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“Pharmaceutical Marketing Malpractices are Barriers to Healthcare Access” – The Relevance of Government Code of Ethical Marketing Practices in India

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Last week (July 19, 2012), most of the leading English business dailies of India reported that much-awaited “Uniform Code of Pharmaceutical Marketing Practices (UCPMP)” authored by the Department of Pharmaceuticals, quite in line with the amended guidelines for the Medical Profession by the Medical Council of India (MCI), is expected to be notified by the government next month for implementation by the entire pharmaceutical industry on a voluntary basis, to start with.

This is only because the draft UCPMP has already specified the following:

“This is a voluntary code of Marketing Practices for Indian Pharmaceutical Industry, for the present and its implementation will be reviewed after a period of six months from the date of its coming into force and if it is found that it has not been implemented effectively by the Pharma Associations/Companies, the Government would consider making it a statutory code.”

This decision of the government is the culmination of a series of events, covered widely by the various sections of the media, at least, since 2004.

The series of events:

Way back, in its January – March, 2004 issue, ‘Indian Journal of Medical Ethics (IJME)’ in the context of marketing practices for ethical pharmaceutical products in India commented: “If the one who decides, does not pay and the one who pays, does not decide and if the one who decides is ‘paid’, will truth stand any chance?” Three years later in 2007, the situation remained unchanged when IJME (April – June 2007 edition) once again reported: “Misleading information, incentives, unethical trade practices were identified as methods to increase the prescription and sales of drugs. Medical Representatives provide incomplete medical information to influence prescribing practices; they also offer incentives including conference sponsorship. Doctors may also demand incentives, as when doctors’ associations threaten to boycott companies that do not comply with their demands for sponsorship.”

‘The Times of India’ also reported the following in its December 15, 2008 edition:

“1. More drugs a doctor prescribes of a specific company, greater are the chances of his/ her winning a car, a high-end fridge or a TV set. 2. Drug companies dole out free trips with family to exotic destinations like Turkey or Kenya. 3. In the West, unethical marketing practices attract stiff penalties. 4. In India, there are only vague assurances of self-regulation by the drug industry and reliance on doctors’ ethics”.

Thus, it has been quite a while from now, serious concerns are being expressed by the media, government and the civil society at large about the means adopted by the pharmaceutical industry in general to get their respective brands prescribed by the doctors.

The discontentment still growing:

Many within the civil society feel, as a result of fast degradation of ethical standards, moral and the noble values, just in many other areas of public life, in the healthcare space as well, the patients in general have started losing their absolute faith and trust both on the medical profession and the pharmaceutical companies, by and large. However, health related multifaceted compulsions do not allow them, either to avoid such a situation or even raise a strong voice of protest against the vested interests.

Growing discontentment of the patients both in the private and public healthcare space in the country, is being regularly and very rightly highlighted by the media all over the world, including reputed medical journals like, ‘The Lancet’ to help arrest this moral and ethical decay with demonstrable and tangible proactive measures.

The issue:

The entire issue arises out of the key factor that the patients do not have any say on the use/purchase of a medicine brand/brands that a doctor will prescribe.

It is generally believed by the civil society that doctors predominantly prescribe mostly those brands, which are promoted to them by the pharmaceutical companies in various ways.  Thus, in today’s world and particularly in India, the degree of commercialization of the noble healthcare services, as reported quite often by the media, has reached a new high, sacrificing the ethics and etiquette both in medical and pharmaceutical marketing practices at the altar of unlimited greed, want and conspicuous consumption.

A credible international report: Let me now combine this scenario with a relatively recent report on India dated January 11, 2011, published in ‘The Lancet’, which states in a similar (though not the same) context, as follows:

1. “Reported problems (which patients face while getting treated at a private doctor’s clinic) include unnecessary tests and procedures, rewards for referrals, lack of quality standards and irrational use of injection and drugs. Since no national regulations exist for provider standards and treatment protocols for healthcare, over diagnosis, over treatment and maltreatment are common.” 2. “Most people accessed private providers for outpatient care – 78% in rural areas and 81% in urban areas.” 3. “India’s private expenditure of nearly 80% of total expenditure on health was much higher than that in China, Sri Lanka and Thailand.” Considering the above three critical issues of India, as reported in ‘The Lancet’, the need to follow a transparent code of pharmaceutical marketing practices by the entire pharmaceutical industry is of utmost importance.

A global phenomenon:

Since quite some time, this issue has indeed become a global phenomenon. Many countries, including India, are taking note of such examples of socioeconomic decay, that too in the healthcare sector.

Just the other day, the July 4, 2012 edition of ‘The Guardian’, while reporting that GlaxoSmithKline has agreed to pay $3bn (£1.9bn) to settle a series of old criminal and civil investigations by the US authorities into the sales and marketing of some of its best-known products, commented, “GlaxoSmithKline’s bribes are evidence that Big Pharma isn’t working – the inadequacies of relying solely on market forces for our drugs are clearer than ever. This scandal should prompt a rethink.”

The Guardian further commented:

“After all, this has happened before. All the giants – AstraZeneca, Bristol-Myers Squibb, Merck, Eli Lilly, Pfizer – have been investigated for bribery. One of the most notorious episodes of misconduct involved Merck’s anti-inflammatory drug Vioxx, withdrawn in 2004 after the company persistently played down its risk of causing cardiovascular problems.”

The New York Times  (NYT) in its April 12, 2010 edition in an article titled, “Data on Fees to Doctors is Called Hard to Parse”, reported that though some big pharmaceutical companies have started disclosing payments to doctors who act as consultants or speakers, many still find it far too difficult to follow the money trail.

NYT reported in the same article, “Senate researchers have found that some prominent doctors at academic medical centers have failed to disclose millions of dollars in drug company payments, despite university requirements that they do so. Federal prosecutors say some payments are really kickbacks for illegal or excessive prescribing”.

General scenario was not much different even in the US until recently:

‘The New England Journal of Medicine’, April 26, 2007 reported that virtually, all doctors in the US take freebies from drug companies, and a third take money for lecturing, and signing patients up for trials. The study conducted on 3167 physicians in six specialties (anesthesiology, cardiology, family practice, general surgery, internal medicine and pediatrics) reported that 94% of the physicians had ‘some type of relationship with the pharmaceutical industry’, and 83% of these relationships involved receiving food at the workplace and 78% receiving free drug samples. 35% of the physicians received re-reimbursement for cost associated with professional meetings or Continuing Medical Education (CME). And the more influential a doctor was, the greater the likelihood that he or she would be benefiting from a drug company’s largess. As a result of some strict regulatory measures, the situation in the US has presumably started changing now.

However, such issues are not related only to physicians. ‘Scrip’ dated February 6, 2009 published an article titled: “marketing malpractices: an unnecessary burden to bear”. The article commented:

“Marketing practices that seem to be a throwback to a different age continues to haunt the industry. Over the past few months, some truly large sums have been used to resolve allegations in the US of marketing and promotional malpractices by various companies. These were usually involving the promotion of off-label uses for medicines. One can only hope that lessons have been learnt and the industry moves on.”

“As the sums involved in settling these cases of marketing malpractices have become progressively larger, and if companies do not become careful even now, such incidents will not only affect their reputation but financial performance too.”

‘The Physician Payment Sunshine Act’:

As the financial relationship between the pharmaceutical companies and the physicians are getting increasingly dragged into the public debate, disclosure of all such payments made to the physicians by the pharmaceutical companies has been made mandatory by the Obama administration, as a part of the new US healthcare reform process.

As a result, ‘The Physician Payment Sunshine Act’, originally proposed in 2009 by Iowa Republican Charles Grassley and Wisconsin Democrat Herb Kohl, became a part of the US healthcare law in 2010. This Act came as an integral part of the healthcare reform initiatives of President Obama to reduce healthcare costs and introduce greater transparency in the system.

The Act requires all pharmaceutical and medical device companies of the country to report all payments to doctors above US $10. As stated earlier, the industry’s gifts to physicians in the US, reportedly, can range from expensive hospitality/dinner in exotic locations, pricey golfing vacations in various places of interest to consulting and speaking fees. As the Act came into force with all its rules in place, failure to provide such details will attract commensurate penal provisions.

Australia sets another example: The Australian Competition and Consumer Commission (ACCC) has decided to grant authorization for five years to Medicines Australia’s 16th edition of its Code of Conduct. The Code sets standards for the marketing and promotion of prescription pharmaceutical products in Australia. The Code provides, among other measures, a standard to address potential conflicts of interest from unrestricted relationships between pharmaceutical companies and the doctors, which may harm the consumers through inappropriate prescriptions. The Code also prohibits the pharmaceutical companies from providing entertainment and extravagant hospitality to doctors with the requirement that all benefits provided by companies should be able to successfully withstand public and professional scrutiny. “The requirement for public disclosure was imposed by the ACCC as a condition of authorization of the previous version of Medicines Australia’s Code and was confirmed on appeal by the Australian Competition Tribunal.” Edition 16 of the Code fully incorporates the public reporting requirements.

“Market malpractices are barriers to healthcare access”: The WHO report of 2006:

A 2006 report of the ‘World Health Organization (WHO) and ‘The Ministry of Health and Family Welfare, Government of India’ titled ‘Options for Using Competition Law/Policy Tools in Dealing  with Anti-Competitive Practices in Pharmaceutical Industry and Health Delivery System, states:

“The right to health is recognized in a number of international legal instruments. In India too, there are constitutional commitments to provide access to healthcare. However despite the existence of any number of paper pledges assuring the right to health, access to health remains a problem across the world”.

“There are several factors that are responsible for such deprivation. Market malpractices in general, and in particular, anti-competitive conduct in the pharmaceutical industry and the health delivery system are also among them.”

India Today: 

The current scenario in India though not very much different, in terms of seriousness of the issue, from what is being reported in the US, the evolving regulatory standards in the US in this matter are definitely more robust and far superior to what we see in our country.

In India, over 20, 000 pharmaceutical companies of varying size and scale are currently operating. It has been widely reported in the media that the lack of regulatory scrutiny is prompting many of these companies to adapt to ‘free-for-all’ types of aggressive sales promotion and cut-throat marketing warfare involving significant ‘wasteful’ expenditures. Such practices reportedly involve almost all types of their customer groups, excepting perhaps the ultimate consumer – the patients.

It has been well reported that industry’s gifts to physicians in India can range from expensive cars, dinners in exotic locations, pricey vacations at various places of interest of the world and sometimes with the doctors’ families, to hefty consulting and speaking fees.

Unfortunately in India there is no single government agency, which is accountable to take care of the entire healthcare needs of the patients and their well-being, in a holistic way.

The pharmaceutical industry in India, in general, has already expressed its desire for self-regulation of marketing practices, instead of any regulatory compulsion by the Government.

However, many activists groups and NGOs still feel that the bottom-line in this scenario is the demonstrable transparency by the pharmaceutical companies in their dealings with various customer groups, especially the physicians/doctors.

Ministry of Health blinked first by amending the MCI Guidelines:

Being concerned with the media outcry, MCI, in 2009, amended their guidelines of ‘Professional Conduct, Etiquette and Ethics’ for the doctors, clearly articulating what they can and cannot do during their interaction and transaction with the pharmaceutical and related industries.

MCI, through amendment of the “Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulation 2002” introduced a new code of conduct for doctors and their professional associations in their relationship with the pharmaceutical and allied industry in India. The amended regulations are known as the “Indian Medical Council (Professional Conduct, Etiquette and Ethics) (Amendment) Regulations, 2009 – Part-I”, which prohibit the doctors from accepting, among many others, any travel facility or hospitality, including gifts of any value, from any pharmaceutical companies.

The Ministry of Health believes that these guidelines, if strictly enforced, would severely limit what the doctors can receive from the pharmaceutical companies in terms of free gifts of wide ranging financial value, entertainments, free visits to exotic locations under various commercial reasons, lavish lunch and dinner etc. in exchange of prescribing specific pharmaceutical brands of the concerned companies.

‘Draft Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’ from the DoP:

In May 2011, the Department of Pharmaceuticals (DoP) released a draft ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’ for the Pharmaceutical Industry of India for comments by the stakeholders.

Some Key features of the DoP Code are as follows:

  • All promotional material must be consistent with the requirements of this Code.
  • Brand names of products of other companies must not be used for comparison without prior consent of the concerned companies.
  • Paid or arranged publication of promotional material in journals must not resemble editorial matter.
  • The names or photographs of healthcare professionals must not be used in promotional material.
  • Audio-visual material must be accompanied by all appropriate printed material to ensure compliance of the Code.
  • Samples should be provided directly to prescribing authority and be limited to prescribed dosages for three patients and in response to a signed and dated request from the recipient. Each sample pack shall not be larger than the smallest pack presented in the market.
  • Medical and Educational events for doctors should be organized in the appropriate venue in India and all expenses must be incurred only for the events held in India.
  • Outline of a detailed Complaint Lodging and Redressal mechanism (Committee for Code of Pharma Marketing) to ensure compliance of the marketing code.

The quality of UCPMP:

The UCPMP draft document is well written, balanced and by and large fair. The DoP should indeed be commended on the great work that they have done in putting all details of pharmaceutical marketing practices together in this document in a very comprehensive manner.

Draft UCPMP does not seem to pose any major extra restrictions to the pharmaceutical companies as compared to the MCI guidelines. All concerned should welcome this decision of the DoP, as the same ethical standards will now be applicable to all small, mid-sized and large pharma players, equally. The main focus of the DoP should be in ensuring that all companies across the pharmaceutical industry follow these well-defined standards in their marketing practices and interactions with the doctors.

The draft UCPMP also states that companies must maintain a detailed record of expenditures incurred on these events. It is not quite clear though, as to what extent the pharmaceutical companies are expected to keep these detail records and how long?  It is also not clear whether such records have to be maintained on file by the individual companies and supplied to the DoP only on specific requests for the same or all these details are expected to be disclosed on a regular basis to the regulator.

The draft UCPMP indicates that industry associations must upload full details of received complaints on their respective websites. Although this provision could help making the system transparent, the DoP should clearly articulate the details about the specific information that will require to be disclosed in cases of any proven breach of the marketing code.

It is interesting to note that the draft UCPMP states that media reports and published letters alleging that a company has breached the UCPMP will be treated as complaints.

Skepticism with the UCPMP:

Some are quite skeptical about the effectiveness of UCPMP in containing unethical marketing practices within the Indian Pharmaceutical Industry.

This section of people believes, with thousands of pharmaceutical companies operating in India, just self-control with UCPMP without any properly enforceable stringent Government regulation, will simply not work.

Conclusion:

In all countries and India is no exception, pharmaceutical companies, by and large, have been articulating that they try to follow the legal ways and means to maximize turnover of their respective brands. Many of them do follow transparent and admirable stringent self-regulations, stipulated either by themselves or by their industry associations.

‘Self-regulation with pharmaceutical marketing practices’ and ‘voluntary disclosure of payment to the physicians’ by some leading global pharmaceutical companies are laudable steps to address this vexing issue. However, the moot question still remains, are all these good enough for the entire industry in India?

It appears, immediately after the Department Related Parliamentary Standing Committee on Health and Family Welfare presented its 58th Report on the action taken by the DoP on the recommendations / observations contained in the 45th report to both the Lower and the Upper houses of the Parliament on May 08, 2012, the DoP has reportedly taken an extra step forward towards this direction last week. The amended MCI regulations for the doctors coupled with the notified UCPMP for the entire pharmaceutical industry should make the financial transactional relationship between the physicians and the pharmaceutical industry in India clean and transparent.

It was also reported  last week that Government will soon decide whether there will be an independent industry appointed ‘Ombudsman’ for the enforcement of UCPMP across the country or the implementation of the code will strictly be monitored under the Government control.

It is worth reiterating that the draft UCPMP very categorically warns, in case the self-control with UCPMP by the industry appointed independent ‘Ombudsman’ does not work effectively, the Government would seriously consider making it statutory for the entire pharmaceutical industry of India. This is indeed quite a strong signal from the government to the industry for ‘Shaping Up’… sooner the better.

The popular dictum, especially used by the healthcare industry, “patients’ interest come first”, should not be allowed to be misused or abused, any further, by some unscrupulous elements and greedy profiteers, to squeeze out even the last drop of financial resource from the long exploited population of ailing patients of India, as “Pharmaceutical Marketing Malpractices are Proven Barriers to Healthcare Access”.

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.

‘Free Essential Medicines for All’ – A Laudable Public Healthcare Initiative of India, Tough Challenges Notwithstanding

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Recently the Government of India has taken a landmark ‘Public Healthcare’ related initiative to provide unbranded generic formulations of all essential drugs, featuring in the ‘National List of Essential Medicines 2011’, free of cost to all patients from the public hospitals and dispensaries, across the country.

This social sector project is expected to roll out, as reported in the media, from October/November this year with a cost of around US$ 5 billion during the 12th Five Year Plan period of the country.

Considering medicines account for around 70% of the total ‘Out of Pocket’ expenses, this particular initiative is expected to benefit, especially the poorer patients, significantly.

Recommendations of the Parliamentary Standing Committee:

Noting the keen interest of the Government for speedier implementation of this scheme, it appears that the Ministry of Health has accepted the recommendations made by the ‘Parliamentary Standing Committee (PSC) for Health and Family Welfare’ to the Indian Parliament on August 4, 2010, regarding prescription of medicines by their generic names in the Public hospitals and dispensaries, to start with.

In this context, it is worth noting that the ‘Drugs Technical Advisory Board (DTAB)’ has also reportedly considered the proposal to amend the rules of the ‘Drugs and Cosmetics Act of India’ for regulatory approval of all drug formulations containing single active ingredient in the generic names by all State Licensing Authorities.

This recommendation of the  PSC is based on the premises that the ‘Brand Building’ exercise of the generic drugs includes a very high sales and marketing expenditure.

The Committee felt that by putting in place a well structured policy such ‘avoidable’ expenditures can easily be eliminated making generic medicines available to the common man at much cheaper prices. ‘Jan Aushadhi’ scheme of the Government is often cited as an example to drive home this point.

The scheme is new for India, but other countries have already taken similar steps:

Just to cite an example, as reported by ‘The Guardian” on August 23, 2011, the Spanish government recently enacted a law compelling the doctors in Spain to prescribe generic drugs instead of more expensive patented and branded pharmaceuticals, wherever available. This move is expected to help the Spanish government to save €2.4 billion (£2.1billion) a year, as in Spain the drug costs are partly reimbursed by the government.

As a result, the doctors in Spain require prescribing only in the generic or chemical names of such drugs. Consequently the pharmacies will be obliged to dispense ‘the cheapest available versions of drugs, which will frequently mean not the better-known brand names sold by the big drugs firms’.

Product quality of generic/ generics and branded generics:

Drugs and Cosmetics Act of India requires all generic/generic and branded generic drugs to have the same quality and performance standards. Thus when a generic/generic medicine is approved by the drug regulator, one should logically expect that it has met with the required standards set for the identity, strength, quality, purity and potency of the chemical substance.

It is not uncommon that there could be some variability taking place during their manufacturing process and all formulations of both the categories produced by different manufacturers may not also contain exactly the same inactive ingredients.

In any case, both generic/generic and branded generic drugs must be shown to be bio-equivalent to the reference drugs with similar blood levels to the respective reference products. Regulators even in the USA believe that if blood levels are the same, the therapeutic effect will also be the same.

A recent study:

As reported by the US FDA, “A recent study evaluated the results of 38 published clinical trials that compared cardiovascular generic drugs to their brand-name counterparts. There was no evidence that brand-name heart drugs worked any better than generic heart drugs. [Kesselheim et al. Clinical equivalence of generic and brand-name drugs used in cardiovascular disease: a systematic review and meta-analysis. JAMA. 2008;300(21)2514-2526]”.

Generic drugs are prescribed more, even in America:

As per published reports, generic medicines account for around 78% of the total prescriptions dispensed by retail chemists and long-term care facilities in the US. For example, in 2010 generic prescriptions were four percentage points more than what these were in 2009 and came up from 63% as recorded in 2006.

Capacity constraints could hold back full implementation of the Indian initiative:

Huge shortages in the number doctors, nurses, paramedics and hospital beds per 10,000 population in India will pose a tough challenge for speedier implementation of ‘Free medicines for all’ project in the country. India should respond to its healthcare infrastructure developmental needs much faster now than ever before to achieve its objective of providing ‘healthcare to all’, sooner.

Overall impact of the scheme:

I reckon, this new scheme will hasten the overall growth of the pharmaceutical industry, as poor patients who could not afford will now have access to essential medicines. On the other hand, rapidly growing middle class population will continue to favor branded generic drugs prescribed by the doctors at the private hospitals and clinics.

Some people are apprehending that generic drug makers will have brighter days as the project starts rolling on. This apprehension is based on the assumption that large branded generic players will be unable to take part in this big ticket drug procurement process of the Government.

However, in my view, it could well be a win-win situation for all types of players in the industry, where both the generic/generic and branded generic businesses will continue to grow simultaneously, because of the reasons as mentioned above.

That said procedural delays and drug quality issues while procuring cheaper generics may pose to be a great challenge for the Government to ensure speedier implementation of this project. Drug regulatory and law enforcing authorities will require to be extremely vigilant to ensure that while sourcing cheaper generic drugs, “Public health and safety” due to quality issues do not get compromised in any way.

How long will it take?

Full implementation of ‘Universal healthcare’ projects takes considerable time in any country. China has taken a long time for its roll-out covering even a larger population than India. Even Mexico has reportedly taken more than seven years for implementation of similar public healthcare initiative.

Thus, I guess, though it is quite possible for India to offer ‘Free Essential Medicines’ to its 1.13 billion people, it may take a decade long efforts for the country to reach out to the entire population.

Are generic/generic drugs really cheaper than their branded generic equivalents?

The recommendation of the ‘Parliamentary Standing Committee for Health and Family Welfare’ on this issue, as stated above, makes sense for India. However, the moot question, which is the basis of choosing generic/generic drugs over their branded generic equivalents, still remains as follows:

“Are the generic/generic drugs really cheaper than their branded generic equivalents in India?”

From the MRPs, as printed on the packs of both branded generic and the generic/generic formulations, it appears that this basic assumption may not hold good universally across the country.

Following examples will vindicate this point:

Molecule

Product

Company

Batch No.

Price Per Tab.
Telmisartan 40 mg Branded Generic

Telmiline 40 mg

John SmithKline

M111622

14/-
Generic/Generic

Generic

Unichem

BTL(11/11001)

30/-

 

Molecule

Brand/ Generic

Company

Batch No.

Price Per Tab.
Rosuvastatin 10 mg Branded Generic

Rosufine

Morpen

P20472

13.20
Generic/Generic

Generic

Sharon Bio-Medicines

AC-2159

16/-

 

Molecule

Brand/ Generic

Company

Batch No.

Price Per Tab.
Cetirizine HCL 10 mg Branded Generic

Cetfast

Elder

CO81810

2.50
Generic/Generic

Generic

Ra Biotech

CT 016B

3/-

 

Molecule

Brand/ Generic

Company

Batch No.

Price Per Tab.
Nimesulide 100 mg Branded Generic

NICIP

Cipla

-

2.53
Generic/Generic

Generic

Themis

-

3/-

 

Molecule

Brand/ Generic

Company

Batch No.

Price Per Tab.
Amlodipine 5 mg Branded Generic

Aginal 5

Alkem

-

2.48
Generic/Generic

Generic

Sandoz

-

2.70

 

Molecule

Brand/ Generic

Company

Batch No.

Price Per Tab.
Ampicillin 500 Branded Generic

Ampisyn

Cipla

-

6.40
Generic/Generic

Generic

SGS

-

7.50

As on July 6, 2012

Let me hasten to add, it is quite possible to present another set of examples, which may show that the MRPs of generic/generic drugs are lesser than the comparable branded generics.

However, the bottom-line is, it will not be fair to comment that MRPs of generic/generic drugs, which do not include any expenditure towards ‘brand-building’, are always significantly lesser than their branded generic counterparts as shown above.

Why are MRPs of generic/generics and branded generics not much different?

It is a general perception, as stated above, that ‘Brand Building’ exercise for generic drugs in India includes a very high component of ‘sales and marketing expenditures’ which are built into the price, making MRPs of the branded generic formulations significantly higher than their generic/generic equivalents.

However, it will not be realistic to accept that generic/generic drugs are not promoted at all, in any form, by the concerned manufacturers. The fact is, in case of generic/generic medicines almost the same amount that is spent on ‘sales and marketing’ for branded generic drugs, is passed on to the retail chemists by their manufacturers as huge incentives for promotion and substitution of such drugs by the respective pharmacies.

Thus, in a large number of cases the patients do not get any significant pricing benefit for buying generic/generic drugs against doctors’ prescriptions instead of branded generics from the retail outlets. 

Conclusion:

In the prevailing scenario, the decision of the Government to procure and distribute only the generic/generic essential medicines through public hospitals/dispensaries simply on pricing ground, keeping the branded generics at bay, is indeed intriguing.

From the data presented above, it will be quite reasonable to believe that MRPs being similar, the ‘sales and marketing’ costs for branded generics are quite comparable to hefty discounts being passed on to the wholesalers and retail chemists by the manufacturers of generic/generic drugs.

Hence, in the balance of probability, a branded generic product can well compete with its genuine generic/generic equivalent, even on pricing ground, in the government procurement process.

Thus, to be fair to the pharmaceutical companies, across the board, the government should invite all generic manufacturers selling their products with or without brand names to participate in the public procurement process and thereafter make the final purchase decisions based on well laid out and transparent criteria, which can stand scrutiny of the strictest audit. 

That said, I fully recognize that the participation in the public procurement process of essential medicines, will indeed be the business decision of individual  companies. If it makes commercial sense, there is no reason why large companies, including the multinationals, will not participate in this laudable project of the Government.

The record of the Government in the implementation of various social sector projects, thus far, may not be brilliant by any measure. Despite that, it does make enough sense for all of us to be rather optimistic about this well hyped ‘Free Essential Medicines for all’ project of India, considering the immense benefits that the common man will derive out of it.

For the effective implementation of the project, the government should now get adequately prepared with required wherewithal, put in place world class skill-sets by partnering with private domain experts wherever required and chart the pathway of success with clearly assigned accountability to each individual responsible for translating this grand ‘Public Healthcare’ initiative of India into reality .

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.

Bollywood Matinee Idol Pontifies on Pharma FDI with Razzmatazz: Exploring Facts

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It has been widely reported  by the media that Bollywood matinee idol Aamir Khan was invited by the Parliamentary Standing Committee  (PSC) on commerce to express his views on Foreign Direct Investments (FDI) in the pharmaceutical sector of India on June 21, 2012.

The actor reportedly has suggested regulations on FDI in the pharma sector to protect the domestic pharmaceutical companies, as well as, any consequent adverse impact on the patients in terms of availability of cheaper generic medicines.

There is absolutely nothing wrong or surprising in the actor’s deposition to the PSC or for that matter in his expressing views on the subject from any platform of his choice. Every citizen of India has got the full right to express his/her views on any matter to the public in general, law or policy makers or any other august body as the person will deem necessary, for the best interest of the country. It is up to the astute individual members or the institutions to extract the essence of the key issues out of all such deliberations based on hard facts and help the nation to move in the right direction for its economic progress with inclusive growth.

That said, one also expects that just charismatic persona of a matinee idol with well-articulated and perfectly modulated pontification, in an expertly manner, on the “do’s and don’ts” of the FDI in Pharma, should not overwhelm anyone, without appropriate substantiation with intimately related hard facts and examples.

From my own perspective, let me now explore the facts on this highly contentious issue for you to judge.

Pharma industry is going through a consolidation process:

Like in many other countries, the consolidation process within the Pharmaceutical Industry in India has also started gaining momentum. Post amendment of the Indian Products Patent Act in January 1, 2005, first major M&A activity took place in 2006 with Mylan acquiring Matrix Lab.

2008 witnessed one of the biggest acquisition in the Pharmaceutical Industry of India, when the third largest drug maker of Japan, Daiichi Sankyo acquired 63.9% stake of Ranbaxy Laboratories for USD 4.6 billion.

This M&A activity was widely believed to be a win-win deal, with Daiichi Sankyo leveraging the cost arbitrage of Ranbaxy, while Ranbaxy benefiting from the innovative product range of Daiichi Sankyo.

In May 2010, Chicago (USA) based Abbott Laboratories acquired the branded generic business of Piramal Healthcare with USD 3.72 billion. This particular acquisition reportedly triggered the Government’s thinking in instituting newer restrictions on FDI in the pharmaceutical sector of the country.

However, I reckon, any such move will be a retrograde step in the financial reform process of India and could adversely affect foreign investments not only in the Pharmaceuticals sector, but possibly far beyond it.

Key Acquisitions of Indian companies:

Following are the details of M&As (Mergers & Acquisitions) in India from 2006 to 2011:

Year Indian Companies Multinational Companies

Value ($Mn)

 Type
2006 Matrix Labs Mylan 736 Acquisition
2008 Ranbaxy Labs Daiichi Sankyo 4,600 Acquisition
Dabur Pharma Fresenius Kabi 219 Acquisition
2009 Shantha Biotech Sanofi-aventis 783 Acquisition
2010 Orchid Chemicals Hospira 400 Business Buyout
Piramal Healthcare Abbott 3,720 Business Buyout
Paras Pharma Reckitt Benckiser 726 Acquisition
2011 Universal Medicare Sanofi 110 Acquisition

It is worth mentioning that all these acquisitions were voluntary in nature, which considerably helped shifting the investment focus of the MNCs into India. This is mainly because the country offers a good science and technology base with a significant cost arbitrage along with a thriving, yet inadequately penetrated, domestic pharmaceutical market.

Key apprehensions on FDI in pharma and the facts:

The Department of Industrial Policy and Promotion (DIPP) of the Ministry of Commerce and Industries in its ‘Discussion Paper’ dated August 24, 2010, which was primarily on Compulsory Licensing (CL), also expressed some of the following apprehensions towards foreign acquisitions of the Indian pharmaceutical companies:

I would like to address these key apprehensions as stated below:

Apprehension 1. Oligopolistic Market will be created with adverse impact on ‘Public Health Interest’

The dictionary defines ‘Oligopolistic Market’ as ‘a market condition in which sellers are so few that the actions of any one of them will materially affect price and have a measurable impact on competitors’.

Indian Pharmaceutical Market (IPM) has over 23,000 players and around 60,000 brands (Source: IMS 2011). Even after, all the recent acquisitions, the top ranked pharmaceutical company of India – Abbott enjoys a market share of just 6.2% (Source: AIOCD/AWACS, March 2011). The Top 10 groups of companies (each belonging to the same promoter groups and not the individual companies) contribute just over 40% of the IPM.

Thus, IPM is highly fragmented. No company or a group of companies enjoys any clear cut market domination. In a scenario like this, the apprehension of an ‘Oligopolistic Market’ being created through acquisitions by the MNCs is indeed unfounded.

Apprehension 2. ‘Oligopolistic’ situation will severely limit the power of the government to face the challenge of Public Health Interest (PHI) by granting CLs:

With a CL, the Indian Government can authorize any pharmaceutical company to make any medicine needed by the country on an emergency basis. With more than 20,000 registered pharmaceutical manufacturing companies operating in India,[1] there will always be enough skilled and able manufacturers willing to make needed medicines during any type of emergency situations. The country has already witnessed this during the H1N1 influenza pandemic, when several domestic and global pharmaceutical companies stepped forward to supply medicines in adequate quantity to meet the urgent need of the ailing patients.

The very thought of creating a legal barrier by fixing a cap on the FDI to prevent the domestic pharma players from selling their respective companies at a market driven price, which they would consider lucrative, just from the CL point of view, as mentioned in the ‘Discussion Paper’ of DIPP, sounds unreasonable, prejudiced and highly protectionist in the globalized economy.

Apprehension 3.  Lesser competition will push up drug prices:

Equity holding of a company has no bearing on the pricing or access to drugs, especially when medicine prices are controlled strictly by the NPPA guidelines and a highly competitive market condition.

That competition within the pharmaceutical market is extremely fierce in India is vindicated by the following facts:

  1. Each branded generic/ generic molecule (constituting over 99% of the IPM) has not less than 50 to 60 competitors within the same chemical compound.
  2. 100% of the IPM is price regulated by the government, around 20% under cost based price control as per DPCO 95 and the balance 80% is under stringent price monitoring mechanism with a maximum annual price increase cap being effectively in place.

In an environment like this, any apprehension or threat to ‘Public Health Interest’ due to irresponsible pricing, will be highly imaginary in nature, especially when the medicine prices in India are cheapest in the world, cheaper than even our next door neighbors like, Bangladesh, Pakistan and Sri Lanka.

As stated above, Ranbaxy was the first major Indian drug company to be acquired by the Japanese MNC Daiichi Sankyo in June 2008. Two years later, the prices of medicines of Ranbaxy did remain stable, some in fact even declined. As per IMS MAT, June data, prices of Ranbaxy products grew only by 0.6% in 2009 and actually fell by 1% in 2010.

Similar trend has been observed even for other acquisitions, as well.

Investments through ‘Collaborative deals’:

Following are some important collaborative deals in the pharmaceutical sector of India from 2009 to 2011:

Year Multinational Companies Indian Companies
2009 GSK Dr. Reddy’s Lab
Pfizer Aurobindo Pharma
2010 AstraZeneca Torrent
Abbott Cadila Healthcare
Pfizer Strides Arcolab
AstraZeneca Aurobindo Pharma
Pfizer Biocon
2011

Bayer

Cadila Healthcare

MSD

Sun Pharma

Such deals help the domestic pharmaceutical industry to reap a rich harvest in many other ways.

Positive fall outs of acquisitions/collaborations:

Mergers and Acquisitions (M&A) or ‘Brownfield’ investments and collaborative deals contribute significantly not only to create high-value jobs for Indians[2] but also enable access to high-tech equipment and capital goods for the country.

Technology cooperation from the global pharmaceutical industry also stimulates growth in the manufacturing and R&D space of the domestic industry and positively impacts patients’ health with increased access to breakthrough medicines and vaccines. 

In this process, with adequate stimulus to the pharmaceutical R&D, India too could fast evolve as a country with a strong research-based pharmaceutical industry capable of developing innovative medicines and inventing new drugs for the world at large.

Many countries, including India, have instituted programs and policy reforms to attract FDI in the pharmaceutical sector. These programs include substantial efforts to build up the R&D infrastructure and create a pool of qualified and talented work force.

Currently, there is a strong global competition for such investments. Countries recognize that pharmaceutical companies bring high-paying jobs, technology know-how and significant economic spill-over effects. As per reports, in the United States, each job in the research-based pharmaceutical industry supports an additional 3.7 additional jobs in the U.S.[3]

By attracting high quality FDI in the pharmaceutical sector, India can further improve its sectoral capabilities and help honing skills of its talent pool. All these, in turn, will also give rise to increasing  global penetration of pharmaceutical exports of the country.[4]

India still draws lowest FDI within the BRIC countries:

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

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

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

Many countries are trying hard to attract FDI:

While our Government has been publicly debating policies to discourage foreign investment, other countries have stepped forward to attract FDI in their respective countries.  Between October 2010 and January 2011, more than 27 countries and economies have adopted policy measures to attract foreign investment.[6]

Access to generic medicines cannot be improved by restricting FDI:

The Pharmaceutical sector in India was opened up for 100% FDI through automatic route, only in the year 2002. This reformed FDI policy regime has been helping India as an attractive investment destination for pharmaceuticals.

Access to generic medicines cannot be improved by restricting FDI. Following measures and many more are required to address this critical issue in the country:

  • The Government has already signaled increasing allocation of resources towards the health sector by doubling the funding available for the National Rural Health Mission (NRHM).
  • It is also planning to extend the Rashtriya Swasthya Bima Yojana (RSBY) scheme to provide out-patient coverage to low income groups.
  • Currently the government seems to be quite poised to distribute all essential drugs to the patients free of cost through public hospitals and dispensaries.
  • Effective implementation of the ‘Universal Healthcare’ project in India will also help improving access to healthcare, including medicines, significantly.
  • Increase in allocation of expenditure towards health from 1.1% of the GDP in the 11th Five Year Plan Period to proposed 2.5% in the 12th Five Year Plan Period is a step in the right direction.
  • Healthcare financing will offer an enduring mechanism for reducing the Out-of-Pocket expenses of the poor, versus short term ‘knee jerk’ measures.
  • Allocating resources from national welfare schemes towards health insurance coverage would be a step in the right direction.  For example, a portion of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) funds could be spent on health insurance premium for workers engaged in such work.

“ Protectionism is harmful”:

It is worth mentioning that our Government has been publicly expressing its views against the concept of ‘Protectionism in Business’ over a period of time.

“Protectionism is harmful” was very aptly commented by Mr. Pranab Mukherjee, the then Finance Minister and now one of the Presidential nominees of India. This comment was in context of “US moves to hike visa fees and clamp down on outsourcing”.

India now needs to ‘Walk the Talk’.

Unfortunately, even recently, on July 3, 2012 Indian media  reports indicate that the Government is still mulling proposals to restrict FDI in India.  It stated, “The new rules will require the foreign investor to give an undertaking that if the company is investing in producing an essential drug, as mentioned in the government list of such drugs, then it will continue to produce that medicine”.

99% of the total pharmaceutical market in India constitutes of generic/branded generic medicines with over 23,000 manufacturers and 60,000 brands. In such a scenario, apprehensions that generic medicines, including those featuring in the National List of Essential of Medicines 2011 (NLEM 2011) will not be produced in India, is indeed intriguing.

Conclusion:

In the light of ‘2010 Economic Survey of India’, the nation acknowledges the need to attract foreign investors in the country.  Increasing foreign investments due to liberalization of FDI policies over the past two decades have benefited the Indian companies in terms of technology cooperation (technology transfer), greater resource mobilization and new market access opportunities.

Collaborative deals with the MNCs are enabling the local pharmaceutical companies to gain access to international expertise, increasing resources and world class manufacturing practices.

Any possible adverse impact of M&A on competition can now be effectively taken care of by the ‘Competition Commission of India (CCI)’. In addition, apprehension for any unreasonable price increases will appropriately be addressed by the ‘National Pharmaceutical Pricing Authority (NPPA)’, as is the current practice.

Thus, in my view, limiting FDI in the pharmaceutical sector of India, at this stage, without any substantive reason and just based on unfounded apprehensions, even when the Government is debating to open up the retail and the insurance sectors to foreign investors, will be a retrograde step in the reform process of the country, pontification with razzmatazz of a Bollywood Matinee Idol notwithstanding.

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.

Counterfeit Drugs and ACTA: Should the global menace related to ‘Public Health and Safety’ be mixed-up with Intellectual Property Rights?

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Here in this article, I am talking about drugs or medicines, which you may ultimately land up into buying, quite innocently though, against your doctor’s prescriptions, without having an inkling that these drugs can push you into serious health hazards, instead of addressing your ailments, as your doctor would have desired to.

These are ‘Counterfeit’, ‘Fake’, ‘Spurious’ or ‘Sub-standard’ drugs, in whatever name we may call them. Such substances in the guise of drugs are therapeutically harmful for the patients and are a global menace. This needs to be addressed urgently and with a military precision.

However, public health policy experts have been arguing since long that the issues of such dimension related to critical ‘Public Health and Safety’ needs to be addressed expeditiously by all concerned with focus, without mixing it up with any other commercial considerations or IP related matter, as is being done by some vested interests across the world. India, in this case as well, is of course no exception.

Some reports:

Following are examples of some reports regarding deliberations on this critical issue:

  • A new study published recently in ‘The Lancet’ reported that 7% of anti-malarial drugs tested in India are of poor quality and many were found fake.
  • A February, 2012 report of ‘The National Initiative against Piracy and Counterfeiting’ of FICCI highlighted that the share of fake/counterfeit medicines is estimated at 15% – 20% of the total Indian pharmaceutical market.
  • Another recent report of the US Customs and Border Protection highlighted, “India and Pakistan both made it to top 10 source countries this year due to seizures of counterfeit pharmaceuticals. Pharma seizures accounted for 86% of the value of IPR seizures from India and 85% of the value of IPR seizures from Pakistan.”

However, in this context, it is worth mentioning that the Indian Pharmaceutical Industry along with the Government has been continuously questioning the original source of fake drugs with prominent ‘made in India labels’ on the outer packaging material. It will not be difficult for many to recall that a couple of years ago consignments of ‘counterfeit or fake drugs’ wearing ‘made in India’ labels were confiscated by the drug regulator of Nigeria (Africa), which after a thorough investigation were found to have originated from China.

A contrarian report – CDSCO Survey:

Central Drugs Standard Control Organization (CDSCO) of the Government of India released the following details on ‘Counterfeit Drugs’ in India from 2006 to 2010, which shows that the issue is not as acute as it is shown above:

Year Drugs samples tested % of sub-standard drugs % of spurious drugs Prosecution for crime Persons arrested
2006 – 07

34738

5.8

0.22

115

12
2007 – 08

39117

6.2

0.19

120

122
2008 – 09

45145

5.7

0.34

220

133
2009 -10

39248

4.95

0.29

138

147

TOTAL

158248

5.66

0.26

593

414

This ‘Pan-India survey report of CDSCO’ shows that from 2006 to 2010 the percentage of both ‘Substandard’ and ‘Spurious’ drugs were quite low in India.

However, the more worrying fact, as seen in the report is, the arrests and prosecutions for this heinous crime are also abysmally low in India.

IP related ‘counterfeit’ drugs are relatively smaller in numbers: 

WHO has identified following types of counterfeit medicines:
• Without active ingredients: 32% • Wrong ingredients: 21.4% • Incorrect quantities of active ingredients: 20.2% • Right quantities of active ingredients but in fake packaging: 15.6% • High levels of impurities and contaminants: 8.5% • “Substituted ingredients of anything from paracetamol to boric acid, talcum powder, rat    poison or road paint”: 2.3%

In addition, 50% of medicines purchased online from illegal internet are ‘counterfeit or fake’

From the above data, it appears that IP related ‘counterfeit or fake’ drugs are relatively small in number.

‘Anti-Counterfeiting Trade Agreement (ACTA)’:

The subject gets more complicated when such critical ‘Public Health and Safety’ related issue is leveraged to further strengthen Intellectual Property Rights (IPR) and address commercial issues in different ways.

One such initiative was ‘Anti-Counterfeiting Trade Agreement (ACTA)’. This was signed mostly by the developed countries of the world in October 2011.

ACTA is a plurilateral international trade agreement aimed at countering more efficiently not only the menace of counterfeit goods, generic medicines and copyright infringement on the internet, but also Intellectual Property (IP) related issues, including stringent enforcement of product patents.

This agreement was primarily designed to form a new forum, outside the existing ones, like for example United Nations (UN), World Trade Organization (WTO) or the World Intellectual Property Organization (WIPO) and was signed by Australia, Canada, European Union, Japan, Morocco, New Zealand, Singapore, South Korea, and the United States. However, the agreement has not been formally approved by any of them, as yet.

According to European Commission, “ACTA is an international trade agreement that will help countries work together to tackle more effectively large-scale IPR violations. Citizens will benefit from ACTA because it will help protect Europe’s raw material – innovations and ideas.”

Two aspects of ACTA definition:

As per ACTA definition, there are two aspects for a medicine being termed as ‘Counterfeit’, which are as follows:

  1. ‘Health and safety’ issues, arising out of therapeutically harmful medicines
  2. Violation of IP rights like, patents, trademark and design

It raises more questions than answers:

ACTA definition, as mentioned above, has led to confusion mainly because, if a patent infringing product is termed ‘counterfeit or fake’ in one country, what will then the same product be called in another country where the molecule has gone off-patent? 

Moreover, countries which consider such types of drugs ‘fake’ or ‘counterfeit’, will have the full right to destroy even the in-transit consignments containing such products, not only causing economic loss to the exporter, but also jeopardizing public health interest at the destination countries. Just to site an example, in not too distant past, consignments of generic medicines exported from India to Brazil were seized at the European ports

Thus, many experts feel that ACTA poses a potential risk for global access to generic medicines endangering public health interest, as it could restrict free passage of such drugs through many ports of the world on IP grounds, as happened more than once in the past.

‘Generic medicines’ to be left unharmed:

In this context, Ellen‘t Hoen, former Policy Advocacy Director of MSF’s Campaign for ‘Access to Essential Medicines’ wrote in April 2009 as follows:

“People often seem to confuse counterfeit, substandard and generic medicines – using the terms interchangeably. But they are very separate issues and clearly defining their differences is critical to any discussion”.

Ongoing WHO debate: 

‘Intellectual Property Watch’ in May 20, 2010 reported that:

“Brazil and India claimed that WHO’s work against counterfeit and substandard medicines is being influenced by brand-name drug producers with an interest in undermining legitimate generic competition. The Brazilian ambassador told ‘Intellectual Property Watch’ there is a ‘hidden agenda’ against generics for countries like Brazil.”

“India and Brazil filed requests for consultations with the European Union and the Netherlands over the seizure of generic medicines in transit through Europe. This is the first step towards a dispute settlement case, and if issues cannot be resolved via consultations then formation of a dispute settlement panel could be requested in the coming months”.

However, as reported by ‘The International Center for Trade and Sustainable Development (ICTSD)’, after the Government of India had taken it up strongly with the EU, the issue of confiscation of in-transit consignments of generic drugs has since been resolved.

Three emerging views:

Arising out of all these, there are following three different clearly emerging views on the global issue of counterfeit drugs:

1. The innovator companies feel that the generic pharmaceutical industry and the drug regulators of the developing countries are not really very keen to effectively address and resolve the global issue of ‘Counterfeit Drugs’.
2. The generic companies and the drug regulators of the developing countries feel that the problem is not as acute as it is being projected to be and the innovator global pharmaceutical companies through their intense advocacy campaigns are trying to exploit the sentiment against spurious and harmful drugs to fight against generic medicines and cheaper parallel imports.
3. Some other important stakeholders, including a section of NGOs claim that an intense ‘Public Health and Safety’ related sentiment is being leveraged by the R&D based global pharmaceutical companies to extend IPR issues to “patients’ safety” related concerns, for vested interest.

The role of WHO:

The leadership role of the WHO is extremely important to effectively eliminate the global menace of ‘Counterfeit Drugs’ for ‘Public Health and Safety’. Across the world, patients need protection from the growing threat of ‘Counterfeit Medicines’. As a premier global organization to address such critical issues effectively, especially for the developing world, the WHO needs to play a more proactive and stellar role in future.

A Rational Approach:

The groups opposing ACTA recommend the following approaches to address the menace of ‘Counterfeit or Fake or Spurious or Harmful Medicines’:

  1. Address the issue of ‘Public Health and Safety’ by strengthening regulatory systems, related laws of the country and the stakeholder awareness program. In case of India, recently amended Drugs and Cosmetics Act needs to be properly implemented in letter and spirit.
  2. The issue of violation of IP should be dealt with through effective enforcement of IP laws of the country.
  3. There should not be any mix-up between ‘Public Health and Safety’ and ‘IP related issues’, in any way or form.

Countries already approached WHO:

Earlier, along with countries like Indonesia and Thailand, India could make the WHO realize that mixing up the above two issues could pose serious impediment for the supply of cheaper generic medicines to the marginalized sections of the society, globally. 

Weak regulatory enforcement lead to more ‘Counterfeit/Fake’ drugs:

The menace of counterfeit medicines is not restricted to the developing countries like, India alone. It is seen in the developed countries, as well, but at a much smaller scale. Thus, it is generally believed that the issue of ‘counterfeit drugs’ is more common in those countries, where the regulatory enforcement mechanism is rather weak.

A study done by IMPACT in 2006 indicates that in countries like, the USA, EU, Japan, Australia, Canada and New Zealand, the problem is less than 1%. On the other hand, ‘in the developing nations like parts of Asia, Latin America and Africa more than 30% of the medicines are counterfeits’.

Conclusion:

In the meeting of the TRIPS Council of the World Trade Organization (WTO) held in June, 2012, developed countries continued to reiterate that ‘Counterfeiting of Drugs’ being a critical issue should be deliberated upon by the council, expeditiously.

However, emerging countries like, Brazil, India and China strongly opposed this view by reemphasizing that in the name of ‘Counterfeit Drugs’ issues of IPR violations should not be clubbed with ‘Public Health and Safety’. They argued that IPR violation should in no way be confused with sub-standard drugs or therapeutically harmful medicines and any attempt to discuss the menace of harmful or substandard medicines at the WTO platform will be improper.

Developing nations, in general, have already alleged in various global forums that being unsuccessful in their efforts to use ACTA in making the IP environment even more stringent, the developed countries are now trying to use the WTO to achieve the same objective.

The debate continues and the moot question still lingers: Why should the issue of ‘Public Health and Safety’ get mixed-up with ‘Intellectual Property (IP)’ related problems?

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.

A Kaleidoscope of Drug Price Control Spanning Across the World and Its Relevance to India

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How much to charge for a drug?

While there is no single or only right way to arrive at the price of a medicine, how much the pharmaceutical manufacturers will charge for a drug still remains an important, yet complex and difficult task, both locally and globally.

A paper titled, “Pharmaceutical Price Controls in OECD Countries”, published by the US Department of Commerce, after examining the drug price regulatory systems of 11 OECD countries concluded that all of them enforce some form of price controls to limit spending on pharmaceuticals.

The report also indicated that the reimbursement prices in these countries are often treated as the de facto market price. Moreover, some OECD governments regularly cut prices of even those drugs, which are already in the market.

An evolving rational system of drug pricing:

The values of health outcomes and pharmacoeconomic analysis are gaining increasing importance for drug price negotiations/control by the healthcare regulators even in various developed markets of the world.

In countries like, Australia and  within Europe in general, health outcomes data analysis is almost mandatory to establish effectiveness of a new drug over the existing ones.

Even in the US, where the reimbursement price is usually negotiated with non-government payors, many health insurers have now started recognizing the relevance of such data.

Such price negotiations at times take a long while and may also require other concessions by manufacturers, for example:

  • In the UK, a specified level of profitability may constrain the manufacturers.
  • Spain would require a commitment of a sales target from the manufacturers, who are made responsible to compensate for any excess sales by paying directly to the government either the incremental profit or by reducing the product price proportionately.

Pharmacoeconomic Based or Value-Based Pricing (PBP/VBP):

Pharmacoeconomics, as we know, is a scientific model of setting price of a medicine commensurate to the economic value that the drug/therapy would offer.  Pharmacoeconomic principles, therefore, intend to maximize the value obtained from expenditures towards medicines through a structured evaluation of products costs and disease outcomes.

PBP/VBP is widely considered to offer the ‘best value for money’ spent to buy a medicine, as it is ‘the costs and consequences of one treatment compared with the costs and consequences of alternative ones’.

A contrarian view:

Let me hasten to add that some shortcomings in PBP/VBP system have already been highlighted by some experts and are being debated threadbare. The key question that is being mooted now is, how to quantify the value of a saved life or relief of intense agony of patients while arriving at a price of a drug based on PBP/VBP model.

PBP/VBP could help ‘freeing-up’ resources to go to front-line healthcare: 

As per the Department of Health, UK, ‘Value-Based Pricing (VBP)’ ‘will help creating a world-class NHS that saves thousands more lives every year by freeing up resources to go to the front line, giving professionals power and patients choice, and maintaining the principle that healthcare should be delivered to patients on the basis of need, not their ability to pay’.

Pharmaceutical Price Control has assumed global importance:

Pricing of pharmaceutical products has now become one of the most complex and a very sensitive area of the business, like never before. This is mainly because of the concerns on the impact of medicine prices to access of medicines, especially, in the developing markets, like India and the cost containment pressure of the governments as well as the healthcare providers in the developed markets of the world.

Evolving Pharmaceutical pricing models:

Pharmaceutical pricing mechanism has undergone significant changes across the world. The old concept of pharmaceutical price being treated as almost given and usually determined only by the market forces with very less regulatory scrutiny is gradually but surely giving away to a new regime.

Currently in many cases, the prices of even patented medicines differ significantly from country to country across the globe, reflecting mainly the differences in their healthcare systems and delivery, along with income status and economic conditions.

Global pharmaceutical majors, like GSK and Merck (MSD) have already started following the differential pricing model, based primarily on the size of GDP and income status of the people of the respective countries. This strategy includes India, as well.

Reference pricing model is yet another such example, where the pricing framework of a pharmaceutical product will be established against the price of a reference drug in the reference countries.

The reference drug may be of different types, for example:

  1. Another drug in the same therapeutic category
  2. A drug having the same clinical indications available in the country of interest e.g, Canada fixes the drug prices with reference to prices charged for the same drug in the US and some European Union countries.

A Kaleidoscope of Drug Price Control across the world:

In most of the countries around the world drug price control in some form or the other has been put in place by the respective governments. Following are just a few examples:

Price Control in Germany:

In not so distant past pharma companies operating in Germany could fix any price for both patented and generic medicines. As a result, the drug prices in Germany have since long been among the highest in Europe.

‘The Act on the Reform of the Market for Medicinal Products (AMNOG)’ that came into effect in January 2011 to regulate the price of new prescription drugs in Germany, is expected to assist in the overall effort to curb in exploding costs for the country’s public health insurance system.

Under the new law, as reported by ‘InPharm’ dated November 12, 2010, pharmaceutical manufacturers in Germany, after the launch of a new drug, will have a one-year window to negotiate prices with health insurers. In case there happens to be no positive outcome of such negotiations, German Health Ministry would set a maximum price for the drug, which would then undergo a cost/benefit analysis by Germany’s ‘Health Technology Assessment (HTA)’ body IQWiG. Thereafter, the price will be fixed for the said new drug accordingly.

Price Control in Spain:

In Spain the local law has made HTA mandatory to ascertain the efficacy, cost, efficiency, effectiveness, safety, and therapeutic utility of different alternatives for the treatment of a disease condition.

After marketing approval of a new drug, either by the European Medicines Agency (EMEA) or the Spanish Medicine Agency (AEMPS),  the Ministry of Health (MSC) invites the manufacturer to provide all relevant information to allow the ‘Inter-Ministerial Pricing Commission (CIPM)’, chaired by the MSC, to decide the right price of the product. After negotiation, if the outcome is positive for inclusion of the product in the national reimbursement list, the decision is implemented across the country.

Effective June 2010, price cuts have been imposed by Spain on reimbursed patented drugs with rebates of 7.5% of sales, under the National Health System (NHS).

Effective July 2010, an average 25% cut has also been implemented for generic medicines in the country.

New Price Control mechanism in the UK:

Quite like US, UK has been one of those western countries, which allows pharmaceutical manufacturers to set their own prices. However, after the expiry of the current ‘Pharmaceutical Price Regulation Scheme (PPRS)’ in 2013, despite many concerns, as decided by the ‘National Institute of Health and Clinical Excellence (NICE)’,  ‘Value-based pricing (VBP)’ is expected to be followed for pharmaceutical product pricing in the UK.  VBP will be worked out ‘by the maximum affordable cost per ‘Quality Adjusted Life Years (QALY)’ generated by the use of new medicines.’

To arrive at VBP for a new product, pharmaceutical manufacturers will require furnishing enough evidence, based on clinical trial, to establish superiority of a new drug over the ones already available in the market.

However, VBP will be followed only for the new prescription drugs and not for the existing ones or generic medicines, with the main regulatory focus being on profit rather than on price control of drugs.

Price Control in France:

As per ISPOR, in France the price control of pharmaceutical products is implemented as follows:

“All registered pharmaceuticals are subjected to Evaluation of Therapeutic Benefit (Amelioration du Service Medical Rendu, or ASMR) by ‘Commission de Transparence (Transparency Commission)’, which is expressed as a classification between 1 & 6, as follows:

  1. Innovative product of significant therapeutic benefit
  2. Product of therapeutic benefit, in terms of efficacy and/or reduction in side effect profile
  3. Already existing product, where equivalent pharmaceuticals exist; moderate improvement in terms of efficacy and/or reduction in side effect profile
  4. Minor improvement in terms of efficacy and/or utility
  5. No improvement but still granted recommendations to be listed
  6. Negative opinion regarding inclusion on the reimbursement list

The ASMR evaluation is based on the expert judgment of the Transparency Commission of the Pharmaceutical Agency ‘(Agence du Medicament)’. Subsequently, a reimbursement price negotiated with ‘Comité Economique du Médicament (CEM)’. The price negotiated with CEM becomes the price at which the drug is sold throughout the country, even for private prescriptions.”

As a part of the 2011 Social Security Budget Bill, France has decided to significantly reduce its healthcare cost by enforcing price cuts including parallel import of drugs.

Price Control in Australia:

Just as many OECD countries, Australia also use drug price control mechanisms to contain its healthcare expenditure. The Australian government manages their healthcare expenditure through the Pharmaceutical Benefits Scheme (PBS), where the pharma companies are required to prove the cost-effectiveness of their drugs for subsequent pricing negotiations with the government.

Price Control in China:

In China, since 2007, ”The National Development and Reform Commission (NDRC)’ controls drug prices in the country. There was, however, a significant re-engineering of the system in  November 2010, when NDRC drastically reduced the prices of essential drugs manufactured locally in partnership with global pharma majors like, Novartis, Pfizer and Roche. In March 2011 prices were slashed for over 1,000 drugs in China.

Patented and imported products enjoyed relatively free-market pricing in China, for some time. However, recently to increase the coverage of ‘Universal Healthcare’, the Chinese pricing authorities have initiated price control measures for many pharmaceutical products in the country.

Pricing mechanism in Singapore:

Singapore also follows a free-market pricing approach for pharmaceutical products, which is, reportedly, to recognize the value and importance of patented products in the country. Though Singapore Government provides ‘Universal Healthcare’ to its residents, individuals are required to share the costs of healthcare services they consume.

This has made the cost of healthcare in Singapore rather expensive, especially for the retired persons and low-income citizens of the country. As a consequence of which, many individuals who would require regular treatment with medicines, very often go to nearby Malaysia to buy those medicines at much lesser prices, probably causing a revenue loss to the Singapore market.

Price control in Japan:

In Japan, the Ministry of Health, Labor, and Welfare (MHLW) follows a system of pricing where the new drugs prices are determined based on those comparable drugs, which are already available in the country. However, in those cases where MHLW cannot find any comparable drug for assessment ‘cost based pricing’ system is followed. The new drugs which are assessed as innovative by the MHLW may attract a premium based on pre-determined criteria.

Price Control in Brazil:

In Brazil, the government controls the drug prices through designated agencies. The ‘Agência Nacional de Vigilância Sanitária (ANVISA)’ is responsible for the marketing approval of new drugs and the ‘Câmara de Regulação do Mercado de Medicamentos (CMED)’ is responsible not only for determining the prices of new drugs, but also for any subsequent price changes for all drugs in the market.

Price Control in Russia:

Currently pricing regulations are applicable to only ‘essential drugs’ in Russia. However, ‘thepharmaletter’ in its January 25, 2011 edition reported that ‘Federal Commission on Safety of Medical Business (FCSMB)’ of Russia has proposed a quick introduction of the government control over prices of all drugs in the domestic market costing more than 100 Roubles (US$3.34).

FCSMB believes that the current system of drug pricing in Russia offers a distinct advantage to the global pharmaceutical players. Hence, the agency feels, the state regulation on all drug prices is necessary in the country.

A damning article from “Los Angeles Times”:

Though United States of America (USA) still remains a free-market even for pharmaceutical product pricing, increasing number of voices are now being heard in favor of pharmaceutical price control even in that country.

‘Los Angeles Times’ in its October 10, 2009 edition commented, “Healthcare reform without drug price controls? That’s sick”.

While, acknowledging high cost of pharmaceutical research, the article continued to state, ”In fact, the companies’ actual research costs are one of the industry’s most closely guarded secrets. In the 1970s and 1980s, pharmaceutical companies waged a decade-long legal battle to keep even government auditors from reviewing those costs, leaving it unclear whether they include non- scientific costs such as promotion”.

The article stated that the bigger issue that has largely escaped public scrutiny is that “Over the last 30 years, the industry hasn’t focused its efforts on discovering those truly amazing innovations that can change the practice of medicine. Instead, the companies have taken the easy path, ordering their scientists to turn out mostly rehashes of medicines already being sold. It’s far cheaper to copy a medicine — tweaking a molecule just enough so it gets its own patent — than it is to do the years of work needed to find new and better cures”.

The author further highlighted, “This focus on copycat medicines is apparent in the list of drugs approved by the Food and Drug Administration. Of the medicines approved between 1990 and 2004, only 16% were what government reviewers deemed to be actually new and significant. The rest were medicines we were already using in a slightly different form. This explains why our pharmacies are stocked with a multitude of medicines that reduce cholesterol in the same exact way. With no price controls, the industry gets away with charging exorbitant amounts — even for drugs that barely work.”

High out-of-pocket expenses for health makes price control relevant in India: 

Medicines are essential for all and constitute a significant cost component of modern healthcare systems, globally. However, in India, overall healthcare system is fundamentally different from many other countries, including China.

Around 80% of expenses towards healthcare, including medicines, are reimbursed either by the Governments or through Health Insurance or similar other mechanisms in many countries.

However, in India the situation is just the reverse, more than 70% of overall healthcare costs are private or out-of-pocket expenses, incurred by the individuals/families. In addition, out of the total 70% out-of-pocket expenses, medicines contribute around 71%, making the life more difficult for many. (Reference: ‘High Level Expert Group Report on Universal Health Coverage for India’ Instituted by Planning Commission of India).

Thus the issue of price control of ‘Essential medicines’ is extremely relevant in the country, more so when pharmaceuticals come under its Essential Commodities Act.

Conclusion:

It is now widely believed that pharmaceutical products, which play a pivotal role in keeping the population of any nation healthy and disease free to the extent possible, should not be exploited by anyone.

Pharmaceutical companies are often criticized in this area by those stakeholders who are genuinely concerned with the well-being of particularly ailing poor and underprivileged population across the world.

While looking through the ‘Kaleidoscope of Drug Price Control’ spanning across the world, it appears quite obvious that the raging debate on improving access to modern medicines will continue to revolve round the pharmaceutical pricing mechanism in almost all countries of the world. India is no exception, in any way.

By: Tapan J Ray

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

India-like New Broader Compulsory Licensing Provisions in China Could Make the Global Pharma Players Edgy

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Quite close on the heel of grant of Compulsory License (CL) to Bayer AG’s expensive Kidney and Liver cancer drug Sorafenib to the domestic Indian manufacturer Natco by the Indian Patent Office, as provided in the Indian Patent Law, China amended its own Patent Law allowing Chinese pharmaceutical manufacturers to make cheaper generic equivalent of patented medicines in the country not only during ‘state emergencies’, but also in ‘unusual circumstances’ or ‘in the interests of the public’.

As reported earlier, Natco Pharma promised to sell its generic version of Sorafenib in India for US$ 176 for a month’s treatment as compared to Bayer’s US$ 5,600, for the same time period.

Let me now very briefly touch upon some WTO related and other facts on CL, in general.

Compulsory Licensing (CL) – A perspective:

World Trade Organization (WTO) defines CL as follows:

“Compulsory licensing is when a government allows someone else to produce the patented product or process without the consent of the patent owner. It is one of the flexibilities on patent protection included in the WTO’s agreement on intellectual property — the TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement”.

These flexibilities for CL are not new and exist in the TRIPS Agreement since its inception in January 1995.

However, November 2001 Doha Ministerial Declaration on ‘TRIPS and Public Health’ included two new provisions of CL, one for the Least-Developed Countries (LDC) and the other for countries that do not have production capacity.

The key purpose of CL: 

CL is generally considered as an excellent provision in the Patent Law of a country to protect public health interest by the respective governments and also the intelligentsia of the civil society. The key purpose of CL is to:

  • Rectify any type of market failure
  • Discourage abuse of a patent in any form by the patent holder

Can CL be granted only in an Emergency situation?

This is a common misunderstanding and the WTO clarifies the situation as follows:

“The TRIPS Agreement does not specifically list the reasons that might be used to justify compulsory licensing. However, the Doha Declaration on TRIPS and Public Health confirms that countries are free to determine the grounds for granting compulsory licenses”.

Keeping all these in view, now let me go back to the China CL story.

China was preparing for it since 2008-09: 

Aljazeera in its June 9, 2012 edition reported that China was toying with this idea since 2008-2009.

In fact, during this time, the State Intellectual Property Office (SIPO) of China had invited experts from other countries to train their officials on how to create robust legal grounds for the grant of CL in the country.

Chinese Patent Law amendment for CL has already been made effective:

The State Intellectual Property Office (SIPO) has reported that a revised version of ‘Measures for the Compulsory Licensing for Patent Implementation’ has already been made operational in China effective May 1, 2012.

Interestingly, for “reasons of public health”, such medicines can also be exported under ‘Compulsory License’ to other countries, including those members of the World Trade Organization, where life-saving treatments are unaffordable.

In tandem, China, reportedly, is in the process of further strengthening its legal framework for local manufacturing of generic equivalents of patented drugs in the country.

Some other countries have already issued CL:

In the emerging markets, India, Brazil, Indonesia, Malaysia and Thailand have already granted CLs in their respective countries. It is worth noting that USA and the member countries of the European Union (EU) have also issued CL in more than one occasion.

China also encourages domestic innovation being world’s top patent filer in 2011:

All these happened, when ‘Thomson Reuters’ research report highlighted that ‘China became the world’s top patent filer in 2011, surpassing the United States and Japan as it steps up local  innovation to improve its intellectual property rights track record.’

Thus China’s intention in maintaining a right balance between encouraging domestic innovation and protecting public health interest is indeed very clear.

A key Chinese concern:

Reuters also reported that the Chinese government is now concerned with the increasing trend of HIV- AIDS in the country and wants to have ‘Viread (Tenofovir)’ of Gilead Sciences, which according to Reuters, is recommended by WHO as part of a first-line cocktail treatment for this disease condition.

Quoting ‘Medecins Sans Frontieres’, Reuters reported that as a result of recent expansion of CL provisions in the Chinese Patent Law, the country compels Gilead Sciences to extend significant concessions on the supply of Viread, which includes a generous donation package for the drug, provided the Chinese government continues to buy the same quantity of the medicine from them.

Many would interpret this development as a clever use of CL by the Chinese government to compel Gilead to extend a better deal for Viread for the country.

Will China use the CL provisions for hard price negotiation for patented drugs?

Like Brazil whether China will also use CL as a potent tool to drive down patented drug prices through hard negotiation or actually make the innovator companies to extend voluntary licenses to Chinese manufactures to produce and sell equivalent generics in the country is something which needs to be very closely watched in due course of time.

Increased patent protection and its impact on drug prices in low-income countries:

On this raging debate, in a July 2011 paper titled, “China and India as Suppliers of Affordable Medicines to Developing Countries”, published by National Bureau of Economic research, USA, the authors articulated as follows:

“As countries reform their patent laws to be in compliance with the Trade Related Intellectual Property Rights Agreement, an important question is how increased patent protection will affect drug prices in low-income countries. Using pharmaceutical trade data from 1996 to 2005, we examine the role of China and India as suppliers of medicines to other middle- and low-income countries and evaluate the competitive effect of medicine imports from these countries on the price of medicines from high- income countries. We find that imports of antibiotics and unspecified medicament from India and China significantly depress the average price of these commodities imported from high-income trading partners, suggesting that India and China are not only important sources of inexpensive medicines but also have an indirect effect by lowering prices through competition. As India is the leading supplier of medicines in Sub-Saharan Africa, this region will likely be affected most adversely”.

Thus, this is also an area worth keeping tab in the years ahead, both in India and China.

A subtle difference: 

The difference between the Indian and Chinese move on CL, I reckon, is that the Indian Patent Office limited the CL of Sorafenib for domestic use only and not for export in any way to any other country.

However, it is interesting to note that Chinese amendment of the CL provisions will now enable the CL holders in China to apply for permissions for export of the same drug in other countries, as well. This could probably point to the direction of future ambitions of China to pave the way for rapid growth of their generic drug industry by invoking CL measures not only for use within the country, but way beyond the shores of China.

Conclusion:

It is worth noting that despite clear provisions of CL in TRIPS and especially even after Doha Declaration, the world had not seen many CL being granted by any country, as yet.

In this context, ‘Business Insider’ in its June 11, 2012 edition stated as follows:

“We haven’t seen a deluge of compulsory licenses over the years, and the drug companies (along with the U.S. government) have done what they can to slow down or halt this process. In China, every time a government official opens his mouth and even talks about compulsory licensing, the lobbyists are sent in, the Op/Ed columns are written, and things quiet down for another couple years.”

However, now with such broad provisions for CL in their respective patent laws to protect public health interest effectively, both India and China can, at least theoretically, allow introductions of low priced generic equivalents of patented medicines in their domestic markets, well before those drugs go off-patent. This development will certainly make the innovator companies edgy…very edgy!

It will be interesting to watch, whether global pharma majors consider such broad CL provisions both in India and now in China as serious business impediments or not.

Most probably, the worry will be more intense for much larger and faster growing Chinese Pharmaceutical market, which is now widely being considered as the emerging ‘Eldorado’ of the world.

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.

Healthcare Malpractice in India: Even Medical Association distastes the ‘Bitter Pill’

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At a peak of repeated overdose of media sensationalism covering various facets of happenings around us, at times almost mimicking ‘self-flagellation’ though, the program ‘Satyamev Jayate (Truth Alone Triumphs) ’ of Bollywood icon Aamir Khan has the potential to be a ‘game changer’ in terms of transformation of mindset of ‘We the People of India’  towards ‘What we can do for the country’ and JUST NOT ‘What the country can do for us’.

My perspective:

As I see it, the show endeavors to instill a sense of introspection in the viewers’ mind providing relevant information and knowledge, especially when for misdeeds of all shades, hues and colors around our lives, we tend to instinctively blame others, positioning ourselves on the illusive high pedestal of probity and considering ourselves ‘Lilly-white’ …and just the victims of circumstances.

What made me aware of it?

Personally, I became aware of the show, when one of my good friends strongly recommended watching its ‘Episode 4′ titled, “Every Life Is Precious: Does Healthcare Need Healing?’  He in fact mailed me even the video link of the same. Thereafter, I collected similar video links for previous other episodes from the internet and was highly impressed with the sense of purpose of the program.

What did it want to achieve?

As far as I am concerned, I am quite convinced that this particular episode highlights that:

“People trust medical practitioners, believing that they are equipped with the knowledge and skills to safeguard their health. But when this knowledge is misused to exploit this trust, medical care becomes a nightmare. The profession is riddled with unscrupulous doctors and hospitals out to make big bucks at the cost of patients, but there are still medical practitioners who stand up for the Hippocratic Oath, and those who want to clean up the profession.”

Dishonest acts in healthcare need to be opposed with courage:

In the program, Aamir Khan started by saying that that the episode was not about mistakes and negligence that a doctor may commit but about dishonest acts of some doctors, which were committed undoubtedly with equally dishonest intentions, amounting to fraud and a breach of trust between doctors and the patients.

The ‘Episode 4′ not only highlighted the deficiencies in the existing system related to medical ethics, but also issues pertaining to pricing of drugs, medical education and  the functioning of the Medical Council of India (MCI).

Strong protests do not prove innocence:

Unfortunately, instead of appreciating the social transformation efforts of the program, many doctors reportedly protested against this particular episode.

I shall not be surprised, if some more protests from other quarters reach Aamir Khan in a different guise, even in the guise of seemingly support, especially from those who are perpetually in a denial mode stating: ‘what all were shown in the program are misguiding/misleading’, ‘you don’t know the facts/reality’, ‘what was shown is just half truth’, ‘our way is the right way’ and ‘we were not given a chance to express our views’.

However, as we all know that strong and venomous protests, even protests well concealed in the guise of support, do not prove innocence of the perpetrators, at all, though we all have a right to protest in our country.

In a protest credibility also matters:

A leading magazine of the country, ‘India Today’ in its August 25, 2011 edition titled ‘Address sick state of the health system’, reported in a different context:

“Among the multitude of people who flocked to the Ramlila grounds this week in support of the anti-corruption crusader Anna Hazare were some surprises. A delegation of the Indian Medical Association (IMA) met Hazare and extended support to his fight against corruption”.

“Subsequently branches of the association all over the country were told to organize candle light vigil and sit-ins against corruption. IMA is the largest professional body of Indian doctors and their support to the anti-graft movement should be taken seriously. After all, doctors are considered strong opinion makers in the society”.

“However, a careful look at the association’s past and its stand on the issue of corruption in medical community makes one wonder if IMA’s views on corruption have any value at all”, the report added.

Reports of protest on “Every Life Is Precious: Does Healthcare Need Healing?’ :

The daily newspaper ‘DNA’ in its June 2, 2012 issue reported, “Indian Medical Association asks Aamir Khan to apologize.”

The report elaborated that the Indian Medical Association demanded an immediate apology from Aamir Khan for having ‘defamed’ the medical profession in his TV show and warned him of legal action if he fails to comply with their demand.

Voices of sanity:

Being in unison with many other voices of sanity, against the demand of apology by the medical association, the lyricist and social activist Javed Akhtar reportedly had commented, “The Indian Medical association wants Aamir to apologize for exposing corruption in their profession. That is really sick.”

The Crusader remains unfazed against threats:

However, as reported by NDTV, Aamir Khan has refused to apologize and said, “I will not apologize to the doctors, I have not insulted the medical profession. Those doctors who indulge in unethical practices have defamed the profession, not me.”

Some other examples of ‘Medical Negligence’:

As reported by ‘Livemint (WSJ)’ in its May 15, 2012 edition, “Dozens of hospitals all over the country are ransacked each year by irate relatives and other ‘socially conscious’ citizens in an attempt to get back at alleged cases of medical malpractice. In many cases patients are crippled for life or even killed, and many of these cases may indeed involve instances of incompetence or malpractice. This does not in any way condone the violence, but then the victims have little recourse to justice or investigation”.

Highlighting similar medical negligence, ‘Times of India’ ‘ on October 22, 2011 reported that ‘The National Consumer Disputes Redressal Commission (NCDRC)’ on October 21, 2012 ordered a compensation amount of Rs 1.73 Crore to be paid to the US-based husband of a child psychologist who died in Mumbai due to medical negligence.

Very few doctors punished for Medical Malpractice:

Effective January 1, 2011, just 17 doctors from all over India were found guilty on account of Medical Negligence/Misconduct and received varying degree of punishment from the MCI.

It is worth noting, unlike other countries and despite all these maladies being faced by a common man reportedly on a daily basis, not a single erring doctor’s name has been removed permanently from the Indian Medical Register/State Medical Register by the MCI or any State Medical Council, since 2008?

Some very recently reported actions by MMC and MCI:

Meanwhile the news daily ‘DNA’ in its June 6, 2012 edition reported that  for different errant behavior, so far, the Maharashtra Medical Council (MMC) has sent show-cause notices to 31 doctors in the state and suspended registrations of five doctors.

Not so long ago to maintain desirable ethical standards within the Medical Profession, the notification of the Medical Council of India (MCI) dated December 10, 2009 amending the “Indian Medical Council (Professional Conduct, Etiquette and Ethics), Regulations 2002″ was also welcomed by concerned right thinking individuals including a large section of the medical profession.

Conclusion:

Medical malpractice, of course, is not just an Indian issue. ‘The Wall Street Journal’ in an article titled, ‘How Other Countries Judge Malpractice’, published on June 30, 2009 reported that in his speech to the ‘American Medical Association’, President Barack Obama held out the tantalizing possibility of reforming medical malpractice law as part of a comprehensive overhaul of the U.S. health-care system.

With TV shows like ‘Satyamev Jayate (Truth Alone Triumphs)’, let us collectively move towards the day, transforming ourselves as the change agents, when all of us rich, middle-class or poor will live in a country where things will be quite different from what we are experiencing today.

Many erudite medical practitioners of our country who still stand up for the ‘Hippocratic Oath’, will expectedly take initiative to clean up their profession, being harsh on the ‘Black Sheep’, probably through stringent self-regulations, even if the MCI continues to keep its eyes closed.

Let us all conscientiously try to pave the way for that day, when despite socioeconomic disparity people from all strata of our society will be able to get quality healthcare, driven by competent regulators, socially conscious industry and above all the dedicated medical profession, who under ‘Hippocrates Oath’ will consider each life equally precious, taking their noble profession almost back to the earlier high pedestal of a ‘Human God’!.

Against the mighty power of rejuvenated human will, all concerned in the healthcare space, willy-nilly, hopefully will have to swallow the ‘Bitter Pill’, not just in India, but across the world, for the sake of humanity.

Let ‘Truth Alone Triumph’….‘Satyamev Jayate’.

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.

Indian Parliamentary Committee Indicts the Department of Pharmaceuticals

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

In this report the Committee examined, besides other important subjects, the issues related to making high quality generic/branded generic medicines, patented and imported products available to the public at affordable prices to reduce ‘out-of-pocket expenses’ of the general population of India, significantly.

The Committee also suggested that the Department of Health and Family Welfare, in coordination with the Department of Pharmaceuticals and with the active involvement of Chief Secretaries of the State Governments should formulate an effective ‘Essential Drug Supply’ policy having the following components:

  • Encouraging prescription of generic drugs
  • Adoption of essential drugs list
  • Adherence to Standard Treatment Guidelines
  • Ensuring drug procurement through open tender system
  • Distribution of low cost medicines through Government drugs stores like, ‘Jan Aushadhi’
  • Demand generation for generic drugs through public awareness program

In addition, the report captured the great concern of the committee on rampant prescription of irrational and useless drugs by many doctors with ulterior motives and expressed the need of inclusion of the essential and lifesaving drugs under strict price regulation.

Parliamentary Report indicts the Department of Pharmaceuticals:

The committee, besides other issues, observed as follows with a strong indictment to the Department of Pharmaceuticals (DoP):

  • The DoP seems be in the grip of policy inertia.
  • ‘Lackadaisical approach’ and ‘lack of sense of urgency’ of the DoP to iron out hindrances in establishing required number of ‘Jan Aushadhi’ stores across the country have also resulted in their ‘soft-pedaling’ the issue of intensive promotion of generic drugs through a large number of ‘Jan Aushadhi’ outlets, as was planned by the government.
  • DoP should shed its ‘indecisiveness’ and take all possible measures to speed up the revival and modernization of Public Sector Pharma Units, so that the all-important objective of access to affordable and quality medicines by all could be realized.
  • Currently there is no mechanism to regulate the prices of new patented drugs which are imported into the country and sold at ‘super-normal profits’. Committee recommended that India as a sovereign country has every right to determine, for public health interest, prices of all drugs which are sold in the open market, by putting in place an effective price control mechanism.
  • The issue of price regulation of all imported molecules including patented ones being sold in the country at high prices should be addressed by the DoP in the New Pharmaceutical Policy which is currently under finalization.
  • The DoP should take decisive action, without further delay, in making the ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’ mandatory so that effective checks could be ensured on ‘huge promotional costs’ and the resultant add-on impact on medicine prices.
  • The country holds a strong position in producing generic drugs. Besides, it has a robust distribution network not only in the domestic market but also in other developing and underdeveloped countries of the world. Thus, the Government should make all-out efforts to arrest the trend of acquisition of domestic pharma companies by the multinationals.
  • The DoP to move the Cabinet for its approval with a sense of urgency for setting up the Central Procurement Agency as an autonomous society, as it can help control drug prices through effective procurement process.

Looking back:

In mid-2008, Government of India had set up a new department under the Ministry of Chemicals & Fertilizers (MC&F), named the ‘Department of Pharmaceuticals (DoP)’. The department was created primarily to have a greater focus on the pharmaceutical sector of India. Historically, issues and policies related to pharmaceutical industry mainly used to be handled by the Department of Chemicals and Petrochemicals. A separate Department of Fertilizers still handles all issues related to fertilizers in India. Both the departments were under the MC&F. The then Minister C&F felt that the pharmaceuticals sector has very many critical and complex issues, which are related mainly to pricing, access, availability, R&D, and other international commitments that necessitate integration of work with different ministries. A separate Department for Pharmaceuticals was, therefore, considered necessary to do justice to the pharmaceutical industry of India. The proposal, I reckon, was incubating with the government for quite some time though.

The expectations from DoP:

At that time in 2008,  it was widely expected that the DoP will be able to address the following key pharmaceutical industry related issues, with an integrated approach, to strike a right balance between the growth fundamentals of the industry and the Public Health Interest:

  • A modern, both growth and access oriented, drug policy and pricing mechanism.
  • Continuous improvement of access to high quality and affordable modern medicines for all.
  • An efficient drug price regulatory system.
  • An appropriate ecosystem to encourage R&D and foster pharmaceutical innovation.
  • Addressing the issue of high ‘out of pocket expenses’ of the general population towards medicines in particular and healthcare in general.
  • Facilitating fiscal and tax incentives required by the Micro-Small and Medium Enterprises (MSME) within the pharmaceutical industry of India to further drive its growth.

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

The Objectives of the Department of Pharmaceuticals (DoP):

Be that as it may, following are the stated objectives of the DoP, as mentioned in the Results-Framework Document (RFD 2011-12) of the DoP:

  1. Ensure availability of drugs at reasonable prices as per the Pharma policy
  2. Facilitate growth of Central pharma PSUs with required support
  3. Develop Pharma Infrastructure and Catalyze Drug Discovery and Innovation
  4. Launch and Position Pharma India Brand
  5. Develop Pharma Human Resources through M.Pharma and Ph.D programs in NIPERS
  6. Provide Infrastructure and staff for new NIPERs
  7. Strengthening of NIPER Mohaili
  8. ‘Jan Aushadhi Campaign’ and implementation of Business Plan for setting up of 3000 ‘Jan Aushadhi’ Stores (upto Subdivision level in the country)
  9. Incentivizing Private Sector for development of new Drugs for diseases endemic to India

It appears, the current performance of the DoP even against their stated objectives as mentioned in RFD 2011-12, has prompted the Parliamentary Committee to make the above harsh comments.

A look at ‘Jan Aushadhi’ – a scheme conceived with a great purpose:

Before going into the reasons for lackluster performance of this scheme, let us look at the following objectives of scheme as set out by the DoP:

1. To promote awareness for cost effective quality generic medicines. (However, how exactly this will be done, is yet to be known.) 2. To make available unbranded affordable quality generic medicines through  Public Private Partnership (PPP) initiatives. (I would support this objective may be from procurement perspective. However, so far as the delivery of these medicines to the common man is concerned, I would still argue: why do we reinvent the wheel?) 3. To encourage doctors in the Government Hospitals to prescribe such cost effective quality generic medicines. (This is again just a statement of good intent without considering the critical issue of its implementation in the predominantly branded generic market of India.) 4. To help patients save significantly towards medicines costs with ‘Jan Aushadhi’ outlets. 5. A national help line to increase awareness level of this initiative. The statement of intent of the DoP also highlights that the State Governments, NGOs and Charitable bodies will be encouraged to set up such generic medicine shops across the country. It also states that the existing outlets of the Government and NGOs may also be used for this cause.

Arguing for the need of a course correction for ‘Jan Aushadhi’ scheme: It now appears that the ‘Jan Aushadhi’ scheme of the DoP may not ultimately be able to achieve its cherished goals and is perhaps destined to go into the history as yet another good intention of the Government, if a course correction is not made forthwith in the right direction. The main issue in improving access to affordable quality medicines for the common man with ‘Jan Aushadhi’ scheme does not lie in the conceptualization of this ‘Public Health’ project, where the Government is pretty good at, armed with the support of a good number of brilliant bureaucrats. The problem in translating this laudable idea into reality, I reckon, lies not only in the understanding of the critical barriers to the project, but also in making out the key drivers of the same.

Key barriers:

In my opinion, following two  are the key barriers to the success of ‘Jan Aushadhi’ scheme:

  • Cost-effective procurement of quality medicines in adequate quantity
  • An effective delivery mechanism involving state government, NGOs and various other related bodies.

Cost effective procurement:

As recommended by the Parliamentary Committee, the DoP should move the Cabinet for its urgent approval to set up a Central Procurement Agency for cost effective procurement of quality medicines and at the same time encourage the state governments to do the same at respective state level.

No need to ‘reinvent the wheel’ – An effective delivery system already exists:

The DoP should explore possibilities of using the existing Government Public Delivery Systems to ensure cost effective easy access and availability of such medicines to the common man after tightening the loose knots wherever exist. There does not seem to be any dire need to ‘reinvent the wheel’ in this particular case.

Two grossly underutilized Government controlled ‘Public Distribution Systems’: The Government of India has following two very unique product distribution and delivery systems within the country with deep penetration from metro cities to far-flung rural areas: 1. Public Distribution System (PDS) : Called Ration shops and is currently used for public distribution of food grains and other essential commodities.

2. Indian Post Offices (IPO): This establishment is currently adding many other products, besides postal services, for effective distribution to the public

Quite like food grains, medicines are also essential items. Why does DoP not collaborate with PDS/Ration Shops and IPOs through appropriate ministries to ensure easy availability and access to essential medicines by the common man?

This assumes even greater significance, when the Postal Department, as mentioned above, has already started collaborating with various other agencies to sell and distribute many types of products in rural areas through IPO network. In that case, what prevents the DoP to consider this alternative, as well?

In fact, I would strongly recommend the usage of both PDS and IPOs by the DoP for deeper penetration of ‘Jan Aushadhi’ across the country, especially for those who do not have adequate access to affordable modern essential medicines.

I am aware that the question of ‘in-efficiency’ of these systems may be raised by many in India. However, at the end of the day who is responsible to make these systems efficient? People responsible for managing a system are usually held accountable for its ‘efficiency’ or ‘inefficiency’. It is about time that the government fixes strict accountability in these areas too.

We have currently many excellent minds in the DoP, I hope, they may wish to explore the possibility of effectively utilizing these two already available state controlled mass distribution systems to ensure proper access and availability of “Jan Ausadhi” drugs to the common man”.

An intriguing observation in the Report:

It is indeed difficult to fathom the robustness of the reasoning of both the Parliamentary Committee and the DoP for the revival of the sick and loss making Public Sector Pharmaceutical Units in the country.

As stated above, the very second objective of the DoP also articulates as follows:

“Facilitate growth of Central pharma PSUs with required support”.

This is indeed quite baffling.

Everyone knows that all these PSUs created at the expense of tax payers’ money, miserably failed to perform time and again, despite receiving all such incentives from the government umpteen number of times, even when the Indian pharmaceutical industry has been growing at a scorching pace, decade after decade.

Thus I wonder what magic wand the Government will wield now to be able to turn around these loss making and heavily bleeding PSUs from continuous non-performance and utter failure in governance and that too in the prevailing environment of fierce competitive pressure within the industry.

Considering all these, will the decision of pouring in even more money from the national exchequer’s fund into the bottomless pits of these loss making PSUs currently under dangerous tail spins fetch any dividend at all for the common man?

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

Conclusion:

Not so long ago, in July 25, 2011 a news item reported, “Department of Pharmaceuticals moots National Authority for Drugs & Therapeutics (NADT) with Central Drugs Standard Control Organization (CDSCO) under it”.

If I recall, some years ago, another taskforce appointed by the Government suggested integration of the offices of the DCGI, CDSCO and NPPA along with all their powers and functions to ensure adequate availability and access to high quality medicines at affordable prices for the population of the country.

Nothing has fructified, as yet, in this direction. However, it appears from all such recommendations of various task forces that a strong desire to create powerful silos has perhaps assumed higher priority of the relevant players engaged in this ball game. Failure to deliver the deliverables for public health interest almost on a continuous basis by spending national exchequers money has become more a routine than exceptions.

That said, there seems to be a silver lining catching some eyeballs in this whole process. Some brilliant minds that the government now has in the DoP, I hope, will be able to turn around the situation to everybody’s satisfaction, sooner than later.

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.