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To Curb Pharma Marketing Malpractices in India Who Bells the Cat?

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Bribing doctors by the pharmaceutical companies directly or indirectly, as reported frequently by the media all over the world, including India, to prescribe their respective brand of drugs has now reached an alarming proportion, jeopardizing patients’ interest, seriously more than ever before.

In this context July 4, 2012, edition of  The Guardian reported an astonishing story. Since quite some time many pharmaceutical giants are being reportedly investigated and fined, including out of court settlements, for bribery charges related to the physicians.

In another very recent article titled “Dollars for Docs Mints a Millionaire” the author stated as follows:

“The companies in Dollars for Docs accounted for about 47 percent of U.S. prescription drug sales in 2011. It’s unclear what percentage of total industry spending on doctors they represent, because dozens of companies do not publicize what they pay individual doctors. Most companies in Dollars for Docs are required to report under legal settlements with the federal government.”

In India, deep anguish of the stakeholders over this issue is also being increasingly reverberated day by day. It has also drawn the attention of the patients’ groups, NGOs, media, Government and even the Parliament. An article titled, “Healthcare industry is a rip-off” published in a leading business daily of India states as follows:

“Unethical drug promotion is an emerging threat for society. The Government provides few checks and balances on drug promotion.”

Unfortunately, nothing substantive has been done in India just yet to address such malpractices across the industry in a comprehensive way, despite indictment by the Parliament, to effectively protect patients’ interest in the country.

Countries started taking steps with disclosure norms:

It is interesting to note that many countries have already started acting, even through implementation of various regulatory disclosure norms, to curb such undesirable activities effectively. Some examples are as follows:

USA

The justice department of the U.S has reportedly wrung huge settlements from many large companies over such nexus between the doctors and the pharmaceutical players.

To address this issue meaningfully, on February 1, 2013 the Department of Health and Human Services (HHS) of the United States of America released the final rules of implementation of the ‘Patient Protection and Affordable Care Act (PPACA)’, which is commonly known as the “Physician Payment Sunshine Act” or just the “Sunshine Act”.

This Act has been a part of President Obama’s healthcare reform requiring transparency in direct or indirect financial transactions between the American pharmaceutical industry and the doctors and was passed in 2010 by the US Congress as part of the PPACA.

The Sunshine Act requires public disclosure of all financial transactions and transfers of value between manufacturers of pharmaceutical / biologic products or medical devices and physicians, hospitals and covered recipients. The Act also requires disclosure on research fees and doctors’ investment interests.

The companies have been directed by the American Government to commence capturing the required data by August 1, 2013, which they will require to submit in their first federal reports by March 31, 2014.The first such disclosure report will be available on a public database effective September 30th, 2014.

France:

On December 2011, France adopted a legislation, which is quite similar to the ‘Sunshine Act’. This Act requires the health product companies like, pharmaceutical, medical device and medical supply manufacturers, among others to mandatorily disclose any contract entered with entities like, health care professionals, hospitals, patient associations, medical students, nonprofit associations, companies with media services or companies providing advice regarding health products.

Netherlands:

On January 1, 2012, Netherlands enforced the ‘Code of Conduct on Transparency of Financial Relations’. This requires the pharmaceutical companies to disclose specified payments made to health care professionals or institutions in excess of € 500 in total through a centralized “transparency register” within three months after the end of every calendar year.

UK:

According to Deloitte Consulting, pharmaceutical companies in the UK are planning voluntary disclosures of such payments. One can expect that such laws will be enforced in the entire European Union, sooner than later.

Australia and Slovakia:

Similar requirements also exist in Australia and Slovakia.

Japan:

In Japan, the Japan Pharmaceutical Manufacturers Association (JPMA) reportedly requires their member companies to disclose certain payments to health care professionals and medical institutions on their websites, starting from 2013.

India still remains far behind:

This issue has no longer remained a global concern. Frequent reports by Indian media have already triggered a raging debate in the country on the subject. It has been reported that a related case is now pending before the Supreme Court against a Public Interest Litigation (PIL) for hearing, in not too distant future.

It is worth noting that in 2010, ‘The Parliamentary Standing Committee on Health’ expressed its deep concern stating, the “evil practice” of inducement of doctors by the pharma companies is continuing unabated as the revised guidelines of the Medical Council of India (MCI) have no jurisdiction over the pharma industry.

It was widely reported that the letter of the Congress Member of Parliament, Dr. Jyoti Mirdha to the Prime Minister Dr. Manmohan Singh, attaching a bunch of photocopies of the air tickets to claim that ‘doctors and their families were beating the scorching Indian summer with a trip to England and Scotland, courtesy a pharmaceutical company’, compelled the Prime Minister’s Office (PMO) to initiate inquiry on the subject.

The letter had claimed that as many as 30 family members of 11 doctors from all over India enjoyed the hospitality of the pharmaceutical company on the pretext of ‘Continuing Medical Education (CME)’.

In addition Dr. Mirdha reportedly reiterated to the PMO, “The malpractice did not come to an end because while medical profession (recipients of incentives) is subjected to a mandatory code, there is no corresponding obligation on the part of the healthcare industry (givers of incentives). Result: Ingenious methods have been found to flout the code.”

The report also indicated at that time that the Department of Pharmaceuticals (DoP) is trying to involve the Department of Revenue under the Ministry of Finance to explore the possibilities in devising methods to link the money trails of offending companies and deny the tax incentives on such expenses.

Incidences of such alleged malpractices are unfolding much faster today and are getting increasingly dragged into the public debate where government can no longer play the role of a mere bystander.

Indian Parliamentary indictment for not having a ‘Marketing Code’:

Thereafter, the Department Related Parliamentary Standing Committee on Health and Family Welfare presented its 58th Report on the action taken by the Government on the recommendations / observations contained in the 45th report to both the Lower and the Upper houses of the Parliament on May 08, 2012.

The committee with a strong indictment to the Department of Pharmaceuticals (DoP), also observed that the DoP should take decisive action, without any further delay, in making the ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’ mandatory so that effective checks could be ensured on ‘huge promotional costs and the resultant add-on impact on medicine prices’.

Unfortunately nothing substantive has happened on the ground regarding this issue as on date.

Ministry of Finance fires the first salvo:

Firing the first salvo closer to this direction, Central Board of Direct Taxes (CBDT), which is a part of Department of Revenue in the Ministry of Finance, has now decided to disallow expenses on all ‘freebies’ to Doctors by the Pharmaceutical Companies in India.

An internal circular dated August 1, 2012, of the CBDT addressed to its tax assessment officers categorically stated that the any expenses incurred by the pharmaceutical companies on gifts and other ‘freebies’ given to the doctors, which do not conform to the revised MCI guidelines, will no longer be allowed as business expenses.

The High Court upheld the CBDT order:

As expected, the above CBDT circular was challenged in the court of law by an aggrieved party.

However, on December 26, 2012, in a significant judgment on the this CBDT circular related to promotional expenses, the High Court of Himachal Pradesh, ordered as follows:

“Therefore, if the assesse satisfies the assessing authority that the expenditure is not in violation of the regulations framed by the Medical Council of India (MCI), then it may legitimately claim a deduction, but it is for the assesse to satisfy the assessing officer that the expense is not in violation of MCI regulations as mentioned above. We, therefore, find no merit in the in the petition, which is accordingly rejected, No costs.”

Unless this High Court order is challenged in the Supreme Court and reversed subsequently, the CBDT circular related to pharmaceutical promotional expenses has assumed a legal status all the way.

Current situation in America post ‘Sunshine Act’:

After enactment of the ‘Sunshine Act’ one gets a mixed response as follows, though these are still very early days of implementation of this new Law in America.

Low awareness level of the ‘Sunshine Act’:

Though this Act was passed in the U.S in 2010, the awareness level is still very low. More than half of the 1,025 physicians interviewed in a recent survey said, they didn’t know that the law requires pharmaceutical and medical device companies to track any payments or “transfers of value” to physicians and teaching hospitals as of August 1, 2013.

The ground reality:

Despite all such measures, current situation in the United States on this issue is still not very encouraging.

The same 2013 survey highlights that many physicians in the United States continue to have some sort of financial relationship with the industry, as follows:

  • Receiving samples (54%)
  • Receiving food and beverage in their workplace (57%),
  • Participating in an “industry-funded program” (48%),
  • Participating in speakers bureau programs (11%)
  • Advisory board programs (10%).

Spin-off benefits of the Law:

It has been reported that the ‘Sunshine Act’ will also provide enormous data on how much the pharmaceutical companies and each of their competitors spend to make the doctors prescribe their drugs from the public data that will be available from September 2014. This will help these companies tracking which type of marketing tools and processes have a linear relationship to generate increased number of prescriptions.

Thus the above report concludes that pharmaceutical players ‘will not stop wooing doctors. They may simply get better at it’, making their marketing expenditure increasingly productive.

However, despite all these, another recent report indicated that after the ‘Sunshine Act,’ some pharma companies have really started cutting back on their payments to doctors and many others have stepped up their efforts in this direction. This augurs a good beginning, if fructifies on a larger scale.

Such Laws could be more impactful in India:

A law like ‘Sunshine Act’ of America, if implemented well in India is expected to have much greater and positive impact. This is mainly due to existence of an effective pharmaceutical pricing ‘watchdog’ in the country in form of the ‘National Pharmaceutical Pricing Authority (NPPA)’ .

When pharmaceutical-marketing expenditures of individual pharma companies, through such public disclosures, will be found to contributing disproportionately to the total expenses of any player, pressure from the regulators and the civil society will keep mounting to bring down the prices of medicines.

An interesting survey in India:

A survey report of Ernst and Young titled, “Pharmaceutical marketing: ethical and responsible conduct”, carried out in September 2011 on the UCMP and MCI guidelines, highlighted the following:

  • Two-third of the respondents felt that the implementation of the UCPMP would change the manner in which pharma products are currently marketed in India.
  • More than 50% of the respondents are of the opinion that the UCPMP may lead to manipulation in recording of actual sampling activity.
  • Over 50% of the respondents indicated that the effectiveness of the code would be very low in the absence of legislative support provided to the UCPMP committee.
  • 90% of the respondents felt that pharma companies in India should focus on building a robust internal controls system to ensure compliance with the UCPMP.
  • 72% of the respondents felt that the MCI was not stringently enforcing its medical ethics guidelines.
  • 36% of the respondents felt that the MCI’s guidelines would have an impact on the overall sales of pharma companies.

The Planning Commission of India expresses its anguish: 

Recently even the Planning Commission of India has reportedly recommended strong measures against pharmaceutical marketing malpractices as follows:

“Pharmaceutical marketing and aggressive promotion also contributes to irrational use. There is a need for a mandatory code for identifying and penalizing unethical promotion on the part of pharma companies. Mandated disclosure by Pharmaceutical companies of the expenditure incurred on drug promotion, ghost writing in promotion of pharma products to attract disqualification of the author and penalty on the company, and vetting of drug related material in Continuing Medical Education would be considered.”

The Ministry of Health may now intervene: 

It was reported by the media just last week that the Ministry of Health (MoH) strongly feels that unethical practices and aggressive promotion of drugs by the pharmaceutical companies through the doctors in lieu of gifts, hospitality, trips to exotic foreign and domestic destinations are adding up to cost of medicines significantly in India. Thus, the MoH is expected to suggest to the Department of Pharmaceuticals for 
mandatory implementation of the ‘Uniform Code of Pharmaceutical Practices (UCPMP)’ by the industry soon.

Conclusion:

Statistics of compliance to UCPMP are important to know, but demonstrable qualitative changes in the ethics and value standards of an organization in this regard should always be the most important goal to drive any pharmaceutical business corporation in India.

The need to announce and implement the UCPMP by the Department of Pharmaceutical, without further delay, assumes critical importance in today’s allegedly chaotic pharmaceutical marketing scenario.

Very unfortunately, the status quo remains unbroken even today. The juggernaut of marketing malpractices keeps moving on unabated. The ‘Cat and Mouse’ game continues as ever. The moot question still remains, who bells the cat? …For patients sake.

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.

‘Havoc’ and its ‘Aftermath’: Clinical Trials in India

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Just as the New Year dawned, on January 3, 2013, in an embarrassing indictment to the Government, the bench of honorable justices R.M Lodha and A.R Dave of the Supreme Court reportedly observed that uncontrolled Clinical Trials (CT) are creating ‘havoc’ to human life causing even deaths to patients.

In an interim order, the bench directed to the Government that CTs can be conducted only under the supervision of the Health Secretary of India. Holding the Government responsible, the bench further observed, “You (Government) have to protect health of citizens of the country. It is your obligation. Deaths must be arrested and illegal trials must be stayed,”

Responding to this damning stricture by the Supreme Court, the Government has now reportedly decided that appropriate rules laying down guidelines for pharma companies and other organizations engaging in drug trials in India would be notified within January 2013. It is envisaged that thereafter, the government will also amend the Drugs and Cosmetics Act of India making any violation of prescribed rules and guidelines a punishable offense under the law.

It is worth mentioning that these guidelines have been reportedly worked out after due consideration of around 300 comments received from the stakeholders on the draft proposal circulated by the Ministry of Health in July 2011, couple of rounds of discussion with the members of the Civil Society, expert groups and against reported ‘stiff opposition from the drug companies’.

Better late than never:

In conformance to the well known saying – “better late than never”, it appears that after reportedly around 2,242 deaths related to CT and under immense pressure from the civil society and the Supreme Court, the Government has now left with no options but to bring US$ 500 million CT segment of the country, which is expected to cross US$ 1 Billion by 2016, under stringent regulations.

Experts believe that the growth of the CT segment in India is driven mainly by the overseas players for easy availability of a large patient population with varying disease pattern and demographic profile at a very low cost, as compared to many other countries across the world.

Clinical trial related deaths in India:

As per the Ministry of Health following are the details of deaths related to CTs registered in India from 2008 to August 2012:

Year Total no of deaths CT related deaths  Compensation paid to:
2012 (up to August) 272 12 NA
2011 438 16 16
2010 668 22 22
2009 737 NA NA
2008 288 NA NA

It is estimated that over the last four years, on an average, 10 persons have died every week in India related to CT.

However, looking at the above reported numbers it appears that financial compensation was paid for all registered death related cases however meager such amounts may be.

A huge ruckus:

The subject of CT in India has created a huge ruckus, mainly for wide spread alleged malpractices, abuse and misuse of fragile CT regulations of the country by some players in this field. The issue is not just of GCP or other CT related standards but more of ethical mind-set and reported rampant exploitation of uninformed patients, especially in case of trial related injuries or even death.

The Bulletin of the World Health Organization (WHO) in an article titled, “Clinical trials in India: ethical concerns” reported as follows:

“Drug companies are drawn to India for several reasons, including a technically competent workforce, patient availability, low costs and a friendly drug-control system. While good news for India’s economy, the booming clinical trial industry is raising concerns because of a lack of regulation of private trials and the uneven application of requirements for informed consent and proper ethics review.”

 Inadequate auditing:

It is unfortunate that focus on ‘Clinical Trial Registry’ and even ‘Auditing of Clinical Trials’ has been grossly lacking in India, which are considered so important not only in maintaining credibility of the studies, but also to demonstrate their scientific integrity and ethical values.

Unfortunately, there seems to be many loose knots in the current CT policy, practices, rules and guidelines. All these require to be adequately tightened by the Government to make the system efficient and transparent in the national endeavor of establishing India as a preferred destination for global CT without compromising safety and the health interest of the volunteers.

 Indian Parliament intervened:

On May 8, 2012, the department related ‘Parliamentary Standing Committee (PSC)’ on Health and Family Welfare presented its 59th Report on the functioning of the Indian Drug Regulator – the Central Drugs Standard Control Organization (CDSCO) in both the houses of the Parliament.

The PSC in its report made the following critical findings, besides many others:

  •  A total of 31 new drugs were approved in the period January 2008 to October 2010 without conducting clinical trials on Indian patients.
  • Thirteen drugs scrutinized by the panel are not sold in the United States, Canada, Britain, European Union and Australia, as instructed by their respective regulatory authorities.
  • Sufficient evidence is available on record to conclude that there is collusive nexus between drug manufacturers, some functionaries of CDSCO and some medical experts.
  • Due to the sensitive nature of CTs in which foreign companies are involved in a big way and a wide spectrum of ethical issues and legal angles, different aspects of CTs need a thorough and in-depth review.

 Jolted drug regulator initiates action: 

In response to the high-pitched conundrum and media glare, The Ministry of Health and Family Welfare of the Government of India issued a draft notification on 17th July 2012 seeking stakeholders’ views on:

  • Permission to conduct CT
  • Compensation of the CT victims

The draft notification also says that the licensing authority, only after being satisfied with the adequacy of the data submitted by the applicant in support of proposed clinical trial, shall issue permission to conduct CT, subject to compliance of specified stringent conditions.

However, some experts do apprehend that such stringent system may give rise to significant escalation in the costs of CT for the pharmaceutical players.

Similarly, to assess right compensation for clinical trial related injuries or deaths, following parameters were mooted in the document:

  • Age of the deceased
  • Income of the deceased
  • Seriousness and severity of the disease the subject was suffering at the time of his/her participation into the trial.
  • Percentage of permanent disability

Further, unlike current practices, the government is expected to set up independent registered Ethics Committees under medical institutions for effective and smooth conduct of CTs in India.

Poor patient compensation:

Absolutely unacceptable level of compensation, by any standard, paid by the concerned companies for the lives lost during CTs are mainly attributed to the lackadaisical attitude of the drug regulators to frame rules and laws for patient compensation for such cases in India.

Information reportedly gathered through the ‘Right To Information (RTI) Act’ reveals that one pharmaceutical company paid just Rs. 50,000 each to the families of two patients who died during CT of its cancer drug. Another Ahmedabad-based Clinical Research Organization (CRO) paid a compensation of exactly the same amount to another patient for a CT related death.

The report points out that in 2011 out of 438 CT related deaths in India only 16 families of such patients received any compensation, the quantum of which varied from Rs. 50,000 to Rs. L 3.0  with one exception being of Rs. L 5.

In 2012 till August, 272 more CT related deaths have already been reported.

Higher patient compensation expected:

It has been alleged that currently the pharmaceutical companies are “getting away with arbitrary payments” sometimes as meager as Rs. 50,000, as stated above, in case of loss of life during CT, as there are no set norms for calculating compensation to those patients.

It is expected that the new rules will help putting in place a transparent formula for providing a respectable compensation for CT related serious adverse events like deaths, along with a prescribed provision for minimum compensation amount to such patients.

Increasing public scrutiny:

Over the last few years, CTs in India are increasingly coming under intense public and media scrutiny. As a result, both the concerned pharmaceutical companies as well as the CROs are facing the wrath of various stakeholders including the Supreme Court.

Following are the reported numbers of registered CTs in India from 2009 to 2011:

Year Total Number
2009 181
2010 313
2011 513

Although the total number of CTs registered in India from 2007 to 2011, as per available records, was around 1875, the number of new trials registered in the country had reportedly sharply declined in 2011 over 2010, mainly due to time-consuming regulatory approvals and increasing public scrutiny on alleged unethical practices.

According to www.clinicaltrials.gov – the website of the U.S Government, out of 118,804 human trials conducted in 178 countries, less than 2,000 or 2%, are carried out in India as compared to 9,352 or 8% in China.

It appears, all concerned players now seem to be either willingly or grudgingly waiting for the CT regulatory system to function the way it should. 

Conclusion:

Although the Ministry of Health has already started taking some positive measures, as stated above, there is an urgent need for the players in this field to reassure the Civil Society, in general, and the Government in particular about the high ethical standards that the pharmaceutical companies and CROs would comply with and continuously practice, while conducting clinical research in India.

We all understand, CTs are the core of research-based pharmaceutical industry. No new drug can come into the market without CTs, which involve both potential benefits and risks to the participants. All CTs are conducted with the primary aim of bringing to patients new medicines with a favorable benefit–risk ratio.

Global CTs being relatively new to India, no wonder, there are several misconceptions on the subject. The companies conducting clinical research need to proactively publicize their commitment to protecting the rights, safety and the well being of the trial participants.

That said, the bottom line is, without any selfish interest or pressure to the Government in any form, from within the country or outside, all concerned must ensure that CTs of all types must strictly adhere to the prescribed norms and well laid down procedures of India, as soon as these are put in place.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion and also do not contribute to any other blog or website with the same article that I post in this website. Any such act of reproducing my articles, which I write in my personal capacity, in other blogs or websites by anyone is unauthorized and prohibited.

 

 

 

“Indian Drug Regulator Accords Primacy to Pharma Industry Instead of Safegurding Public Health and Safety” – Parliamentary Committee

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The Department Related Parliamentary Committee on Health and Family Welfare presented its 59th Report of 118 pages in total on the functioning of the Indian Drug Regulator – the Central Drug Standards Control Organization (CDSCO) in both the houses of the Parliament on May 08, 2012.

Regulations and the Regulator for the Pharmaceutical Industry of India – A snapshot:

The pharmaceutical industry in India is regulated, broadly, in the following ways:

  • Drugs and Cosmetics Act of India 1940 together with Drugs and Cosmetics Rules regulate the Pharmaceutical Industry across the country for all types of drugs, irrespective of the fact whether these are locally produced or imported from other countries of the world.
  • The office of the Drug Controller General of India (DCGI) is primarily responsible for effective enforcement of most of these laws and rules across the country.
  • All issues related to clinical trials, product approval and standards, import licenses and introduction of new drugs are the direct responsibilities of the DCGI’s office.
  • Health being a state subject in India, on the ground, Foods and Drugs Administrations (FDA) of the State Governments enforce laws related to approvals for setting up pharmaceutical production facilities and obtaining licenses to stock and sell drugs in their respective states.
  • A valid license from the Drug Regulator is necessary for location-wise manufacturing of each type of drugs in the country with a mandatory requirement of periodic renewal of such licenses, as specified therein.

A key point to ponder from the Report:

The report begins with the following observations:

Medicines apart from their critical role in alleviating human suffering and saving lives have very sensitive and typical dimensions for a variety of reasons. They are the only commodity for which the consumers have neither a role to play nor are they able to make any informed choices except to buy and consume whatever is prescribed or dispensed to them because of the following reasons:

  • Drug regulators decide which medicines can be marketed
  • Pharmaceutical companies either produce or import drugs that they can profitably sell
  • Doctors decide which drugs and brands to prescribe
  • Consumers are totally dependent on and at the mercy of external entities to protect their interests.

In this prevailing condition, the committee felt that effective and transparent drug regulation, free from all commercial influences, is absolutely essential to ensure safety, efficacy and quality of drugs keeping just one objective in mind, i.e., welfare of patients.

Quite in congruence with this critical requirement the Committee examined in detail the functioning of CDSCO, which includes the office of the DCGI, as well, to ascertain whether applicable rules and laws are being implemented efficiently and honestly for the best interest of patients by the Drug Regulator of India.

Why is the ‘Mission Statement’ of CDSCO industry oriented and not patient focused?

Very interestingly, the report highlights with the following examples, how out of line the ‘Mission Statement’ of CDSCO is as compared to the same of other countries by being blatantly industry oriented instead of safeguarding Public Health and safety:

Drug Regulator

The ‘Mission Statement’
1

CDSCO, India

 Meeting the aspirations…. demands and requirements of the pharmaceutical industry.
2.

USFDA, USA

 Protecting the public health by assuring the safety, efficacy, and security of human and veterinary drugs.
3.

MHRA, UK

 To enhance and safeguard the health of the public by ensuring that medicines and medical devices work, and are acceptably safe.
4.

TGA, Australia

 Safeguarding public health & safety in Australia by regulatingMedicines…

Consequently, the Committee took a very strong exception for such utter disregard and continued neglect of patients’ interest by the Drug Regulator of India and recommended immediate amendment of the ‘Mission Statement’ of CDSCO incorporating in very clear terms that the existence of the organization is solely for the purpose of protecting the best interest of patients and their safety. It is needless to say that thereafter, it will require stringent conformance with the same with high precision.

Some very critical findings:

The committee in its report made the following critical findings, besides others:

  • “A total of 31 new drugs were approved in the period January 2008 to October 2010 without conducting clinical trials on Indian patients.
  • Thirteen drugs scrutinized by the panel are not allowed to be sold in the United States, Canada, Britain, European Union and Australia.
  • Sufficient evidence is available on record to conclude that there is collusive nexus between drug manufacturers, some functionaries of CDSCO and some medical experts.
  • When it comes to approving new drugs, too much is left to the absolute discretion of the CDSCO officials.
  • The Central Government can either issue directions under Section 33P to states to withdraw the licenses of FDCs granted without prior DCGI approval or the Central Government can itself ban such FDCs under Section 26A.
  • Though the Ministry is forming Drug Approval Committees, which are given very important powers, there is no transparent procedure for the selection of experts of such Committees.
  • Accurate information on drugs for patients is absolutely essential to prevent inappropriate use more particularly in children, elderly, during pregnancy and lactation.
  • Due to the sensitive nature of clinical trials in which foreign companies are involved in a big way and a wide spectrum of ethical issues and legal angles, different aspects of Clinical trials need a thorough and in-depth review.”

The Report named some pharmaceutical companies:

While arriving at these points, the report indicted some pharmaceutical companies, both national and international as follows (in alphabetical order):

Company Company Company
1. Bayer 8. Lundbeck 15. Ranbaxy
2. Cipla 9. Macleods 16. Sanofi
3. Centaur 10. Mars 17. Sun Pharmaceuticals
4. Emcure 11. Merck 18. Themis
5. Eli Lilly 12. Novartis 19. Theon
6. GlaxoSmithKline 13. Pharmacia (acquired by Pfizer) 20. UCB
7. Hetero 14. Phamasset Inc. (a subsidiary of Gilead) 21. Venus

A scathing remark against CDSCO:

The report made the following scathing remarks on CDSCO in its point 2.2:

“The Committee is of the firm opinion that most of the ills besetting the system of drugs regulation in India are mainly due to the skewed priorities and perceptions of CDSCO. For decades together it has been according primacy to the propagation and facilitation of the drugs industry, due to which, unfortunately, the interest of the biggest stakeholder i.e. the consumer has never been ensured.”

Allegation of possible collusion needs to be thoroughly probed:

The report also deliberates not only on the utter systemic failure of CDSCO along with the DCGI’s office to enforce law effectively, but also towards a possible collusion between CDSCO and the pharmaceutical industry to implement a self-serving agenda by hoodwinking the system. This is a very serious allegation, which needs to be thoroughly probed and the findings of which should be made public for everybody’s satisfaction.

Parliamentary Committee Report is a ‘considered advice and of persuasive value’:

Though any report of such Parliamentary Committee has been stated to have a persuasive value and be treated as considered advice given by the Committee, which in this case is to CDSCO, DCGI, Ministry of Health and also the industry.

Some probes already initiated:

Reuters in its publication of May 9, 2012 indicated that this Parliamentary Committee Report has prompted greater scrutiny even from the US regulators, which are reportedly investigating a number of drug companies under the Foreign Corrupt Practices Act (FCPA).

Initial reports also indicate that both the Indian Government and some large international pharmaceutical companies have announced detail probe based on this report at their respective ends.

Some remedial measures - Mashelkar Committee Recommendations:

Considering all these, besides taking appropriate remedial measures related to Clinical Trials of drugs in India, it is about time to reconsider the recommendations of Dr. R. A. Mashelkar Committee on the subject and make amendments in the Act accordingly to facilitate creation of a ‘Central Drugs Authority (CDA)’ introducing, along with other measures, a centralized licensing system for the manufacture, sale, export and distribution of drugs.

Why does India need CDA?

I firmly believe that the formation of the ‘Central Drugs Authority (CDA)’ will provide the following significant benefits to the Industry and also to the Government for the best interest of public health and safety:

  1. Achieving uniform interpretation of the provisions of the Drugs & Cosmetics Act & Rules
  2. Standardizing procedures and systems for drug control across the country
  3. Enabling coordinated nationwide action against spurious and substandard drugs
  4. Upholding uniform quality standards with respect to exports to foreign countries from anywhere in India
  5. Implementing uniform enforcement action in case of banned and irrational drugs
  6. Creating a pan-Indian approach to drug control and administration
  7. Evolving a single-window system for pharmaceutical manufacturing and research undertaken anywhere in the country.

Conclusion:

As a consequence of the above report of the Parliamentary Committee identifying gross irregularities in the functioning of the CDSCO, the Minister of Health and Family Welfare (MoHFW) of India Mr. Ghulam Nabi Azad has already announced constitution of a three-member committee to probe into the matter in depth.

Following well-known experts have been named as members of this high powered committee, which will submit its report and recommendations in two months’ time:

  • Dr. V.M. Katoch: Director General, Indian Council of Medical Research (ICMR),
  • Dr. P.N. Tandon: President, National Brain Research Centre
  • Dr. S.S. Aggarwal: Former Director, Sanjay Gandhi Postgraduate Institute of Medical Sciences, Lucknow

The committee has been mandated to:

  • Examine the validity of the scientific and statutory basis adopted for approval of new drugs without clinical trials
  • Outline appropriate measures to bring about systemic improvements in the processing and grant of statutory approvals
  • Suggest steps to institutionalize improvements in other procedural aspects of functioning of the CDSCO

The outcome of the report of this high powered committee, internal probes voluntarily initiated by some pharmaceutical companies and possible implementation of the ‘Mashelkar Committee’ recommendations on the formation of CDA in the country will hopefully bring in some systemic changes in the drug regulatory system of India, for patients’ sake.

By: Tapan 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.

Restructure, reposition and empower the DoP to deliver more to the nation: Break the Silos

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A news item on July 25, 2011 reported, “DoP (Department of Pharmaceuticals) moots National Authority for Drugs & Therapeutics (NADT) with Central Drugs Standard Control Organization (CDSCO) under it”.

If I recall, some years ago, a Government of India (GoI) appointed taskforce had also suggested integration of the offices of the DCGI, CDSCO and NPPA along with all their powers and functions. However, nothing has fructified, as yet, not even the Central Drug Authority (CDA) Bill, which was mooted in 2007.

In the same context while taking a pause to look back, we note that in 2008 to help accelerating the growth momentum of the pharmaceutical industry of India through a more efficient government administrative and policy machinery, the GoI created a new department called the ‘Department of Pharmaceuticals’ under the MOC&F.

It was widely expected at that time that the DoP will be able to address the following key pharmaceutical industry related issues with an integrated approach to strike a right balance between the growth fundamentals of the industry and the Public Health Interest (PHI):

  • Drug policy and pricing
  • Providing access to high quality and affordable modern medicines to all
  • A facilitating drug regulatory system
  • An appropriate ecosystem to encourage R&D and protect Intellectual Property Rights (IPR)
  • Addressing the issue of high out of pocket expenses of the general population for healthcare
  • Fiscal and tax incentives required by the Micro-Small and Medium Enterprises (MSME) within the pharmaceutical industry of India.

As stated above, all these will necessitate close coordination and integration of work of various departments falling under the different ministries of the government. 

The key Objectives of the DoP: 

Following are the stated key objectives of the DoP:

1 Ensure availability of quality drugs at reasonable prices as per the Pharma Policy

2 Facilitate growth of Central pharma PSUs with required support

3 Develop Pharma Infrastructure and Catalyze Drug Discovery and Innovation

4 Launch and Position Pharma India Brand.

The moot questions:

Considering all these, the moot questions that could follow are as follows:

  1. Do the objectives of the DoP effectively address the need to improving access to quality and affordable medicines to the common man with an integrated approach between all concerned departments of MOC&F and MOH&FW?
  2. Is the nodal department of the pharmaceutical industry – the DoP currently placed in the right Ministry to contribute more effectively to achieve the ultimate national goal of ‘ affordable healthcare for all’ ?

Need for greater co-ordinated approach:

The issue of access to quality and affordability medicines, reaching patients in conformance to a strict regulatory framework, will need to be addressed with an integrated systems approach.

As is commonly believed, increasing access to modern medicines will depend mainly on the following key requirements:

  1. Creating an appropriate healthcare infrastructure and delivery system across the country.
  2. Making prices of medicines reasonable/affordable to a large section of the population.
  3. Reducing high (80%) ‘Out of Pocket’ healthcare expenses of the common man through a well-structured healthcare financing/health-insurance model for all strata of society.

All these measures will entail very closely working together between the DoP and the related departments of MOH&FW. This situation calls for consideration of repositioning the DoP by making it a part of MOH&FW and NOT of MOC&F.

Pharmaceutical Industry: The areas of key importance:

Be that as it may, let us now try to have a closer look at the other aspect – the key areas of importance of the pharmaceutical industry for its accelerated growth and development and try to ascertain, if DoP is made responsible for all these critical areas, which Ministry they will need to deal with, the most:

1. Drug Policy and Pricing:

Currently DoP is responsible for an inclusive growth oriented drug policy and drugs pricing (through National Pharmaceutical Pricing Authority, NPPA) under the MOC&F. This key activity of  the department has immense impact on the performance of the pharmaceutical industry of India.

2. ‘Access’ and ‘Availability’ of modern medicines across the country:
Availability of pharmaceutical products is intimately linked to the quality of access to pharmaceuticals by a vast majority of population of India, as indicated above, depends on availability of requisite healthcare infrastructure and the delivery systems, besides the prices of medicines.

‘Jan Aushadhi’ scheme – a praiseworthy initiative of the DoP now seems to be a near disaster in terms of the project implementation.  This scheme could have been more meaningful with the support of adequate health related infrastructural facilities and in tandem with the projects like, National Rural Health Mission (NRHM), National Urban Health Mission (NUHM), Rashtriya Swasthaya Bima Yojna (RSBY) targeted to offer better healthcare to the common man with a robust and integrated healthcare delivery initiative.

Ministry of Health and Family Welfare (MOH&FW) is responsible to create such healthcare related infrastructure and delivery system.

3. Drug Regulatory System:

The drug regulatory system of the country, which is so important to the pharmaceutical industry for its rapid growth and development, is now operating at a sub-optimal level for various reasons. The dissatisfaction of the industry with this key regulator reportedly has reached its nadir.

Almost the entire Drug Regulatory System in India is being run and governed by the office of the Drug Controller General of India (DCGI), which comes under the MOH&FW. DCGI’s office is responsible for effective and speedy implementation of the Drugs and Cosmetics Act of India (DCA), which includes world class and ethical clinical trial standards in the country, marketing approval of all new products including exports, implementation of Schedule M (cGMP), all pharmaceuticals site registrations and effectively addressing the issue of spurious and counterfeit drugs, just to name a few. DoP has hardly any direct or indirect control over any of these key activities falling under the purview of the MOH&FW.

4. Biopharmaceuticals:

The Department of Biotechnology under the Ministry of Science and Technology currently looks after this emerging area of pharmaceuticals sector. DoP has no direct control over these activities.

5. R&D and IPR:

R&D and IPR related issues in pharmaceuticals/biopharmaceuticals are very important areas of the pharmaceutical business in the country. Although IP Policy related areas are looked after by the Department of Industrial policy and Promotion (DIPP), some contentious and highly debated IP related issues like, Regulatory Data Protection (RDP), Patent Linkage etc. are currently within the domain of DCGI under MOH&FW. DoP has no direct role to play in these areas.

6. High out of pocket expenses for healthcare:

In India ‘Out of Pocket Expenses (OPE)’ towards healthcare is around 80%. Such high OPE, especially in case of very serious and life threatening illnesses, like cancer, cardiovascular emergencies etc. could make a middle class household poor and a poor household could even be pushed ‘Below the Poverty Line (BPL)’.

Thus high OPE is indeed a very serious issue of the country, which can only be addressed through policy initiatives by designing appropriate health insurance/healthcare financing scheme for all strata of society in India.

For a large section of the society, this issue can be addressed by MOH&FW in consultation with Ministry of Finance, just as they have come out with an innovative and praiseworthy RSBY scheme for the BPL families. DoP does not seem to have much role to play in this area, as well.

Thus the objective of GoI to have greater focus on healthcare in general and the pharmaceuticals in particular could be better achieved, if the DoP is made a part of MOH&FW by breaking the independent silos in form of the NPPA, CDSCO, DCGI etc., now operating, especially, in these two ministries.

Key issues of pharma industry versus key objectives of the DoP: From the above details, if one compares the key issues and success factors of the pharmaceutical industry of India versus the key objectives of the DoP, one will notice a dis-conformity.

If this is allowed to continue even the all-important first objective of the department, ”Ensuring availability of quality drugs at reasonable prices as per the Pharma Policy” will continue to remain an illusion. It is indeed surprising to note that this objective does not talk anything about improved access to modern medicines by the common man, either.

Over a period of over last four decades India has experienced that only through increased focus on affordability, the objective of increased access to medicines by the common man could not be achieved in India. Besides other healthcare infrastructure related factors, high OPE still remains a key barrier to access to modern medicines by the common man.

Why is  DoP trying to revive the loss making pharmaceutical Public Sector Units (PSUs)?

As stated above, the second objective of the DoP, which states, “Facilitate growth of Central pharma PSUs with required support” is equally intriguing. Everyone knows that all these PSUs created by spending tax payers’ money , miserably failed to perform and deliver even when the Indian pharmaceutical industry continues to register a CAGR growth of around 15% decade after decade. It is indeed difficult to fathom, which magic wand of the DoP will be able to bring these loss making and heavily bleeding PSUs out of continuous non-performance and governance failure in an era of fierce competitive pressure within the industry, by pouring even more from the national exchequer’s fund in the bottomless pits of losses of these PSUs?

I reckon, if these PSUs still attract interest of some good private buyers/investors with reasonable valuation, the government should unhesitatingly decide to unlock these values, sooner the better.

Conclusion:

In my view, if the DoP is expected to ensure improved “access to affordable and quality modern medicines to all”, as discussed above, the department should be repositioned and made a part of MOH&FW, rather than keeping it with the MOC&F, ignoring any possible political squabbles between the two concerned ministries, even in the coalition politics of India.

Such restructuring, repositioning and empowerment of the DoP in turn, will help achieving one of the key healthcare objectives of the nation, simultaneously fostering rapid growth of the industry making it a formidable global force to reckon with, both in the innovative and generic pharmaceutical business of the world.

This expected scenario, if gets translated into reality will justify the creation and existence of the DoP at the cost of huge amount of public fund.

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.

NRHM of India: Yet to ‘Tick all the Right Boxes’

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‘National Rural Health Mission (NRHM)’, one of the largest and a very ambitious healthcare initiative for the rural population of India, was launched by the Government of India on April 12, 2005.

The primary purpose of NRHM, as announced by the Government, was to ensure universal access to affordable and quality healthcare for the rural poor of 18 states of India, namely, Arunachal Pradesh, Assam, Bihar, Chhattisgarh, Himachal Pradesh, Jharkhand, Jammu and Kashmir, Manipur, Mizoram, Meghalaya, Madhya Pradesh, Nagaland, Orissa, Rajasthan, Sikkim, Tripura, Uttarakhand and Uttar Pradesh, to start with.
During the launch of NRHM, the then Health Minister of India announced that the nation would see the results of these efforts in three years’ time.

The key objectives of NRHM:

• Decrease the infant and maternal mortality rate • Provide access to public health services for every citizen • Prevent and control communicable and non-communicable diseases • Control population as well as ensure gender and demographic balance • Encourage a healthy lifestyle and alternative systems of medicine through AYUSH

As announced by the government NRHM envisages achieving its objective by strengthening “Panchayati Raj Institutions” and promoting access to improved healthcare through the “Accredited Social Health Activist” (ASHA). It also plans on strengthening existing Primary Health Centers, Community Health Centers and District Health Missions, in addition to making maximum use of Non-Governmental Organizations.

NRHM was to improve access to healthcare by 20 to 25% in 3 years’ time:
To many the National Rural Health Mission (NRHM) has made a significant difference to the rural health care system in India. It now appears that many more state governments are envisaging to come out with innovative ideas to attract and retain public healthcare professionals in rural areas.
On January 11, 2010, the Health Minister of India Mr. Ghulam Nabi Azad, while inaugurating the FDA headquarters of the Western Zone located in Mumbai, clearly articulated that the NRHM initiative will help improving access to affordable healthcare and modern medicines by around 20 to 25 percent during the next three years. This means that during this period access to modern medicines will increase from the current 35 percent to 60 percent of the population.
If this good intention of the minister ultimately gets translated into reality, India will make tremendous progress in the space of healthcare, confirming the remarks made by Professor Sir Andrew Haines, Director, London School of Hygiene and Tropical Medicine, as quoted above.

The Achievements:

More than five years are over now. Let us have a look at the key achievements of this ambitious health scheme as on January 2010, as available from the Ministry of Health:

  • 71.6% (10.86 million) institutional deliveries across India as compared to only 41%
  • 78.8% (19.82 million) children across the country fully immunized
  • A total of 23,458 primary health centers (PHC) have been set up against NRHM goals of 27,000 during the same period.
  • 5,907 community health centers were upgraded against 7,000 as was planned under the NRHM.
  • 462,000 Associated Social Health Activists were trained
  • 177,924 villages have sanitation committees functional
  • 323 district hospitals have been taken for up gradation

Free Care to Mothers and Children: A new initiative

In the recent publication of the Ministry of Health and Family Welfare (MoHFW) titled, ‘Two years (2009-2011): Achievements & New Initiatives’, the ministry has highlighted another commendable initiative to provide free care to the mothers and children, which includes as follows:

Provision of free drugs,

  • Free Consumables and Diagnostics,
  • Free Diet during stay and
  • Free transport to health facility and drop back home. 

Still to ‘Tick all the Right Boxes’:

Despite all these, a recent study done by ‘Chronic Care Foundation’ indicates that in India about 86% of highly populated rural districts still do not have provisions for basic diagnostic tests for chronic ailments.

The study also highlights that in rural areas, as a percentage of total healthcare expenses, out of pocket costs are more than the urban areas, with hospitalization expenses contributing the most to the total costs. In many rural areas the healthcare costs have been reported to be as high as around 80% of the total expenses. Such a high out of pocket expenses have mainly been attributed to the lack of facilities in these rural areas, requiring patients to travel to distant areas for medical treatment. It was also reported that even in rural areas due to inefficient and inadequate services at the Government healthcare units there has been a very high dependence on more expensive private healthcare facilities.

Obvious questions:

Thus even after over five years from the inception of NRHM, the current status of rural public healthcare system, poses the following obvious questions:
• How is the huge money allocated for NRHM being utilized? • Who all are accountable for the current state of affairs of this great scheme?
Even our Prime Minister Mr. Manmohan Singh has admitted recently that “the shortage of human resources was becoming an impediment in strengthening the public health delivery system through the National Rural Health Mission (NRHM)”.

Economic Survey 2010 did raise a flag:

The Economic Survey 2010 highlighted that ‘several glitches in the flagship NRHM needed to be ironed out to improve health infrastructure’, some of these are the following:

  • Shortage of over 6,800 more hospitals in rural areas to provide basic health facilities to people
  • Shortage of 4,477 primary healthcare centers and 2,337 community healthcare centers as per the 2001 population norms.
  • Almost 29% of the existing health infrastructure is in rented buildings.
  • Poor upkeep and maintenance, and high absenteeism of manpower in the rural areas are the main problems in the health delivery system.
  • Basic facilities are still absent in many Primary Health Centers (PHCs) and Community Health Centers (CHCs) to provide guaranteed services such as in-patient care, operation theatres, labor rooms, pathological tests, X-ray facilities and emergency care.

The Economic Survey further highlighted that “An assessment of the health related indicators would suggest that significant gains have been made over the years. However, India fares poorly in most of the indicators in comparison to the developing countries like China and Sri Lanka. The progress in health has been quite uneven, across regions, gender, as well as space.”

It now appears that this great initiative of the government of India called the NRHM, has made, if at all, only marginal impact on the healthcare needs and systems of the nation.

Leveraging capacity of the Private Healthcare sector is critical:

Though the private sector contributes over 70% in healthcare space, unfortunately NRHM has not yet been successful to leverage this key strength.  Participation of the private healthcare players through Public Private Partnership (PPP) initiatives could be one of the key determinants of success of NRHM of India. Electronic Media outreach program, though quite sporadic, has started creating some awareness about this project within the general population.

Role of the State Governments:

In the federal governance structure of India, health being a state subject, respective state governments should play more creative and proactive role with requisite allocation of fund, freedom of operation and accountability to make NRHM successful across the country.

Who will bell the cat?

To make NRHM deliver desired results the Government should at the very outset significantly increase in health expenditure to around 3% to 5% of GDP and simultaneously outline, decide and announce the key measurable success parameters for performance evaluation of the scheme. This is to be done by uploading for public scrutiny in the respective Health Ministry websites of both the Central and State Governments the names and designations of the responsible senior Government officials who will be held accountable for the success or failure to deliver the deliverables for NRHM. All these details should be updated at least half yearly.

With tax-payers money being utilized for this important and critical public health arena, no non-performance should escape attention and go unpunished.
Moreover, with the help of experts, the Government should decide which elements of each identified success parameters the Government will be able to deliver better with its own internal resources and what are those areas where the Government should outsource from the private players.
Such an approach when worked out in great details will be able to ensure whether through NHRM the country is making progress to improve access to affordable and quality healthcare for a vast majority of its rural population. Otherwise this scheme may well be treated just as one of those which failed to deliver and over a period of time vanished in the oblivion.

Conclusion:

Thus, in my view, despite publication of all the details done for NRHM by the MoHFW in its latest publication titled, ‘‘Two years (2009-2011): Achievements & New Initiatives’ and witnessing some sporadic flashes of brilliance here or there, I reckon, the overall implementation of this excellent healthcare project called NRHM has failed to tick many of the important boxes as was eagerly expected by the common man of India.

By: Tapan J Ray

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

‘India Taskforce’ takes the first step in an arduous task to bridge the trust deficit.

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To prepare a comprehensive long term strategy to unleash the growth potential of the Pharmaceutical Industry of India considering all its current issues, the Ministry of Health and Family Welfare announced constitution of a taskforce on March 15, 2011 involving all the stakeholders, as mentioned below. As per reports, the first meeting of the committee was held on June 6, 2011 to deliberate on the mandated goals.

Within 3 months the taskforce, under the chairmanship of V.M. Katoch, Secretary, Department of Health Research and Director-General, Indian Council of Medical Research (ICMR), is expected to work out and submit a short, medium and long term strategic path and goals to the Government, highlighting the key and specific policy measures required to achieve these objectives.

The taskforce will have members drawn from:

  1. National Pharmaceutical Pricing Authority,
  2. Department of Industry Policy and Promotion,
  3. Indian Drug Manufacturers Association, Mumbai,
  4. Indian Pharmaceutical Alliance, Mumbai,
  5. Organization of Pharmaceutical Producers of India, Mumbai,
  6. Federation of Pharmaceutical Entrepreneurs, Gurgaon,
  7. Confederation of Indian Pharmaceutical Industry,
  8. Bulk Drug Manufacturers’ Association, Hyderabad,
  9. SME Pharma Industry Confederation, New Delhi
  10. Drug Controller General of India as the Member Secretary.

The focus areas:

The report has been mandated to cover the following critical areas:

  1. Evolving a short, medium and long-term policy and strategy to make India a hub for drug discovery, research and development.
  2. Evolving strategies to further the interests of Indian pharma industry in the light of issues related to intellectual property rights and recommend strategies to capitalize the opportunity of $60 to $80 billion drugs going off-patent over the next five years.
  3. Evolve policy measures to assure national drugs security by promoting indigenous production of bulk drugs, preventing takeover of Indian pharma industry by multi-national corporations, drug pricing, promotion of generic drugs
  4. Recommend measures to assure adequate availability of quality generic drugs at affordable prices.
  5. Recommend measures to tackle the problem of spurious drugs and use of anti-counterfeit technologies.

Estimates and Perspectives:

  • The pharma industry is growing at around 1.5-1.6 times the Gross Domestic Product growth of India
  • Currently, India ranks third in the world of volume of manufacturing pharmaceutical products
  • The Indian pharmaceutical industry is expected to grow at a rate of around 15 % till 2015
  • The retail pharmaceutical market in India is expected to cross US$ 20 billion by 2015
  • According to a study by FICCI-Ernst & Young India will open a probable US$ 8 billion market for MNCs selling patented drugs in India by 2015
  • The number of pharmaceutical retailers is estimated to grow from 5,50,000,  to 7,50,000 by 2015
  • At least 2,00,000 more pharma graduates would be required by the Indian pharmaceutical industry by 2015
  • The Indian drug and pharmaceuticals sector attracted Foreign Direct Investments to the tune of US$ 1.43 billion from April 2000 to December 2008 (Ministry of Commerce and Industry), which is expected to increase significantly along with the policy reform measures and increased Government investment (3%-4%) as a percentage of GDP towards healthcare, by 2015
  • The Minister of Commerce estimates that US$ 6.31 billion will be invested in the domestic pharmaceutical sector
  • Due to low cost of R&D, the Indian pharmaceutical off-shoring industry is expected to be a US$ 2.5 billion opportunity by 2012

Key growth drivers: Local and Global:

Local: • Rapidly growing middle class population of the country with increasing disposable income. • High quality and cost effective domestic generic drug manufacturers are achieving increasing penetration in local, developed and emerging markets. • Rising per capita income of the population and inefficiency of the public healthcare system will encourage private healthcare systems of various types and scales to flourish. • High probability of emergence of a robust healthcare financing/insurance model for all strata of society. • Fast growing Medical Tourism. • Evolving combo-business model of global pharmaceutical companies with both patented and generic drugs is boosting local outsourcing and collaboration opportunities. Global: Global pharmaceutical industry is going through a rapid process of transformation. The moot question to answer now is how the drug discovery process can meet the unmet needs of the patients and yet remain cost effective.

Cost containment pressure due to various factors is further accelerating this process. CRAMS business, an important outcome of this transformation process, will be the key growth driver for many Indian domestic pharmaceutical players in times to come. Bridging the ‘Trust Deficit’ is one of the key Challenges:

Like all other industries, Pharmaceutical Industry in India has its own sets of challenges and opportunities under which it operates. Some of the challenges the industry faces are:

  • Unfortunate “Trust Deficit” between the Government and the Industry to improve access to affordable modern medicines.
  • Regulatory red tape and lack of initiative towards international harmonization.
  • Inadequate infrastructure and abysmal public delivery system.
  • Lack of adequate number of qualified healthcare professionals.
  • Inadequate innovation friendly ecosystem to encourage R&D and other non-product related innovation in the pharmaceutical value chain.
  • Myopic Drug Policies have failed to deliver.
  • Addressing needs of over 350 million BPL families who cannot afford to buy any healthcare products and services.
  • ‘80% out of pocket expenditure’ of the common man towards healthcare.
  • Inadequate Public Private Partnership (PPP) initiatives in most of the critical areas of healthcare.

Urgent need to bridge the ‘Trust Deficit’ and improve public perception of the Industry:

Like many other countries of the world, in India too there is a negative public perception about the pharmaceutical industry. Recent reports on ‘clinical trials related patient’s compensation’ or the government intervention on allegedly gross ‘unethical’ marketing practices by the pharmaceutical companies, further strengthen such belief.  Unfortunately, despite meteoric success of the generic pharmaceutical industry of India in the global arena, public perception of the industry still remains as one, which is being driven by profiteering motive at the cost of the precious lives of ailing common population of the country. This is indeed acting as a strong retarding force. As a result the regulators are also compelled to introduce more of growth stifling measures at a fairly regular pace.

A new ‘Harris Poll’ conducted in the US between November 8 and 15, 2010 reports as follows:

Top industries that largest numbers of people believe should be more regulated

Industry % of respondents
Oil

47
Pharmaceuticals

46
Health Insurance

42
Tobacco

38
Banks

34
Managed Care

34

That an overwhelming 46% respondent in the US feels that the Pharmaceutical Industry should be regulated, only reflects a poor public perception of the industry in the USA.

Industries trusted by the fewest people

Industry % of respondents
Tobacco

2
Oil

4
Telecommunication

7
Managed Care

7
Life Insurance Companies

10
Pharmaceuticals

11

(Source: Harris Poll 2010) 

It is indeed an irony that a miniscule 11% respondents trust pharmaceutical industry in the USA.

Thus in the prevailing scenario globally, the Indian Pharmaceutical Industry should take more demonstrable self-regulatory measures to improve its public perception and make its growth more inclusive, in the best possible way that it can. Without active support of the government, media and other stakeholders, through conscious efforts to improve its image, all the efforts of the taskforce may ultimately get converted into a zero sum game.

Job Creation by the industry is of critical importance: Pharmaceutical sector in India has created employment for approximately 3 million people from 23,000 plus units. Accelerated growth in job creation, will not only open up more opportunities to pharmaceutical professionals, but will also fuel growth opportunities in allied business segments like Laboratory, Scientific instruments, Medical Devices and Pharma machinery manufacturing sectors.

Despite all these, it is worth noting that a major challenge still remains in getting employable workforce with the required skill sets. This issue will grow by manifold, as we move on, if adequate vocational training institutes are not put in place on time to generate employable workforce for the industry.

Government Initiatives, thus far, are still less than adequate: The government of India has started working out some policy and fiscal initiatives, though grossly inadequate, for the growth of the pharmaceutical business in India. Some of the measures adopted by the Government are follows:

  • Pharmaceutical units are eligible for weighted tax reduction at 175% for the research and development expenditure obtained.
  • Two new schemes namely, New Millennium Indian Technology Leadership Initiative and the Drugs and Pharmaceuticals Research Program have been launched by the Government.
  • The Government is contemplating the creation of SRV or special purpose vehicles with an insurance cover to be used for funding new drug research
  • The Department of Pharmaceuticals is mulling the creation of drug research facilities which can be used by private companies for research work on rent

Pharmaceutical Export going North: In recent years, despite economic slowdown in the global economy, pharmaceutical exports in India have registered a commendable growth. Export has emerged as an important growth driver for the domestic pharmaceutical industry with over 50 % of their total revenue coming from the overseas markets. For the financial year 2008-09 the export of drugs is estimated to be around US $8.25 billion as per the Pharmaceutical Export Council of India (Pharmexil). A survey undertaken by FICCI reported 16% growth in India’s pharmaceutical export during 2009-2010.

This trend needs to be encouraged and be given further boost.

Conclusion:

The newly formed taskforce will hopefully be able to address all these issues in an integrated way to guide this life-line industry to a much higher growth trajectory  to compete effectively not only in the global generic space, but also with the global innovator companies, sooner than later.

So the ball game for the taskforce is to recommend strategy and policy measures to improve access to modern medicines by reducing ‘out of pocket’ expenses significantly through public/private health insurance initiatives, protect public health interest and foster a climate for innovation, simultaneously, and certainly not one at the cost of the other.

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.

Deadly ‘Superbugs’: The larger issues

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Every year, April 7 is observed as ‘World Health Day’ across the globe. This year, 2011, is no exception. However, interestingly considering the increasing debate on the antibiotic resistance ‘Superbug’, the theme of this year has been very aptly coined as “No action today, no cure tomorrow”.

April 2011 issue of ‘The Lancet’ reported again the presence of drug-resistant bacteria NDM-1 in the public water system of Delhi.

Some observers in this area commented that this report is clearly aimed at raising alarm by recycling an old claim that has been found to be contentious, clearly suggesting indirectly that foreigners who visit India for medical and cosmetic treatments may carry back the deadly microbes with them to their respective countries.

The new report attempts to establish that the ‘Superbug NDM-1′ is no longer a hospital-born infection but can also spread through contaminated water and food. Understandably, this has raised a hue and cry in India.

Ministry of Health ridicules ‘The Lancet’ April study:

Last week the Ministry of Health rejected the above study observing that it was not only conducted with “motivated intentions”, but is illegal too. As transport of  water samples for such study out of the country requires prior permission from regulatory authorities. The authenticity of the samples also appears to be questionable, as these were reportedly to have been collected by a TV reporter.

However, just a day after the government rejected ‘The Lancet’ report, it formed a committee to look into the findings of the study, as announced by Dr R K Srivastava, Director General of Health Services, Government of India.

However, ‘The Lancet’ stands by this study report.

August 2010 report of ‘The Lancet’:

One will perhaps recall that on August 11, 2010, “The Lancet” published similar article highlighting that a new antibiotics-resistant “Superbug” originating from Pakistan has taken its first life. This happened when a patient brought to a hospital in Belgium died in June 2010 after having met with a car accident in Pakistan, where from the person got infected with this “Superbug”.

The above article was written by a team of international researchers including an Indian. The study elaborated that a new variety of enzyme named after India’s national capital New Delhi, called, “New Delhi Metallo beta lactamase” in short “NDM 1” turns any bacteria into a deadly “Superbug”, making it resistant to all types of antibiotics, leaving virtually no cure in sight. This deadly “Superbug” was reported to have already reached the United Kingdom through patients who acquired it from the hospitals in India and has the potential to precipitate serious health issues across the world. “The New Delhi Superbug” was discovered even earlier: The ‘The Lancet’ report generated a sharp reaction in India and from some of its authors regarding its authenticity. Some experts even termed this study as the ‘Western plot to undermine medical tourism in India’. A leading daily of India reported, “Indian medical journal first documented Superbug”. It stated that that the first ever formal documentation of this ‘Superbug’ was made in 2009 at the P.D. Hinduja National Hospital and Medical Research Centre located in Mumbai. This finding was published in the ‘Journal of the Association of Physicians in India (JAPI’) in March 2010. The reason for the emergence of the ‘Superbug’ was attributed to the ‘worrisome outcome of the indiscriminate use of antibiotics’. “Unfair to blame the country for the ‘New Delhi’ Superbug”: Reacting to the August article, Indian health authorities opined at that time, “It is unfortunate that this new bug, which is an environmental thing, has been attached to a particular country.” The reasons being, “Several superbugs are surviving in nature and they have been reported from countries like Greece, Israel, the U.S., Britain, Brazil and there is no public health threat and no need to unnecessarily sensationalize it”.

Some experts, however, feel, “such drug resistant pathogens, is a global phenomenon and is preventable by sound infection prevention strategies which are followed in any good hospital.”

Based on this report the ‘National Center for Disease Control of India’ started working on guidelines for appropriately recording these types of nosocomial (hospital acquired) infections.

“Superbug Hype” and Medical Tourism:

Many people of both India and Pakistan felt since then that in absence of an effective response by the health authorities, especially in India, the fast evolving Medical Tourism initiatives providing medical services ranging from complicated cardiovascular, orthopedic and cerebrovascular surgery to other life-threatening illnesses, may get adversely impacted.

The ‘blame game’: Experts have opined that overuse, imprudent or irrational use of antibiotics without any surveillance protocol is the root cause for emergence of “Superbugs”, though some Indian parliamentarians had termed the August article as the propaganda by some vested interests.

It has been alleged that the study was funded by the Wellcome Trust and Wyeth, the two global pharmaceutical companies who produce antibiotics to treat such conditions, together with the European Union.

In this context it is worth mentioning that ‘The Lancet’ article of August 2010 in its disclosures says:

“Kartikeyan K Kumarasamy has received a travel grant from Wyeth… David M Livermore has received conference support from numerous pharmaceutical companies, and also holds shares in AstraZeneca, Merck, Pfizer, Dechra, and GlaxoSmithKline, and, as Enduring Attorney, manages further holdings in GlaxoSmithKline and Eco Animal Health. All other authors declare that they have no conflicts of interest.” Not a first time reported incidence: This type of situation has indeed some precedents. When ‘MRSA’ was reported for the first time, it caused similar scare. However, this time many experts feel that it is too early to conclude whether or not ‘NDM-1’ will eventually prove to be more dangerous than ‘MRSA’. Several such “Superbugs”, as stated earlier, have already been reported from countries like Greece, Israel, USA, UK, and Brazil. As I know, in the battle against infectious diseases involving both the scientists and the bacteria, the later had  to succumb mostly, in the long run. ‘NDM-1′ perhaps will be no exception. All concerned must continue to make it happen, not by mere wishful thinking but by establishing a strong procedural mechanism to keep a careful vigil on the reasons for emergence of drug resistant bacterial strains in the country.

The World Health Organization (WHO) perspective:

On Saturday, August 21, 2010 the WHO commented, “while multi-drug resistant bacteria are not new and will continue to appear, this development requires monitoring and further study to understand the extent and modes of transmission, and to define the most effective measures for control”.

International Cooperation:

US based Center for Disease Control and Prevention (CDC), which is known as one of the world’s best-known institute for handling ‘Superbugs’, will help India in its capacity building efforts to better detect pathogens like NDM-1.

In India, the National Center for Disease Control (NCDC) with state of art facilities is expected to commence working from the next year. The facility is expected to be equipped with highly-advanced bio-safety level-II and BSL-III laboratories and would cost around Rs 382.41 Crore.

The larger issue:

The larger issue is that antibiotic resistance is fast becoming a global health concern as drug-resistant bacteria can turn a simple infection life threatening. According to the World Health Organization, ‘some 440,000 new cases of tuberculosis resistant to different types of drugs were detected last year in 60 countries across the world.’

Thus the emergence of drug-resistant ‘Superbug’ is being seen by many experts as a natural process of evolution of organisms. However, it goes without saying that indiscriminate use of antibiotics is hastening this deadly process.

R&D focus shifted more towards chronic illnesses:

Besides the reasons attributed to emergence of such “Superbugs”, as discussed earlier, one more important issue I could foresee in today’s environment compared to the past decades.

This issue possibly lies in the drastic shift in focus of pharmaceutical R&D from discovery of novel drugs for short term treatment of infectious diseases to discovery of potentially greater money spinner drugs for life-long treatment of non-infectious chronic illnesses like, metabolic disorders (diabetes), hypertension, cardiovascular diseases, psychiatric disorders, cancer, vaccines etc. This shift in the R&D focus has obviously been prompted by the tilt in the prevalence of the disease pattern towards the same direction. As a consequence, one notices hardly any significant and novel molecules in the research pipelines of either global or local pharmaceutical companies to treat  antibiotic-resistant infections.

As reported by the ‘Infectious Diseases Society of America’ between 1983 and 1987 sixteen new patented antibiotics were approved by the US FDA, while from 2003 to March 2011 only seven patented antibiotics were launched in the international market.

It is understandably not an ‘either/or’ situation so far as R&D target molecules are concerned. However, as we all know, in life-threatening conditions both types of drugs have their respective places to save precious lives.

Conclusion:

Let the global innovators ponder over the issue for newer antibiotics to counter the emerging ‘Superbugs’.

In India, the Ministry of Health should consider strictly implementing the measures suggested by the task force set up last year to prevent indiscriminate use of antibiotics. Such measures include a ban on sale of antibiotics without prescriptions and simultaneously regular audits of prescriptions of the doctors to stop irrational use of such drugs.

The need of the hour is a well-orchestrated effort by the Government, members of the civil society and the medical fraternity to have full control on this growing menace, through tangible, prudent and truly patient-friendly action .

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.

Fostering ‘Innovation’ and protecting of ‘Public Health Interest’: A formidable task for the new TF (taskforce)

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‘The Lancet’, March 19, 2011 in its article titled “India: access to affordable drugs and the right to health”, where the authors reiterated:

‘The right to health is a fundamental right in India, judicially recognized under article 21 of the Constitution…Access to affordable drugs has been interpreted to be a part of right to health’.

Keeping in view of this ‘fundamental right’ of the citizens, public health related issues will continue to be treated as a subject of ‘Public Interest’ in the country.

At the same time, no one can wish away the fact that unmet medicinal needs of the ailing patients can only be met through discovery of innovative drugs. Hence, an innovation friendly ecosystem must necessarily be created in the country, simultaneously. This throws open the dual challenge to the government in the healthcare space of the nation – charting an appropriate pathway to foster a climate for innovation and at the same time protecting ‘Public Health Interest’ of its citizens.

The recent admirable response of the Ministry of Health:

Considering this dual healthcare related needs of the country, on March 15, 2011, Mr Ghulam Nabi Azad, the Minister of Health and Family Welfare, announced the formation of a 12-member task force that will evolve the following strategies under the chairmanship of V.M. Katoch, Secretary, Department of Health Research and Director-General, ICMR and will submit its report within three months.

  1. Evolving a short, medium and long-term policy and strategy to make India a hub for drug discovery, research and development.
  2. Evolving strategies to further the interests of Indian pharma industry in the light of issues related to intellectual property rights and recommend strategies to capitalise the opportunity of $60 to $80 billion drugs going off-patent over the next five years.
  3. Evolve policy measures to assure national drugs security by promoting indigenous production of bulk drugs, preventing takeover of Indian pharma industry by multi-national corporations, drug pricing, promotion of generic drugs
  4. Recommend measures to assure adequate availability of quality generic drugs at affordable prices.

Indian Pharmaceutical Industry is on a growth spree:

The pharmaceutical industry of India is currently playing a key role in promoting and sustaining development in the healthcare space of India. Due to significant cost arbitrage, educated and skilled manpower and cheap labor force among others, the industry is set to establish itself as a global force to reckon with, especially in the areas of generic formulations business, Contract Research and Manufacturing Services (CRAMS).

Estimates and Perspectives:

  • The pharma industry is growing at around 1.5-1.6 times the Gross Domestic Product growth of India
  • Currently, India ranks third in the world in terms of volume of manufacturing pharmaceutical products
  • The Indian pharmaceutical industry is expected to grow at a rate of around 15 % till 2015
  • The retail pharmaceutical market in India is expected to cross US$ 20 billion by 2015
  • According to a study by FICCI-Ernst & Young India will open a probable US$ 8 billion market for MNCs selling patented drugs in India by 2015
  • The number of pharmaceutical retailers is estimated to grow from 5.5 lakh to 7.5 lakhs by 2015
  • At least 2 lakh more pharma graduates would be required by the Indian pharmaceutical industry by 2015
  • The Indian drug and pharmaceuticals sector attracted foreign direct investment to the tune of US$ 1.43 billion from April 2000 to December 2008 (Ministry of Commerce and Industry), which is expected to increase significantly along with the policy reform measures and increased Government investment (3%-4%) as a percentage of GDP towards healthcare, by 2015
  • The Minister of Commerce estimates that US$ 6.31 billion will be invested in the domestic pharmaceutical sector
  • Due to low cost of R&D, the Indian pharmaceutical off-shoring industry is expected to be a US$ 2.5 billion opportunity by 2012

Key growth drivers: Local and Global:

Local:

• Rapidly growing middle class population of the country with increasing disposable income.
• High quality and cost effective domestic generic drug manufacturers are achieving increasing penetration in local, developed and emerging markets.
• Rising per capita income of the population and inefficiency of the public healthcare system will encourage private healthcare systems of various types and scales to flourish.
• High probability of emergence of a robust healthcare financing/insurance model for all strata of society.
• Fast growing in Medical Tourism.
• Evolving combo-business model of global pharmaceutical companies with both patented and generic drugs is boosting local outsourcing and collaboration opportunities.
Global:
Global pharmaceutical industry is going through a rapid process of transformation. The moot question to answer now is how the drug discovery process can meet the unmet needs of the patients and yet remain cost effective.

Cost containment pressure due to various factors is further accelerating this process. CRAMS business, an important outcome of this transformation process, will be the key growth driver for many Indian domestic pharmaceutical players in times to come. 

Key Challenges:

Like all other industries, Pharmaceutical Industry in India has its own sets of Challenges and opportunities under which it operates. Some of the challenges the industry faces are:

  • Unfortunate “Trust Deficit” between the Government and the Industry, especially in pharmaceutical pricing area
  • Regulatory red tape and lack of initiative towards international harmonization
  • Inadequate infrastructure and abysmal public delivery system
  • Lack of adequate number of qualified healthcare professionals
  • Inadequate innovation friendly ecosystem to encourage R&D
  • Myopic Drug Policies have failed to deliver. The needs of over 350 million BPL families who cannot afford to buy any healthcare products and services, have not been effectively addressed, as yet
  • Inability of the government to address the critical issue of ‘80% out of pocket expenditure’ of the common man towards healthcare
  • Inadequate Public Private Partnership (PPP) initiatives in most of the critical areas of healthcare

Job Creation:

Pharmaceutical sector in India has created employment for approximately 3 million people from 23,000 plus units. Accelerated growth in job creation, will not only open up more opportunities to pharmaceutical professionals, but will also fuel growth opportunities in allied business segments like Laboratory, Scientific instruments, Medical Devices and Pharma machinery manufacturing sectors.

Despite all these, it is worth noting that the Indian pharmaceutical industry is confronting with a major challenge in getting employable workforce with the required skill sets. This issue will grow by manifold, as we move on, if adequate vocational training institutes are not put in place on time to generate employable workforce for the industry.

Government Initiatives are inadequate:

The government of India has started working out some policy and fiscal initiatives, though grossly inadequate, for the growth of the pharmaceutical business in India. Some of the measures adopted by the Government are follows:

  • Pharmaceutical units are eligible for weighted tax reduction at 175% for the research and development expenditure obtained.
  • Two new schemes namely, New Millennium Indian Technology Leadership Initiative and the Drugs and Pharmaceuticals Research Program have been launched by the Government.
  • The Government is contemplating the creation of SRV or special purpose vehicles with an insurance cover to be used for funding new drug research
  • The Department of Pharmaceuticals is mulling the creation of drug research facilities which can be used by private companies for research work on rent

Encouraging Pharmaceutical Export:

In the recent years, despite economic slowdown being witnessed in the global economy, pharmaceutical exports in India have registered an appreciable growth. Export has emerged as an important growth driver for the domestic pharmaceutical industry with more than 50 % of their total revenue coming from the overseas markets. For the financial year 2008-09 the export of drugs is estimated to be around US $8.25 billion as per the Pharmaceutical Export Council of India (Pharmexil). A survey undertaken by FICCI reported 16% growth in India’s pharmaceutical export during 2009-2010.

Five ‘Strategic Changes’ envisaged:
Five new key strategic changes, in my view, will be as follows:
1. As the country will move towards an integrated and robust healthcare financing system:
• Doctors will no longer remain the sole decision makers for the drugs that they will prescribe to the patients and also the way they will treat the common diseases. Healthcare providers/ medical insurance companies would play a key role in these areas by providing to the doctors well thought out treatment guidelines. • Tough price negotiation with the healthcare providers/ medical insurance companies will be inevitable for a significant proportion of the products that the pharmaceutical companies will sell related to these areas.

• Health Technology Assessment (HTA) or outcome based pricing will play an important role in pricing a healthcare product.
2. An integrated approach towards disease prevention will emerge as equally important as treatment of diseases.
3. A shift from just product marketing to marketing of a bundle of value added comprehensive disease management processes along with the product will be the order of the day
4. More affordable innovative medicines will be available with increasing access to a larger population, as appropriate healthcare financing model is expected to be in place.

5. Over the counter medicines, especially originated from rich herbal resources of India, will curve out a larger share of market, as appropriate regulations will be put in place.

Conclusion:

With the all these evolving trends in the healthcare sector of India, the ball game of the successful domestic Indian pharmaceutical industry is expected to undergo a rapid metamorphosis, as they will require to  compete with the global players on equal footing. Those Indian Pharmaceutical companies, who are already global players in their own rights, are already well versed with the nuances of this new game and are expected to offer a tough competition to the global players, especially, in the branded generic space, initially.

However, for some domestic players, the new environment could throw a major challenge and make them vulnerable to the consolidation process, already set in motion within Indian pharmaceutical industry.

The newly formed taskforce will hopefully be able to address all these issues in an integrated way to guide this life-line industry to a much higher growth trajectory to compete effectively not only in the global generic space, but also with the global innovator companies, sooner than later.

So the name of the game is to ‘Foster Innovation’ and protect ‘Public Health Interest’ simultaneously and not one at the cost of the other.

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.