Has Prime Minister Modi Conceded Ground To America On Patents Over Patients?

Posted on October 6, 2014 by Tapan Ray

Unprecedented high profile engagement of the Indian Prime Minister with various interested groups during his recent visit to the United States under equally unprecedented media glare, has invited overwhelmingly more kudos than brickbats, from across the world.

However, in the context of upholding patients’ health interest in India, a lurking fear did creep in, immediately after his visit to the United States. This was related to whether or not demonstrably tough minded Prime Minister Modi has yielded to enormous pressure created by all powerful American drug lobby against the current Intellectual Property (IP) regime in India.

The backdrop:

This apprehension started bothering many as the Prime Minister appeared to have moved away from a much-reiterated stand of India that any IP related issue would be discussed only in a multi-lateral forum.

That India’s Patents Act is TRIP’s compliant, has been categorically endorsed by a vast majority of international and national experts, including, a key intellectual belonging to Prime Minister Modi’s ‘Think -Tank’ – Arvind Panagariya, Professor of Economics at Columbia University, USA.

Subsequent to my blog post of February 5, 2014, an article dated March 4, 2014 titled “India Must Call The US’ Bluff On Patents” penned by Panagariya stated as follows:

“Critics of the Indian patent law chastise it for flouting its international obligations under the TRIPS Agreement. When confronted with these critics, my (Arvind Panagariya) response has been to advise them:

To urge the US to challenge India in the WTO dispute settlement body and test whether they are indeed right.

Nine years have elapsed since the Indian law came into force; and, while bitterly complaining about its flaws, the USTR has not dared challenge it in the WTO. Nor would it do so now. Why?

There is, at best, a minuscule chance that the USTR will win the case.

Against this, it must weigh the near certainty of losing the case and the cost associated with such a loss.

Once the Indian law officially passes muster with the WTO, the USTR and pharmaceutical lobbies will no longer be able to maintain the fiction that India violates its WTO obligations.

Even more importantly, it will open the floodgates to the adoption of the flexibility provisions of the Indian law by other countries.

Activists may begin to demand similar flexibilities even within the US laws.

On possible actions against India under the ‘Special 301’ provision of the US trade law, Professor Arvind Panagariya argues:

“Ironically, this provision itself was ruled inconsistent with the WTO rules in 1999 and the US is forbidden from taking any action under it in violation of its WTO obligations. This would mean that it couldn’t link the elimination of tariff preferences on imports from India to TRIPS violation by the latter. The withdrawal of preferences would, therefore, constitute an unprovoked unilateral action, placing India on firm footing for its retaliatory action.”

Examples of some global and local views:

On this score, a large number of business experts from all over the world have expressed their views, recently. Some examples are as follows:

The former Chairman of Microsoft India reportedly advised the new ‘Modi Regime’ as follows:

“While the new government must work hard to make India more business friendly, it must not cave in to pressure on other vital matters. For instance, on intellectual property protection, there is enormous pressure from global pharmaceutical companies for India to provide stronger patent protection and end compulsory licensing. These are difficult constraints for a country where 800 million people earn less than US$ 2 per day.”

Maruti Suzuki, India’s largest car manufacturer, aircraft maker Boeing, global pharma major Abbott and technology leader Honeywell have reportedly just not supported India’s IP regime, but have strongly voiced that IPR regime of India is “very strong” and at par with international standards.

The Chairman of the Indian pharma major – Wockhardt also echoes the above sentiment by articulating, “I think Indian government should stay firm on the Patents Act, which we have agreed.”

Other domestic pharma trade bodies and stakeholder groups in India expect similar action from the ‘Modi Government’.

Who are against Indian IP regime?

By and large, American pharma sector and their well-paid lobbyists representing drug multinationals are the strongest critics of Indian Patents Act 2005. They allege that Indian IP law discriminate against US companies and violates global norms, severely affecting their investments in India.

Recent stand of India on unilateral US measures:

Just to recapitulate, on April 30, 2014, the United States in its report on annual review of the global state of IPR protection and enforcement, named ‘Special 301 report’, classified India as a ‘priority watch list country’.

On this report, India responded by saying that the ‘Special 301’ process is nothing but unilateral measures taken by the US under their Trade Act 1974, to create pressure on countries to increase IPR protection beyond the TRIPS agreement.

The Government of India has always maintained that its IPR regime is fully compliant with all international laws.

The Indo-US working group on IP:

The Indo-US high-level working group on IP would be constituted as part of the Trade Policy Forum (TPF). The US-India TPF is the principal trade dialogue body between the countries. It has five focus groups: Agriculture, Investment, Innovation and Creativity, Services, and Tariff and Non-Tariff Barriers.

The recent joint statement issued after talks between Prime Minister Narendra Modi and US President Barack Obama states:

“Agreeing on the need to foster innovation in a manner that promotes economic growth and job creation, the leaders committed to establish an annual high-level Intellectual Property (IP) Working Group with appropriate decision-making and technical-level meetings as part of the TPF.”

This part of the Indo-US joint statement on IPR created almost a furore not just in India, but in other parts of the world too, interpreting that Prime Minister Modi has conceded ground to America on patents over patients.

IP experts’ expressed concerns even in the US:

Commenting on this specific move by the Obama Administration to push India on issues related to IP, even the independent American healthcare experts expressed grave concern.

Professor Brook K. Baker from the Northeastern University School of Law has reportedly said:

“This working group will give the US a dedicated forum to continue to pressure India to adopt TRIPS-plus IP measures, including repeal of Section 3(d) of the India Patents Act, adoption of data exclusivity/monopolies, patent term extensions, and restrictions on the use of compulsory licenses”.

Professor Baker further said:

“The US, in particular, will work to eliminate local working requirements that India is seeking to use to promote its own technological development…. The fact that this working group will have ‘decision-making’ powers is particularly problematic as it places the US fox in the Indian chicken coop.”

“FDI and innovation are also always rhetorically tied to strong IPRs despite inclusive evidence that typically shows that most low and middle-income countries do not benefit economically from IP maximization, since they are net importers of IP goods. It is also because the path to technological development is ordinarily through copying and incremental innovation – development tools that are severely undermined by IP monopoly rights and their related restrictive licensing agreements,” Baker elaborated.

Jamie Love, Director, Knowledge Ecology International, an NGO working on knowledge governance also reportedly said:

“It is very clearly going to be used to pressure India to expand liberal grants of drug patents in India, and to block or restrain the use of compulsory licenses on drug patents.”

Has India conceded to American bullying?

On this backdrop, during Indian Prime Minister’s interaction with the President of the United States and his aids, it was reportedly decided to set up a high-level working group on IP, as a part of the TPF, to sort out contentious issues which have been hampering investments. This was interpreted by many experts that India has conceded to American bullying, as it apparently deviated from its earlier firm stand that the country would discuss IP issues only in multilateral forum such as the World Trade Organization (WTO).

No change in India’s position on patents:

Taking note of this humongous misunderstanding, on October 4, 2014, the Union Ministry of Commerce in an official clarification reiterated that during Prime Minister Modi’s visit to America:

There has been no change in India’s stated position on Intellectual Property Rights (IPR).

India has reaffirmed that the IPR legal regime in India is fully TRIPS-compliant.

A bilateral Innovation and Creativity Focus Group already exists in the Trade Policy Forum (TPF) since 2010. Any IP related issues have to be discussed by the United States only in the TPF. This group consults each other no less than twice a year on improving intellectual property rights protection and enforcement, enhancing awareness of intellectual property rights, fostering innovation and creativity, and increasing collaboration between American and Indian innovators.

The Indo-US joint statement issued now merely reiterates whatever has existed in the earlier Trade Policy Forum. IPR issues are critical for both the countries and India has been repeatedly raising the issue of copyright piracy and misappropriation of traditional knowledge with the US.

The US agreeing to discuss IPR issues through the bilateral mechanism of the Trade Policy forum is in fact a re-affirmation of India’s stand that issues need bilateral discussion and not unilateral action. The statement on the IPR issue will only strengthen the bilateral institutional mechanism.

Conclusion:

Most part of the above statement is indeed quite consistent to what happened even immediately before the Modi regime.

In September 2013, the Commerce Secretary and India’s Chief trade Negotiator, Rajeev Kher, while terming the decision by the US Trade Representative for not labeling India with its worst offender tag in IP as a ‘very sensible decision’, strongly defended India’s right to overrule patents in special cases to provide access to affordable innovative medicines to its 1.2 billion people.

Moreover, many recent judicial verdicts have vindicated that a strong and balanced patent regime of the country not just secures the bonafide rights of the patentee, but at the same time ensures genuine needs of the public and in case of pharma of the ailing patients.

The Indian Supreme Court judgment on Glivec of Novartis in the recent past, have re-established, beyond an iota of doubt, that to secure and enforce patents rights of genuine inventions, other than evergreening, India provides a very transparent IP framework.

Taking all these into consideration, it seems unlikely to me that Prime Minister Modi, who is a self-confessed nationalist and holds India’s interest first, would in any way compromise with the country’s TRIPS compliant patent regime, sacrificing millions of Indian patients’ health interest at the altar of American business needs.

The above official clarification by the Union Ministry of Commerce is expected to tame the fire of this raging debate to a great extent. However, the grave concern expressed in the following lines by the independent healthcare experts, such as Professor Baker, on the high-level IP working group, cannot just be wished away:

“The fact that this working group will have ‘decision-making’ powers is particularly problematic as it places the US fox in the Indian chicken coop.”

That said, from your government Mr. Prime Minister “Yeh Dil Maange Much More”.

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.

“Make in India…Sell Anywhere in The World”: An Indian Pharma Perspective

Posted on September 29, 2014 by Tapan Ray

In his Independent Day speech from the ramparts of the Red Fort on August 15, 2014, Indian Prime Minister Modi gave a clarion call to all investors of the world, “Come, make in India”, “Come, manufacture in India”, “Sell in any country of the world, but manufacture here”.

The Prime Minister did not stop there. In his inimitable style, following it through on September 25, 2014 he gave an official status to ‘Make in India’ slogan and launched a global campaign.

“My definition of FDI for the people of India is First Develop India. This is also a responsibility for the people of India,” he further clarified.

An Indian perspective:

If I juxtapose this vision of the Prime Minister in the Indian pharmaceutical industry perspective, one finds that many small, medium and large size local domestic manufacturers are currently manufacturing drugs not just for the domestic market, but are also exporting in large quantities to various countries of the world, including, North America, South America and Europe.

The United States (US) is one of the most critical markets for majority of the Indian drug exporters. This transaction was taking place 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, making a significant impact on the drug exports of the country.

Most of these quality issues are related to ‘Data Integrity’ in the dug manufacturing and its documentation processes.

The impact:

According to industry data, in 2013-14, Indian drug exports registered the slowest growth in nearly the last 15 years. In this fiscal year, pharma exports of the country with a turnover of US$ 14.84 billion grew at a meager 1.2 percent. Pharmexcil attributed its reason to USFDA related regulatory issues and increasing global competition.

US accounts for about 25 percent of India’s pharma exports and its Federal Drug Administration (USFDA) has been expressing, since quite a while, serious concerns on ‘Data Integrity’ at the agency’s previously approved production facilities of a large number of Indian pharma players.

The issue is causing not just a serious concern to USFDA and some other overseas drug regulatory agencies, but also posing a huge threat to future growth potential of Indian drug exports.

It is worth noting that Indian government had set an objective, in its strategy document, to register a turnover of US$ 25 billion for pharma exports in 2014-15. In all probability, it would fall far short of this target at the end of this fiscal, predominantly for related reasons.

Why is so much of ‘fuss’ on ‘Data Integrity’?

Broadly speaking, ‘Data Integrity’ in pharmaceutical manufacturing ensures that finished products meet pre-established specifications, such as, for purity, potency, stability and sterility. If data integrity is breached in any manner or in absence of credible data, the product becomes of dubious quality in the eyes of drug regulators.

Manufacturing related ‘Data Integrity’ is usually breached, when data from a database is deliberately or otherwise modified or destroyed or even cooked.

Over the last several years, ‘Data Integrity’ related issues in India are attracting enormous attention of both the USFDA and the MHRA, UK. As a result, concerned pharma manufacturing facilities are receiving Import Alerts/Warning Letters from the respective overseas drug regulators, refusing entry of those medicines mostly in the United States and some in the UK.

Recent warning letters:

Just over a year – from May 2013 to July 2014, around a dozen ‘Warning Letters’ have been sent to the Indian drug manufacturers by the USFDA on ‘Data Integrity’ related issue, as follows:

	Recent ‘Warning Letter’ issued to:	Date of issue
1.	Marck Biosciences Ltd.	08. 07. 2014
2.	Apotex Pharmachem India Pvt Ltd.	17. 06. 2014
3.	Sun Pharmaceutical Industries	07. 05. 2014
4.	Canton Laboratories Private Limited	27. 02. 2014
5.	USV Limited	06. 02. 2014
6.	Wockhardt Limited	25. 11. 2013
7.	Agila Specialties Private Limited	09. 09. 2013
8.	Posh Chemicals Private Limited	02. 08. 2013
9.	Aarti Drugs Limited	30. 07. 2013
10.	Wockhardt Limited	18. 07. 2013
11.	Fresenius Kabi Oncology Ltd	01. 07. 2013
12.	RPG Life Sciences Limited	28. 05. 2013

(Source: RAPS, 19 August 2014)

Another report states that USFDA has, so far, banned at least 36 manufacturing plants in India from selling products in the US.

Importance of US for Indian generic players:

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. Almost all of these are cheaper generic versions of patent expired drugs. Hence, India’s commercial stake in this area is indeed mind-boggling.

The ‘Data Integrity’ issue is not restricted to just US or UK:

A report quoting researchers led by Roger Bate, an American Enterprise Institute scholar and funded by the The Legatum Institute and the Humanities Research Council of Canada, concluded that many Indian pharma companies follow double manufacturing standards, as they are sending poor quality drugs to Africa compared to the same pills sold in other countries. This study was based on tests of 1,470 samples produced by 17 Indian drug manufacturers.

Besides India, the researchers took drug samples from pharmacies in Africa and middle-income countries, including China, Russia and Brazil.

According to this paper, the researchers found that 17.5 percent of samples of the tuberculosis therapy rifampicin sold in Africa tested substandard, which means the drug has less than 80 percent of the active ingredient than what it should otherwise. Against this number, in India, 7.8 percent of the medicine sampled was found substandard.

Moreover, Almost 9 percent of samples of the widely used antibiotic ciprofloxacin sold in Africa tested substandard, as compared to 3.3 percent in India.

Thorny issues around golden opportunities:

Much reported breach in manufacturing ‘Data Integrity’ detected at the manufacturing sites in India, are throwing fresh doubts on the efficacy and safety profile of generic/branded generic medicines, in general, produced in the country and more importantly, whether they are putting the patients’ health at risk.

A new analysis by the U.S. National Bureau of Economic Research pointed out some thorny issues related to ‘Data Integrity’ of drugs produced by the Indian pharmaceutical companies, which supply around 40 percent of the generic drugs sold in the United States, as stated above.

The researchers examined nearly 1,500 India-made drug samples, collected from 22 cities and found that “up to 10 percent of some medications contained insufficient levels of the key active ingredients or concentrations so low, in fact, that they would not be effective against the diseases they’re designed to treat.”

The report also highlighted that international regulators detected more than 1,600 errors in 15 drug applications submitted by Ranbaxy. The Bureau Officials commented that these pills were “potentially unsafe and illegal to sell.”

Frequent drug recalls by Indian pharma majors:

The above findings came in tandem with a series of drug recalls made recently by the Indian pharma companies in the US.

Some of the reported recent drug recalls in America, arising out of manufacturing related issues at the facilities of two well-known Indian pharma majors, which are going to merge soon, are as follows:

Sun Pharmaceuticals recalled nearly 400,000 bottles of the decongestant cetirizine (Zyrtec) and 251,882 of the antidepressant venlafaxine (Effexor) this May, because the pills failed to dissolve properly. The drugs were distributed by the drug maker’s US subsidiary Caraco Pharmaceutical Laboratories, but were manufactured in India.

In the same month – May, Ranbaxy recalled 30,000 packs of the allergy drugs loratadine and pseudo-ephedrine sulphate extended release tablets because of manufacturing defects in packaging.

In March, Sun Pharma recalled a batch of a generic diabetes drug bound for the US after an epilepsy drug was found in it. A patient discovered the error after noticing the wrong medication in the drug bottle.

Again in March, Ranbaxy recalled nearly 65,000 bottles of the statin drug atorvastatin calcium (Lipitor) after 20-milligram tablets were found in sealed bottles marked 10-milligrams. A pharmacist in the U.S. discovered the mix up.

Indian media reinforces the point:

Indian media (TNN) also reported that there is no quality control even for life-saving generic drugs and the government is apathetic on ensuring that the quality protocol of these drugs is properly observed.

This happens, as the report states, despite government’s efforts to push generic drugs, as they are more affordable. The report gave an example of a life-saving drug, Liposomal Amphotericin B, which is used to treat fungal infections in critically ill patients.

Are all these drugs safe enough for Indian Patients?

Though sounds awkward, it is a fact that India is a country where ‘export quality’ attracts a premium. Unintentionally though, with this attitude, we indirectly accept that Indian product quality for domestic consumption is not as good.

Unfortunately, in the recent years, increasing number of even ‘export quality’ drug manufacturing units in India are being seriously questioned, warned and banned by the overseas drug regulators, such as USFDA and MHRA, UK, just to ensure dug safety for the patients in their respective countries.

Taking all these into consideration, and noting increasing instances of blatant violations of cGMP standards and ‘Data Integrity’ requirements for ‘export quality’ drugs, one perhaps would shudder to think, what could possibly be the level of conformance to cGMP for the drugs manufactured solely for the consumption of local patients in India.

A cause of concern, as generic drugs are more cost effective to patients:

It has been widely recognized globally that the use of generic drugs significantly reduces out-of-pocket expenditure of the patients and also payers’ spending.

The findings of a study conducted by the Researchers from Brigham and Women’s Hospital (BWH), Harvard Medical School and CVS Health has just been published in the Annals of Internal Medicine on September 15, 2014. In this study the researchers investigated whether the use of generic versus brand name statins can play a role in medication adherence and whether or not this leads to improved health outcomes. The study concluded that patients taking generic statins were more likely to adhere to their medication and also had a significantly lower rate of cardiovascular events and death.

In this study, the mean co-payment for the generic statin was US$10, as against US$48 for brand-name statins. It is generally expected that the generic drugs would be of high quality, besides being affordable.

I deliberated on a related subject in one of my earlier blog posts of November 11, 2013 titled, “USFDA” Import Bans’: The Malady Calls For Strong Bitter Pills”.

Conclusion:

According to USFDA data, from 2013 onwards, about 20 drug manufacturing facilities across India attracted ‘Import Alerts’ as against seven from China, two each from Australian, Canadian and Japanese units and one each from South African and German facilities.

Unfortunately, despite intense local and global furore on this subject, Indian drug regulators at the Central Drugs Standard Control Organization (CDSCO), very strangely, do not seem to be much concerned on the ‘Data Integrity’ issue, at least, not just yet.

In my view, ‘Data Integrity’ issues are mostly not related to any technical or other knowledge deficiency. From the “Warning Letters” of the USFDA to respective Indian companies, it appears that these breaches are predominantly caused by falsification or doctoring of critical data. Thus, it basically boils down to a mindset issue, which possibly pans across the Indian pharma industry, irrespective of size of operations of a company.

Indian Prime Minister’s passionate appeal aimed at all investors, including from India, to “Make in India” and “Sell Anywhere in The World”, extends to pharma industry too, both local and global. The drug makers also seem to be aware of it, but the ghost keeps haunting unabated, signaling that the core mindset has remained unchanged despite periodic lip service and public utterances for corrective measures by a number of head honchos.

Any attempt to trivialize this situation, I reckon, could meet with grave consequences, jeopardizing the thriving pharma exports business of India, and in that process would betray the Prime Ministers grand vision for the country that he epitomized with, “Make in India” and “Sell Anywhere in The World”.

By: Tapan J. Ray

Pharma And Healthcare: Mounting ‘Trust Deficit’ In Post Halcyon Days

Posted on September 1, 2014 by Tapan Ray

Although a radical transformation in the field of medicine and path breaking advances of medical sciences are in progress, the healthcare system as whole, including the pharma industry, as voiced by many, is fast losing its human touch and values. This is mainly because a large number of patients feel that they are being financially exploited in the entire medical treatment chain, as their ailments become primary means of making money…more money by many others .

A new and interesting book, authored by a practicing cardiologist, titled “Doctored: The Disillusionment of an American Physician”, which has just been released in August 2014, also unfolds with self-example a dysfunctional healthcare system and stark realities of practicing medicine even in the ‘Mecca’ of medicine – the United states.

The author eloquently highlights the malaise and cronyism affecting a sizeable number within the medical profession, being hand in gloves with a large constituents of the pharma industry. Medical practice seems to have now become just as any other ‘make-money’ endeavor; not quite different from what the pharma business has metamorphosed into, over a period of time.

A heartless game played by shrewd minds:

In a situation like this, a heartless game is being played by shrewd business savvy minds, at the cost of patients, making healthcare frightfully expensive to many.

As the above new book narrates, many pharmaceutical companies are coming to the fore to exploit the situation for commercial gain. In the book the author confesses, to make extra cash, he too accepts speaking fees from a pharmaceutical company that makes a cardiac drug he prescribes. He candidly admits enjoying the paid speeches on that specific pharma company’s drugs to influence other doctors, usually arranged at exotic places over fancy dinners. The author does not fail in his part to admit that the drug he touts on behalf of the pharma company turns out to be no better than other cheaper alternatives.

In this beautifully written memoir, the author Dr. Sundeep Jauhar tries to bring to light many complex problems of the healthcare system and alleged involvement of global pharma companies to drive the medical treatment costs up at a galloping pace. All these are being driven by various malpractices in pursuit of making quick bucks.

There are some compelling health policy, public spending on health and infrastructure related issues too, specifically for India, which are not the subject of my today’s discussion.

In this article, I shall neither dwell on the above book any further, but briefly deliberate on how all these, much too often repeated instances, are giving rise to mounting ‘Trust Deficit’ of the stakeholders, involving both the pharma industry and the medical profession at large and yet, quite intriguingly, they seem to remain unbothered.

The Halcyon days and after:

When we take a glimpse into the recent history of pharma and healthcare industry, it would be quite possible to convince ourselves that the overall situation, focus and mindset of the drug industry honchos and members of the medical profession were quite different, even a few decades ago. Those were the ‘Halcyon Days’.

At that time, pharmaceutical industry used to be one of the most admired industries of the world and people used to place the doctors almost in the pedestal of God.

Unlike today, when the drugs meant for the treatment of even widely prevalent dreaded diseases, such as, Cancer, Hepatitis C and HIV are not spared from maximum stretch pricing, the grand vision of the Global Chief Executives, in general, used to extend much beyond of just making profits. So were the doctors christened by the Hippocratic Oath. Yes, I repeat, those were the ‘Halcyon Days’.

Just to cite an example, in 1952, George Wilhelm Herman Emanuel Merck, the then President of Merck & Co was quoted on the front cover of the ‘Time Magazine’, epitomizing his following vision for the company:

“Medicine is for people, not for the profits”.

Having articulated this vision with so much of passion and clarity, Merck did not just walk the talk, in tandem, he steered an up swing in the company’s valuation over 50 times, proving beyond an iota of doubt that it is possible to give shape to his vision, if there is a will.

Today, in post ‘Halcyon Days’, for many of those who follow the history and development of the knowledge driven pharma and healthcare industry, this grand vision is no more than a sweet memory. Though the bedrock of pharma industry is innovation, is it inclusive? Is it benefitting the majority of the global population? No one believes now that “Medicine is for people, not for the profits”.

Thus, it was no surprise to many, when in 2012 while vocalizing its anguish on specific pharma mega malpractices ‘The Guardian’ came out with a lashing headline that reads as follows:

‘Pharma Overtakes Arms Industry To Top The League Of Misbehavior.’

Ignoring the reality:

Many people believe that all these are happening, as the global pharma industry refuses to come out of its nearly absurd arrogance created by spectacular business successes, over a very long period of time, with a large number of blockbuster drugs and the massive wealth thus created.

It appears, the pharma industry, by and large, cannot fathom just yet that its business model of 1950 to perhaps 1990, has lost much of relevance at the turn of the new millennium with changing aspirations and values of people, governments and the civil society at large.

Key reasons of distrust:

If we make a list from the global and local reports, the following are some of the key examples:

Media reports on pharmaceutical companies directly paying to doctors for writing prescriptions of high priced drugs to patients.

A growing belief that the pharma industry spends disproportionately more on sales & marketing than on R&D, which eventually increases the drug prices.

Unabated reports in the media of various pharma malpractices from across the world, including hefty fines amounting to billions of dollars, paid by many global pharma players.

A widespread belief that for commercial gain, the industry often hides negative clinical trial results, which go against patients’ health interest.

A recent survey:

According to a recent ‘Healthcheck Survey’ of the drug business by ‘Eye for Pharma’:

42 percent of the respondents indicated that image of pharma is not getting any better among average people.

More than one-third said they are not sure or remained neutral on the subject.

19 percent within the group are optimistic about improving image of pharma.

Though, it was reported that almost half of the respondents believe the industry knows what to do to gain standing and only 24 percent think pharma is clueless about how to regain its reputation, the commentators on the survey results are skeptical that companies are willing to do what it takes. This is predominantly because the pharma players do not know what would be the immediate financial impact, if the corrective measures were taken.

2014 developments in India:

In August 2014, a premier television news channel of India – NDTV exposed some blatant violations of medical guidelines involving both the doctors and the pharmaceutical companies in the country. The crew of NDTV carried out a sting operation (video), pretending to be medical representatives of a Delhi based new pharma company. The video clipping showed three doctors resorting to malpractices for which the pharma companies pay them heavily, though illegally.

This particular sting operation by NDTV could arrest the attention of the new Union Minister of Health Dr. Harsh Vardhan, whose reaction on tweeter was:

“One more sting operation on doctors exposing greed and readiness to shed professional ethics. I again appeal to brother doctors – show spine!”

Based on this public expose, the Medical Council of India (MCI), which is supposed to serve as the watchdog for doctors and overall medical practices, was compelled to conduct an enquiry on professional misconduct against those three doctors through its Ethics Committee. MCI has the power to cancel licenses of the erring medical practitioners.

Soon thereafter, one of the three Delhi doctors, who were caught on camera taking bribes in exchange of prescribing drugs, was reportedly arrested and the other two doctors were summoned by MCI for further investigation.

Just before this incident an article published in the well-reputed British Medical Journal (BMJ) on 08 May 2014 highlighted, “Corruption ruins the doctor-patient relationship in India”. The author David Berger wrote, “Kickbacks and bribes oil every part of the country’s healthcare machinery and if India’s authorities cannot make improvements, international agencies should act.”

I deliberated a part of this issue in one of my earlier blog posts titled “Kickbacks And Bribes Oil Every Part of India’s Healthcare Machinery”.

Interestingly, a couple of months earlier to this BMJ report, the Competition Commission of India (CCI) issued notices for various illegal practices in the pharma industry. These notices were served, among others, to pharma industry associations, chemists associations, including individual chemists & druggists, stockists, wholesalers and even to some local and global pharma majors.

In February 2014, the CCI reportedly issued a warning of severe penalties and prosecution to various bodies in the pharmaceutical industry indulging in anti-competitive practices even after giving undertakings of stopping the illegal practices, for which they were summoned for deposition before the commission earlier.

The CCI has now called upon the public through a public notice to approach it for curbing the malpractices that amount to anti-competitive in nature, adversely impacting interests of the consumer.

I reckon, all these actions are fine, but the bottom-line is, pharma and healthcare malpractices still continue unabated at the cost of patients, despite all these. Unable to garner adequate resources to pay for the high cost of treatment, which is fuelled by virtually out of control systemic malfunctioning, the families of a large number of patients are reportedly embracing abject poverty each year.

Pharma and healthcare continue to remain unbothered:

It is also not surprising that despite global uproar and all these socio-commercial issues, including pressure on drug prices, pharma and healthcare continue to march on the growth path, without any dent in their business performance particularly on this count.

Just to give an example, Moody Investor Services have highlighted just last week that India’s pharmaceutical market is set to experience continuing double-digit growth, faster than most other markets of the industry.

Lack of significant financial impact on the overall business performance on account of the alleged misconducts, barring USFDA imports bans, further reduces the possibility of a sense urgency for a speedy image makeover of the industry by doing the right things, in an organized manner.

The reason behind this inertia is also understandable, as expenditure on healthcare is not discretionary for the patients. To save lives of the near and dear ones, almost everybody, irrespective of financial status, try to garner resources to the maximum possible, whatever it costs.

Urgent remedial measures necessary:

Effective remedial measures to allay public distrust in all the above areas, in tandem with working out well-networked and inclusive innovation models, I reckon, would prove to be more meaningful today. This would facilitate not just in increasing the market access, but also for cost-effective innovation of new products leveraging the complex science of evolving biology. Let me reiterate, all these should be woven around the center piece of patients’ interest, without an exception.

I hasten to add here that some green shoots in this area have already started becoming visible, as some global industry constituents, though small in number, are articulating their new vision and the uncharted path that they intend to follow. Keeping a tab on the speed of spread of these green shoots would be important.

It is really a matter of conjecture now, whether the visible green shoots, as seen today would perish or not over a period of time. Nonetheless, that possibility is always there, if the concerned companies decide afresh that the efforts required for a long haul are not sustainable due to intense short-term performance pressure. Hence, it is not worth the financial risk taking.

In that scenario, they would continue with their existing business model of achieving the financial goals by selling the high priced medicines to the privileged few of the rich countries and to affluent people living in the other parts of the world, depriving millions of patients who desperately need those drugs, but are unable to afford.

Conclusion:

Alleged malpractices in pharma and healthcare business operations, might not have hit any of the constituents really hard in financial terms just yet. However, the humongous ‘Trust Deficit’ of stakeholders, including the government, is gradually compelling them to face tougher resistance in operating the key business levers. Such resistance is increasingly coming in drug pricing, clinical trial requirements and related disclosure, marketing practices and even in the arena of Intellectual Property Rights (IPR).

On the part of the government, it is important to realize that self-regulations of various business and marketing practices have miserably failed in India for the pharmaceutical industry, just as it has failed in many other parts of the world, self-serving hypes often created by the global pharma associations in this regard notwithstanding. Besides the China saga and other reported scandals, billions of dollars of fines levied to the global pharma players, since last so many years, for a large number of malpractices would vindicate this point. It is worth noting that even these hefty fines are pittance, as compared to mind-boggling profits that these companies make on patented drugs with the adopted means. Hence, many of them would possibly feel that this risk is worth taking. Similarly, lackadaisical implementation of MCI guidelines for the medical profession brings shame to the country, as evidenced by the article in the BMJ.

As self-regulation by the industry has proved to be nothing more than an utopia, it is about time for the new government to come out with strict, yet transparent and fair regulation, ensuring its effective implementation, to kill all these malpractices, once and for all, writing an apt epitaph to draw the final curtain to this chronicle.

That said, conscious efforts towards a mindset-changing approach for inclusive progress and growth by majority of pharma players and a sizeable number within the medical profession, would surely help reducing the ‘Trust Deficit’ of the stakeholders.

This much desirable transformation, if materializes, would enable both the pharma and healthcare industry to retrieve, at least, a part of the past glory. The constituents of the industry undoubtedly deserve it, just for the very nature of business they are engaged in.

By: Tapan J. Ray

Cheaper Drugs: Happy Patients: Angry Industry

Posted on July 21, 2014 by Tapan Ray

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

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

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

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

The new Minister’s recent statement:

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

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

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

Industry’s key concern:

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

1. Span of price control:

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

2. Methodology of price control:

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

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

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

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

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

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

Key lacunae in DPCO 2013:

As highlighted in my earlier blog post titled “Is The New ’Market Based Pricing Model’ Fundamentally Flawed?”, even besides that specific drawback in the methodology of price control in DPCO 2013, NLEM 2011 does not also cover a wide range of essential drugs.

NLEM 2011 does not cover many combinations of TB drugs, a large number of important drugs for diabetes and hypertension, which I shall deliberate in just a bit.

Many other critical life saving medicines, such as, anti-cancer drugs, expensive antibiotics and products needed for organ transplantation have been left out of price control. In fact, the prices of a number of these drugs have reportedly gone up after the notification of DPCO 2013.

The government has now reportedly admitted in an affidavit filed before the Supreme Court that the market value and share of medicines covered by new DPCO 2013, as ‘Essential Drugs’, is a meager 18 per cent of the Indian Pharmaceutical Market (IPM).

As a result, DPCO 2013 based on NLEM 2011 undermines the entire objective of making essential drugs affordable to all.

All these lacunae in the current DPCO 2013 calls for a major revision of NLEM 2011. The Union Health Ministry has reportedly initiated steps to revise the list considering the existing market conditions and usage of drugs by the patients.

Invocation of a ‘Safeguard Provision’ in DPCO 2013:

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

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

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

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

Many important drugs are outside NLEM 2011:

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

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

More reasons for industry outcry:

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

The price control order under Para 19 has been notified without any prior consultation with the industry.

The manner and method in which this unilateral decision has been taken is untenable.

The NPPA’s reasoning, about exploitative pricing by the industry as the reason for such a move, is incorrect given that every product category (in consideration) has approximately 30-70 brand options across price ranges for physicians and patients to choose from. The premise that products are not accessible due to affordability is misplaced. (The above table explains this point).

Disease environment was same when the government had cleared the policy and no “extraordinary circumstance” has emerged since then for the regulator to invoke Para 19 in public interest.

NPPA has exceeded its brief and gone into policy-making.

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

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

The aim of DPCO 2013 is to ensure that essential drugs are available to all at affordable prices. The Supreme Court of India vide its Order dated November 12, 2002 in SLP no. 3668/2003 have directed the Government to ensure that essential and life saving drugs do not fall outside the ambit of price control, which has the force of law.

The Ministry of Chemicals and Fertilizers has delegated the powers in respect of specified paragraphs of the DPCO 2013, including paragraph 19, to be exercised by the NPPA on behalf of the Central Government in public interest.

There exist huge inter-brand price differences in branded-generics, which is indicative of a severe market failure as different brands of the same drug formulation identical to each other vary disproportionately in terms of price.

The different brands of the same drug formulation may sometimes differ in terms of binders, fillers, dyes, preservatives, coating agents, and dissolution agents, but these differences are not significant in terms of therapeutic value.

The main reason for market failure is that the demand for medicines is largely prescription driven and the patient has very little choice in this regard.

Market failure alone may not constitute sufficient grounds for Government intervention, but when such failure is considered in the context of the essential role that pharmaceuticals play in the area of public health, such intervention becomes necessary. This assumes greater significance, especially when exploitative pricing makes medicines unaffordable and beyond the reach of most, putting huge financial burden in terms of out-of-pocket expenditure on healthcare.

There is very high incidence of diabetes in the country, which affects around 61 million persons and the figure is expected to cross 100 million by 2030 as per the projection of the International Diabetes Federation; and it is estimated that every year nearly 1 million people in the country die due to diabetes and hypertension.

The drug regulator categorically mentions that In accordance with the guidelines issued by the NPPA, after approval of the ‘Competent Authority’, these price fixations of non-scheduled formulations under Para 19 of DPCO 2013 have been made.

Constituents of the same Ministry with conflicting view points:

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

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

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

The arguments for and against:

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

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

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

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

- Cardiovascular ailments and diabetes have assumed endemic proportion

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

B. NPPA has exceeded its brief:

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

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

The impact:

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

MNCs seem to have been hit harder:

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

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

Conclusion:

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

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

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

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

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

By: Tapan J. Ray

The New Government To Ponder: Is “Market Based Drug Pricing Policy” An ill Conceived One?

Posted on June 4, 2014 by Tapan Ray

According to a recent media report, Mr. Ananth Kumar, the new minister of Chemicals and Fertilizers has recently made a statement, as follows:

This statement assumes great significance for the Indian Pharmaceutical Industry and simultaneously rekindles hope for many patients, as the minister expressed intent that the new government wants to revisit the current drug price control system of India.

However, why did the minister in his above statement single out MNCs for discussion, is not very clear, just yet. Most probably, this is due to much published reports that branded generics from MNCs, which are outside price control, usually cost more than others, for whatever may be the reasons. Anyway, that could be the topic of another discussion in this blog.

The backdrop of DPCO 2013:

After a protracted negotiation and lobbying by the Indian Pharma Industry and others with the then UPA II Government, a well sought after paradigm shift took place in the drug price control regime of India.

In the new “National Pharmaceutical Pricing Policy 2012”, the span of price control was changed from bulk-drug based to all drug formulations falling under the ‘National List of Essential Medicines 2011 (NLEM 2011)’. The methodology of price control was also radically modified from the cost-based to market based one. Accordingly the new Drug Price Control Order (DPCO 2013) was notified on May 15, 2013.

The decision to have new drug policy was taken as a last minute sprint, as it were, primarily driven by the immense pressure generated by the Supreme Court on the UPA II Government for pussyfooting this important issue over almost a decade.

Hurried action after prolonged inaction:

The last Drug Policy of India was announced in 2002, which was subsequently challenged by a Public Interest Litigation (PIL) in the Karnataka High Court on the ground of being inflationary in nature. The Honorable Court by its order dated November 12, 2002 issued a stay on the implementation of the Policy.

This judgment was challenged by the Government in the Supreme Court, which vacated the stay vide its order dated March 10, 2003 and ordered as follows:

“We suspend the operation of the order to the extent it directs that the Policy dated February 15, 2002 shall not be implemented. However we direct that the petitioner shall consider and formulate appropriate criteria for ensuring essential and lifesaving drugs not to fall out of the price control and further directed to review drugs, which are essential and lifesaving in nature till 2nd May, 2003”.

As a result, DPCO 1995 continued to remain in operation pending formulation of a new drug policy as directed by the honorable court, since then.

Unfortunately, the then government did not show any urgency to come out with a new drug policy, even thereafter, for about a decade.

Fortunately, in the recent years, coming under intense judicial scrutiny and pressure due to a PIL on the subject before the Supreme Court of India, the then Government was compelled to come out with the New National Pharmaceutical Pricing Policy 2012 (NPPP 2012), rather hurriedly, effective December 7, 2012.

That was the ‘grand beginning’ of a new paradigm of ‘market-based’ drug price control regime in India.

Hype and rapid disillusionment:

Many stakeholders, barring some NGOs, felt at that time that DPCO 2013 could be a win-win strategy for both the industry and patients, as it would apparently be less intrusive for the pharma players.

Along side, through ‘Public Relations’ overdrive, hype was created by vested interests to generate a feeling that the drug prices are coming down by 30-40 percent, as a result of the new market-based price control regime.

That could well be true for a handful of drugs, but the fact is that the industry was adversely impacted by around 2.3 percent and the span of price control came down from 20 percent of the just pervious DPCO 1995 to 18 percent in DPCO 2013, not impacting the industry as much as it was hyped before.

Realization of these facts was just enough for the public disillusionment to set in.

Questions started popping-up almost immediately:

Unfortunately, many key questions started popping-up just at the very onset of its implementation process. Besides many others, some basic questions raised on DPCO 2013, a good number of which went into litigations and/or departmental reviews, are as follows:

Implementability of new ‘Ceiling Prices (CP)’ for market stocks within 45 days of notification by the respective companies.

Criteria of calculation of 1 percent market share for brands.

How would already existing different drug delivery systems of the same drug substance be considered to work out a common CP?

How reliable is the IMS Data, based on which CP calculation would be done by the NPPA?

What will happen to those NLEM 2011 drugs for which IMS does not provide any information?

Erstwhile Finance Ministry wanted to continue with cost plus formula:

When the new draft National Pharmaceutical Pricing Policy (NPPP) had gone for comments from various ministries of UPA II Government, the key recommendations of the then Ministry of Finance were reportedly as follows:

The proposal to limit the NPPP to control prices of only formulations leaving aside bulk drugs is not supported.

Top priced brands in many therapy areas are also the brand leaders. As a result, high prices of such drugs while calculating the ceiling prices would push up prices of many low priced drugs significantly.

The current system, which is a cost plus system is adequate to cover all legitimate costs for a manufacturer, particularly when the costing is being done annually and should be continued.

The same cost plus system should also apply to other formulations where additional therapeutic elements will be added. Related incremental cost in those cases can be considered to determine the ceiling price of combination formulations.

The Maximum Retail Prices (MRP) for all NLEM 2011 drugs may be fixed by the NPPA accordingly and the pharmaceutical companies would be free to price these NLEM products at any level below the MRP.

Annual indexation of price with WPI is not supported. The cost analysis should determine the quantum of increase.

Data related to prices and market shares should be collected from sources other than IMS even for drugs covered by them. The methodology to be followed by NPPA for evaluating IMS data and for collecting the data for medicines from other sources should be included in the NPPP.

A phased movement towards 100 percent generic manufacturing, as recommended by the Ministry of Health (MoH), for all drugs under the NLEM should be considered.

Current imbroglio over ceiling price fixation:

A recent media report highlighted that even almost 15 months after the announcement of DPCO 2013, National Pharmaceutical Pricing Authority (NPPA) fails to fix prices of 111 scheduled formulations due to scanty available information.

According to this report, though NPPA has revised prices of over 400 formulations out of around 652 as per DPCO 2013, it has now come out with a list of 103 formulations for which prices could not be fixed due to insufficient information. Besides, it could not fix the prices of eight more formulations, as the NLEM 2011 did not provide required information, such as, strength, route of administration and dosage form.

Thus, it appears that required price control of essential drugs as per DPCO 2013 is in a limbo today because of serious implementability issues, over and above its other (de)merits, as discussed above.

The fundamental question:

The fundamental question that is now being raised by many is, whether from patients point of new there was any need to change from ‘Cost Based Price Control (CBPC)’ to the new ‘Market Based Price Control (MBPC)’ system?

As a result, a Public Interest Litigation (PIL) is still pending before the Supreme Court challenging DPCO 2013.

This judicial scrutiny could put the MBPC concept in jeopardy, placing the pharma price control system back to CBPC mode, unless the new government takes a pre-emptive strategic move well before hand.

The New Minister’s recent statement rekindles hope for action:

There are now more reasons to justify why the new Minister Mr. Ananth Kumar should revisit MBPC mechanism, sooner. As I wrote in one of my earlier blog post that “The New ‘Market Based Pricing Model’ is Fundamentally Flawed”.

Conclusion:

From the statements of the new Minister of Chemicals and Fertilizers herein, and also the new Health Minister, as quoted in my last blog post, it appears that the Department of Pharmaceuticals (DoP) would continue to remain with the Ministry of Chemicals and Fertilizers, at least for some more time. This is quite contrary to the general expectations that DoP would be a part of the Ministry of Health in the new regime.

That said, besides full implementability of DPCO 2013 for all essential drugs, the Ceiling Price (CP) calculation methodology also appears to be fundamentally flawed, its misuse and abuse by some pharma players, as highlighted in my earlier blog post, have also been a subject of great concern and consumer aghast.

With this rapidly evolving scenario, unless the new minister Ananth Kumar steps in to sort out the conundrum with deft handling, unlike his almost defunct predecessor in UPA II, or till the Supreme Court intervenes responding to the PIL on DPCO 2013 related issues, the growing dissatisfaction of the affected section of stakeholders and the constraints of the NPPA would continue to linger, poor patients being the ultimate sufferers.

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.

“Make Global Pharma Responsible in Homeland for Objectionable Conduct in Clinical Trials Elsewhere”

Posted on February 12, 2014 by Tapan Ray

In the context of his recent meeting with Commissioner Margaret A. Hamburg of US-FDA, the Drug Controller General of India (DCGI) reportedly expressed his concern to ‘The Economic Times’ on the ‘objectionable conduct’ of global pharma in new drug trials in India, as follows:

“US and other global drug makers who conduct clinical trials at different locations across the globe need to be made responsible in their home country for their objectionable conduct in clinical trials elsewhere.”

He further added:

“While conducting trials, drug makers cannot discriminate on the basis of nationality, because patient safety is top priority for every regulator – US or India”

The above report also mentioned that there is already a law in place in the United States that makes companies accountable in their homeland, if they are found to be indulging in corruption overseas.

‘Uncontrolled clinical trials are causing havoc to human life’:

That is exactly what the Supreme Court of India observed last year in response to a Public Interest Litigation (PIL) filed by the Human Rights group ‘Swasthya Adhikar Manch (SAM)’.

At the same time, revoking the power of the ‘Central Drugs Standard Control Organization (CDSCO)’ under the Drug Controller General of India (DCGI), the apex court directed the Health Secretary of India to be personally responsible for all ‘Clinical Trials (CT)’ of new drugs conducted in the country in order to control the ‘menace’ of poorly regulated trials on a war-footing.

Earlier in May 2012, the Parliamentary Committee on Health and Family Welfare in its report on the CDSCO, also stated as follows:

“There is sufficient evidence on record to conclude that there is collusive nexus between drug manufacturers, some functionaries of CDSCO and some medical experts.”

Inaction on CT related deaths:

According to the Ministry of Health, between 2005 and 2012, around 475 new drugs were approved for CT, out of which only 17 obtained the regulatory approval for market launch. Though 57,303 patients were enrolled for CT, only 39,022 could complete the trials. During CT, 11,972 patients suffered Serious Adverse Events (SAE) and 2,644 died. 506 SAEs out of the total and 80 deaths had clearly established link to CTs. However, only 40 out of 80 trial related deaths had their respective families meagerly compensated.

An independent investigation:

Interestingly, an investigation in 2011 by ‘The Independent’, a newspaper of global repute, also highlighted the recruitment of hundreds of tribal girls for a drug study without any parental consent.

Stringent regulatory action followed:

Following high voltage indictments, alleging wide spread malpractices, from all corners – the Civil Society, the Supreme Court and the Parliament, the Ministry of Health constituted an experts committee last year chaired by Professor Ranjit Roy Chaudhury. The committee, after due consultation with all stakeholders, submitted its report recommending a robust process for CTs in India. Besides many other, the experts committee also recommended that:

CTs can only be conducted at accredited centers.

The principal investigator of the trial, as well as the Ethics Committee of the institute, must also be accredited.

If a trial volunteer developed medical complications during a CT ‘the sponsor investigator’ will be responsible for providing medical treatment and care.

Further, in October 2013, the Supreme Court reportedly ordered the government to video record clinical trials of new drugs, making it even tougher for pharma MNCs and the CROs to avoid responsibility on informed consent of the participating volunteers, as required by the regulator.

Consequent industry uproar and recent Government response:

Following all these, as the ball game for CTs in India changed significantly, there were uproars from Big Pharma, the CROs and their lobbyists crying foul.

As the caustic comments and the directive of the Supreme Court of India triggered the regulatory changes in CT, the Union Ministry of Health did not have much elbowroom to loosen the rope. Consequently, the pharma industry and the CROs reportedly made some angry comments such as:

“The situation is becoming more and more difficult in India. Several programs have been stalled and we have also moved the trials offshore, to ensure the work on the development does not stop.”

In response to shrill voices against the stringent drug trial regime in India, Mr Keshav Desiraju, Secretary, Union Ministry of Health and Family Welfare, reportedly said recently:

“While it is not our intention to impose unrealistic barriers on industry, it is equally our intention not to take risks, which may compromise the safety of the subjects of clinical trials.”

During the same occasion, the Union Health Minister Ghulam Nabi Azad also remarked:

“The industry has complained that the regulations are too stringent, but there have also been complaints by parliamentarians, NGOs and others that they are too lax, which the Supreme Court had taken note of.”

He further said without any elaboration, “The Indian regulatory regime governing clinical trials needs to balance the interests of all stakeholders.”

Conclusion:

According to the Indian Society for Clinical Research (ISCR), pharma companies conduct around 60 percent of CTs and the rest 40 percent are outsourced to Contract Research Organizations (CROs) in India.

With the Supreme Court laying stringent guidelines and the regulatory crackdown on CTs, the number of new drug trials in India has reportedly come down by 50 percent. According to Frost & Sullivan, the Indian CT industry was worth US$ 450 million in 2010 -11. Currently, it is growing at 12 percent a year and is estimated to exceed the US$1 billion mark in 2016, with perhaps some hiccups in between due to recent tightening of the loose knots in this area.

Some experts reportedly argue that laxity of regulations and cost arbitrage were the key drivers for global players to come to India for CTs. Thus, there should not be any surprise that with the costs of drug trials going north, in tandem with stringent regulations in the country, some business may shift out of the country. As Mr. Desiraju epitomized in his interview succinctly, as quoted above, this shift would result in much increased costs for the respective companies, which his ministry would ‘regret greatly.’

That said, would the recent anguish of the DCGI, when he expressed “Make global pharma also responsible in their respective homelands for objectionable conduct in CTs elsewhere”, be also construed as a clear signal for shaping up, sooner?

By: Tapan J. Ray

“Big Pharma’s Satanic Plot is Genocide”: South Africa Roars

Posted on January 20, 2014 by Tapan Ray

In a recent interview, the Health Minister of South Africa (SA) Mr. Aaron Motsoaledi reportedly made the above comment.

The background:

As reported in the interview and also indicated in an article in this blog, the Trade and Industry Department of SA, on September 4, 2013, published a long-awaited draft national policy on Intellectual Property (IP) in the Government Gazette. In that draft policy, the department recommended, besides others, the following:

Provision should be made for the Compulsory Licensing (CL) of crucial drugs.

Provision should be made for the parallel importation of drugs.

Grant of drug patents should ensure that the drug is new or innovative.

“Patent flexibility” for medicine should be made a matter of law.

The holders of Intellectual Property Rights (IPR), such as drug companies, should be encouraged to protect their own rights rather than depending on state institutions, such as the police or customs.

SA should seek to influence the region, and the world, to move towards its vision of Intellectual Property (IP) protection.

The draft does not have the status of a policy, as yet, and was open for public comment.

Pharma MNC moved surreptitiously:

Pharma MNCs having local operations being flabbergasted by this development, almost immediately, started working on a plan to change the direction of the policy radically, the report states. Instead of optimal protection for drug patents, they planned to seek stronger protection.

Having finalized the counter strategy this month, the local MNC pharma association, ‘Innovative Pharmaceutical Association of South Africa (Ipasa)’, reportedly selected a Washington DC-based lobbying firm ‘Public Affairs Engagement (PAE)’, headed by a former US ambassador – Mr. James Glassman, to lead the charge against the policy. PAE, by now, has put forward a proposal on how it would effect radical changes to the policy, the report stated.

The same article mentions, PAE intends to launch a persuasive campaign throughout Africa and in Europe with an aim to convince the South African Government to further strengthen, rather than weaken, patent protection for drugs. The grand plan of PAE contains elements, which could seriously bother many right thinking individuals, as it includes:

Setting up a “coalition” with an innocuous name such as “Forward South Africa (FSA)”, which will be directed from Washington DC, while appearing to be locally run in SA.

Encouraging other African countries, especially Rwanda and Tanzania, to help convincing SA that it could lose its leadership role in the continent, if it decides to push ahead with the draft policy.

Distracting NGOs from their own lobbying by changing the nature of the debate.

Commissioning seemingly “independent” research and opinion pieces for broad public dissemination – but vetting all such material before publication to ensure those fit the messages.

Creation of surrogate public faces:

It is worth noting from the report that the so called coalition ‘FSA’, the proposed public face of the campaign, would be “led by a visible South African, most likely a respected former government official, business leader or academic”. However, at the same time, it would be “directed by staff from PAE and its South African partner”.

Majority funding by an American association in SA:

The report also highlights, nothing in the document suggests that the funding for FSA – estimated at mind-boggling numbers of U$ 100,000 from IPASA and another US$ 450,000 from an ‘American Association’ of pharmaceutical companies – would be disclosed.

The report concluded by quoting the American lobbyists hired to launch a counter campaign, which states, “Without a vigorous campaign, opponents of strong IP will prevail, not just in South Africa, but eventually in much of the rest of the developing world.”

This is not a solitary example:

The Guardian reported another such incident in July 2013. The article stated that the global pharmaceutical industry has “mobilized” an army of patient groups to lobby against the plan of European Medicines Agency (EMA) to force pharma companies to publish all Clinical Trial (CT) results in a public database for patients’ interest.

While some pharma players agreed to share the CT data as required, important global industry associations strongly resisted to this plan. The report indicated that a leaked letter from two large pharma trade associations, the Pharmaceutical Research and Manufacturers of America (PhRMA) of the United States and the European Federation of Pharmaceutical Industries and Associations (EFPIA), have drawn out a strategy to combat this move.

The strategy reportedly demonstrates, as the article highlights, how have the Big Pharma associations drawn the patient groups, many of which receive funding from drugs companies, into this battle.

Conclusion:

As I had articulated several times in the past, newer innovative drugs are extremely important in the fight against diseases and this flow must continue, actively supported by a well-balanced Patents Act of the country, as India has already implemented.

That said, the moot question continues to remain, who are these innovations and innovative medicines for? Are these to save precious lives of only a small minority of affluent nations, their populations and other wealthy people elsewhere, depriving a vast majority, across the world, of the fruits of innovation? Would repeated harping on the much hyped phrase, “meeting unmet needs of patients”, negate such gross indifference?

If that is the case, it becomes the responsibility of a Government, keeping the civil society on board, to formulate effective remedial legal measures. The draft national policy on ‘Intellectual Property’ of SA is one such initiative that needs to be applauded.

Surreptitious reported attempts of pharma MNCs, repeatedly, through their respective associations, backed by bagful of ‘resources’ of all kinds to thwart such patient centric moves of Governments, should be deplored with contempt that they deserve.

As Indian scenario is no different, it would perhaps be good to fathom, whether similar surreptitious and high resource-intensives moves are in progress in this country as well.

By: Tapan J. Ray

Pharma FDI: Damning Report of Parliamentary Panel, PM Vetoes…and Avoids Ruffling Feathers?

Posted on August 19, 2013 by Tapan Ray

An interesting situation emerged last week. The Parliamentary Standing Committee (PSC) on Commerce proposed a blanket ban on all FDI in brownfield pharma sector. Just two days after that, the Prime Minister of India vetoed the joint opposition of the Department of Industrial Policy and Promotion (DIPP) and the Ministry of Health to clear the way for all pending pharma FDIs under the current policy.

On August 13, 2013, Department related Parliamentary Standing Committee on Commerce laid on the Table of both the Houses of the Indian Parliament its 154 pages Report on ‘FDI in Pharmaceutical Sector.’

The damning report of the Parliamentary Standing Committee flags several serious concerns over FDI in brownfield pharma sector, which include, among others, the following:

1. Out of 67 FDI investments till September 2011, only one has been in green field, while all the remaining FDI has come in the brown field projects. Moreover, FDI in brown field investments have of late been predominantly used to acquire the domestic pharma companies.

2. Shift of ownership of Indian generic companies to the MNCs also results in significant change of the business model, including the marketing strategy of the acquired entity, which are quite in sync with the same of the acquirer company. In this situation, the acquired entity will not be allowed to use flexibilities such as patent challenges or compulsory license to introduce new affordable generic medicines.

The withdrawal of all patent challenges by Ranbaxy on Pfizer’s blockbuster medicine Lipitor filed in more than eight countries immediately after its acquisition by Daiichi-Sankyo is a case in point.

3. Serial acquisitions of the Indian generic companies by the MNCs will have significant impact on competition, price level and availability. The price difference between Indian ‘generics’ and MNCs’ ‘branded generic’ drugs could sometimes be as high as 80 to 85 times. A few more larger scale brownfield takeovers may even destroy all the benefits of India’s generics revolution.

4. FDI inflow into Research & Development of the Pharma Industry has been totally unsatisfactory.

5. FDI flow into brown field projects has not added any significant fresh capacity in manufacturing, distribution network or asset creation. Over last 15 years, MNCs have contributed only 5 per cent of the gross fixed assets creation, that is Rs 3,022 crore against Rs 54,010 crore by the domestic companies. Further, through brownfield acquisitions significant strides have not been made by the MNCs, as yet, for new job creation and technology transfer in the country.

6. Once a foreign company takes over an Indian company, it gets the marketing network of the major Indian companies and, through that network, it changes the product mix and pushes the products, which are more profitable and expensive. There is no legal provision in India to stop any MNC from changing the product mix.

7. Though the drug prices may not have increased significantly after such acquisitions yet, there is still a lurking threat that once India’s highly cost efficient domestic capacity is crushed under the weight of the dominant force of MNCs, the supply of low priced medicines to the people will get circumvented.

8. The ‘decimation’ of the strength of local pharma companies runs contrary to achieving the drug security of the country under any situation, since there would be few or no Indian companies left having necessary wherewithal to manufacture affordable generics once a drug goes off patent or comply with a Compulsory License (CL).

9. Current FIPB approval mechanism for brownfield pharma acquisitions is inadequate and would not be able to measure up to the challenges as mentioned above.

The Committee is also of the opinion that foreign investments per se are not bad. The purpose of liberalizing FDI in pharma was not intended to be just about takeovers or acquisitions of domestic pharma units, but to promote more investments into the pharma industry for greater focus on R&D and high tech manufacturing, ensuring improved availability of affordable essential drugs and greater access to newer medicines, in tandem with creating more competition.

Based on all these, The Committee felt that FDI in brown field pharma sector has encroached upon the generics base of India and adversely affected Indian pharma industry. Therefore, the considered opinion of the Parliamentary Committee is that the Government must impose a blanket ban on all FDI in brownfield pharma projects.

PM clears pending pharma FDI proposals:

Unmoved by the above report of the Parliamentary Committee, just two days later, on August 16, 2013, the Prime Minister of India, in a meeting of an inter-ministerial group chaired by him, reportedly ruled that the existing FDI policy will apply for approval of all pharmaceutical FDI proposals pending before the Foreign Investments Promotion Board (FIPB). Media reported this decision as, “PM vetoes to clear the way for pharma FDI.”

This veto of the PM includes US $1.6-billion buyout of the injectable facility of Agila Specialties, by US pharma major Mylan, which has already been cleared by the Competition Commission of India (CCI).

This decision was deferred earlier, as the DIPP supported by the Ministry of Health had expressed concerns stating, if MNCs are allowed to acquire existing Indian units, especially those engaged in specialized affordable life-saving drugs, it could possibly lead to lower production of those essential drugs, vaccines and injectibles with consequent price increases. They also expressed the need to protect oncology facilities, manufacturing essential cancer drugs, with assured supply at an affordable price, to protect patients’ interest of the country.

Interestingly, according to Reserve Bank of India, over 96 per cent of FDI in the pharma sector in the last fiscal year came into brownfield projects. FDI in the brownfield projects was US$ 2.02 billion against just US$ 87 million in the green field ventures.

Fresh curb mooted in the PM’s meeting:

In the same August 16, 2013 inter-ministerial group meeting chaired by the Prime Minister, it was also reportedly decided that DIPP will soon float a discussion paper regarding curbs that could be imposed on foreign takeovers or stake purchases in existing Indian drug companies, after consultations with the ministries concerned.

Arguments allaying apprehensions:

The arguments allaying fears underlying some of the key apprehensions, as raised by the Parliamentary Standing Committee on Commerce, are as follows:

1. FDI in pharma brownfield will reduce competition creating an oligopolistic market:

Indian Pharmaceutical Market (IPM) has over 23,000 players and around 60,000 brands. Even after, all the recent acquisitions, the top ranked pharmaceutical company of India – Abbott enjoys a market share of just 6.6%. The Top 10 groups of companies (each belonging to the same promoter groups and not the individual companies) contribute just over 40% of the IPM (Source: AIOCD/AWACS – Apr. 2013). Thus, IPM is highly fragmented. No company or group of companies enjoys any clear market domination.

In a scenario like this, the apprehension of oligopolistic market being created through brownfield acquisitions by the MNCs, which could compromise with country’s drug security, needs more informed deliberation.

2. Will limit the power of government to grant Compulsory Licensing (CL):

With more than 20,000 registered pharmaceutical producers in India, there is expected to be enough skilled manufacturers available to make needed medicines during any emergency e.g. during H1N1 influenza pandemic, several local companies stepped forward to supply the required medicine for the patients.

Thus, some argue, the idea of creating a legal barrier by fixing a cap on the FDIs to prevent domestic pharma players from selling their respective companies at a price, which they would consider lucrative otherwise, just from the CL point of view may sound unreasonable, if not protectionist in a globalized economy.

3. Lesser competition will push up drug prices:

Equity holding of a company is believed by some to have no bearing on pricing or access, especially when medicine prices are controlled by the NPPA guidelines and ‘competitive pressure’.

In an environment like this, any threat to ‘public health interest’ due to irresponsible pricing, is unlikely, especially when the medicine prices in India are cheapest in the world, cheaper than even Bangladesh, Pakistan and Sri Lanka (comment: whatever it means).

India still draws lowest FDI within the BRIC countries:

A study of the United Nations has indicated that large global companies still consider India as their third most favored destination for FDI, after China and the United States.

However, with the attraction of FDI of just US$ 32 billion in 2011, against US$ 124 billion of China, US$ 67 billion of Brazil and US$ 53 billion of Russia during the same period, India still draws the lowest FDI among the BRIC countries.

Commerce Minister concerned on value addition with pharma FDI:

Even after paying heed to all the above arguments, the Commerce Minister of India has been expressing his concerns since quite some time, as follows:

“Foreign Direct Investment (FDI) in the pharma sector has neither proved to be an additionality in terms of creation of production facilities nor has it strengthened the R&D in the country. These facts make a compelling case for revisiting the FDI policy on brownfield pharma.”

As a consequence of which, the Department of Industrial Policy and Promotion (DIPP) has reportedly been opposing FDI in pharma brownfield projects on the grounds that it is likely to make generic life-saving drugs expensive, given the surge in acquisitions of domestic pharma firms by the MNCs.

Critical Indian pharma assets going to MNCs:

Further, the DIPP and the Ministry of Health reportedly fear that besides large generic companies like Ranbaxy and Piramal, highly specialized state-of-the-art facilities for oncology drugs and injectibles in India are becoming the targets of MNCs and cite some examples as follows:

Through the big-ticket Mylan-Agila deal, the country would lose yet another critical cancer drug and vaccine plant.

In 2009 Shantha Biotechnics, which was bought over by Sanofi, was the only facility to manufacture the Hepatitis B vaccine in India, which used to supply this vaccine at a fraction of the price as compared to MNCs.

Mylan, just before announcing the Agila deal, bought over Hyderabad based SMS Pharma’s manufacturing plants, including some of its advanced oncology units in late 2012.

In 2008, German pharma company Fresenius Kabi acquired 73 percent stake in India’s largest anti-cancer drug maker Dabur Pharma.

Other major injectable firms acquired by MNCs include taking over of India’s Orchid Chemicals & Pharma by Hospira of the United States.

With the US market facing acute shortage of many injectibles, especially cancer therapies in the past few years, companies manufacturing these drugs in India have become lucrative targets for MNCs.

An alternative FDI policy is being mooted:

DIPP reportedly is also working on an alternate policy suggesting:

“It should be made mandatory to invest average profits of last three years in the R&D for the next five years. Further, the foreign entity should continue investing average profit of the last three years in the listed essential drugs for the next five years and report the development to the government.”

Another report indicated, a special group set up by the Department of Economic Affairs suggested the government to consider allowing up to 49 per cent FDI for pharma brownfield investments under the automatic route.However, investments of more than 49 per cent would be referred to the Foreign Investment Promotion Board (FIPB).

It now appears, a final decision on the subject would be taken by the Prime Minister after a larger inter-mimisterial consultation, as was decided by him on August 14, 2013.

The cut-off date to ascertain price increases after M&A:

Usually, the cut off point to ascertain any price increases post M&A is taken as the date of acquisition. This process could show false positive results, as no MNC will take the risk of increasing drug prices significantly or changing the product-mix, immediately after acquisition.

Significant price increases could well be initiated even a year before conclusion of M&As and progressed in consultation by both the entities, in tandem with the progress of the deal. Thus, it will be virtually impossible to make out any significant price changes or alteration in the product-mix immediately after M&As.

Some positive fallouts of the current policy:

It is argued that M&As, both in ‘Greenfield’ and ‘Brownfield’ areas, and joint ventures contribute not only to the creation of high-value jobs for Indians but also access to high-tech equipment and capital goods. It cannot be refuted that technology transfer by the MNCs not only stimulates growth in manufacturing and R&D spaces of the domestic industry, but also positively impacts patients’ health with increased access to breakthrough medicines and vaccines. However, examples of technology transfer by the MNCs in India are indeed few and far between.

This school of thought cautions, any restriction to FDI in the pharmaceutical industry could make overseas investments even in the R&D sector of India less inviting.

As listed in the United Nation’s World Investment Report, the pharmaceutical industry offers greater prospects for future FDI relative to other industries. Thus, restrictive policies on pharmaceutical FDI, some believe, could promote disinvestments and encourage foreign investors to look elsewhere.

Finally, they highlight, while the Government of India is contemplating modification of pharma FDI policy, other countries have stepped forward to attract FDI in pharmaceuticals. Between October 2010 and January 2011, more than 27 countries and economies have adopted policy measures to attract foreign investment.

Need to attract FDI in pharma:

At a time when the Global Companies are sitting on a huge cash pile and waiting for the Euro Zone crisis to melt away before investing overseas, any hasty step by India related to FDI in its pharmaceutical sector may not augur well for the nation.

While India is publicly debating policies to restructure FDI in the ‘Brownfield’ pharma sector, other countries have stepped forward to attract FDI in their respective countries. Between October 2010 and January 2011, as mentioned earlier, more than 27 countries and economies have adopted policy measures to attract foreign investment.

Thus the moot question is, what type of FDI in the pharma brownfield sector would be good for the country in the longer term and how would the government incentivize such FDIs without jeopardizing the drug security of India in its endeavor to squarely deal with any conceivable eventualities in future?

Conclusion:

In principle, FDI in the pharma sector, like in any other identified sectors, would indeed benefit India immensely. There is no question about it…but with appropriate checks and balances well in place to protect the national interest, unapologetically.

At the same time, the apprehensions expressed by the Government, other stakeholders and now the honorable members of the Parliament, across the political party lines, in their above report, should not just be wished away by anyone.

This issue calls for an urgent need of a time bound, comprehensive, independent and quantitative assessment of all tangible and intangible gains and losses, along with opportunities and threats to the nation arising out of all the past FDIs in the brownfield pharma sector.

After a well informed debate by experts on these findings, a decision needs to be taken by the law and policy makers, whether or not any change is warranted in the structure of the current pharma FDI policy, especially in the brownfield sector. Loose knots, if any, in its implementation process to achieve the desired national outcome, should be tightened appropriately.

I reckon, it is impractical to expect, come what may, the law and policy makers will keep remaining mere spectators, when Indian Pharma Crown Jewels would be tempted with sacks full of dollars for change in ownerships, jeopardizing presumably long term drug security of the country, created painstakingly over decades, besides leveraging immense and fast growing drug export potential across the world.

The Competition Commission of India (CCI) can only assess any possible adverse impact of Mergers & Acquisitions on competition, not all the apprehensions, as expressed by the Parliamentary Standing Committee and so is FIPB.

That said, in absence of a comprehensive impact analysis on pharma FDIs just yet, would the proposal of PSC to ban foreign investments in pharma brownfield sector and the PM’s subsequent one time veto to clear all pending FDI proposals under the current policy, be construed as irreconcilable internal differences…Or a clever attempt to create a win-win situation without ruffling MNC feathers?

By: Tapan J. Ray

PILMAN

A Tapan Ray Website

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