Tag Archives: Medicare

Big Pharma Fails Avoiding Drug Price ‘Control’? Even In The US? Why?

Posted on by
Reply

It ultimately happened – even in the United States, as the US President signed a bill on August 16, 2022 that aims to reduce healthcare costs, alongside fighting climate change, besides raising taxes on the rich. This new law was enacted, despite powerful lobbying and the vehement opposition of big pharma associations and that too in their home turf.

According to the Fierce Pharma report of the same day, since the current US President moved into the White House in 2020, the drug industry left no stone unturned battling to preserve pricing status-quo. It further added, the ‘pharmaceutical industry, including, PhRMA, its allies, and the nation’s largest pharmaceutical firms’ have spent more than $205 million in multi-media ads opposing ‘Medicare price negotiations’ and lobbying against efforts to lower drug prices for consumers.’

No wonder, when the bill was just introduced to the US lawmakers, big pharma’s disappointment on the bill was palpable. This gets well-captured in what the AbbVie CEO pointed out at that time. He said, ‘the legislation would force manufacturers to accept the government’s proposed price or face a harsh tax on their revenues from a given product.’ He also said: “So, it’s not a negotiation,” as stated in the bill. He further opined in his conference call: “We should just call it what it is. It’s price controls,’ which is what the lawmakers are ‘basically putting in place, if the language stays the same,’ the AbbVie chief added.

Capturing this new development in the United States, at least, in the recent past - Fierce Pharma in its August 08, 2022, issue commented: “The seemingly unstoppable pharma lobbying force has lost its charm. With the passage of a new bill, the U.S. Senate is opening the door to major drug pricing reform, leaving the drug industry licking its wounds.”

In the Eldorado of the global drug industry, this is indeed an unprecedented initiative to significantly reduce costs of many important drugs and reduce patients’ out of pocket expenses. Consequently, it has created so much of hullabaloo, across the world, for various reasons. In this article, I shall track this emerging scenario along with the message that it sends across the globe, and its possible impact on new drug innovation to meet unmet needs of patients. In India, one such area could be revisiting the price negotiation proposal for patented drugs, a government initiative that failed to take off earlier.

Would lowering prices stifle new drug innovation?

The apprehension, I reckon, that big pharma will continue to play with - price control will stifle new product innovation – adversely impacting patient interest. Notably, to many industry experts, this argument doesn’t just lack robustness, seems more a conjecture rather than the outcome of any peer- reviewed research study findings. On ewthe contrary, several highly credible and independent studies prove otherwise. Thus, let me put hereunder:

  • One – what big pharma directly and through their powerful industry associations or some financially sponsored studies are saying
  • And – what the top experts concluded from their independent analysis in this regard, as published in the globally acclaimed journals.

I leave it to my readers to evaluate the credibility of each to form their views.

Drug industry arguments supported by recent studies:

The findings of a study conducted recently, with the financial support of the Pharmaceutical Research and Manufacturers of America (PhRMA), the Biotechnology Innovation Organization (BIO), Amgen, Pfizer, Alexion, AbbVie, Genentech, and Bristol Myers Squibb, were released by PhRMA on November 23, 2021. The study was conducted by Vital Transformation. The key findings of this study highlighted: ‘Every 10% drop in the price of medicines in price-controlled EU markets was associated with a:

  • 14% decrease in total VC funding (10% early stage and 17% late stage)
  • 7% decrease in biotech patents
  • 9% decrease in biotech start-up funding relative to the US
  • An 8% increase in the delay of access to medicines.

It concluded: ‘Drug pricing controls implemented in the US would likely have an even greater impact on Biopharma KPIs given its global leadership in investment and innovation.’

Independent expert studies, published in highly reputed journals:

Around the same time as the above report, an independent study published in the Harvard Business Review (HBR) on October 01, 2021, found exactly the opposite. It categorically stated: ‘The U.S. can lower drug prices without sacrificing innovation.’

The paper summed up: ‘With Congress considering legislation to allow Medicare to use its bargaining power to negotiate lower drug prices, large pharmaceutical companies are once again waging a campaign that contends that doing so would seriously harm the development of breakthrough drugs. This is not true. Smaller companies now account for the lion’s share of such breakthroughs. The key to supporting drug innovation is to increase NIH funding of the efforts that give rise to these new companies, cut the costs, and accelerate the speed of clinical trials, and reform patent law.’

Drug pricing in the Indian context:

Prices of, especially, new drugs and the overall cost of healthcare are two major concerns – more in the developing countries like India. Responding to this need drug price control for pre-defined essential medicines are already in place in the country. More recent studies further vindicate the relevance of such regulation from the perspective of affordability of drugs for the poorer section of the society, and where out of pocket expenses are very high.

Let me quote one such paper, published on June 04, 2022, which received no outside financial support from this study, where the researchers concluded: ‘With induced demand and an inadequate competitive environment, the pharmaceutical industry fails to reduce prices. Supply-chain trade margins are very high. Hence, government intervention through price control of essential and life-saving drugs is a necessity in India.’

In this context, another question that is being raised – are there other alternatives to expand access to high-priced life-saving drugs at an affordable cost to all those who need those most? The most common alternative that floats, encourage more competition for those drugs as soon as they go off patent. Let me examine what’s big pharma players are doing in that area.

Does Big Pharma encourage increasing competition to reduce drug prices?

Another way to reduce the price of an expensive product is encouraging competition to enable market forces bring down the price. An interesting article on breaking the rule of drug pricing by pharma companies was published in the Forbes magazine on June 29, 2022. I also wrote on June 10, 2013: ‘To scale-up access to health care, especially for the marginalized population of any country, greater access to affordable generic drugs will always remain fundamental, besides improving healthcare infrastructure and its delivery mechanism.’

Thus, there should be a robust mechanism, across the world, to facilitate quick entry of cheaper generic equivalents immediately after patent expiry of the original molecule. Increasing attempts of blocking entry of generics surreptitiously by vested interests, leaves no other alternative, but price control. This is imperative, ‘as without the availability of newer generics, unmet medical needs of the most vulnerable section of the society cannot be met effectively by any country, as I wrote there.

Attempts to game the system to minimize competition continue unabated:

Even after my article, this red flag is being raised for quite some time. It will be evident from another Harvard Business Review article titled, ‘How Pharma Companies Game the System to Keep Drugs Expensive,’ published in the on April 06, 2017. Acknowledging: ‘Drug development is risky and expensive, thanks to the long testing and approval process,’ the author concluded from their study – ‘But, increasingly, makers of branded drugs are using a variety of tactics to extend their exclusive rights,’ enabling them to maintain high drug prices for much longer time.

More recently, the above Forbes article of June 10, 2022 also highlighted, ‘even the most generous patent protections come to an end and companies must face the potential for generic competition. That’s when major drug manufacturers shift tactics from influencing policy to crushing the competition.’ There are several legal and semi-legal approaches that big pharma players adapt to game the system and maintain pricing monopoly. Let’s recap it with just three of these examples:

- ‘Patent Thicket: Delaying entry of lower price off-patent molecule through a Patent Thicket. This involves creation of ‘a dense web of overlapping intellectual property rights that a generic pharma company must hack its way through in order to actually commercialize new technology of a drug molecule,’ even after the original patent expires. For example, AbbVie’s Humira, the world’s best-selling drug for a long time. I also discussed this issue in my blog over three years ago – on April 22, 2019.

- ‘Pay-for-delay deals’:  I discussed this issue in this blog on June 19, 2013. Moreover, the above Forbes article of June 29, 2022, also underscored this tactic. It explained that this is a deal in which drug companies agree not to compete for a set amount of time to maintain high prices of their brand-name drugs. The article, published in Bloomberg Law on February 20, 2020, captures it nicely.

- Authorized generics: As many would know, law permits six months of exclusivity to the first generic version of an off-patent new molecule coming into the market. Interestingly, just before patent expiry of an innovative drug, several drug makers roll out their own generics to stifle competition. Although, they keep different names for the generic versions, but pricing remains almost similar. Such a practice obliviously delays the entry of cheaper generics, at least by six months.

In this scenario, the new drug prices continue racing north. Something was to be surely done – for patients’ sake, as many believe, at least, where it all started – the US.

New drug prices are highest in 2022:

As reported by Reuters on August 16, 2022:

  • Eight of 13 drugs launched in 2022 priced over $200,000 per year
  • Median annual price for new U.S. drugs this year is $257,000
  • Some drugmakers disclose less information on pricing

Despite this, as reported on August 15, 2022: ‘The main U.S. drug lobby has said it will push back against the legislation, which includes policies that drug makers have opposed for decades.’

Conclusion:

The significance of the above development in the US healthcare scenario, was aptly summed-up by the US House Speaker, as she said: “If you are sitting at your kitchen table and wonder how you’re going to pay the bills – your health care bills, your prescription drug bills – this bill is for you.” For the first time in the US – the champion of champions of free-drug pricing market, will negotiate the drug price with their manufacturers to become patient -centric.

The reverberations of this difficult decision, especially on new drug prices, are expected to prompt the need for price negotiation or price control, primarily for expanding access to new drugs for a larger number of patients. This deserves to be a focus area for the Government, including India. Moreover, the August 18, 2022, media report also suggests that the top court of India may now encourage the Government to investigate, report and take remedial action on drug industry malpractices.

Finally, it’s worth noting that over a decade ago, international media widely reported -  ‘India considering price controls for patented drugs.’ Its objective was to address the aggressive new drug pricing trend in the country. Accordingly, the price negotiation proposal for patented drugs was notified by the Department of Pharmaceuticals (DoP) in 2007. The constituted Committee submitted a report, as well, on February 21, 2013. But it did not take off as on date. Many apprehend, this is due to intensive and ongoing lobbying by big pharma, just as what happened in the US. Nevertheless, the question that surfaces – will the above new drug law in the largest pharma market in the world encourage the DoP to revisit price negotiation for patented drugs - to make modern drugs affordable to a larger patient population in India – now?

By: Tapan J. Ray

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

Sanofi’s acquisition of Universal Medicare could redefine nutraceuticals business in India

Posted on by
Reply

The Economic Times in its August 24, 2011 edition reported that Sanofi-Aventis has acquired the nutraceuticals business of Universal Medicare to scale up their business operations in the ‘wellness’ space of the healthcare sector in India.

What are ‘Nutraceuticals’?

Dr. Stephen DeFelice of the ‘Foundation for Innovation in Medicine’ coined the term ‘Nutraceutical’ from “Nutrition” and “Pharmaceutical” in 1989. The term nutraceutical is being commonly used in marketing such drugs/substances but has no regulatory definition.

It is often claimed that nutraceuticals are not just dietary supplements, but also help prevention and/or treatment of disease conditions.

Besides diseases, nutrition related risk factors contributing to more than 40% of deaths in the developing countries like India, nutraceutical products do show a promise as an emerging business opportunity within the healthcare space of the country.

The market:

The global nutraceuticals market is currently estimated to be around US$ 117 billion and expected to reach US$ 177 billion by 2013 with a CAGR of 7%, driven mainly by functional foods segment with a CAGR of 11%. The top countries in this category are Japan, USA and Europe with the former two together enjoying around 58% market share of the total nutraceuticals consumption of the world. In 2008 Indian nutraceuticals market was around US$ 1.0 billion, 54% of which being functional foods.

The prices of most nutraceuticals products, being outside government price regulations in India, are usually high.

Although current market share of India in the global nutraceuticals market is less than even 1%, a report from PwC predicts that India will join the league of top 10 by 2020. Increasing discretionary spending, changing lifestyles and growing awareness among Indians about healthy living, coupled with current overall low market penetration of high priced nutraceuticals products in India, could create a powerful trigger for the market growth.

Sanofi could sniff the opportunity in India:

Sniffing the market opportunity in this segment, especially in India, the Sanofi group’s Aventis Pharma, as mentioned above, has acquired the nutraceuticals business of Universal Medicare Private Ltd of worth Rs.110 Crore, in August, 2011. The nutraceuticals product portfolio of Universal Medicare consists of more than 40 brands, which include cod liver oil capsules, vitamins/ mineral supplements, antioxidants and liver tonics to name a few.

It will be interesting to watch whether Sanofi takes these nutraceutical products to other markets of the world, especially in Japan, Europe and the US.

Currently most global pharma companies are engaged in evidence based therapeutic substances:

So far, the large global pharmaceutical players have been focusing mainly, if not only on Evidence Based Medicines (EVM). Companies like, GlaxoSmithKline (GSK), were reported to have discontinued marketing those products, which do not fall under ‘Evidence Based Medicines (EVM), even in India.

Evidence-Based Medicine (EBM):

The term and concept of EBM originated at McMaster University of Canada in early 1990 and has been defined as “the integration of best research evidence with clinical expertise and patient values” (Sackett, 2000).

EBM is thus a multifaceted process of systematically reviewing, appraising and using clinical research findings to aid the delivery of optimum clinical care to patients/user. EBM also seeks to assess the strength of evidence of the risks and benefits of any particular treatment claim. This is mainly because increasingly the users are looking to authentic scientific evidence in clinical/wellness practice.

Thus many global pharmaceutical companies believe that EBM offers the most objective way to determine and maintain consistently high quality and safety standards of healthcare products in the healthcare practice.

The span of nutraceuticals ranges from prescription to OTC Products:

In India, nutraceuticals are being used/prescribed even by the medical profession, not only as nutritional supplements but also for the treatment of disease conditions, like arthritis, osteoporosis, cardiology, diabetes, pain management etc.

The challenge: Some experts believe, robust clinical data support is essential to substantiate ‘wellness’ claim with nutraceuticals:

Therapeutic efficacy in the treatment of a disease condition is established with pharmaceutical, pharmacokinetic and pharmacodynamics studies of the substances concerned. Some experts believe that these studies are very important also for nutraceuticals, as they are involved in a series of various reactions within the body, especially while making any therapeutic claims, directly or indirectly.

Similarly, to establish any long term toxicity problem with such products, generation of credible data including those with animal reaction to the products, both short and long term, using test doses several times higher than the recommended ones, is critical.

These experts, therefore, quite often say, “A lack of reported toxicity problems with any nutraceutical should not be interpreted as evidence of safety.”

The status in the USA:

In the USA, Congress passed the ‘Dietary Supplement Health and Education Act’ in 1994. This act allows ‘functional claims’ to Dietary supplements without drug approval, like “Vitamin A promotes good vision” or “St. Johns Wort maintains emotional well-being”, as long as the product label contains a specific disclaimer that the said claim has not been evaluated by the FDA and that the product concerned is not intended to diagnose, treat, cure or prevent disease.

The above Act bestows some important responsibility to the doctors in particular, who are required to provide specific and accurate scientific information for nutraceutical products to their patients. This process assumes critical importance as the patients would expect the doctors to describe to them about the usefulness of nutraceutical products as alternatives to approved drugs. In such cases, if any doctor recommends a dietary supplement instead of pharmaceutical products, the doctor concerned must be aware of the risk that the patient’s health may suffer, for which the affected patient could sue the doctor for malpractice.

The Point to ponder: What happens if nutraceuticals are regulated as pharmaceuticals?

It is worth mentioning, if generation of clinical data, though albeit less than the pharmaceuticals, ever becomes mandatory regulatory requirements for getting marketing approval of nutraceutical products in India, commensurate increase in price for such products could indeed push their commercial survival in jeopardy.

Conclusion:

Nutraceuticals bearing a tag of promise, in a conducive regulatory environment, to provide desirable therapeutic benefits with less or no side effects as compared to conventional medicines, is growing well with reasonably good financial success, across the world. India is no exception.

In India, many nutraceuticals products, which are currently in the market, do not seem to have been adequately tested to generate robust clinical data, leave aside being peer reviewed and published in the reputed international journals for either safety or efficacy. Entry of global majors, like Sanofi, with a sharp focus on EBM, brings in a hope and promise to get these loose knots, in this very important area, tightened very significantly, while driving their business growth in the country.

Under this backdrop, it is widely expected that Sanofi, with its well proven global marketing and technical leadership, would change the ball game of nutraceutical products business in the healthcare space of India.

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.