the US.

Almost all of these are cheaper generic versions of patent expired drugs, which are mainly produced in around 200 USFDA approved drug-manufacturing facilities located in India. Hence, India’s commercial stake in this space is indeed mind-boggling.

Indian drug exports were taking place satisfactorily without any major regulatory hitches since quite some time. Unfortunately, over the last few years, mostly the Federal Drug Administration of the US (USFDA) and the United Kingdom (UK)’s Medicines and Healthcare Products Regulatory Agency (MHRA) have started raising serious doubts on the quality of medicines manufactured in India, creating an uncertainty on drug exports in those countries.

To overcome this critical issue and keep marching ahead with distinction in the drug exports front, Indian pharma would require to successfully dealing with the following two areas:

A. Data integrity:

Since quite a while, USFDA has been raising serious concerns on ‘Data Integrity’ in their previously approved production facilities of a large number of Indian pharma players. The details of each of these concerns are available in the USFDA website.

This worrying development is now posing a huge threat to future growth potential of Indian drug exports, as in this area the Indian government had set an objective, in its strategy document, to register a turnover of US$ 25 billion in 2014-15. In all probability, it would fall far short of this target at the end of this fiscal, predominantly for related reasons. However, the good news is, considering the criticality of the situation, the Indian government is now working with the USFDA to resolve this problem.

I discussed a part of this area in my Blog Post of September 29, 2014 titled “Make in India…Sell Any Where in The World”: An Indian Pharma Perspective

B. Credibility of Clinical Trial Data from India:

Credibility of ‘Clinical Trial Data’ generated by the domestic players in India, has also become a cause of great concern, as the regulators in France, Germany, Belgium and Luxembourg suspended marketing approval for 25 drugs over the genuineness of clinical trial data from India’s GVK Biosciences.

Key issues and challenges in ‘The Domestic Front’:

Though 2015 would also witness the following important issues and challenges, meeting with this challenge of change should not be difficult with a proper mindset and right strategies:

A. The Drug Price Control Order 2013 (DPCO 2013):

Change in the mechanism of drug price control from earlier ‘cost based’ to newer ‘market based’ one and the specified provisions to neutralize inflationary impact of the input costs on the bottom line, based on the WPI, have already been considered as welcoming changes for the industry. As a result, despite implementation of the DPCO 2013, the pharma shares continued to do well in 2014 despite doomsayers’ predicaments, not just in the past, but even today.

I believe, the DPCO 2013 would not cause any significant negative impact further in 2015 on the performance of pharma companies, as the price controlled drugs would in all probability continue to be around 20 percent of the total pharma market. Moreover, now annual price increases are linked to the WPI for the controlled products and the companies can increase prices of remaining 80 percent of decontrolled products, upto 10 percent every year, irrespective of inflationary trend.

That said, due to huge inter-brand price differences, in July 2014 the National Pharmaceutical Pricing Authority (NPPA) had brought under price control 50 more cardiovascular and anti-diabetic drugs in addition to 348 drugs that featured under price control in the DPCO 2013.

If the pharma players do not take note of such abnormal inter-brand price variation of the same drugs without meaningful reasons, there could possibly be further move by the NPPA in this direction.

Additionally, any mechanism for patented products’ pricing, if announced in 2015, would have far-reaching impact, especially on the MNCs marketing such drugs.

B. Unethical practices in Clinical trial:

In the Clinical Trial arena of India, responding to a Public Interest Litigation (PIL), the Supreme Court of the country and separately the Parliamentary Standing Committee had indicted the drug regulator and charted out some action areas. The Parliamentary Committee in its report had even mentioned about a nexus existing between the drug regulator and the industry in this area.

Driven by the directives of the Apex Court of the country, the union ministry of health of the government of India has already strengthened some areas of past laxity in drug regulatory control, such as mandatory registration of clinical trials, constitution of committees to oversee the trial approval, its execution and above all ethical treatment of patients, including compensation.

Although, these are all requisite measures to create an appropriate longer-term eco-system for clinical trials in India, it has reportedly ruffled many feathers, such as CROs in the country who work mainly for pharma MNCs and some global pharma players too. This is mainly because of inordinate delays in drug approvals during the regulatory rectification process, besides cost of clinical trials going up. An orderly drug regulatory environment must prevail, instead of allegedly ‘free for all’ clinical trial environment in the country, costing many innocent lives and livelihoods.  Responding to this changing clinical trial environment, some MNCs have already articulated that they are reconsidering their drug trial strategy in India and some Indian players, possibly with vested interests and echoing similar sentiments, are also saying that they would shift their clinical trial projects out of India, which would adversely impact the country’s clinical trial industry.

Be that as it may, it appears now that under the directive of the Supreme Court of the country, the decisions taken by the government in clinical trial area are irreversible, for the long-term interest of the country.

C. Intellectual Property (IP) issues:

Reacting to some well-justified measures taken by India in the IP area to make healthcare affordable to all, the US and its some key allies, continuously pressured by their powerful pharma lobby groups, continue to push India hard to broaden the IP protections. ‘Big Pharma’ lobbyists are reportedly trying to compel India to amend its IP laws that would suit their business interest at the cost of patients.

Fortunately, many stakeholders, including media, have started raising their voices against such strong-arm tactics, further fueling the credibility erosion of ‘Big Pharma’ and creating important pressure groups for the government.

Simultaneously, concerned pharma MNCs are also seeking legal recourse over issues mainly related to the section (3d) and Compulsory Licensing of the Indian Patents Act. However, most of the judicial verdicts vindicate the quality of decisions taken by the Indian Patent Office (IPO) in these areas.

Though very unlikely, any amendment or tweaking of the existing patent laws of India in 2015 would provide an unfair advantage to MNCs with negative impact on public health interest.

D. Uniform Code of Pharmaceutical Marketing Practices:

Compared to the actions that are now being taken by the law enforcers overseas against pharmaceutical marketing malpractices, India has been showing a rather lackadaisical attitude in these areas, until recently. It astonishes many that unlike even China; no pharmaceutical company has been investigated thoroughly and hauled up by the government for alleged bribery and other serious allegations of corrupt practices.

However, frequent reporting by the Indian media had triggered a debate in the country on the subject. A Public Interest Litigation (PIL) on this subject is now pending before the Supreme Court for hearing in the near future. It is worth noting that in 2010, ‘The Parliamentary Standing Committee on Health’ also had expressed its deep concern by stating that the “evil practice” of inducement of doctors by the pharma companies is continuing unabated as the revised guidelines of the Medical Council of India (MCI) have no jurisdiction over the pharma industry.

The Government, until recently, has shown no active interest in this area either, though the new Union Health Minister, J.P. Nadda decried the unethical nexus between the doctors and pharma companies, amounting violations of medical ethics in the country. He reportedly has stated that in majority of the cases, the pharma companies are luring the doctors by giving gifts and other benefits for prescribing the brand of medicines of their choice to the patients.

As the saying goes, ‘better late than never’, on December 12, 2014, the Department of Pharmaceuticals (DoP) of the Government of India announced details of the ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’, which would be effective across the country from January 1, 2015 for all pharma players to implement, across India.

However, I reckon, the document in its current form is rather weak in its effective implementation potential. Meaningful and transparent deterrent measures to uphold public health interest are also lacking. The entire process also deserves a well-structured monitoring mechanism and digital implementation tools that can be operated with military precision. I discussed this issue in my Blog Post of December 29, 2014, titled “India’s Pharma Marketing Code (UCPMP): Is It Crafted Well Enough To Deliver The Deliverables?”

On UCPMP a survey done by E&Y has highlighted the following points, besides other areas:

  • More than 50 percent of the respondents are of the opinion that the UCPMP may lead to manipulation in recording of actual sampling activity.
  • Over 50 percent of the respondents indicated that the effectiveness of the code would be very low in the absence of legislative support provided to the UCPMP committee.
  • 90 percent of the respondents felt that pharma companies in India should focus on building a robust internal controls system to ensure compliance with the UCPMP.

In my view as well, the self-regulatory measures prescribed in the UCPMP of the DoP are unlikely to make any significant impact in 2015, unless pharma companies start focusing on building robust internal controls system to ensure compliance with the UCPMP.

Conclusion:

I would now put on the balance of probabilities, the new ‘Silver Linings’ of the Global pharmaceutical industry as discussed above, the issues and challenges of 2015 for the Indian pharma and also other important factors that I have not been able to discuss in this article. The overall emerging picture depicts that the pharma industry, both global and local, would fare much better than what it did in the recent past, provided the industry, as a whole, does not continue to ignore the storm signals outright.

Thus, based on the available data, the year 2015, as appears to me, would provide an enormous opportunity with promises of an interesting time ahead that the pharmaceutical industry should try to leverage on…and then cherish it for a long while…most probably as a turning point of the same ball game with different success requirements.

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.