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Big Pharma Demands Transparency, Keeping their ‘Black-Boxes’ Tight and Safe?

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Pharmaceutical Industry across the globe wants absolute transparency in all government laws, policies, guidelines, transactions and overall governance. They also expect the trade environment should be predictable, non-manipulative and business-friendly. These expectations are indeed well justified and deserve whole-hearted support from all concerned.

However, when similar expectations of transparency are voiced by stakeholders in the Big Pharma business operations, that will have direct or indirect impact on public health interests, one would mostly encounter a well guarded, mammoth and impregnable ‘Black Box’, wearing a ‘Top Secret’ label, with all relevant information kept inside.

Such areas of stakeholders’ interests on Big Pharma could well be related to details, like for example:

  • Actual break-up of R&D expense details,
  • Transparency in all clinical trials data for experts review,
  • Patented products’ pricing rationale,
  • Enormous total costs of lobbying and related expenses at the global level,
  • Marketing spend on doctors and other decision makers, directly or indirectly, just to name a few.

Mounting curiosity:

Continuation of such opaque practices for a long time, in turn, sparks the curiosity of the intelligentsia to know more in details, especially, about the areas as stated above.

Various research studies are now coming up, with huge revelations and strong findings in these areas. All of these together indicate, it is about time for the global pharma to also demonstrate transparency in their respective business practices and corporate governances, without further delay.

If it does not happen, probably respective governments in various countries will start acting on these areas of opaque self-serving pharma business practices, with the enactment and more importantly, stricter enforcement of requisite laws and policies. President Obama Administration in the United States has already initiated some important actions in these areas with proposals and laws, like for example,  the “Physicians Payment Sunshine Act’ .

The ‘Power Game’:

An interesting article of May 3, 2013 highlighted that the global pharmaceutical industry exerts incredible influence over the prescription medicines across the globe. This power, as many will know, flows from robust political contacts and influences over various important government agencies administrating the entire healthcare system, executed immaculately by expensive lobbying and PR campaigns by their globally integrated trade bodies.

Similar powerful influences also get extended to doctors and the people who matter to further their interests. These well crafted plans are reportedly executed through sponsored or paid opinion-modifying articles, ‘advertorials’, DTC advertisements (wherever legally permitted) and well-organized, seemingly third party, speeches to push the envelopes further.

Most probably, keeping such ongoing practices in mind and coming under intense media pressure, the Medical Council of India (MCI) on December 10, 2009 amended the “Indian Medical Council (Professional Conduct, Etiquette and Ethics), Regulations 2002″ for the doctors in India. Unfortunately, its implementation on the ground is rather tardy.

The above article also stated, “In fact, in the United States the industry contributes heavily to the annual budget of the U.S. Food and Drug Administration (FDA), which is charged with regulating drugs and devices made by those same companies.”

Avoidable Expenditures:

The paper indicates that in the United States alone the industry associations:

  • Have 1,100-plus paid lobbyists on Capitol Hill,
  • Allocated US$ 188 million annual lobbying budget
  • Doles out around US$ 14 million to political candidates every year

The report also comments, ‘Drug companies spend substantially more on marketing than they do on research and development.’

Influencing opinion against patients’ interest?

The article in the ‘drugwatch’ also states:

“Doctors are persuaded by the pharma companies to attach their names (ghost writing), against financial considerations, to favorable article on a particular drug ensuring that it is published in a well reputable medical journal.”

The author continues that ‘Ghost writings’ are being used to promote numerous drugs to influence concerned stakeholders.

In 1998, a study of the prestigious New England Journal of Medicine found that ‘out of 75 published articles, nearly half were written by authors with financial conflicts. And, worse than this, only two of the articles disclosed interests.’

Richard Smith, former editor of the British Medical Journal, was quoted saying, “All journals are bought – or at least cleverly used – by the pharmaceutical industry.”

Striking facts:

Following are some striking facts as reported in the article, as mentioned above:

“Advertising instead of research: For every US$ 1 spent on “basic research,” Big Pharma spends US$ 19 on promotions and advertising.

Distribution of free drug samples: The United States has 1 pharmaceutical sales representative for every 5 office-based physicians.

Sponsorship of symposiums and medical conventions: Drug and medical device makers spend lavishly on doctors, including covering meals, travel, seminars and conventions that may look more like vacations.”

Pressure on publications:

The paper highlights that large global pharma majors may even pull its advertisements out, if the concerned medical journal will question the accuracy of an ad. Such types of threats have very serious effects on these journals in running their businesses without getting lucrative advertisement dollars from the drug manufacturers.

Making drugs looking good:

The same article highlights:

“Quite often the academics and scientists are hired hands who supply human subjects and collect data according to the instructions from their corporate employers. Sponsors keep the data, analyze, write the papers and decide whether and when and where to submit them for publication. Drug companies have discovered ways to stage-manage trials to produce predetermined outcomes that will put their products in the best light.”

With this strategy even a bad drug can allegedly be made looking good by doing many things, like for example:

  • Comparing them to a placebo
  • Comparing them to a competitor’s medication in the wrong strength
  • Pairing them with a drug that is known to work well
  • Shortening a trial before any bad results surface
  • Testing in groups too small to provide valid evidence

Pay-for-delay deals:

A recent report titled, “Top twenty pay-for-delay drugs: How Industry pay-off delay generics” highlights that ‘Pay-for-delay deals’ have forced patients in the United States to pay an average of 10 times more than necessary for at least 20 blockbuster drugs.

Key findings of the analysis on the impact of pay-for-delay deals are as follows:

  • This practice has held back generic medicines used by patients with a wide range of serious or chronic conditions, ranging from cancer and heart disease, to depression and bacterial infection.
  • These payoffs have delayed generic drugs for five years, on average, and as long as nine years.
  • These brand-name drugs cost 10 times more than their generic equivalents, on average, and as much as 33 times more.
  • These patented drug companies have made an estimated US$ 98 billion in total sales of these drugs while the generic versions were delayed.

Citing example, the paper says, a pay-for-delay deal kept a generic version of the breast cancer drug Tamoxifen off the US market for nine years, while Pfizer made $7.4 billion in sales of its cholesterol-lowering drug Lipitor (atorvastatin) in 2012 alone.

The point to ponder yet again is, why such practices are being surreptitiously carried out for years sacrificing patients’ interest and without the regulators’ strong interventions, in general?

French Government has initiated a probe:

The French Competition Authority is reportedly expected to publish a report on the findings of its inquiry, initiated in February 2013, into the costs and pricing of medicines in France. The report will also look at whether industry practices are interfering with the market entry of generic drugs, including distribution arrangements between drug manufacturers, wholesalers and pharmacists.

An appreciable initiative in America, but why not in India?

There is still a simmering hope. As indicated above, President Obama’s Affordable Care Act reportedly requires that from September 2013, pharmaceutical companies will need to collect data and openly report information on payments, investment interests, ownership and items of value given to doctors and hospitals. Very unfortunately, the Department of Pharmaceuticals of the Government of India has not taken any such steps, as yet, despite the situation turning grave in the country.

The power of pharma lobby in the US:

According to a recent NYT report, in the United States, government health programs are forbidden from rejecting new drugs on cost grounds.

When the issue of drug prices came up as part of President Obama’s ‘Affordable Care Act’ debate, it was summarily rejected in Congress. Simultaneously, a move toward comparative-effectiveness studies, putting rival drugs or treatments through trials to determine which work better, was also decried.

The report highlights, the mere suggestion of the US government throwing its weight around on drug prices stirs up talk of ‘socialism’. The pharma lobby doesn’t have to look far for support in fighting that idea. In the US, the so-called ‘free market’ is trusted to regulate drug prices, despite the reality that the healthcare market is far from transparent, ‘with byzantine pricing mechanisms and costs that vary wildly region-by-region, pharmacy by pharmacy and even patient-by-patient’.

The usual supply/demand/pricing relationships do not apply to drug prices at the consumer level in the US too, just as it has been proved in India. 

A large part of creation of this environment is attributed to pharmaceutical and other health-products firms, who reportedly spent a total of US$ 250 million on lobbying last year. 

Big Pharma keeps failing credibility tests:

This happened very recently, when The Guardian in July 2013 reported, the pharmaceutical industry has “mobilized” an army of patient groups to lobby against plans to force companies to publish secret documents on drug trials. This is related to the news that the European Medicines Agency (EMA) could force drug companies to publish all Clinical Trial (CT) results in a public database.

The above report says, while some pharma players agreed to share data, important global pharma industry associations have resisted this plan of the EMA. The report continues, a leaked letter from two large pharma trade associations, the Pharmaceutical Research and Manufacturers of America (PhRMA) of the United States and the European Federation of Pharmaceutical Industries and Associations (EFPIA), have drawn out a strategy to combat calls by drug regulators to force companies to publish all CT results.

The strategy reportedly shows how patient groups, many of which receive some or all of their funding from drugs companies, have been drawn into this battle by these Big Pharma lobby groups.

The e-mail reportedly seen by ‘The Guardian’ was from Richard Bergström, Director General of EFPIA, addressed to directors and legal counsel at Roche, Merck, Pfizer, GSK, AstraZeneca, Eli Lilly, Novartis and many smaller companies.

The e-mail leaked by an employee of a pharma company describes a four-pronged campaign that starts with “mobilizing patient groups to express concern about the risk to public health by non-scientific re-use of data”.

Translated, as ‘The Guardian’ reported, “that means patient groups go into bat for the industry by raising fears that if full results from drug trials are published, the information might be misinterpreted and cause a health scare.”

This appears to be another classic case of vested interests working against patients’ interests.

Global lobbying started taking the center stage in India too:

With the above back-drop and lobbying scandals reportedly being surfaced in many other countries, it is about time that India puts its acts together with India-specific stricter disclosure policies, including R&D, Clinical Trials (CTs), Patented Products Pricing, Marketing Practices and Trade Lobbying.

Interestingly, to influence Government policies India’s top lobbying spenders in 2012 (US$ million) were reported as follows:

1 US Chamber of Commerce

136.3
2 National Association of Realtors

41.5
3 Blue Cross / Blue Shield

22.5
4 General Electric

21.1
5 American Hospital Association

19.2
6 National Cable & Telecom. Association

18.9
7 Pharmaceutical Research & Mfrs. of America (PhRMA)

18.5
8 Google

18.2
9 Northrop Grumman

17.5
10 AT&T

17.4
11 American Medical Association

16.5
12 Boeing

15.6

Source: The Center for Responsive Politics (Economic Times, June 4, 2013)

According to the latest lobbying disclosure reports filed with the US Senate and the House of Representatives, at least two dozen American companies and industry associations are reportedly lobbying hard with the US lawmakers on issues in India, which include:

  • Intellectual Property (IP)
  • Patent
  • Market access

Another recent report comments as follows:

“The US Chamber of Commerce has become a portal for dubious reports that claim India’s intellectual property regime is worse than China’s. Such “research” by paid lobbyists and disseminated through the halls of US Congress…”

Hefty fines for illegal practices, yet Black Box remains tight and safe: 

In December 2010, Healthcare advocacy group Public Citizen published a report that, for the first time, documented all major financial settlements and court judgments between pharmaceutical manufacturers and the federal and state governments of the United States since 1991.

It says, almost US$ 20 billion was paid out by the pharmaceutical industry to settle allegations of numerous violations, including illegal, off-label marketing and the deliberate overcharging of taxpayer-funded health programs, such as Medicare and Medicaid.

Three-fourths of the settlements and accompanying financial penalties had occurred in just the five-year period prior to 2010. There has been no indication that this upward trend is subsiding.

10 Largest Settlements and Judgments on Big Pharma mis governance:
(Period: Nov. 2, 1010 – July 18, 2012)

Company Amount    US$ Million Year Reasons
1. GlaxoSmithKline 3, 000 2012 Unlawful promotion, kickbacks, concealing study data, overcharging government health programs
2. Abbott  1,500 2012 Unlawful promotion, kickbacks
3. Johnson & Johnson 1,200 2012 Unlawful promotion
4.  Merck 950 2011 Unlawful promotion
5. Ranbaxy 500 2012 Poor manufacturing practices, falsifying data on FDA applications.
6. Johnson & Johnson 327 2011 Unlawful promotion
7. Boehringer Ingelheim 280 2011 Overcharging government health programs
8. Mylan’s Dey Pharma unit 280 2010 Overcharging government health programs
9. Elan 203 2010 Unlawful promotion, kickbacks
10. Johnson & Johnson 158 2012 Unlawful promotion

Conclusion:

All such expenditures, including expensive lobbying and court settlement charges for illegal business practices, as mentioned above, I reckon, are wasteful and avoidable. These are mostly outcomes of self serving measures, shorn of public health interest, 

If all these costs are eliminated and actual R&D expenses are reflected, in a transparent manner, there could be significant reduction in the costs of newer innovative drugs, extending their access to billions of patients, across the world.

Thus to help evaluating the innovative drugs with greater transparency, there is an urgent need for the Big Pharma to set examples by voluntarily disclosing the secrets hidden within the ‘Black Boxes’, as deliberated above. These disclosures should be made to the independent experts and the respective Governments under appropriate statutes.

Expectations of transparency in Governance should not, therefore, be restricted just to Government laws, policies and decisions, the industry should reciprocate it too, in equal measures.

To be patient-centric, transparency in governance needs to be a two-way traffic, where pharma industry should volunteer to be an integral part, sooner than later. Otherwise it may be too late for them to avoid harsh interventions of the respective regulators, as the intense pressure from intelligentsia, civil society and media, keep mounting.

That said, the question lingers:

When the ‘Big Pharma is rightly demanding transparency in all areas of public discourse, why are they so reluctant in making their intriguing ‘Black Boxes’ transparent, that too only in areas of public health interest, for fair experts review?

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.

R&D: Is Indian Pharma Moving Up the Value Chain?

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It almost went unnoticed by many, when in the post product patent regime, Ranbaxy launched its first homegrown ‘New Drug’ of India, Synriam, on April 25, 2012, coinciding with the ‘World Malaria Day’. The drug is used in the treatment of plasmodium falciparum malaria affecting adult patients.  However, the company has also announced its plans to extend the benefits of Synriam to children in the malaria endemic zones of Asia and Africa.

The new drug is highly efficacious with a cure rate of over 95 percent offering advantages of “compliance and convenience” too. The full course of treatment is one tablet a day for three days costing less than US$ 2.0 to a patient.

Synriam was developed by Ranbaxy in collaboration with the Department of Science  and Technology of the Government of India. The project received support from the Indian Council of Medical Research (ICMR) and conforms to the recommendations of the World Health Organization (WHO). The R&D cost for this drug was reported to be around US$ 30 million. After its regulatory approval in India, Synriam is now being registered in many other countries of the world.

Close on the heels of the above launch, in June 2013 another pharmaceutical major of India, Zydus Cadilla announced that the company is ready for launch in India its first New Chemical Entity (NCE) for the treatment of diabetic dyslipidemia. The NCE called Lipaglyn has been discovered and developed in India and is getting ready for launch in the global markets too.

The key highlights of Lipaglyn are reportedly as follows:

  • The first Glitazar to be approved in the world.
  • The Drug Controller General of India (DCGI) has already approved the drug for launch in India.
  • Over 80% of all diabetic patients are estimated to be suffering from diabetic dyslipidemia. There are more than 350 million diabetics globally – so the people suffering from diabetic dyslipidemia could be around 300 million.

With 20 discovery research programs under various stages of clinical development, Zydus Cadilla reportedly invests over 7 percent of its turnover in R&D.  At the company’s state-of-the-art research facility, the Zydus Research Centre, over 400 research scientists are currently engaged in NCE research alone.

Prior to this in May 14, 2013, the Government of India’s Department of Biotechnology (DBT) and Indian vaccine company Bharat Biotech jointly announced positive results, having excellent safety and efficacy profile in Phase III clinical trials, of an indigenously developed rotavirus vaccine.

The vaccine name Rotavac is considered to be an important scientific breakthrough against rotavirus infections, the most severe and lethal cause of childhood diarrhea, responsible for approximately 100,000 deaths of small children in India each year.

Bharat Biotech has announced a price of US$ 1.00/dose for Rotavac. When approved by the Drug Controller General of India, Rotavac will be a more affordable alternative to the rotavirus vaccines currently available in the Indian market. 

It is indeed interesting to note, a number of local Indian companies have started investing in pharmaceutical R&D to move up the industry value chain and are making rapid strides in this direction.

Indian Pharma poised to move-up the value-chain:

Over the past decade or so, India has acquired capabilities and honed skills in several important areas of pharma R&D, like for example:

  • Cost effective process development
  • Custom synthesis
  • Physical and chemical characterization of molecules
  • Genomics
  • Bio-pharmaceutics
  • Toxicology studies
  • Execution of phase 2 and phase 3 studies

According to a paper titled, “The R&D Scenario in Indian Pharmaceutical Industry” published by Research and Information System for Developing Countries, over 50 NCEs/NMEs of the Indian Companies are currently at different stages of development, as follows:

Company Compounds Therapy Areas Status
Biocon 7 Oncology, Inflammation, Diabetes Pre-clinical, phase II, III
Wockhardt 2 Anti-infective Phase I, II
Piramal Healthcare 21 Oncology, Inflammation, Diabetes Lead selection, Pre-clinical, Phase I, II
Lupin 6 Migraine, TB, Psoriasis, Diabetes, Rheumatoid Arthritis Pre-clinical, Phase I, II, III
Torrent 1 Diabetic heart failure Phase I
Dr. Reddy’s Lab 6 Metabolic/Cardiovascular disorders, Psoriasis, migraine On going, Phase I, II
Glenmark 8 Metabolic/Cardiovascular /Respiratory/Inflammatory /Skin disorders, Anti-platelet, Adjunct to PCI/Acute Coronary Syndrome, Anti-diarrheal, Neuropathic Pain, Skin Disorders, Multiple Sclerosis, Ongoing, Pre-clinical, Phase I, II, III

R&D collaboration and partnership:

Some of these domestic companies are also entering into licensing agreements with the global players in the R&D space. Some examples are reportedly as follows:

  • Glenmark has inked licensing deals with Sanofi of France and Forest Laboratories of the United States to develop three of its own patented molecules.
  • Domestic drug major Biocon has signed an agreement with Bristol Myers Squibb (BMS) for new drug candidates.
  • Piramal Life Sciences too entered into two risk-reward sharing deals in 2007 with Merck and Eli Lilly, to enrich its research pipeline of drugs.
  • Jubilant Group partnered with Janssen Pharma of Belgium and AstraZeneca of the United Kingdom for pharma R&D in India, last year.

All these are just indicative collaborative R&D initiatives in the Indian pharmaceutical industry towards harnessing immense growth potential of this area for a win-win business outcome.

The critical mass:

An international study estimated that out of 10,000 molecules synthesized, only 20 reach the preclinical stage, 10 the clinical trials stage and ultimately only one gets regulatory approval for marketing. If one takes this estimate into consideration, the research pipeline of the Indian companies would require to have at least 20 molecules at the pre-clinical stage to be able to launch one innovative product in the market.

Though pharmaceutical R&D investments in India are increasing, still these are not good enough. The Annual Report for 2011-12 of the Department of Pharmaceuticals indicates that investments made by the domestic pharmaceutical companies in R&D registered an increase from 1.34 per cent of sales in 1995 to 4.5 percent in 2010. Similarly, the R&D expenditure for the MNCs in India has increased from 0.77 percent of their net sales in 1995 to 4.01 percent in 2010.

Thus, it is quite clear, both the domestic companies and the MNCs are not spending enough on R&D in India. As a result, at the individual company level, India is yet to garner the critical mass in this important area.

No major R&D investments in India by large MNCs:

According to a report, major foreign players with noteworthy commercial operations in India have spent either nothing or very small amount towards pharmaceutical R&D in the country. The report also mentions that Swiss multinational Novartis, which spent $ 9 billion on R&D in 2012 globally, does not do any R&D in India.

Analogue R&D strategy could throw greater challenges:

For adopting the analogue research strategy, by and large, the Indian pharma players appear to run the additional challenge of proving enhanced clinical efficacy over the known substance to pass the acid test of the Section 3(d) of the Patents Act of India.

Public sector R&D:

In addition to the private sector, research laboratories in the public sector under the Council for Scientific and Industrial Research (CSIR) like, Central Drug Research Institute (CDRI), Indian Institute of Chemical Technology (IICT) and National Chemical Laboratory (NCL) have also started contributing to the growth of the Indian pharmaceutical industry.

As McKinsey & company estimated, given adequate thrust, the R&D costs in India could be much lower, only 40 to 60 per cent of the costs incurred in the US. However, in reality R&D investments of the largest global pharma R&D spenders in India are still insignificant, although they have been expressing keenness for Foreign Direct Investments (FDI) mostly in the brownfield pharma sector.

Cost-arbitrage:

Based on available information, global pharma R&D spending is estimated to be over US$ 60 billion. Taking the cost arbitrage of India into account, the global R&D spend at Indian prices comes to around US$ 24 billion. To achieve even 5 percent of this total expenditure, India should have invested by now around US$ 1.2 billion on the pharmaceutical R&D alone. Unfortunately that has not been achieved just yet, as discussed above.

Areas of cost-arbitrage:

A survey done by the Boston Consulting Group (BCG) in 2011 with the senior executives from the American and European pharmaceutical companies, highlights the following areas of perceived R&D cost arbitrage in India:

Areas % Respondents
Low overall cost 73
Access to patient pool 70
Data management/Informatics 55
Infrastructure set up 52
Talent 48
Capabilities in new TA 15

That said, India should realize that the current cost arbitrage of the country is not sustainable on a longer-term basis. Thus, to ‘make hay while the sun shines’ and harness its competitive edge in this part of the world, the country should take proactive steps to attract both domestic as well as Foreign Direct Investments (FDI) in R&D with appropriate policy measures and fiscal incentives.

Simultaneously, aggressive capacity building initiatives in the R&D space, regulatory reforms based on the longer term need of the country and intensive scientific education and training would play critical role to establish India as an attractive global hub in this part of the world to discover and develop newer medicines for all.

Funding:

Accessing the world markets is the greatest opportunity in the entire process of globalization and the funds available abroad could play an important role to boost R&D in India. Inadequacy of funds in the Indian pharmaceutical R&D space is now one of the greatest concerns for the country.

The various ways of funding R&D could be considered as follows:

  • Self-financing Research: This is based on:
  1. “CSIR Model”: Recover research costs through commercialization/ collaboration with industries to fund research projects.
  2. “Dr Reddy’s Lab / Glenmark Model”: Recover research costs by selling lead compounds without taking through to development.
  • Overseas Funding:  By way of joint R&D ventures with overseas collaborators, seeking grants from overseas health foundations, earnings from contract research as also from clinical development and transfer of aborted leads and collaborative projects on ‘Orphan Drugs’.
  • Venture Capital & Equity Market:  This could be both via ‘Private Venture Capital Funds’ and ‘Special Government Institutions’.  If regulations permit, foreign venture funds may also wish to participate in such initiatives. Venture Capital and Equity Financing could emerge as important sources of finance once track record is demonstrated and ‘early wins’ are recorded.
  • Fiscal & Non-Fiscal Support: Should also be valuable in early stages of R&D, for which a variety of schemes are possible as follows:
  1. Customs Duty Concessions: For Imports of specialized equipment, e.g. high throughput screening equipment, equipment for combinatorial chemistry, special analytical tools, specialized pilot plants, etc.
  2. Income tax concessions (weighted tax deductibility): For both in-house and sponsored research programs.
  3. Soft loans: For financing approved R&D projects from the Government financial institutions / banks.
  4. Tax holidays: Deferrals, loans on earnings from R&D.
  5. Government funding: Government grants though available, tend to be small and typically targeted to government institutions or research bodies. There is very little government support for private sector R&D as on date.

All these schemes need to be simple and hassle free and the eligibility criteria must be stringent to prevent any possible misuse.

Patent infrastructure:

Overall Indian patent infrastructure needs to be strengthened, among others, in the following areas:

  • Enhancement of patent literacy both in legal and scientific communities, who must be taught how to read, write and file a probe.
  • Making available appropriate ‘Search Engines’ to Indian scientists to facilitate worldwide patent searches.
  • Creating world class Indian Patent Offices (IPOs) where the examination skills and resources will need considerable enhancement.
  • ‘Advisory Services’ on patents to Indian scientists to help filing patents in other countries could play an important role.

Creating R&D ecosystem:

  • Knowledge and learning need to be upgraded through the universities and specialist centers of learning within India.
  • Science and Technological achievements should be recognized and rewarded through financial grants and future funding should be linked to scientific achievements.
  • Indian scientists working abroad are now inclined to return to India or network with laboratories in India. This trend should be effectively leveraged.

Universities to play a critical role:

Most of Indian raw scientific talents go abroad to pursue higher studies.  International Schools of Science like Stanford or Rutgers should be encouraged to set up schools in India, just like Kellogg’s and Wharton who have set up Business Schools. It has, however, been reported that the Government of India is actively looking into this matter.

‘Open Innovation’ Model:

As the name suggest, ‘Open Innovation’ or the ‘Open Source Drug Discovery (OSDD)’ is an open source code model of discovering a New Chemical Entity (NCE) or a New Molecular Entity (NME). In this model all data generated related to the discovery research will be available in the open for collaborative inputs. In ‘Open Innovation’, the key component is the supportive pathway of its information network, which is driven by three key parameters of open development, open access and open source.

Council of Scientific and Industrial Research (CSIR) of India has adopted OSDD to discover more effective anti-tubercular medicines.

Insignificant R&D investment in Asia-Pacific Region:

Available data indicate that 85 percent of the medicines produced by the global pharmaceutical industry originate from North America, Europe, Japan and some from Latin America and the developed nations hold 97 percent of the total pharmaceutical patents worldwide.

MedTRACK reveals that just 15 percent of all new drug development is taking place in Asia-Pacific region, including China, despite the largest global growth potential of the region.

This situation is not expected to change significantly in the near future for obvious reasons. The head start that the western world and Japan enjoy in this space of the global pharmaceutical industry would continue to benefit those countries for some more time.

Some points to ponder:

  • It is essential to have balanced laws and policies, offering equitable advantage for innovation to all stakeholders, including patients.
  • Trade policy is another important ingredient, any imbalance of which can either reinforce or retard R&D efforts.
  • Empirical evidence across the globe has demonstrated that a well-balanced patent regime would encourage the inflow of technology, stimulate R&D, benefit both the national and the global pharmaceutical sectors and most importantly improve the healthcare system, in the long run.
  • The Government, academia, scientific fraternity and the pharmaceutical Industry need to get engaged in various relevant Public Private Partnership (PPP) arrangements for R&D to ensure wider access to newer and better medicines in the country, providing much needed stimulus to the public health interest of the nation.

Conclusion:

R&D initiatives, though very important for most of the industries, are the lifeblood for the pharmaceutical sector, across the globe, to meet the unmet needs of the patients. Thus, quite rightly, the pharmaceutical Industry is considered to be the ‘lifeline’ for any nation in the battle against diseases of all types.

While the common man expects newer and better medicines at affordable prices, the pharmaceutical industry has to battle with burgeoning R&D costs, high risks and increasingly long period of time to take a drug from the ‘mind to market’, mainly due to stringent regulatory requirements. There is an urgent need to strike a right balance between the two.

In this context, it is indeed a proud moment for India, when with the launch of its home grown new products, Synriam of Ranbaxy and Lipaglyn of Zydus Cadilla or Rotavac Vaccine of Bharat Biotech translate a common man’s dream of affordable new medicines into reality and set examples for others to emulate.

Thus, just within seven years from the beginning of the new product patent regime in India, stories like Synriam, Lipaglyn, Rotavac or the R&D pipeline of over 50 NCEs/NMEs prompt resurfacing the key unavoidable query yet again:

Has Indian pharma started catching-up with the process of new drug discovery, after decades of hibernation, to move up the industry ‘Value Chain’?

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.

The R&D Factor: “One of the Great Myths of the Industry”

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Yes, that is what the global CEO of one of the Pharmaceutical giants of the world commented in a very recent interview with Reuters. Adding further to this comment he said, “US $1 billion price tag for R&D was an average figure that includes money spent on drugs that ultimately fail… If you stop failing so often, you massively reduce the cost of drug development  … It’s entirely achievable.”

Therefore, he concluded his interview by saying that the pharmaceutical industry should be able to charge much less for new drugs by passing on efficiencies in R&D to the customers.

A vindication:

The above comment does not seem to be a one off remark. A recent study on R&D productivity of 12 top pharmaceutical companies of the world by Deloitte and Thomson Reuters highlighted that the average cost of developing a new medicine is now US$ 1.1 billion with the most successful company in the group studied incurred an average cost of just US$ 315 million, while at the other extreme, another company spent US$ 2.8 billion.

How much of it then covers the cost of failures and who pays for such inefficiencies?

Some experts have gone even further:

Some experts in this area have gone even further arguing that pharmaceutical R&D expenses are over stated and the real costs are much less.

An article titled “Demythologizing the high costs of pharmaceutical research”, published by the London School of Economics and Political Science in 2011 indicates that the total cost from the discovery and development stages of a new drug to its market launch was around US$ 802 million in the year 2000. This was worked out in 2003 by the ‘Tuft Center for the Study of Drug Development’ in Boston, USA.

However, in 2006 this figure increased by 64 per cent to US$ 1.32 billion, as reported by a large overseas pharmaceutical industry association.

The authors of the above article also mentioned that the following factors were not considered while working out the 2006 figure of US$ 1.32 billion:

▪    The tax exemptions that the companies avail for investing in R&D.

▪   Tax write-offs amount to taxpayers’ contributing almost 40% of the R&D cost.

▪   The cost of basic research should not have been included, as these are mostly         undertaken by public funded universities or laboratories.

The article commented that ‘half the R&D costs are inflated estimates of profits that companies could have made if they had invested in the stock market instead of R&D and include exaggerated expenses on clinical trials’.

“High R&D costs have been the industry’s excuses for charging high prices”:

In the same article the authors strongly commented as follows:

“Pharmaceutical companies have a strong vested interest in maximizing figures for R&D as high research and development costs have been the industry’s excuse for charging high prices. It has also helped generating political capital worth billions in tax concessions and price protection in the form of increasing patent terms and extending data exclusivity.”

The study concludes by highlighting that “the real R&D cost for a drug borne by a pharmaceutical company is probably about US$ 60 million.”

 Another perspective to the “R&D Factor”:

A book titled “Pharmaceutical R&D: Costs, Risks, and Rewards”, published by the government of USA gives another perspective to the “R&D Factor”. It articulates that the three most important components of R&D investments are:

  • Money
  • Time
  • Risk

Money is just one component of investment, along with a long duration of time, to reap benefits of success, which is intertwined with a very high risk of failure. The investors in the pharmaceutical R&D projects not only take into account how much investment is required for the project against expected financial returns, but also the timing of inflow and outflow of fund with associated risks.  It is thus quite understandable that longer is the wait for the investors to get their real return, greater will be their expectations for the same.

This publication also highlights that the cost of bringing a new drug from ‘mind to market’ depends on the quality and sophistication of science and technology involved in a particular R&D process together with associated investment requirements for the same.

In addition, regulatory demand to get marketing approval of a complex molecule for various serious disease types is also getting more and more stringent, significantly increasing their cost of clinical development in tandem. All these factors when taken together, the authors argue, make the cost of R&D not only very high, but unpredictable too.

Thus to summarize from the above study, high pharmaceutical R&D costs involve:

  • Sophisticated science and technology dependent high up-front financial investments
  • A long and indefinite period of negative cash flow
  • High tangible and intangible costs for acquiring technology with rapid trend of obsolescence
  • High risk of failure at any stage of product development

Even reengineered R&D model may not be sustainable:

Many research scientists have already highlighted that sharp focus in some critical areas may help containing the R&D expenditure to a considerable extent and also would help avoiding the cost of failures significantly. The savings thus made, in turn, can fund a larger number of R&D projects.

The areas identified are as follows:

  • Early stage identification of unviable new molecules and jettisoning them quickly.
  • Newer cost efficient R&D models.
  • Significant reduction in drug development time. 

Unfortunately, sustainability of the above model too still remains in the realm of a wishful thinking and raises a serious question mark to many for various other reasons.

Should Pharmaceutical R&D move away from its traditional models?

Thus the critical point to ponder today, should the Pharmaceutical R&D now move from its traditional comfort zone of expensive one company initiative to a much less charted frontier of sharing drug discovery involving many players? If this overall approach gains acceptance sooner by all concerned, it could lead to increase in R&D productivity significantly at a much lesser cost, benefiting the patients community at large.

Finding right pathway in this direction is more important today than ever before, as the R&D productivity of the global pharmaceutical industry, in general, keeps going south and that too at a faster pace, prompting major cuts in the absolute R&D expenditure by many, as compared to the previous year.

A global R&D spend comparison (2011 and 12):

R&D expenditures in absolute terms of the following global companies in 2011 and 2012, without drawing any relationship to their respective R&D productivity, were reportedly as follows:

Company

2012

US$ Bn.

2011

US$ Bn.

% Change

% of Sale
Roche

10.10

8.81

13.7

21.0
Novartis

9.33

9.58

(3.0)

16.4
Merck

8.16

8.46

(4.0)

17.0
Pfizer

7.90

9.10

(13.0)

13.3
J&J

7.66

7.54

1.5

11.6
Sanofi

6.40

6.24

2.5

14.1
GSK

5.95

6.01

(1.0)

15.0
Eli Lilly

5.30

5.00

5.0

23.4
AstraZeneca

5.24

5.52

(5.0)

18.8
Abbott Labs

4.32

4.12

4.7

10.8
Total

70.36

70.38

 

 

Source: Fierce Biotech, March 18, 2013

This particular table points out that five out of the reported ten companies had to spend less towards R&D in 2012 as compared to 2011 and four out of the remaining five players were able to increase their R&D spend just marginally.

Thus the same question comes at the top of mind yet again: is the current pharmaceutical R&D model sustainable and working with optimal productivity and cost efficiency for  the benefits of patients?

Towards greater sustainability of the R&D model: 

A July 2010 study of Frost & Sullivan reports, “Open source innovation increasingly being used to promote innovation in the drug discovery process and boost bottom-line”.

It underscores the urgent need for the global pharmaceutical companies to respond to the challenges of high cost and low productivity in their respective R&D initiatives, in general.

The ‘Open Innovation’ model assumes even greater importance today, as we have noted above, to avoid  huge costs of R&D failures, which are eventually passed on to the patients through the drug pricing mechanism.

‘Open Innovation’ model, as they proposed, will be most appropriate to even promote highly innovative approaches in the drug discovery process bringing many brilliant scientific minds together from across the world.

The key objective of ‘Open Innovation’ in pharmaceuticals is, therefore, to encourage drug discovery initiatives at a much lesser cost, especially for non-infectious chronic diseases or the dreaded ailments like Cancer, Parkinson’s, Alzheimer, Multiple Sclerosis, including many neglected diseases of the developing countries, making innovative drugs affordable even to the marginalized section of the society.  

“Open Innovation” is very successful in IT industry:

The concept of ‘Open Innovation’ is being quite successfully used in the Information Technology (IT) industry since nearly three decades across the world, including India. Web Technology, Linux Operating System (OS) and even the modern day ‘Android’ are excellent examples of commercially successful ‘Open innovation’ model in IT,

In the sphere of Biotechnology ‘Human Genome Sequencing’ is another remarkable outcome of such type of R&D model. Therefore, why not a similar model be actively pursued in a much larger scale to discover newer and innovative drugs at a much lesser cost for greater access to patients?

Issues involved:

In the evolving process of ‘Open Innovation’ in pharma there are some issues to be addressed and at the same time some loose knots to be tightened to make the process increasingly more user friendly and robust. Many experts feel that the key issues for the ‘Open Innovation’ model are as follows:

▪   Who will fund the project and how much?

▪   Who will lead the project?

▪   Who will coordinate the project and find talents?

▪   Who will take it through clinical development and regulatory approval process?

That said, all these issues do not seem to be insurmountable problems at all to add greater speed and efficiency to the process, as the saying goes, ‘where there is a will, there is a way’.

Conclusion: 

Having deliberated on this issue as above, I reckon, there is a dire need to make the process of offering innovative drugs at affordable prices to the patients sustainable over a long period of time, for the sake of all.

This can happen only when there will be a desire to step into the uncharted frontier, coming out of much beaten and a high cost tract of R&D, especially after having picked-up the low hanging fruits. Dove tailing the passion for business excellence with the patients’ interest, dispassionately, will then be the name of the game.

As the Reuters article quoting the CEO of a global pharma major points out, in addition to improvements in research, increasing global demand for medicines and the explosion in the volume of products sold in emerging markets should also contribute to lower unit costs of the innovative drugs ensuring their greater access to patients.

This process, in turn, will help fostering a win-win situation for all stakeholders, exploding “one of the great myths of the industry” – The ‘R&D Factor’.

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.

 

 

 

Open Innovation: Quo Vadis, Pharmaceutical R&D?

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Is the Pharmaceutical R&D moving from the traditional models to much less uncharted frontiers?

Perhaps towards this direction, in November, 2010 in a report titled, “Open Source Innovation Increasingly Being Used to Promote Innovation in the Drug Discovery Process and Boost Bottomline”, Frost & Sullivan underscored the urgent need of the global pharmaceutical companies to respond to the challenges of high cost and low productivity in their respective Research and Development initiatives, in general.

‘Open Innovation’ model, they proposed, will be most appropriate in the current scenario to improve not only profit, but also to promote more innovative approaches in the drug discovery process.  Currently, on an average it takes about 8 to 10 years to bring an NCE/NME to market with a cost of around U.S$ 1.7 billion.

The concept of ‘Open Innovation’ is being quite successfully used by the Information Technology (IT) industry since nearly three decades all over the world, including in India.  Web Technology, the Linux Operating System (OS) and even the modern day ‘Android’ – the open source mobile OS, are excellent examples of ‘Open source innovation’ in IT.

In the sphere of Biotechnology Human Genome Sequencing is another remarkable outcome in this area.

On May 12, 2011, in an International Seminar held in New Delhi, the former President of India Dr. A.P.J. Abdul Kalam commented, “Open Source Drug Discovery (OSDD) explores new models of drug discovery”. He highlighted the need for the scientists, researchers and academics to get effectively engaged in ‘open source philosophy’ by pooling talent, patents, knowledge and resources for specific R&D initiatives from across the world. In today’s world ‘Open Innovation’ in the pharmaceutical R&D has a global relevance, especially, for the developing world of ‘have-nots’.

The ‘Open Innovation’ model: 

As the name suggest, ‘Open Innovation’ or the ‘Open Source Drug Discovery (OSDD)’ is an open source code model of discovering a New Chemical Entity (NCE) or a New Molecular Entity (NME). In this model all data generated related to the discovery research will be available in the open for collaborative inputs. The licensing arrangement of OSDD where both invention and copyrights will be involved, are quite different from any ‘Open Source’ license for a software development.

In ‘Open Innovation’, the key component is the supportive pathway of its information network, which is driven by three key parameters of open development, open access and open source.

As stated earlier, ‘Open Innovation’ concept was successfully used in the ‘Human Genome Project’ where a large number of scientists, and microbiologists participated from across the world to sequence and understand the human genes. However, this innovation process was first used to understand the mechanics of proteins by the experts of the Biotech and pharmaceutical industries.

The Objectives of ‘Open Innovation’: 

The key objective of ‘Open Innovation’ in pharmaceuticals is to encourage drug discovery initiatives, especially for the dreaded disease like cancer and also the neglected diseases of the developing countries to make these drugs affordable to the marginalized people of the world.

Key benefits of ‘Open Innovation’:

According to the above report of Frost & Sullivan on the subject, the key benefits of ‘Open Innovation’ in pharmaceuticals will include:

• Bringing together the best available minds to tackle “extremely challenging”   diseases

• Speed of innovation

• Risk-sharing

• Affordability

Some issues:

Many experts feel that the key issues for ‘Open Innovation’ model are as follows:

  • Who will fund the project and how much?
  • Who will lead the project?
  • Who will coordinate the project and find talents?
  • Who will take it through clinical development and regulatory approval process?

However, all these do not seem to be an insurmountable problem at all, as the  saying goes, ‘where there is a will, there is a way’.

Current Global initiatives for ‘Open Innovation’:

  1. In June 2008, GlaxoSmithKline announced in Philadelphia that it was donating an important slice of its research on cancer cells to the cancer research community to boost the collaborative battle against this disease. With this announcement, genomic profiling data for over 300 sets of cancer cell lines was released by GSK to the National Cancer Institute’s bioinformatics grid. It has been reported that over 900 researchers actively contribute to this grid from across the industry, research institutes, academia and NGOs. Many believe that this initiative will further gain momentum to encourage many more academic institutions, researchers and even smaller companies to add speed to the drug discovery pathways and at the same time make the NCEs/NMEs coming through such process much less expensive and affordable to a large section of the society, across the globe.
  2. The Alzheimer’s  Disease Neuroimaging Initiative (ADNI) is another example of a Private Public Partnership (PPP) project with an objective ‘to define the rate of progress of mild cognitive impairment and Alzheimer’s disease, develop improved methods for clinical trials in this area and provide a large database which will improve design of treatment trials’. 
  3. Recently announced ‘Open invitation’ strategy of GlaxoSmithKline (GSK) to discover innovative drugs for malaria is yet another example where GSK has collaborated with European Bioinformatics Institute and U.S. National Library of Medicine to make the details of the molecule available to the researchers free of cost with an initial investment of US $ 8 million to set up the research facility in Spain involving around 60 scientists from across the world to work in this facility.

‘Open Innovation’ in India: 

In India, Dr. Samir Brahmachari, the Director General of the Council of Scientific and Industrial Research (CSIR) is the champion of the OSDD movement. CSIR believes that for a developing country like India OSDD will help the common man to meet his unmet medical needs in the areas of neglected tropical diseases.

‘Open Innovation’ project of CSIR is a now a global platform to address the neglected tropical diseases like, tuberculosis, malaria, leishmaniasis by the best research brains of the world working together for a common cause.

To fund this initiative of the CSIR the Government of India has allocated around U.S $40 million and an equivalent amount of funding would be raised from international agencies and philanthropists.

Success of ‘Open Innovation’ initiative of CSIR: 

Sometime in late November 2009, I received a communication from the CSIR informing that their OSDD project, since its launch in September 2009, has crossed 2000 registered users in a very short span of time. The pace of increasing number of registered users indeed reflects the confidence that this initiative has garnered among the interested researchers across the world.

CSIR has indicated that the next big leap planned by them in the area of ‘Open Innovation’ is to completely re-annotate the MTb genome for which they have already launched a project titled ‘Connect to Decode’ 2010.

Conclusion: 

Currently pharmaceutical R&D is an in-house initiative of innovator global companies. Mainly for commercial security reasons only limited number of scientists working for the respective innovator companies will have access to these projects.

‘Open Innovation’ on the other hand, has the potential to create a win-win situation, bringing in substantial benefits to both the pharmaceutical innovators and the patients.

The key advantage of the ‘Open Innovation’ model will be substantial reduction in the costs and time of R&D projects, which could be achieved through voluntary participation of a large number of researchers/Scientists/Institutions in key R&D initiatives. This in turn will significantly reduce the ‘mind-to-market’ time of more affordable New Chemical/Molecular Entities in various disease areas.

Thus, to answer to ‘Quo Vadis, Pharmaceutical R&D’, I reckon, ‘Open Innovation’ model  could well be an important direction for tomorrow’s global R&D initiatives to improve access to innovative affordable Medicines to a larger number of ailing patients of the world, meeting their unmet medical needs, more effectively and with greater care.

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.

From Cross-Licensing to ‘Patent Pools’ and… India: Will there be a ground swell?

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Since many years, the global pharmaceutical industry has been making effective commercial use of cross-licensing, however, by and large, the industry still does not seem to be quite in favor of  ‘Patent Pools’ for various reasons.

The ‘Patent Pool’, as I understand is defined as, “an agreement between different owners, including companies, governments and academic bodies to make available patent rights on non-exclusive basis to manufacturers and distributor of drugs against payment of royalties.”

Thus one of the often repeated key benefits of the ‘Patent Pools’, as considered by its proponents, is that the system enables the use of innovation against payment of royalties, without the risk of patent infringement. Many believe that the concept of ‘Patent Pool’ can play an immensely useful role for productive use of Intellectual Property (IP) in the global pharmaceutical industry.

The difference between cross-licensing and ‘Patent Pools’:

The basic purposes of both Cross-Licensing and patent pools may appear to be similar, however the key difference is that in ‘Patent Pool’ system the patent owners usually agree to license to third parties who may not even contribute any patents to the pool. Moreover, ‘Patent Pools’ involve a large number of parties with its scope being narrow and well standardized.

“Patent Pools”- still a contentious issue:

The concept of ‘Patent Pools’ has become a contentious issue within the global pharmaceutical industry. Some opinion leaders vehemently argue that creation of a ‘patent pool’ will bring down the cost of any innovation significantly and save huge time, ensuring speedier and improved access to such medicines to a vast majority of ailing population across the world. This section of the experts also feels, “in the case of blocking patents as a commercial strategy, it would only be a reasonable method for making the innovation publicly available.”
In the midst of this high decibel debate, on February 13, 2009, ‘The Guardian’ reported the following comment of Andrew Witty, CEO of GlaxoSmithKline (GSK) on the same issue:
“GSK will put any chemicals or processes over which it has intellectual property rights that are relevant to finding drugs for neglected diseases into a patent pool, so they can be explored by other researchers”.
Andrew Witty in that interview also commented, “I think it’s the first time anybody’s really come out and said we’re prepared to start talking to people about pooling our patents to try to facilitate innovation in areas where, so far, there hasn’t been much progress… I think the shareholders understand this and it’s my job to make sure I can explain it. I think we can. I think it’s absolutely the kind of thing large global companies need to be demonstrating, that they’ve got a more balanced view of the world than short-term returns.”
Quoting Andrew Witty, ‘The Guardian’ reported, “his stance may not win him friends in other drug companies, but he is inviting them to join him in an attempt to make a significant difference to the health of people in poor countries”.
Yet another ‘out of box’ comment:
As if to prove ‘The Guardian’ right on their above comment, during his visit to India on March 2010, though in a slightly different context, Witty made the following comments, while answering a question of “The Economic Times”:
“I am relatively relaxed with the Indian regulatory environment. The government has made it clear about the direction to have an Intellectual Property (IP) mechanism and to be TRIPS compliant. Some people are unrealistic and want everything to change overnight. But we should be absolutely realistic about pricing to keep it affordable for India. If someone has the IP right, it does not mean that it should make it inaccessible for lower income people. Over the next 10-15 years India will become increasingly IP defined market.”
The rationale for ‘Patent Pools’ system:
Many experts in this area feel that the conventional patent system does not really work for the diseases of the poor, all over the world. Though the concept of ‘Patent Pools’ is quite new in the global pharmaceutical industry, this system is being very successfully and widely practiced within the Information Technology (IT) industry. ‘Patent Pool’ system, if effectively used, as stated earlier, can also help the global pharmaceutical companies to improve access of such medicines to many more developing countries of the world.

Key requirements for the ‘Patent Pools’:
Careful identification of various patents, which will be essential for the pool, will be one of the key requirements to initiate a ‘Patent Pool’ system. It makes the need to obtain individual patents, required in the process of a drug discovery, less important.

National Institute of Health (NIH), USA initiated the process:
On September 30, 2010, NIH became the first patent-holder to share its intellectual property with the Medicines Patent Pool, supported by UNITAID, by licensing a patent for ‘Darunavir’ to increase access of HIV and AIDS medicines to the suffering patients in the developing countries of the world.

UNITAID, an innovative global health financing mechanism is funded by a levy on airline tickets. This initiative was co-founded by the U.K, France, Norway, Brazil and Chile at the United Nations General Assembly in 2006 and buys drugs against HIV/AIDS, malaria and tuberculosis.
The above move of NIH towards the noble cause was appreciated by many all over the world, urging the global pharmaceutical industry, in general, to take a leaf out of it.

India was kept out of UNITAID “Patent Pool”:

In 2009-10, UNITAID reportedly had opposed the move to include countries like, India, China and Brazil from the proposed patent pool for AIDS drugs. At least seven civil society groups from India like, the Centre for Trade and Development, the National Working Group on Patent Laws, the All India Peoples Science Network openly stated that UNITAID does not intend to share the patent pool implementation plan with these civil society groups of India. They also alleged that this development in UNITAID will have a significant impact on the ability of Indian Pharmaceutical industry to manufacture low-cost versions of patented HIV/AIDS medicines for the developing countries of the world.

At that time, it was also reported that large global pharmaceutical players had indicated to UNITAID that they could contribute to the ‘patent pool’ on a selective basis, however, over 100 middle income countries such as India, Brazil and China should not have rights to manufacture generic versions of these HIV/AIDS medicines. They felt that ‘patent pool’ will be meaningless if poor countries, who do not have the capability to manufacture these medicines, are included in the process.

However, according to UNITAID, “the patent pool in no way a means to replace or override other provisions contained in the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement or the Doha Declaration on TRIPS and Public Health. The patent pool represents an additional tool to increase access to HIV treatment, and an opportunity for patent holders to voluntarily contribute to the attainment of crucial health-related goals endorsed by the international community.”

GSK kick-started the process:

Andrew Witty of GSK is undoubtedly the first CEO of a global pharmaceutical company to announce a ‘Patent Pool’ system for research on 16 neglected tropical diseases like, tuberculosis, malaria, filariasis, leprosy and leishmaniasis. GSK has, in a real sense, kick started the process by putting more than 500 granted pharmaceuticals patents and over 300 pending applications in the ‘Patent Pool’.

J&J followed suit:

Johnson and Johnson (J&J) in January 2011 expressed its willingness to assist ‘Medicines Patent Pool Foundation (MPPF)’ to implement ‘Medicines Patent Pool (MPP)’, which aims to improve access to affordable and appropriate HIV medicines in developing countries. MPPF works through voluntary licensing of patents for public health interest, at the same time extending compensation to the innovator pharmaceutical companies.

‘Medicines Patent Pools’:

On April 7, 2011. ‘Intellectual Property Watch’ reported that the ‘Medicines Patent Pools’, an initiative to improve access to HIV drugs through voluntary licenses of patented drugs, have launched a new database of patent information on HIV medicines in developing countries. The database has been developed with the support of the World Intellectual Property Organization (WIPO) and Regional Patent Offices across the world. Intellectual Property Watch

Key issues with the ‘Patent Pools’ concept:
The report from a WHO conference held in April, 2006 ‘Innovation Strategy Today’ indicates that the start-up cost of a ‘Patent Pools’ for vaccines will be economically viable only if more than 25 participants holding relevant patents join the initiative.
Moreover, various types of litigation related to patents, which are being currently witnessed within the global pharmaceutical industry, could also be an impediment in getting more patents in the pool.

Recommended ‘General Principles’ for “Patent Pools”:
International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), Switzerland, suggested the following guidelines for the ‘Patent Pool’ initiatives:
1. Patent pools should be voluntary associations of entities formed without coercion 2. Objectives of any patent pool should be clearly defined 3. Patent pools should complement rather than replace elements of existing intellectual property regimes 4. Rights and obligations of contributors and licensees of contributed rights should be clear 5. Patent pools should reduce transaction costs, and not increase administrative costs, relative to other options such as direct licensing
Conclusion:
There is certainly an urgent need to communicate more on how innovation and IPR could help rather than hinder public health. At the same time all stakeholders of the pharmaceutical industry need to come out with a robust solution to ever increasing problem of improving access to innovative medicines to the ailing population of the world, in the best possible way.
However, these are still very early days, before such a disrupting idea get widely accepted by the global innovators and implemented religiously not just for the ‘public health interest’, across the world, but also to create a sustainable business model to harvest ‘Fortune at the Bottom of the Pyramid’.

Only future will tell us whether or not the ‘Patent Pools’ initiatives become the footprints on the sands of time as the global pharmaceutical industry keeps  navigating through the challenges of change.

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.

The relevance of the Indian version of the Bayh-Dole Act – the country needs all stakeholders’ open debate on the proposed bill.

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The Bayh-Dole Act is an American legislation, which was originally sponsored by two US senators named Birch Bayh and Bob Dole. This Act deals with Intellectual Property (IP) arising out of US government funding. Bayh-Dole Act is also known as University and Small Business Patent Procedure Act. In December 12, 1980 this was enacted into a law by the US Congress.
What it does:
Under this Act, IP rights over government funded inventions for further development, license to other parties or direct commercialization are transferred to the universities and small businesses operating with government contracts. The government though retains its right to license the invention to any third party without any consent from the IP right owner or the licensee, if it feels that on a reasonable basis the public is being denied of the benefits of the invention.

The Indian version of the Bayh-Dole Act:

The Utilization of the Public Funded Intellectual Property Bill 2008, which has been formulated in line with the US Bayh-Dole Act, has already been approved by the Union Cabinet of India. This bill ensures both utilization and protection of the IP arising out of government funded research initiatives. Currently government funded academic institutions and research institutes cannot commercialize the inventions.

The proposed bill will not only allow them to patent such inventions but will also reward the inventors and the institutes with a share of its commercialization proceeds as per specific guidelines.
The bill has attracted a mixed response from the stake holders.

The relevance of Bayh-Dole Act in India:

Relevance of Indian version of the Bayh-Doll Bill in the post product patent regime in India is
significant. The core concept of the bill encourages innovation and ensures protection of patents and other forms of IP rights of the government funded R&D outcomes, where the owner of the intellectual property will be the government grant receipients or the government.

This bill is expected to offer to various research institutions, universities, small businesses and non-profit organizations, the IP rights on their inventions, resulted from the government funding. Overall environment towards innovation within the country is expected to get a boost in that process.

Is the ownership and protection of R&D a real remedy to make government academic institutions and universities self sustainable?

This is certainly not the only remedy, but an important one. This process will have significant potential to effectively facilitate technology transfer from government funded research laboratories or universities to the user industry to make these establishments self-sustainable.

What are the main implications of the bill if enacted in its current form?

Although the fine prints of the bill are not yet clearly known, the bill in its current form raises more questions than answers. Some of the concerns with the bill in its current form are as follows:

- This law could effectively transfer the decision making process about
publications of the research papers from the researchers and academia to
the bureaucrats in the government establishments, making the R&D
environment quite stifling for the researchers and the initiative
counterproductive.

- Academia at times will be compelled to incur significant expenditures
towards different types of IPR related litigation, which could have been
otherwise productively spent by these institutions towards research
initiatives.

- The learning and research may get transformed into another kind of
businesses activity, as such a law could change the research focus on to
the issues, which will be of greater commercial interest to various
industries and will offer immediate financial benefits to the
institutions. As a result vital non-commercial research, which could be of
critical interest to the nation as such, may take a back seat.

Conclusion:

The country will therefore need an extensive public debate on this bill, which has not taken place, as yet. The loose knots of the bill need to be tightened and the concerns of the stakeholders need to be adequately addressed before its enactment into a law.

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.

Innovative use of the new-age ‘Social cyber-media’ as a pharmaceutical marketing tool has the potential to open a goldmine of opportunities.

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The new-age marketing tool:
With more and more doctors not giving adequate time and even showing reluctance to meet the medical representatives and the important hospitals following suit, the global pharmaceutical companies are now in search of new marketing tools.

To get the marketing communications across to important target audiences, many of them have started experimenting, quite seriously, with the digital world. Effective networking media like ‘Facebook’ , ‘YouTube’, ‘MySpace’ and ‘Twitter’ are showing promises to become powerful online pharmaceutical marketing tools. Recent report of Pfizer’s new RSS feed and the plan for a unique ‘Pfacebook’ site for internal communication perhaps is an important step towards this direction.

Global pharmaceutical companies have already started ‘testing the water’:

Some global pharmaceutical giants who have already started using this new age media for pharmaceutical marketing are as follows:

1. Bayer uses ‘Facebook’ page to promote its Aspirin for women

2. Merck is using ‘Facebook’ to promote its cervical cancer vaccine, Gardasil

3. GlaxoSmithKline is using ‘YouTube’ for ‘restless-legs syndrome’ awareness film. The popularity of this video spot perhaps has prompted the company to come out with its own ‘YouTube’ channel last year with a name, ‘GSKvision’.

4. AstraZeneca is also using ‘YouTube’ for their anti-asthma drug Symbicort

5. Johnson & Johnson and Novartis use ‘blog’s, ‘YouTube’ and ‘Twitter’ to channel patient groups and deliver news.

Why have these pharmaceutical companies started using the social media as a marketing tool?

This is because social media like, ‘Facebook’, ‘Twitter’, ‘YouTube’ etc. provide a very important platform towards patients’ outreach efforts of the pharmaceutical companies exactly in a format, which will be preferred by the target group.

With the new-age social media these companies are now joining communities to begin a dialogue with the important stakeholders. It has been reported that some of these companies have already created un-branded sites like, silenceyourrooster.com or iwalkbecause.org, to foster relationship with patients’ group through online activity, the contents of which have been generated by the users themselves of the respective social medium. With the help of click-through links these sites lead to the branded sites of the concerned companies.

As reported by TNS Media Intelligence, internet media spending of the global pharmaceutical companies had increased by 36% to US$137 million, in 2008, which is significantly higher than their spending in Television advertisements.

Why is the entry of pharmaceutical companies in the new-age social media so slow?

Pharmaceutical companies are currently delving into marketing through cyber media with a very cautious approach, though the new social media will become more central to many global marketing strategies in not too distant future. The cautious approach by the pharmaceutical companies is primarily due to evolving regulatory requirements in this new space

In the USA, very recently the FDA cautioned the major players in the industry to refrain them from publishing any misleading communication through social media. This is primarily because of absence of any published guidelines for online pharmaceutical marketing. How to use this powerful social media for maximum marketing and other benefits will indeed be quite a challenging task, at this stage. Many pharmaceutical companies are, therefore, slow to use the social media to the fullest extent.

Not only in the USA, there are no specific regulatory guidelines to promote a pharmaceutical brand or create brand awareness through these media in most of the countries of the world, including Europe and Japan. In this much uncharted territory, as there are not enough foot-steps follow, the pharmaceutical companies are now just ‘testing the water’. Most probably to fathom how far regulatory authorities will allow them to explore with this new media.

Effective use of social media is expected to be financially attractive:

Low costs associated with creating internet promotional inputs will make social media quite attractive to pharmaceutical and biotechnology companies, not only as a marketing tool, but also in their other outreach program for the stakeholders. The role and power of social media are expected to play a significant and cost effective role in creating pharmaceutical brand awareness and brand marketing to appropriate target segments.

‘Proof of the pudding is in the eating’:

A recent report indicates that in 2007, well reputed computer maker Dell’s ‘Twitter’ activity brought in US$ half-million in new business to the company.

Thus the innovative use of the new-age social cyber-media indeed has immense potential to open a goldmine of opportunities for the global pharmaceutical industry.

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.

‘Patent Pool’ – is GSK setting a new trend for the global pharmaceutical industry?

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On February 13, 2009, The Guardian reported that Andrew Witty, CEO of GlaxoSmithKline (GSK) announced some significant changes to the way his company will operate in the developing countries of the world.

GSK, as Witty said, will:

• “Cut its prices for all drugs in the 50 least developed countries to no more than 25% of the levels in the UK and US – and less if possible – and make drugs more affordable in middle- income countries such as Brazil and India.

• Put any chemicals or processes over which it has intellectual property rights that are relevant to finding drugs for neglected diseases into a “patent pool”, so they can be explored by other researchers.

• Reinvest 20% of any profits it makes in the least developed countries in hospitals, clinics and staff.

• Invite scientists from other companies, NGOs or governments to join the hunt for tropical disease treatments at its dedicated institute at Tres Cantos, Spain.”

Quoting Andrew Witty, The Guardian reported, “his stance may not win him friends in other drug companies, but he is inviting them to join him in an attempt to make a significant difference to the health of people in poor countries”.

“We work like crazy to come up with the next great medicine, knowing that it’s likely to get used an awful lot in developed countries, but we could do something for developing countries. Are we working as hard on that? I want to be able to say yes we are, and that’s what this is all about – trying to make sure we are even-handed in terms of our efforts to find solutions not just for developed but for developing countries,” Witty envisioned.

“I think the shareholders understand this and it’s my job to make sure I can explain it. I think we can. I think it’s absolutely the kind of thing large global companies need to be demonstrating, that they’ve got a more balanced view of the world than short-term returns,” he expressed Knowing full well that his comments will be considered as quite radical within the global pharmaceutical Industry.

The unorthodox young CEO of GSK continued, “I think it’s the first time anybody’s really come out and said we’re prepared to start talking to people about pooling our patents to try to facilitate innovation in areas where, so far, there hasn’t been much progress.”

Definition of ‘Patent Pool’:

The ‘Patent Pool’ is defined as, “an agreement between different owners, including companies, governments and academic bodies to make available patent rights on non-exclusive basis to manufacturers and distributor of drugs against payment of royalties”

Thus one of the often repeated key benefits of the ‘Patent Pool’, as considered by its proponent, is that the system enables the use of innovation against payment of royalties, without the risk of patent infringement.

The rationale for ‘Patent Pool’ system:

Many experts in this area feel that the conventional patent system does not really work for the diseases of the poor, all over the world. Though the concept of ‘Patent Pool’ is quite new in the global pharmaceutical industry, this system is being very successfully and widely practised within the Information Technology (IT) industry. ‘Patent Pool’ system, if effectively used, can also help the global pharmaceutical companies to improve their access to many more developing countries of the world.

GSK appears to have kick started the process:

Andrew witty of GSK is undoubtedly the first CEO of a global pharmaceutical company to announce a ‘Patent Pool’ system for research on 16 neglected tropical diseases like, tuberculosis, malaria, filariasis leprosy and leishmaniasis. GSK has, in a real sense, kick started the process by putting more than 500 granted pharmaceuticals patents and over 300 pending applications in the ‘Patent Pool’.

Key requirements for the ‘Patent Pool’:

Careful identification of various patents, which will be essential for the pool, will be one of the key requirements to initiate a ‘Patent Pool’ system. It makes the need to obtain individual patents, required in the process of a drug discovery, less important.

Key issues with the ‘Patent Pool’ concept:

It has been reported, from a WHO conference held in April, 2006 ‘Innovation Strategy Today’ worked out that the start-up costs of a ‘Patent Pool’ for vaccines will be economically viable only if more than 25 participants holding relevant patents join the initiative.

Moreover, various types of litigations, related to patents, which we are currently witnessing within the global pharmaceutical industry, could also be impediment in getting more patents in the pool.

Conclusion:

The initiative to create a ‘Patent Pool’ system in the global pharmaceutical industry, especially for the diseases of the poor, as enunciated by the CEO of GSK, is indeed a path breaking one. Such initiatives are likely to have very positive contribution in solving the problem of access to affordable medicines, especially in the developing world.

In fact, the Council of Science and Industrial Research of the Government of India, lead by its Director General, Dr. Samir Brahmachari has already undertaken similar initiatives in the country where global experts including academia are actively participating.

Though ‘Patent Pool’ is still an untested model in the global pharmaceutical industry, the recent announcement of GSK towards this direction does appear to offer a realistic and practical approach to address the critical global issue of improving ‘access to affordable innovative modern medicines’ to a vast majority of population in the developing countries of the world.

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.