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Ringside View Of A Key Pharma Job Missing ‘The X Factor’

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Just the other day, a well known doctor and a long-time friend of mine invited me for a friendly chat over lunch, after a long while. I had no option really but to accept the invite, as the warmth of his voice was overflowing.

Though the eatery, based on the ambiance and the quality of food we like, was mutually decided in his previous call, I called him again to ask whether on the pre-fixed date, about an hour earlier to the scheduled time, I can meet him first in his clinic and from there we can go together for lunch.

With a slight pause, he said, ‘No problem…but I won’t be able to talk to you there much, as I need to see all those patients with pre-scheduled appointments.”

“That’s no issue. We’ll have enough time to chat while eating. But, would you see any Medical Representatives (MRs) during that time?” I asked.

“Though my hectic schedule and other commitments don’t allow me to meet with them as much as I used to earlier…  yes, still I do meet with a few of them only two days in a week,” he took a pause, possibly to refer to his calendar and said, “Tomorrow being one those day…yes… I will… but why are you asking that?”

“I would like to just observe the MRs, while they discuss their products with you”, I literally warmed up while replying to him

“But Tapan, I don’t talk much in these meetings”, he replied somewhat apprehensively.

“Don’t worry, I shall just sit there, incognito, taking a mental note of what’s happening around, nothing more, nothing less,” I closed the call, as he did not ask any further question.

The ‘D-Day’:

On the ‘D-Day’, I entered for the first time into his well equipped and squeaky-clean clinic and saw his secretary sitting outside his office. She buzzed him immediately, as I introduced myself to her. To my utter surprise, my doctor friend came out promptly, despite his jam-packed schedule. Greeting me with his both hands and usual warmth and laughter, he took me inside, as the waiting patients were probably wondering, who is this gate-crasher? Offering a chair to me, the doctor friend smiled and said, “I couldn’t make time to meet any MR today since morning, though have kept a couple of them waiting for you to arrive, as you had desired.”

“That was not really necessary,” I quipped, “but thanks so much, nonetheless.”

The ringside view:

In a little over an hour’s time, I observed with great interest four MRs interacting with their, quite expectedly, one of the very potential customers.

Three of them were about thirtyish or below and one middle aged gentleman. Two of them came with their respective superiors. Three were quite traditional in approach. One was armed with an iPad.

I got an overall impression that the MRs were more in a hurry to conclude the call as compared to my doctor friend. Most of the interactions were more of reminder types than full detailing of any product, though all four of them had some very specialized products. I was under the impression that, at least, in presence of the supervisors, in-clinic proceedings take place with far more detail.

My doctor friend seem to be rather impatient and not quite enthused with the ongoing proceedings, but I was curious, very curious, especially when the young MR took out his iPad. I expected to see something novel on the innovative application of technology in medical communication. Probably for that reason, I was disappointed, when the young man handled the gizmo rather clumsily and used it merely to highlight some recent references on his specialized product stored in the archive.

Young looking accompanying managers of the two MRs did not appear to be live-wires, either. The participation of one of them was restricted to just handing over some medicine samples to the doctor, which the MR was passing on to him from his bag and the other just requested for prescription support for a product, as he was getting up from his chair.

While I was engrossed in the ringside view and my related thoughts, my doctor friend seemingly woke up wearing a smile, as a middle-aged confidant looking MR entered into the room. That gentleman came alone. He started his interaction recalling some events related to a trip abroad, which his boss had briefed him and conveyed to my friend how positive was the audience feedback after his speech. Informing that after the event his company has analyzed the key questions raised on the concerned product, he sought permission of the doctor to discuss top three of those questions very briefly, and he did. The doctor shifted his position in the chair several times rather awkwardly; probably because he was being so frequently referred to by the MR with lavish eulogy and that too in my presence. Though the content of the MR’s talk was not anything earthshaking, the environment that he created putting my friend on the pedestal, albeit with plain flattery, appeared to be working. He used no detailing aids, neither did he give any gift, but applied just impromptu traditional salesmanship.

This was the last MR call for us. My friend looked at me and asked, “Liked?” looking at each other both of us laughed loudly. I then stopped to ask him, “Do you prescribe the products they thanked you for prescribing?”

I am not very sure about others, but the gentleman who came last? … Yes, I do prescribe at least two of his products,” my friend replied with a disarming smile as he was standing up, looking at his watch.

He then put his hand on my shoulder and with a mild squeeze said, “Let’s step out now, rest we shall catch up on the run.”

A quick analysis:

According to my assessment, barring the last MR, none of the other three calls appeared to have interested my friend in any way, as he kept referring to his calendar, diary and other things very often, while those MRs were talking.

No wonder, my friend could not even remember prescribing any of their products. This probably means, at least three out of the four calls, made by MRs of very well reputed companies, did not leave much impact, if at all. Interestingly, two out of the four calls were from the MNCs.

Is the professional standard of MRs declining in India?

As we know, pharma industry in India is highly fragmented, with over 10,000 companies in the organized sectors and around 60,000 brands. In an environment of cutthroat competition like this, pharma players are exploring all possible means to carve out for themselves a decent share of the respective product categories, incurring average sales and marketing expenditure of around 20 to 22 percent of the total sales.

Like many other countries of the world, in India too, MRs are the most important link between the medical profession and the pharma companies. Thus, the cost of MRs takes quite a significant chunk of total sales and marketing budget of the pharma companies. There remains a huge scope for improvement though, in the realm of per MR productivity, which varies widely between the companies. For example, according to a recent report, a Sun Pharma MR on an average generated around Rs 90 lakh of business in the full year ended on March 31 2014, as compared to Rs 55 lakh of Ranbaxy, during the same period.

According to a survey conducted among both specialists and General Practitioners (GP), published in Express Pharma some years ago, out of total 30 doctors interviewed, 23 reported that quality of medical representatives visiting them has deteriorated. Only three doctors reported that the quality has not really changed, while four reported quality has improved. It was claimed by the authors that this survey result is statistically significant both on ‘t test and z test’.

The study concluded that pharma companies are responsible for this decline, as majority of them are focusing just on the end results without bothering much about the means to the end. This indicates, disproportionately more weightage is being given on the total quantum of sales rather than its quality, during performance measurement.

My above personal experience on the subject, though very short, is not much different from the above survey results, either.

The tradition continues over decades:

It appeared to me, besides new application of state-of-art technology to modernize the communication process, to ensure rapid access to all related information and to improve efficiency of tech based command and control sales & marketing management systems; basically nothing noteworthy has changed, just yet.

Interestingly, many readily available third party training programs for the MRs in the peripheral areas are springing up in large numbers with fancy claims, leaving one of the most critical issues virtually unaddressed.

I shall try to deliberate on that area now, as I see it.

‘The X Factor’:

In my view, just as the doctors are well recognized professional experts in medical care for treating patients based on evidence based science, MRs are also, supposedly, experts and a valuable source of knowledge for the medicines that their respective companies deal with, but unfortunately not regarded that way in India, generally. This is predominantly because, the doctors have accreditation for their profession that is absolutely a pre-requisite for their medical care business. Whereas, MRs do not have any such accreditation, which could formally recognize them as professionals in the knowledge-based drug/medicine business and related areas. Thus, there is somewhere a basic disconnect between the professions of the doctors and the MRs.

‘The X Factor’, in my view, is the process that facilitates requisite professional connects between the doctors and MRs, cemented by mutual professional respect, sans any kind of vested interests or needs of allurements, generally speaking.

Only with ‘The X Factor’ induced professional connects, I reckon, MRs could establish themselves as high quality source of knowledge for the drugs and disease areas that they deal with, of course, backed by regular training to hone their knowledge and skills.

This ‘X Factor’ could well be embedded into the organizational sales/marketing systems by putting in place a formal process to recognize medical representation as a respected profession.

The process of accreditation:

A structured process for Accreditation of MRs, most desirably, by involving the Government, can help achieving this goal sooner. If the Government participation is not possible for various reasons, the accreditation to MRs should come from some highly credible source, as would be accepted by the medical profession.

The process of Accreditation of MRs involves, in brief, documentation of the candidate’s basic pharma related knowledge, comprehension ability and domain specific skill sets, together with the ability of successful application of all those, while interacting with the medical profession to achieve the business goals.

The key task in the process of Accreditation is to develop modern technology based self-learning programs for the MRs that would provide basic knowledge of anatomy, physiology, pathophysiology and pharmacology together with a range of common treatments. Overall knowledge of communication and selling skills would also form an integral part of this process.

The Accreditation would ensure that the MR aspirants attain reasonable high standards for the profession that they are aspiring for. Later on, the pharmaceutical companies, who would hire them, could mold and sharpen their knowledge and skills according to company specific requirements.

Accreditation of MRs would, therefore, be a formal way to ensure that requisite high standards of the MR profession are met. Consequently, while meeting accredited MRs, the doctors would also know that they are meeting well trained and groomed, competent and credible disease area specific drug consultants. This, in turn, would help establishing requisite professional connects between the two professions based on a bond of mutual trust and respect, resulting in a win-win outcome for both.

How would the doctors recognize accredited MRs?

On successful completion of the examination for Accreditation, the individual would earn the privilege of being called an ‘Accredited Medical Representative (AMR)’, and acquire the right to put ‘AMR’ symbol next to his or her name in the business card and to wear a nice looking ‘AMR Pin’, while meeting the doctors.

Nothing much visible in this direction:

That said, not much has been effectively done, as yet, either to arrest the declining image of the MRs in the eyes of the medical profession or to make the MR profession a respectable one, except giving some extrinsic fancy job titles to them, devoid of any intrinsic value.

I am aware of some highly credible organizations, which are capable enough to give a formal shape to ‘MR Accreditation Program’ in India.

Thus the following key question arises in search of ‘The X-Factor’:

Should MRs need to have Accreditation from a credible and recognized authority in India, formally recognizing them as ‘Drugs/Medicine professionals’ and adding significant value and greater respect to the profession that they belong to?

In an earlier blog post titled “A National Regulatory Standard is necessary for MRs of the Indian Pharmaceutical Industry”, I had flagged this issue, though on a different perspective

Epilogue:

Now I get back to where I started from, in this article:

In about an hour, we were done with the lunch. However, while my doctor friend and I were eating, in track two of my brain, all those that I mentioned above were flashing by, though not in an orderly manner.

While we were in the portico of the hotel requesting the doorman to page our drivers, I thanked my doctor friend for buying me a sumptuous lunch and casually commented, “You remember the last MR?… He seems to have been really flabbergasted by your awesome speech in their conference abroad. My compliments! You have always been an excellent speaker!”

“Well…”, he quipped somewhat embarrassingly.

“Why have you reduced the frequency of meeting with the MRs?” I was curious, as those calls were a great learning experience for me, after a long while.

“Time…that’s a great constraint for me. Moreover, these meetings are like going through just motions”, he replied, while looking for his car.

Our cars arrived.

Before, I got into my car, I turned back to ask again, “Did you enjoy your foreign sojourn as a speaker for that pharma company?”

By that time the doctor friend was already in his car. Before closing the door, he looked at me again, widely smiled…somewhat naughtily, lunged forward, lowered his voice and haltingly replied, “Well…You know that…Bye for now.”

By: Tapan J. Ray

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

Does Patent Expiry Matter Less For Difficult To Copy Drugs?

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“Patent expiry matters much less for difficult to copy drugs”.

Not so long ago, this is what many used to believe in the pharma industry. However, looking at the current trend involving the tech savvy generic players, it appears, gone are those days even for the home grown companies in India. As we witness today, a number of global generic players, including some from India, are overcoming the tough challenge of technological barrier of the original drugs with technology, boldly and squarely, and that too with reasonably good speed.

A global CEO felt quite the same:

Possibly encouraged by this commercial dogma, the Chief Executive of GlaxoSmithKline (GSK) Sir Andrew Witty reportedly felt in not too distant past that his company’s blockbuster drug Advair/Seretide, used for the treatment of asthma, would continue to remain a major product, despite losing US patent in end 2010. Witty thought so considering the intricate technology involved in making its high tech inhalation drug delivery system with exacting precision.

Technology based entry barrier:

Although, Advair/Seretide is a respiratory inhalation drug, it is not quite like a typical aerosol inhaler consisting of a pressurized canister filled with liquid medicine formulation. In such system, as the canister is compressed, the liquid inside comes out as a spray that is breathable in an amount as required for desirable clinical efficacy for the patients.

With the application of complex technology, Advair/Seretide was formulated not as a liquid, but as pre-determined fixed dose combination of powders that patients inhale into their respiratory tracts with a device called ‘Diskus’, which involves a complex and difficult to copy inhaler technology with a long patent life.

This precision technology was expected to create the requisite entry barrier for generic equivalents of this important medicine.

“Diskus” patent to continue:

It is important to note, though Advair/Seretide had gone off patent in end 2010, the patent protection for the “Diskus” device that dispenses the powder version of the fixed dose drugs combination, continues till 2016. For the inhaler device that dispenses the aerosol version of the same drugs, the patent remains valid until 2025.

New USFDA guidance:

Keeping these factors in mind, the USFDA in its latest guidance has clearly enunciated the characteristics that an inhaler should have, including a similar size and shape to Diskus. This new USFDA guidance for inhaled drugs, like Advair/Seretide, now requires only “relatively basic” preclinical tests and a short clinical trial.

Many believe that this new guidance is mainly to ensure that other generic devices also qualify for the GSK’s asthma drug combo, after its patent expiry.

Nevertheless a challenging task:

Despite this new USFDA guidance for inhaled drugs, some large generic manufacturers apprehended, even way back in 2010, that they doubt whether it will be possible for them to adequately replicate Advair/Seretide to meet the stringent “substitution” requirements of the USFDA on generics. This is exactly what Witty had envisaged earlier.

Almost two years after its patent expiry, in October 2012, the world’s largest generic drug maker Teva also announced that the company does not expect to see true substitutes for Advair/Seretide before 2018.

No immediate sales impact post-patent expiry:

As a result, in 2012, even a couple of years after its patent expiry, Advair/Seretide could successfully weather the impending storm, though GSK reported a lackluster overall business performance. The brand at that time was virtually immune to substitution threats from generic equivalents. The key reason being, as stated above, much unlike a patented chemical drug substance, the ‘Diskus’ system of the GSK inhaler is a hell of a task to copy by meeting the regulatory requirements of substitution.

In 2013, close to three years after its patent expiry, Advair/Seretide ranked fourth within the top 10 global best-selling drugs of that year, clocking annual revenue of US $8.25 billion.

The first competition:

In the midst of all these, the first generic equivalent of Advair/Serevent with a new inhalation device, carrying a name AirFluSal Forspiro from the Sandoz unit of Novartis, started warming up to obtain regulatory approval from several countries within the European Union (EU).

The product was first approved in Denmark on December, 2013 with subsequent marketing authorizations received in Germany, Sweden, Hungary, Romania, Bulgaria, and Norway.

The heat started being felt now:

The overall position of the brand started changing thereafter. According to published reports, sales trend of Advair/Seretide in Europe and other markets are on the decline in 2014. In Europe, the drop was around 3 percent and in the US around 19 percent in the last quarter, due to a combined impact of many factors.

According to Bloomberg, the sales of Advair/Seretide are expected to drop from US$8.25 billion in 2013 to US$5.9 billion in 2016 with the entry of generics.

A large and growing market to invest into:

According to the World Health Organization (WHO), in every 10 seconds, Chronic Obstructive Pulmonary Disease (COPD) that includes conditions such as chronic bronchitis and emphysema kills one person globally. It is expected to be the third leading cause of death worldwide by 2030.  However, though more number of people suffers from asthma globally, its mortality rate is still much less, WHO says.

Bloomberg estimates that COPD market, including asthma, is expected to reach over US$30 billion by 2018.

Cipla came next crossing the ‘technology hurdle’:

Though the leader in the global generic market – Teva, expressed its inability to introduce the generic version of Advair/Seretide before 2018, this month, the Indian pharma major Cipla introduced its version of the product in two European countries, just next to Novartis. Consequently, Cipla demonstrated its ability to overcome the technological hurdle of the product faster than most others and mastering the intricate NDDS technology in record time, with precision.

The Cipla product is named as ‘Serroflo’ in Germany and ‘Salmeterol/Fluticasone Cipla’ in Sweden. As reported in the media quoting Cipla Chairman Dr. Yusuf Hamied, the product has also been launched in Croatia. By now, Cipla has obtained regulatory approvals of this product in 10 countries in total, with an approval pending in the GSK’s own domestic turf, the United Kingdom (UK). Other country-wise launches in Europe would probably take place much before the end of 2014, according to Dr. Hamied.

The product is expected to be launched in the US in the next three to four year’s time, though one media report mentioned about its 2015 launch in that market. Dr. Hamied also said that his company is now planning its first-ever manufacturing plant in America, which might focus on producing HIV medicines.

On a conservative estimate, the market analysts expect Cipla to generate around US$50 million in sales from the EU markets by 2016 and around US$110 million by 2018, as the company gains increasing market access with not more than 4-5 generic competitors competing in this segment.

Be that as it may, getting regulatory approval for launch of a generic version of Advair/Seretide in the regulated markets, by itself, is a huge achievement of technological prowess that Cipla has demonstrated, yet again.

Not too many generic competition expected:

Because of high quality technological requirements to develop a replaceable generic version of the GSK product, not too much competition is expected in this segment.

Thus far, another global generic drug major Mylan is expected to file for a generic version of Advair/Seretide in the US by the third quarter of 2015 for a 2016 launch. Besides Cipla and Novartis, Mylan, Teva and Actavis are expected come out with the generic version of this drug.

Opportunities in ‘difficult to copy’ drugs:

According to a recent ‘RnR Market Research Report’, over 1,400 drugs with New Drug Delivery System (NDDS) have since been approved globally. This includes inhalation devices too.

The oral drugs contribute the largest share of the overall NDDS market with over 52 percent of the total pie. This segment is expected to attain a turnover of over US$90 billion by 2016 at a CAGR of 11 percent. The injectable new drug delivery market is expected to reach a turnover of over US $29billion by 2015, according to this report.

I have deliberated this subject in one of my earlier blog posts titled. “Moving Up The Generic Pharma Value Chain”.

Another high tech area – biosimilar drugs:

As the high priced biologic drugs of the innovator companies go off patent, large molecule biosimilar drugs, involving high technology, would emerge as another lucrative growth opportunity for the generic players having requisite wherewithal.

Recombinant vaccines, erythropoietin, recombinant insulin, monoclonal antibody, interferon alpha, granulocyte cell stimulating factor like products are now being manufactured by a number of domestic biotech companies. Some of the Indian companies that have already entered into the biosimilar segment are Dr. Reddy’s Laboratories (DRL), Lupin, Biocon, Panacea Biotech, Wockhardt, Glenmark, Emcure, Bharat Biotech, Serum Institute, Hetero, Intas and Reliance Life Sciences, besides others.

The ultimate objective of all these Indian companies is to get regulatory approval of their respective biosimilar products in the US and the EU either on their own or through collaborative initiatives.

Overall improvement in the quality of ANDA filings:

In the last few years, overall quality of ANDA filings of the domestic Indian pharma players has also improved significantly. Their regulatory filing schedules now include many complex molecules, injectibles, oral contraceptives, ophthalmic preparations, inhalers/other drug delivery systems and biosimilars, beside Para IV/FTFs. All these are now contributing a growing share in their new product initiatives for the regulated markets.

Conclusion:

In the largest pharma market of the world – the United States, global generic companies are increasingly facing cutthroat price competition with steep price erosion, registering mixed figures of business performance and growth.

However, a new trend is fast emerging. Even when global innovator companies are including increasing number of difficult to copy medicines in their product portfolio, some pharma players are reaping a rich harvest by moving up the value chain with the generic versions of those products, post patent expiry. These copycats offer much higher margin than non-differentiated generics.

Some Indian generic companies too have started focusing on building value added, difficult to manufacture, and technology intensive generic product portfolios in various therapy areas. DRL is reportedly all set to take its complex generic drug Fondaparinux sodium injection to Canada and two other emerging markets.

Those Indian pharma companies, which would be able to develop a robust product portfolio of complex generics and other differentiated formulations for the global market, would now be much better placed in positioning themselves significantly ahead of the rest, both in terms of top and the bottom line performance.

The myth, as epitomized in the good old saying, “Patent expiry matters less for difficult to copy drugs”, seems to be partly true in delaying entry of generics immediately after the end of the monopoly period, at least, for now. However, I reckon, this gap of delay would eventually get much reduced, if not eliminated altogether, as we move on. Armed with cutting edge technology Cipla has almost busted the myth, as it came close second to Novartis with the launch of a complex generic equivalent of Advair/Seretide in the EU and other markets.

Pharma majors of the country, such as, DRL, Cipla, Lupin and Biocon, to name a few, are taking great strides, setting examples for many others to emulate and excel in this area. The groundswell has already begun for a long haul global journey of the Indian pharma into the El Dorado of high tech generics fetching higher rewards.

By: Tapan J. Ray

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

 

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

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

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

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

A heartless game played by shrewd minds:

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

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

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

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

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

The Halcyon days and after:

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

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

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

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

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

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

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

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

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

Ignoring the reality:

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

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

Key reasons of distrust:

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

  • Media reports on pharmaceutical companies directly paying to doctors for writing prescriptions of high priced drugs to patients.
  • A growing belief that the pharma industry spends disproportionately more on sales & marketing than on R&D, which eventually increases the drug prices.
  • Unabated reports in the media of various pharma malpractices from across the world, including hefty fines amounting to billions of dollars, paid by many global pharma players.
  • A widespread belief that for commercial gain, the industry often hides negative clinical trial results, which go against patients’ health interest.

A recent survey:

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

  • 42 percent of the respondents indicated that image of pharma is not getting any better among average people.
  • More than one-third said they are not sure or remained neutral on the subject.
  • 19 percent within the group are optimistic about improving image of pharma.

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

2014 developments in India:

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

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

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

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

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

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

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

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

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

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

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

Pharma and healthcare continue to remain unbothered:

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

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

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

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

Urgent remedial measures necessary:

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

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

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

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

Conclusion: 

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

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

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

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

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

By: Tapan J. Ray

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.

 

Hepatitis C: A Silent, Deadly Disease: Treatment Beyond Reach of Most Indians

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Every year, July 28 is remembered as the ‘World Hepatitis Day’. In India, this year too, the day had gone by virtually uneventful, for various reasons. This happened despite increasing trend of the disease in the country.

Though, there are five main hepatitis virus types, namely A, B, C, D and E, of which B and C are the most fatal, in this article, I shall focus mainly on hepatitis C.

According to the World Health Organization (WHO), globally around 150 million people are infected with chronic hepatitis C virus (HCV), which is considered as one of the key factors for liver cirrhosis, fibrosis and hepatocellular carcinoma. At least, 350,000 HCV infected people die annually from these ailments.

A July 2014 study conducted by Metropolis Healthcare reportedly found that 17.97 percent of 78,102 samples studied in major cities of India such as, Mumbai, Delhi and Chennai, were infected with HCV and the patients belonged to the age group of 20 to 30 years. Out of 10,534 the tested sample in the age group of 0 to 10 years, 3,254 samples (30.89 percent) tested positive with HCV.

Institutes of Medicine (IOM) and the Department of Health and Human Services (HHS) of the United States consider hepatitis C infections a “silent epidemic,” as many patients infected with HCV are symptom free, without even leaving any hint to them that they are infected. The infected persons may feel healthy, even when serious liver damage is taking place, sometimes through decades.

All these patients are also potential carriers of HCV, risking rapid spread of the virus, as identification of the infected individuals for remedial measures continue to remain mostly eluding in India.

According to experts, around 80 percent of the HCV patients ultimately develop chronic hepatitis with serious liver damage, causing significant debility. With further progression of the disease, around 20 percent of these patients could develop fatal liver cirrhosis and 5 percent may fall victim of liver cancer.

A situation like this, is indeed a cause of yet another major worry in the healthcare space of India. Deadly hepatitis C crisis would likely to worsen much, if it does not receive healthcare focus of all stakeholders, sooner.

Traditional treatment regime:

There is no vaccine developed for HCV, as yet. HCV usually spreads through sharing of needles, syringes or other equipment to inject drugs, infected blood transfusion and tattooing, among others.

The standard treatment for HCV is interferon-based injections, which could make patients feel ill and give rise to flulike symptoms. Moreover, the treatment with interferon lasts from six months to a year and cures only 40 to 50 of HCV infected patients.

Now, chronic HCV treatment also includes a combination of three drugs – ribavirin (RBV), pegylated interferon (PEG) and a protease inhibitor, such as, simeprevir or boceprevir or telaprevir. These three drug combinations inhibit viral replication for enhancing immune response of the body to hopefully eradicate the virus.

At times, patients with very advanced liver disease may not be able to tolerate this traditional treatment with interferon-based injections, as those could make them feel worse.

The latest development in treatment:

There has been a significant advance in the treatment of HCV patients today with a new drug in the form of tablet that has doubled the viral cure rates from 40 to 50 percent to 90 to 100 percent.

Moreover, the new drug not just enables the physicians switching from injectibles to oral tablet, but at the same time reduces the duration of treatment to just 12 weeks, instead of 6 months to one year, offering a huge advantage to patients suffering from HCV.

This new generation of treatment now includes only Sovaldi (sofosbuvir) of Gilead, which is the first drug approved to treat certain types of hepatitis C infection, without any compelling need to co-administer with interferon.

Some other global pharma majors, such as Bristol-Myers Squibb, Merck & Co, Johnson & Johnson and AbbVie are also developing oral treatment regimens for HCV. All these have shown equally dramatic results in clinical trials, reducing the requirement for debilitating interferon injections.

Allegation of profiteering:

Looking at the high cure rate of more than 90 per cent for much-distressed HCV infected patients, none would possibly dispute that Sovaldi of Gilead signifies a giant leap in the treatment of HCV. But Gilead, according to a ‘Financial Times (FT)’ report, faces strong criticism of alleged ‘profiteering’ for its pricing strategy of this drug.

Sovaldi has been priced by Gilead at Rs 60,000 (US$ 1,000) per tablet with a three-month course costing Rs1.8 Crore (US$ 84,000), when it reportedly costs around U$130 to manufacture a tablet. This treatment cost is being considered very high for many Americans and Europeans too.

“At the US price, Gilead will recoup its Sovaldi development investment  . . . in a single year and then stand to make extraordinary profits off the backs of US consumers, who will subsidize the drug for other patients around the globe”, the FT report states.

This line of argument has been gaining ground on Capitol Hill, as well. This month, two senior members of the US Senate Finance Committee wrote to John Martin, Gilead Chief Executive, asking him to justify Sovaldi’s price, the report mentioned.

Half yearly sales of US$ 5.8 billion came from just 9,000 patients:

Be that as it may, the bottom line is, in the midst of huge global concerns over alleged ‘profiteering’ with this exorbitantly priced HCV drug, Gilead has reportedly registered US$ 5.8 billion in sales for Sovaldi in the first half of 2014.

The company has reportedly noted on its earnings call that it believes 9,000 people have been cured of HCV so far with Sovaldi. This means that the 6-month turnover of Sovaldi of US$ 5.8 billion has come just from 9000 patients. If we take the total number of HCV infected patients at 150 million globally, this new drug has benefited just a minuscule fraction of less than one percent of the total number of patients, despite clocking mind-boggling turnover and profit.

Stakeholders’ pressure building up:

Coming under intense pressure from all possible corners, Gilead has reportedly announced that it has set a minimum threshold price of US$ 300 a bottle, enough for a month. With three months typically required for a full course and taking into account the currently approved combination with interferon, the total cost per patient would be about US$ 900 for a complete treatment against its usual price of US$ 84,000. The company would offer that price to at least 80 countries.

For this special price, Gilead reportedly has targeted mostly the world’s poorest nations, but also included some middle income ones such as Egypt, which has by far the highest prevalence of HCV in the world. In Egypt, about 10 million people remain chronically infected and 100,000 new infections occur each year, according to Egyptian government figures. However, independent surveys  put this number between 200,000 and 300,000. Gilead has already signed an agreement with the Egyptian government in early July 2014 and the drug would be available there in September 2014. This would make Egypt the first to have access to Sovaldi outside the US and the EU.

What about India?

Gilead has reportedly announced, “In line with the company’s past approach to its HIV medicines, the company will also offer to license production of this new drug to a number of rival low-cost Indian generic drug companies. They will be offered manufacturing knowhow and allowed to source and competitively price the product at whatever level they choose.”

This is indeed a welcoming news for the country and needs to be encouraged for expeditious implementation with support and co-operation from all concerned.

Regulatory requirement:

However, despite all good intent, Gilead says, “ Some countries, such as India and China, are not satisfied with the tests conducted in the US and elsewhere for Sovaldi. They want additional clinical trials to be conducted on their own patients as a precondition for authorization, which will add extra costs and delays.”

Patent status:

It is worth noting here that the Indian patent office has not even recognized Sovaldi’s patent for the domestic market.

Local measures to address chronic hepatitis:

On May 22, 2014, the World Health Assembly adopted a resolution to improve prevention, diagnosis and treatment of viral hepatitis, in general. However, as things stand today in India, the surveillance systems for viral hepatitis are grossly inadequate and preventive measures are not universally implemented.

The Union Government of India has now expressed its intent to set up ten regional laboratories through the National Communicable Disease Centre (NCDC) for surveillance of viral hepatitis in the country. The key objective of these laboratories would be to ascertain the burden of viral hepatitis in India by 2017 and to provide lab support for investigating outbreaks.

Government sources indicate, the initial focus would be more on the preventive aspects rather than treatment of viral hepatitis given the limited health resources available. Setting up universal guidelines for immunization along with mass awareness and education have been considered as critical to fight this dreaded disease in the country. Simultaneously introduction of nucleic acid testing (NAT) and standardization of blood bank practices would be undertaken for preventing blood transfusions related viral hepatitis, in general.

Treatment for HCV is not widely available in the country. All types of HCV treatments, especially the newer and innovative ones, must be made available to all infected patients, as these drugs have high cure rates, short duration of treatment and minimal side effects.

Conclusion:

Viral hepatitis in general and hepatitis C in particular are becoming great national health concerns, as these contribute to significant morbidity and mortality, further adding to the national economic burden. India should just not strengthen its prevention strategies; it needs to focus on all the factors that influence speedy diagnosis and treatment of HCV.

As the WHO says, “New drugs have the potential to transform hepatitis C treatment, with safe and simple treatments resulting in cure rates of over 90 per cent”. The raging debate on Sovaldi needs to explore the newer avenues and measures for appropriately pricing the innovative medicines in the days ahead.

Concerned pharma players, the government and other stakeholders must work together and in unison to ensure that all those infected with HCV are diagnosed quickly and have access to life-saving treatments.

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.

Big Pharma’s Windfall Gain From Indian Pharma’s Loss, Costs American Patients Dear

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According to US-FDA, its ‘Import Bans’ on quality grounds of the drugs manufactured at various Indian facilities, such as, Ranbaxy’s Paonta Sahib, Dewas and Mohali and Toansa plants, were reportedly solely directed at negating the health safety risks of American patients consuming those medicines.

US Media now raises a critical question:

Interestingly, the Wall Street Journal (WSJ) has now flagged a very valid question, whether such US-FDA drug ‘Import Bans’ have really worked in the best interest of American patients, as it has cost the US consumers millions of dollars.

Vindicates past apprehensions:

I also had raised similar apprehensions, at least twice, in my blog posts, one in March 17, 2014 in an article titled, “Loss of Ranbaxy, Gain of Big Pharma…And Two Intriguing Coincidences” and the other on June 9, 2014 in another article titled, “Drugs From The Same Indian Plant: Safe For Europe, Unsafe For America, Why?”

Cheaper generic launches got interrupted:

The report states that the ‘Import Bans’ of products manufactured in the above four plants of Ranbaxy kept the Indian company away from its ‘first to launch’ opportunities of at least two blockbuster drugs, namely, Diovan of Novartis and Nexium of AstraZeneca, besides Valcyte of Roche.

As a result of these ‘Import Bans’ of the US-FDA, the concerned global pharma majors were able to continue selling their high priced brands even long after the respective patent expiries, causing hardship to many patients.

Caused windfall gain to Big Pharma:

WSJ reports, these ‘Import Bans’ hugely helped the Big Pharma, as the combined sales of those three drugs in the US totaled US$ 8 billion in 2013. It also states that unavailability of those three generic equivalents would cost US$125 million annually just in 39 counties of upstate New York. This is mainly because once generics are available, patented drug prices usually fall by 80 percent or more.

Thus, the net losers became the purchasers and patients, along with the federal government, the report says.

A serious question to ponder even for the US:

Quoting Columbia Law School professor Scott Hemphill, the report highlights a serious question over whether the US-FDA rules are too complex to manage, or to anticipate strange, unusual and unfortunate consequences that result from them. It also expresses concern over how such delays in generic entry raising the drug treatment costs in the United States.

A repetitive saga:

The saga of losing ‘first to launch’ opportunities, seems to be repetitive in nature for Ranbaxy.

As I stated earlier in my above blog posts, it is also worth noting from another report that:

“Nexium is the third drug for which a Ranbaxy generic has been delayed. Novartis’ heart drug Diovan went off patent in September of 2012. Instead of seeing its sales of the drug plunge last year, the Swiss drug maker earned US $1.7 billion from it, according to the drug maker’s annual report. Roche’s antiviral Valcyte has also escaped competition after going off patent last year. Roche doesn’t break down U.S. sales but reported global revenues of $ 672 million last year, up 10%.”

The same plant meets drug safety standards of Europe, but ‘unsafe’ for America!

In this context it is worth noting, according to another recent media report, quite contrary to the stern actions by US-FDA, European drug regulators have commented as follows on a plant that has been banned by the american regulator:

“The inspection team concluded that there was no evidence that any medicines on the EU market that have an active pharmaceutical ingredient manufactured in Toansa were of unacceptable quality or presented a risk to the health of patients taking them.”

They further added, “This conclusion was supported by tests of samples of these medicines, all of which met the correct quality specifications.”

Isn’t this indeed intriguing?

Conclusion:

The USFDA quagmire in India raises more questions than answes, but one critical trend, where the ultimate gainer is the Big Pharma and the net losers are the American patients and the Indian pharma industry.

Be that as it may, it is about time to for the Modi Government to take up this important issue at the highest level in the United States, as the losers would continue to be the domestic pharma manufacturers in India and in the American patients, Big Pharma being the main beneficiary.

Considering all these, doesn’t this jigsaw puzzle require to be resolved once and for all, without any further dilly-dally?

By: Tapan J. Ray 

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

 

Does India Believe in Two Different Drug Quality standards?

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“Maintain and sharpen your intellectual honesty so that you’re always realistic. See things as they are, not way you want them to be.”

The above profound statement is what the Management Guru Ram Charan made in his book titled, ‘Execution: The Discipline of Getting Things Done’ co-authored by Larry Bossidy.

Placing the content of this book against current series of events plaguing the Indian pharmaceutical industry, a pertinent question floats at the top of mind. Are these books meant to hone the corporate leadership practices at all level or for preserving in the bookshelves, just as another collector’s item?

This is probably a good question to deliberate upon. Otherwise, why do we keep on encountering barrage of newspaper reports on rampant fraudulent practices within the pharmaceutical industry, especially related to quality of drugs and pricing?

Today’s flavor of ongoing practices:

Just to give a flavor of ongoing practices, following are what appeared in today’s newspaper headlines, besides umpteen numbers of instances reported in the past:

  • “USFDA says team threatened during Wockhardt inspection”
  • Or “FDA caution on Wockhardt US unit”
  • Or even “GSK Consumer fined for overcharging” Crocin Advance tablets

All these similar and unabating instances of “short changing” the systems by the business leadership, vindicate the point that much sought after management Pandits’ precious wisdom to corporate honchos seems to be falling in deaf ears, as a sizable section of the Indian pharmaceutical industry apparently sacrificing the “Intellectual Honesty” in the alter of greed and quick profit making.

“Medicine is for people, not for the profits” – George Merck:

To exemplify “Intellectual Honesty” in the above book, Ram Charan and Larry Bossidy deliberated on ‘The 10 Greatest CEOs Ever’. One of these 10 greatest CEO is George Merck of the global pharmaceutical giant Merck & Co, who articulated his vision for his Company way back in 1952 as follows:

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

George Merck believed that the purpose of a corporation is to do something useful, and to do it well, which also ensures decent profits.

Some say, those were the good old days of ethics and values. Things do not seem to be quite the same in today’s India, for various reasons. ‘Walking the Talk’ clutching the ethics and values close to one’s heart, is glaringly missing in a large section of pharma leadership of date.

Currently, all indications confirm that the market would keep growing at a decent pace, despite all odds, as we move on. To achieve sustainable success in the rapidly changing business environment, especially in the healthcare space, globally accepted quality standards of products and services, delivered in a credible and equitable way with built in scalability, would matter the most

Does India believe in two different drug manufacturing quality standards?

Not withstanding the possible opportunities galore, as stated above, the spate of ‘Warning Letters’ from the US-FDA have brought to the fore existence of two different quality standards for drug manufacturing in India:

  • High quality plants dedicated to serving the largest market of the world – the United States and following the US-FDA regulations.
  • Other plants, with much less regulations, to cater to the needs of the Indian population and other developing non-regulated markets.

In a situation like this, especially when many Indian manufacturers are repeatedly failing to meet the American quality standards, the following questions come up:

  • Is the US-FDA manufacturing requirement too troublesome, if not oppressive?
  • If not, do the Indian and other patients too deserve to have drugs conforming to the same quality standards?

Answers to these questions are absolutely vital to convince ourselves, why should Indian patients have access to drugs of lower quality standards than Americans, with consequential increase in their health risks?

Different strokes for different folks:

To immediately alleviate the business risk of Indian exporters through resumption of business with those banned drugs in the United States, the only immediate solution is to ensure strict conformance to US-FDA regulations by enhancing organizational ethics and value systems to the desired level of acceptance of the US regulator, as most of these were identified as fraudulent practices and alleged ‘threats’, as reported above.

However, for getting answer to the question of dual drug manufacturing quality standards in India, Indian Ministry of Health has already made the public understanding on the subject even more complicated.

This is due to conflicting acts of two responsible officials in the Ministry of Health of India on the same issue, as follows:

  • On February 10, 2014, Dr. Keshav Desiraju, the then Secretary of Health signed a “Statement of Intent” with Dr. Margaret A. Hamburg, Commissioner of US-FDA to encourage collaboration between American and Indian regulators to effectively address this issue.
  • The very next day, on February 11, 2014, the Drug Controller General of India, while addressing the media expressed his great apprehension against over regulation of the US regulator.

It is, therefore, amazing to note the above different strokes for different folks by the same ministry and on the same very sensitive subject, creating a snowballing effect of confusion within the stakeholders.

Conclusion:

To reap rich harvest out of the emerging gold-plated opportunity, as stated above, not just coming from India, but across the world, Indian pharma does need a strong leadership with unflinching belief in business practices weaved in corporate ethics and values.

Even to come out of the episodes of repeated ‘Warning Letters’ from US-FDA, casting aspersions on the quality of Indian drug manufacturing standards, which are mainly related to alleged fraudulent business practices, strong corporate leadership with high ethics and value standards at all level is of absolute necessity.

Equally important is to follow the visionary statement of the pharma iconoclast George Merck, made way back in 1952 that “Medicine is for people, not for the profits”.

Moving towards this direction, would the newly formed Ministry of Health clarify expeditiously, without any ambiguity and with intellectual honesty that Indian patients are taking as safe and effective medicines as their counterparts, living in any other corner of the developed world, including the United States?

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.

New ‘Modi Government’: Would Restoring Cordial Relationship with America Be As Vital As Calling Its Bluff On IP?

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Newspaper reports are now abuzz with various industry groups’ hustle to lobby before the ‘Modi Government’ on their expectations from the new regime. This includes the pharmaceutical industry too. The reports mention that the industry groups, including some individual companies, have started getting their presentations ready for the ministers and the Prime Minister’s Office as soon as a new government takes charge on May 26, 2014.

Conflicting interests on IP:

While the domestic pharma industry reportedly wants the new Government to take a tough stand on the Intellectual Property (IP) related issues with the United States (US), the MNC lobbyists are raising the same old facade of so called ‘need to encourage innovation’ in India, which actually means, among others, for India to:

  • Amend its well-crafted IP regime
  • Change patentability criteria allowing product patents for even ‘frivolous innovation’ by scrapping Section 3(d) of the Indian Patents Act
  • Introduce Data Exclusivity
  • Implement patent linkages
  • Re-write the Compulsory Licensing (CL) provisions and not bother at all, even if patented drugs are priced astronomically high, denying access to majority of Indian population.

Interestingly MNC Lobby Groups, probably considering rest of the stakeholders too naive, continue to attempt packaging all these impractical demands on IP with unwavering straight face ‘story telling’ exercises, without specificity, on how well they are taking care of the needs of the poor in this country for patented medicines.

This approach though appears hilarious to many, MNC lobbyists with their single minded purpose on IP in India, keep repeating the same old story, blowing both hot and cold, nurturing a remote hope that it may work someday.

Recent views:

On this score, along with a large number of independent experts from across the world, very recently, even the former Chairman of Microsoft India reportedly advised the new ‘Modi Regime’ as follows:

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

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

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

Strong India matters:

India is the largest foreign supplier of generic medicines to America, having over 40 percent share in its US$ 30-billion generic drug and Over-The-Counter (OTC) product market.

Thus, expecting that Indian Government would wilt under pressure, the 2014 ‘Special 301 Report’ of the US Trade Representative (USTR) on Intellectual Property Rights (IPR) has retained India on its ‘Priority Watch List’, terming the country as violators of the US Patents Law. It has also raised serious concern on the overall ‘innovation climate’ in India urging the Government to address the American concerns in all the IP related areas, as mentioned above. 

My earlier submission in this regard:

In my blog post of February 5, 2014, I argued that patentability is related mainly to Section 3(d) of the Patents Act. and India has time and again reiterated that this provision and all the sections for invoking CL in India are TRIPS compliant. If there are still strong disagreements in the developed world in this regards, the Dispute Settlement Body of the ‘World Trade Organization (WTO)’can be approached for a resolution, as the WTO has clearly articulated that:

“WTO members have agreed that if they believe fellow-members are violating trade rules, they will use the multilateral system of settling disputes instead of taking action unilaterally. That means abiding by the agreed procedures, and respecting judgments. A dispute arises when one country adopts a trade policy measure or takes some action that one or more fellow-WTO members considers to be breaking the WTO agreements, or to be a failure to live up to obligations.”

Thus, it is quite intriguing to fathom, why are all these countries, including the United States, instead of creating so much of hullabaloo, not following the above approach in the WTO for alleged non-compliance of TRIPS by India?

How should the new Government respond?  – The view of a renowned pro-Modi Economist:

Subsequent to my blog post of February 5, 2014, as mentioned above, a recent article dated March 4, 2014 titled “India Must Call The US’ Bluff On Patents” penned by Arvind Panagariya, Professor of Economics at Columbia University, USA, who is also known as a close confidant of Prime Minister Narendra Modi, stated as follows, probably taking my earlier argument forward:

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

  • To urge the US to challenge India in the WTO dispute settlement body and test whether they are indeed right.
  • But nine years have elapsed since the Indian law came into force; and, while bitterly complaining about its flaws, the USTR has not dared challenge it in the WTO. Nor would it do so now.
  • Why?
  • There is, at best, a minuscule chance that the USTR will win the case.
  • Against this, it must weigh the near certainty of losing the case and the cost associated with such a loss.
  • Once the Indian law officially passes muster with the WTO, the USTR and pharmaceutical lobbies will no longer be able to maintain the fiction that India violates its WTO obligations.
  • Even more importantly, it will open the floodgates to the adoption of the flexibility         provisions of the Indian law by other countries.
  • Activists may begin to demand similar flexibilities even within the US laws.

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

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

US power play on IP continuing for a while:

United States, pressurized by its powerful pharma lobby groups, started flexing its muscle against India for a while. You will see now, how this short video clip captures the American ‘Power Play’ in this area.

Conclusion: 

It is undeniable that there is moderately strong undercurrent in the current relationship between the United States and India, mostly based on differences over the Intellectual Property Rights (IPRs).

The resourceful MNC pharmaceutical lobby groups with immense influence in the corridors of power within the Capitol Hill, are reportedly creating this difference for unfair commercial gain.

All these are being attempted also to blatantly stymieing India’s efforts to ensure access to affordable medicines for a vast majority of the global population without violating any existing treaty commitments, as reiterated by a large number of experts in this area.

Professor Arvind Panagariya reportedly calls it: “The hijacking of the economic policy dialogue between the U.S. and India by pharmaceutical lobbies in the U.S.”

That said, while cordial relationship with the United States in all economic and other fronts must certainly be rejuvenated and adequately strengthened with utmost sincerity, the newly formed Federal Government at New Delhi with Prime Minister Narendra Modi as its bold and strong face, should not hesitate to call the US bluff on IP… for India’s 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.

 

Is Sun Pharma Sailing In The Same Boat As Ranbaxy?

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A ‘Warning Letter’ of May 7, 2014 from the USFDA to Sun Pharmaceuticals – the no.1 pharma major by market capitalization in India has nailed its Karkhadi, Vadodara, Gujarat based plant in India for similar data deletions as found at Ranbaxy.

Such data manipulation reportedly got Ranbaxy into so much trouble that it last year paid U$ 500 million and agreed to plead guilty to 7 felony charges.

The concerned Gujarat based plant of Sun pharma manufacturers the antibiotic cephalosporin.

This development came to the fore just weeks after Sun Pharmaceutical announced a US$ 3.2 billion deal to buy the much troubled, yet the largest generic drug company of India – Ranbaxy.

My earlier apprehensions on this deal:

At that time in my blog post of April 14, 2014, I expressed my apprehensions on this deal on four key areas, with as many words as follows:

1. Sun Pharma too is under USFDA radar:

As we know that along with Ranbaxy, Wockhardt and some others, Sun Pharma also had come under the USFDA radar for non-compliance of the Current Good Manufacturing Practices (cGMPs).

Under the prevailing circumstances, I apprehended, it would indeed be a major challenge for Sun Pharma to place its own house in order first and simultaneously address the similar issues to get USFDA ‘import bans’ lifted from four manufacturing plants of Ranbaxy in India that export formulations and API to the United States.

This could be quite a task indeed for Sun Pharma.

 2. Pending Supreme Court case on Ranbaxy:

Prompted by a series of ‘Import Bans’ from US-FDA on product quality grounds, the Supreme Court of India on March 15, 2014 reportedly issued notices to both the Central Government and Ranbaxy against a Public Interest Litigation (PIL) seeking not just cancellation of the manufacturing licenses of the company, but also a probe by the Central Bureau of Investigation (CBI) on the allegation of supplying adulterated drugs in the country.

Ranbaxy/ Sun pharma would, therefore, require convincing the top court of the country that it manufactures and sells quality medicines for the consumption of patients in India.

 3. CCI scrutiny of the deal:

Out of the Top 10 Therapy Areas, the merged company would hold the highest ranking in 4 segments namely, Cardiac, Neuro/CNS, Pain management and Gynec and no. 2 ranking in two other segments namely, Vitamins and Gastrointestinal.

Noting the above scenario and possibly many others, the Competition Commission of India (CCI), after intense scrutiny, would require taking a call whether this acquisition would adversely affect market competition in any of those areas. If so, CCI would suggest appropriate measures to be completed by the two concerned companies before the deal could take effect.

This would also be a task cut out for the CCI in this area.

 4. SEBI queries:

Securities and Exchange Board of India (SEBI), has already sought information from Sun Pharmaceutical on stock price movement and the deal structure.

According to reports, it is due to “Ranbaxy shares showing good movement on three occasions: first in December, then in January and subsequently in March 2014, just before the deal was announced.” This has already attracted SEBI’s attention and has prompted it to go into the details.

The matter is now subjudice.

The current scenario:

Out of my four identified areas of challenges, Sun Pharma has already started feeling the heat in the following two areas:

1. Quality issues with FDA:

The issue is extremely important, as to turn around Ranbaxy, this has to be addressed to the complete satisfaction of the USFDA. Otherwise, the game is a non-starter.

2. SEBI queries on stock price movement and the deal structure:

In this area, just today the Supreme Court reportedly refused to stay the Andhra Pradesh High Court order that stalled the US$ 4 billion Sun Pharma merger with Ranbaxy. Daiichi Sankyo and Ranbaxy had approached the Supreme Court seeking vacation of the stay of the status quo order by the High Court, which on April 25, 2014 directed the BSE and NSE not to approve the merger while admitting a petition by retail investors alleging insider trading in the US$ 4 billion deal.

The vacation bench comprising of Justices B S Chouhan and A K Sikri also directed the High Court to decide on Sun Pharma’s application seeking vacation of the status quo order within two days and posted the matter for further hearing on May 29. The judges observed that the Andhra High Court has no territorial jurisdiction over the merger process.

The outcome of this case would indeed be interesting and crucial for Sun Pharma.

Conclusion:

Even if one keeps aside the three issues out of above four as the legal ones, the very first challenge related to USFDA on drug quality, would continue to remain as the ‘make or break’ area, for this deal to be commercially successful for Sun Pharma.

When USFDA reportedly nailed Sun Pharma’s Karkhadi , Vadodara, Gujarat based plant for similar data deletions as found at Ranbaxy, it may give a feeling that the acquirer Sun Pharma possibly is also sailing in the same boat as the acquiree Ranbaxy.

If this apprehension makes any sense, the moot question that comes up:

“Can one blind man show the right direction to another blind man sailing in the same boat in the midst of a storm?”

Let us wait for the eternal time to tell us the answer.

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.