Health Care in India: Disrupt The Status Quo

Posted on August 24, 2015 by Tapan Ray

Over decades, we have been trying to ferret out the unfeigned reasons of failure for India to provide access to reasonably affordable, quality health care to all its citizens, but in vain. The quest to know its rationale becomes more intense, as we get to know, even some developing countries in Asia, Africa and Middle East are taking rapid strides to catch up with the health care standards of the developed countries of the world.

In the last few years many such countries, such as, Thailand, Turkey, Rwanda and Ghana, besides China, have successfully ensured access to quality and affordable healthcare to their citizens through well-structured national initiatives. Governments of economically poorer countries, such as, Sri Lanka and Bangladesh too are making rapid progress in this direction. All these commendable health care initiatives are protecting the most vulnerable populations in their respective countries from getting swept away by extreme poverty.

No more than just assurances:

In India, economic and social costs of public health care infrastructural inadequacy, consequent low access and inefficient delivery mechanism keep going north, unabated, barring a small number of States. Over decades, Union Governments of all political dispensations have been making no more than incoherent promises and that too in bits and pieces on reform in public health care services. As on date, no Union Government has articulated a comprehensive pathway to achieve this goal, in tandem with the States, specifying required time-frames and making commensurate budgetary allocations.

Despite the legacy factor, the incumbent Government as well, has not taken any tangible measure in this direction, just yet, besides giving similar in-coherent assurances. Nor has it clearly articulated that providing access to quality health care for all, at a reasonable cost, is one of its top areas of priority in the widely publicized ‘National Development Agenda’.

Agonizing wait continues:

That the Government is now in the process of drafting a National Health Policy to meet the rising demand for sustainable healthcare across the country, was announced by the Secretary – Health & Family Welfare on September 1, 2014. The first draft of The National Health Policy 2015 was placed in the public domain seeking inputs from the stakeholders in January 2015.

That said, agonizing wait of the patients with unfathomable patience still continues for better days of high quality and affordable health care services in India. Palpable feeling of long standing apathy of the decision makers in this area keep lingering simultaneously.

Two critical admissions:

Besides others, following are the two critical and unambiguous admissions in the draft National Health Policy 2015:

“The failure to attain minimum levels of public health expenditure remains the single most important constraint.”

“Over 63 million persons are faced with poverty every year due to health care costs alone, it is because there is no financial protection for the vast majority of health care needs.”

In my article of January 12, 2015 published in this Blog, titled “National Health Policy 2015 Needs Wings To Fly ”, I deliberated on the draft National Health Policy 2015.

No commensurate budgetary provisions:

Despite being aware of the above facts, the Union Budget for 2015-16 allocated just below Rs. 30,000 Crore for health care in India, without unveiling any longer term picture in this regard, not even a ‘broad brush’ one.

To give a perspective regarding how meagre is this budgetary allocation on so critical an area, I quickly add that on August 19, 2015, Prime Minister Modi announced an allocation of Rs.1.25 lakh crore for the development of only Bihar, just prior to the state going for the assembly election.

Untenable reason:

The Finance Ministers reasoned in his budget speech that post devolution of resources to the states following the recommendations of the 14th Finance Commission, the states will address the issue of healthcare in their respective geographical jurisditions.

However, it does not make much sense to me, if at all. This is mainly because, though health is a state subject, it is still a very critical national issue with an overall dismal performance of the country against most of the ‘Millennium Development Goals’.

Only a ‘National Health Plan’ funded jointly and adequately by both the center and the States with clear budgetary provisions and executed immaculately against clearly measurable performance parameters with specifically assigned accountabilities, could salvage the disastrous consequences of further neglect in the health care space of the country.

Not just deployment of financial resources:

The core issue, I reckon, is not just inadequate deployment of financial resources, but continuation of lack of effective governance in the Union Ministry of Health, as well. And, this is indeed a deadly combination. It has been pushing a large number of patients in India embracing abject poverty every year, as admitted in the draft National Health Policy 2015 of the incumbent Government, but with no visible rectifying measures, as on date.

Dangling carrots, as it were, to the patients by different Union Governments in shedloads, such as, ‘free medicines for all’, ‘free health insurance for all’, ‘free diagnostics for all” and what not ‘for all’, has been continuing forever, with patients having no other choices but to have patience in plenty and probably in perpetuity.

When Primary Health Care itself is a critical issue… :

In such deteriorating heath care environment, when primary health care still remains a key issue mostly in rural India, yet another interesting and tentative assurance reportedly comes from no less than the Union Minister of Health himself on August 18, 2015, when he said:

“The government is working both in secondary and tertiary medical sector and I believe that we need to work out a module in PPP mode to lessen the healthcare burden of common man.”

Having said that, when it comes to providing healthcare services to the poor and the needy, the Honorable Minister, expressed his vision in a notably interesting way, which is reportedly as follows:

“How will we be able to give the healthcare facility to helpless is one question that is unanswered…. All stakeholders should answer this question. Enhance the teaching, the training should be at much higher, speed, scale and skill and above all there should be better communication.”

Going beyond just allopathic treatment:

To answer the Health Minister’s above question – “How will we be able to give the healthcare facility to helpless”, one of the many important ways for the Government, I reckon, is to make a decisive and robust move much beyond Allopathic treatment, just as what China has done with its ‘traditional medicines’.

The strengths of traditional Indian medicines need to be properly leveraged with requisite intervention of science and technology and supported by effective awareness building campaigns.

Expand the role of ‘Traditional Medicines’:

Treatment with traditional medicines in India for many well-tried common diseases, has the potential to play an important role in providing access to health care for all, at least in the public health care space of the country, where AYUSH (Ayurveda, Yoga, Unani, Siddha and Homoeopathy) needs to be promoted and encouraged, actively.

It is expected that the new National Health Policy 2015 would have a much greater focus on the traditional systems of medicine – AYUSH, for the treatment of many common diseases.

It appears from various reports, AYUSH system that calls for not very sophisticated technological inputs for diagnosis of common diseases and preparation of medicinal substances, could be made an integral part of the entire healthcare spectrum, starting from the primary health centers.

As a basic preparatory measure to achieve this goal, the rejuvenated ‘Department of AYUSH’ should work, in consultation with the respective domain experts, to chart out an effective and implementable pathway for the development of education and research in Ayurveda, Yoga, Naturopathy, Unani, Siddha, and Homeopathy systems.

Need to increase focus on AYUSH:

It has been widely reported that the use of herbs to treat various common ailments is almost universal among many societies, as these are quite often more affordable than buying expensive modern allopathic medicines.

According to the World Health Organization, around 80 per cent of the population of some Asian and African countries currently use traditional medicines to address their health care needs.

I thought the same holds good for India, as well.

However, from a very recent and credible survey report, I find that the above impression is not quite true for India. Penetration of traditional AYUSH systems of treatment, even within the rural population of India, is currently abysmally low.

According to NSSO’s (National Sample Survey Office) Household Expenditures on Health Survey, conducted between January and June 2014, usage of Allopathy for “spells of ailment” is unusually high both in urban and rural India, as follows:

Category	Allopathy Treatment %
Rural Males	90.6
Rural Females	88.7
Urban Males	90.4
Urban Female	91.0

(Source: NSSO 2014-15)

In the absence of adequate access to safe and cost-effective treatments through public health care infrastructure and delivery systems, be it Allopathic or AYUSH, more number of patients are compelled to seek expensive private healthcare services for their “spells of ailment”, as follows:

Category	Private Doctors	Private Hospitals
Male	51.3	24.3
Female	49.7	23.9

(Source: NSSO 2014-15)

AYUSH could play an important role to address such issues, appreciably.

An intriguing recent media report:

On August 19, 2015, I read an intriguing media report that highlights the following two points on apparently a ‘recently overhauled draft’ of the National Health Policy 2015, as follows:

“The National Democratic Alliance (NDA) government plans to increase public investment in health from 1.04 per cent of GDP (gross domestic product) to 2.5 per cent by 2020, with 70 per cent of this being dedicated to primary health care. This target has been set in the overhauled draft National Health Policy that now emphasizes on substantially ratcheting up government investment in public health care facilities across the country.”

“Of the total funds required, the Union government would provide 40 per cent, which could be shored up through a health cess on the lines of an education cess. The cess fund to be used specifically for public health investments could be partly shored up by imposing additional duties on tobacco, alcohol, fatty, salty and sugary products that are considered unhealthy by experts.”

Why is this media report so baffling?

This news really baffled me…a lot, as another more than six month old media report of January 1, 2015 stated just the same on the same two points, exactly quoting the very first draft (not the ‘overhauled’ one) of the National Health Policy 2015 , as follows:

“The draft National Health Policy, 2015 has proposed a target of raising public health expenditure to 2.5 % from the present 1.2% of GDP. It also notes that 40% of this would need to come from central expenditure.”

“The government is also keen to explore the creation of a health cess on the lines of education cess for raising money needed to fund the expenditure it would entail. Other than general taxation, this cess could mobilize contributions from specific commodity taxes such as the taxes on tobacco, and alcohol, from specific industries and innovative forms of resource mobilization.”

Be that as it may, I would urge you to please read both the old and new original media reports on the same draft National Health Policy 2015 and draw your own conclusions, as you deem appropriate.

No change on the ground:

The media reports, such as above, elaborately detailing a significant increase in the health care expenditure as a percentage of GDP in the so called “overhauled” draft of the National Health Policy 2015, gave me an impression that the status quo, at least, in the public health care expenditure scenario has now been disrupted, which in reality has not, at all.

Such reports make patients continue ‘counting colors in the rainbow’, as it were. They keep expecting that getting access to quality and affordable health care for all would soon become a reality, with the Government thinking afresh to raise the public health care expenditure significantly. In reality, the status quo on the ground continues and it can’t be just wished away.

Deserves ‘Infrastructure Status’:

To achieve the basic health care goals of the nation, the Government would require to set the national priorities right. Health care has to be placed at the top rungs of its ‘National Development Agenda’ just as ‘infrastructure’- disrupting the prevailing status quo.

Considering its critical social and economic impact on the progress of the nation, it is about time that ‘Health Care Sector’ be given the ‘infrastructure status’ in India, not just to give a further boost to the industry, but also to make health care products and services affordable to all.

Conclusion:

Making health a ‘Fundamental Right’ for Indian Citizens, as narrated in the draft National Health Policy (NHP) 2015 of Narendra Modi Government, is indeed profound in its both content and intent. However, inordinate delay in its finalization and commencement of implementation process is rather disturbing.

Overhaul and expansion of public health care infrastructure, services and the effective delivery mechanism, undoubtedly, are very necessary requirements for the length and breadth of the country, excepting a very small number of states, which are doing so well in this area.

That said, the real issue is much more deep seated. As the well-known economist Subir Gokarn wrote in one of his articles that in health care “the consequence of inaction is a vicious circle between morbidity and poverty.”

This ‘vicious circle’ has to be broken, sooner. Many developing countries, including much poorer nations, have successfully demonstrated that access to basic quality healthcare can be provided to all, at an affordable cost.

Well-crafted robust national health care plan and policy, which are integrated with similar initiatives of the States should soon be put in place. Effective implementation of a comprehensive, well-integrated and time-bound health care strategic plan, with requisite budgetary allocations and periodic review, assigning specific accountabilities to individuals, are the needs of the hour. Otherwise, the social and economic consequences of the status quo in the health care space of India, would impede the sustainable growth of the nation, seriously.

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’s Drug Pricing Policy: “Absurd, Unreasonable And Irrational” – Supreme Court

Posted on July 20, 2015 by Tapan Ray

On July 15, 2015, while hearing a petition related to the current ‘Market Based Drug-Pricing Policy’ of the country, the Supreme Court of India expressed its bewilderment on the very rationality of the ‘National Pharmaceutical Pricing Policy 2012’ and directed the Government for its review.

The petition was filed by an NGO called, ‘All India Drug Action Network’. It pleaded before the honorable court that ‘Market Based Drug-Pricing’ that is currently followed in India, was never used for any price regulatory purposes. Under this new policy, simple average ‘Ceiling Prices’, in many cases, are higher than the market leader price.

The petitioner reportedly also alleged that under the new drug policy, the profit margin for pharma companies and dealers has become in the range of 10-1300 per cent. Thus, the NGO sought a direction to the Government to continue with earlier ‘Cost-Based Pricing’ to arrive at ‘Ceiling Prices’ for all essential drugs.

‘All India Drug Action Network’ contended that the ‘National List of Essential Medicines (NLEM)’ consisted of only 348 drugs and had left out many other essential medicines from price control. Thus, it sought inclusion of more life-saving medicines in the NLEM whose prices would be regulated by the government. It also pleaded that the price control must extend to various “dosages, strength and combinations” of those drugs falling under NLEM.

Expressing its serious concern, the three-judge bench of the Apex Court reportedly told the Government, “You are fixing the maximum price of a medicine above the retail price of the leading company of the same drug. It is absurd.”

The honorable Supreme Court reportedly also observed that the “pharmaceutical companies were already charging 5,000 times of the production cost and then you are taking the average of them and fixing under the drug price control order. This is legitimizing the profiteering”.

Many construe this observation of the Supreme Court as virtual endorsement of ‘All India Drug Action Network’s accusation that the earlier ‘cost-based drug-pricing’ model was better for the patients, whereas the new ‘market-based drug pricing’ model just legitimizes profiteering and pushes drugs out of reach of the poor, who are already suffering under very high ‘out of pocket’ health expenditure burden.

The Honorable Court reportedly asked the Department of Pharmaceuticals of Union Ministry of Chemicals and Fertilizers to reconsider aspects like the formula to fix prices. And thereafter pass a “reasoned” order on the representation of the NGO on the issue within six months after hearing all parties concerned. It also asked the Centre to file a copy of its decision on the representation of NGO, which would file it in six weeks.

However, at the very beginning the bench had expressed, “this is not an easy area for the courts to intervene and it is very difficult for a court to sit in judgment in such kind of policy matters.”

The Additional Solicitor General appearing for the Government reportedly submitted that the Government is open to consider the representation. “We will have a look to add some more drugs under the price control order”, she reportedly said.

Key objectives for drug price control in India:

As has now been well established, backed by robust data, that in a country like India ‘Out of Pocket Expenditure’ for medicines is very high.

According to the World Bank Out-of-pocket health expenditure (% of private expenditure on health) in India was last measured at 85.88 in 2013.

In a situation like this, to ensure adequate access to affordable essential medicines for the common man, the Government has hardly any option but to regulate the prices of, at least, the essential medicines.

To achieve this objective meaningfully, the Government through the ‘National Pharmaceutical Pricing Authority (NPPA)’ tries to make sure that all such medicines are:

Adequately Available
Reasonably Affordable

Therefore, maintaining a right balance between ‘affordability’ and ‘availability’ of medicines is of critical importance, while framing any drug pricing policy, .

A January, 2013 article titled, “Pharma Policy 2012 and Essential Drug’s Pricing” gives the following examples to illustrate how current ‘market based pricing’ mechanism is going to make many drugs costlier:

Drug	Disease	Market-based pricing (simple average)	Cost based pricing
Metformin	Diabetes	Rs.35	Rs.14
Atorvastatin	Cholesterol	Rs.127	Rs.16
Atenolol	Hypertension	Rs.38.5	Rs.08

Source: Jan Swasthya Abhiyan (JSA)

Why ‘drug price control’ at all in a ‘Free Market Economy’?

It is indeed a very pertinent question to ponder over.

However, equally pertinent answers are also available. One such was deliberated in a 2014 paper titled, “Competition Issues in the Indian Pharmaceuticals Sector” of Delhi School Economics (DSE). The paper deals with the subject related to failure of ‘Free Market Economy’ especially for branded generic drugs in India, despite seemingly intense price competition.

In an ideally free-market economy model, for each of these brands of identical drugs, having similar regulatory approvals from the Indian drug regulator on efficacy, safety and quality standards, competitive forces should have prompted uniform or at least near uniform prices for all such products.

Any brand of the same drug/drugs charging more, should generally have attracted lesser customers, if consumers would have exercised their purchase decisions directly; efficacy, safety and quality standards being the same, as certified by the drug regulator.

Interestingly, for prescription medicines, the much proven process of consumers exercising their free choice to select a brand, influenced by advertising or other available information, does not happen at all.

A snapshot of key changes in the new drug policy over the previous one:

The ‘Drug Price Control Order 2013 (DPCO 2013)’ clearly articulates two basic changes in the criteria for drug price control in India, as follows:

1. Span of price control:

This was re-defined in DPCO 2013 based on the ‘essentiality criteria’ of the drugs, which in turn is based on the ‘National List of Essential Medicines 2011 (NLEM 2011)’, instead of bulk drug based price control of DPCO 1995.

2. Methodology of price control:

This was also re-defined in DPCO 2013, making a clear departure from ‘Cost-Based Price Control’ of DPCO 1995 to ‘Market-Based Price Control’. The ‘Ceiling Prices’ are now arrived at by calculating the simple average price of each essential drug with market share of 1 percent and above. Instead, in DPCO 1995, ‘Ceiling Prices’ of price-controlled drugs used to be arrived at by applying specified ‘Maximum Allowable Post Manufacturing Expenditure (MAPE)’ on the manufacturing costs of each of such formulations.

Key lacunae in DPCO 2013:

Besides contentious methodology of price control in DPCO 2013, NLEM 2011 does not also cover a wide range of essential drugs, which are so important for patients. I had highlighted this issue in one of my earlier blog posts titled “Is The New ’Market Based Pricing Model’ Fundamentally Flawed?”

NLEM 2011 does not cover many combinations of TB drugs, a large number of important drugs for diabetes and hypertension. Many other critical life saving medicines, such as, anti-cancer drugs, expensive antibiotics and products needed for organ transplantation have been left out of price control. In fact, the prices of a number of these drugs have reportedly gone up after the notification of DPCO 2013, though NPPA has now started acting on this avoidable trend.

The government has reportedly admitted in an affidavit filed before the Supreme Court that the market value and share of medicines covered by new DPCO 2013, as ‘Essential Drugs’, is a meager 18 per cent of the Indian Pharmaceutical Market (IPM), instead of 20 percent under DPCO 1995.

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

All these lacunae in the current DPCO 2013 calls for a major revision of NLEM 2011, besides methodology of ‘Ceiling Price’ calculations. The Union Health Ministry has reportedly initiated steps to revise the list considering the existing market conditions and usage of drugs by the patients. This has reportedly happened again as recently as on July 16, 2015.

Observations of Indian lawmakers:

On April 20, 2015, a panel of 31 lawmakers of the Standing Committee on Chemicals and Fertilizers tabled its report in the Indian Parliament. The committee emphasized that patients in India should have access to all medicines, including life saving drugs, at affordable prices. Accordingly, it recommended expansion of the scope of price control to all medicines available in the country.

The Committee wondered why all medicines are still not listed in the ‘National List of Essential Medicines (NLEM)’ and is of the view that drugs of all kinds are essential and are required by the patients for treatment of various disease conditions at different times.

Government defines “Market Failure for pharmaceuticals”:

In its price notification dated July 10, 2014, the NPPA has categorically stated about “Market Failure for pharmaceuticals” as follows:

There exist huge inter-brand price differences in branded-generics, which is indicative of a severe market failure, as different brands of the same drug formulation, which are identical to each other in terms of active ingredient(s), strength, dosage, route of administration, quality, product characteristics, and intended use, vary disproportionately in terms of price.

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

In India the market failure for pharmaceuticals can be attributed to several factors, but the main reason is that the demand for medicines is largely prescription driven and the patient has very little choice in this regard.

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

Has DPCO 2013 delivered?

Many stakeholders, barring some NGOs, felt initially that DPCO 2013 would be a win-win drug pricing policy for both the industry and patients, as it would apparently be less intrusive for the pharma players.

Along side, through ‘Public Relations’ overdrive, a hype was successfully created in the media by vested interests to generate a feeling that the drug prices are coming down by 30-40 percent as a result of the new market-based price control regime under DPCO 2013.

That could well be true for a handful of drugs. However, the fact is that the industry was adversely impacted by just around 2.3 percent, with the provision for annual price increases for even the price-controlled drugs. On the other hand, the span of price control came down from 20 percent of the just pervious DPCO 1995 to 18 percent in DPCO 2013, not impacting the industry as significantly as it was hyped before. This is quite evident even from the reported overall performance of the industry.

For the general patients, by and large, DPCO 2013 has not delivered what it was expected to on the ground.

Conclusion:

Realization of these facts has been just enough for the public disillusionment to set in, with a possible snowballing effect. Now the Supreme Court has intervened responding to a Public Interest Litigation (PIL). It has also made tough observations on the rationale of ‘market based drug price control’ and directed the government to review it.

On the other side, the Government appointed experts are reportedly revisiting the NLEM 2011 to include more essential drugs in this list.

In the midst of all these, the same drug pricing juggernaut continues to keep rolling, with almost similar narrative, though with different packaging and all associated theatrics of the day. Universal Health Care (UHC) for all now seems to be no more than an illusion, as vindicated by the recent union budgetary allocations for health in India

The Supreme Court of the country has observed afresh that India’s drug pricing policy is “Absurd, Unreasonable and Irrational”. This ticks the general population looking up to the honorable Apex Court as the savior to their long outstanding misery in this area, especially when steep ‘Out of Pocket Health Expenditure’ in India continues to stand out as a sore thumb.

Be that as it may, hoping against hope, the common man continues to clutch on mostly to Government assurances, just on its face value, that ‘Achhe din anne wale hain (Good days are coming)’ for most patients in the country…who knows?

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.

TPP: Discord Within A Strange Mélange And Impact On Access To Medicines

Posted on May 25, 2015 by Tapan Ray

On May 19, 2015, Bloomberg reported that a sizable number of President Barack Obama’s own party colleagues, besides teachers, seniors, Internet freedom groups and nuns, have joined the push to defeat the proposed Trans-Pacific Partnership (TPP) treaty.

Before I delve into the TPP, solely from the Indian pharmaceutical industry perspective, it is worth acknowledging upfront India’s firm assertion, repeatedly, to continue with its well-thought out and robust Patents Act 2005.

Even the final draft of the National IPR policy, which is now being circulated for inter-ministerial consultations and will soon be taken up by the Cabinet, reasserted that the country’s IPR policy is fully compliant with the Trade Related aspects of IPR (TRIPS) agreement of the World Trade Organization (WTO).

In this process, global demonstration of India’s firm resolve against dilution of the country’s Intellectual Property (IP) regime, coming under any form of intense external pressure, seems to have become a model to follow for the emerging economies of the world, in general.

This trend now gets reflected from some constituents even within the United States, besides several members of the 12-nation TPP, which is a proposed regional regulatory and investment treaty, aimed at strengthening relationship on economic policies and regulatory issues between the member nations.

Publicly articulated key objectives of the pact are to significantly reduce tariffs between the member nations and open up trade, boosting investment flows between its signatories, to accelerate economic growth.

The member countries of TPP have also agreed to work together on issues such as customs procedures, labor practices, intellectual property and competition policies.

Through its comprehensive coverage of issues and binding regulations, TPP is expected to set new benchmark for international trade. It is expected to eventually mature into a regional trade agreement covering the entire Asia-Pacific region.

Uneasy secrecy:

However, the uneasy secrecy surrounding the negotiations of the agreement makes its critics seriously apprehensive about its impact on the developing nations of the world. This is because; the concerned delegates of the negotiating team always remain tight lipped about the progress made in coming to an agreement on the scope of the pact. This information is critical for assessment of direct and indirect global impact of TPP on the trade, economy and society, in general.

According to reports, TPP members, such as, Brunei, Malaysia, Singapore and Vietnam are negotiating hard to get incorporated somewhat similar to Indian IP rules in the TPP agreement.

Besides the above countries, other members of TPP are United States, Australia, Japan, New Zealand, Canada, Chile, Mexico and Peru.

Large Asian economies are not a part:

Interestingly, large Asian economies, especially, four important members of the G20, namely, China, India, South Korea and Indonesia, are not a part of the TPP, just yet.

It is worth noting, TPP is being led by the world’s largest economy and the biggest trading nation – the United States, the country that sees Asia-Pacific as key to its future growth.

Noting all these, many experts in this field, across the world, have already raised a flag saying that the US may be trying to use TPP as a means to undermine China’s growing economic might in the region.

Many gaps still to bridge:

The real negotiations for this treaty started only in 2010 and are still continuing. However, the details of negotiations is so much shrouded under water tight secrecy, even to the lawmakers of the United States, it is indeed challenging for anyone to predict the timeframe of its coming to fruition.

Reuters reported on May 21, 2015, “Chief negotiators from the 12 TPP countries are trying to bridge gaps for a deal at a meeting in Guam that will run through to May 28, 2015. But ministers would need to meet to clinch an accord,”

In this article, I shall only focus on the possible impact of this pact on the access to medicines, especially in the developing world.

Leaked drafts of TPP negotiations:

As the progress of negotiations of this pact continue to remain under uneasy secrecy, on November 13, 2013, WikiLeaks released the secretly negotiated draft text for the entire IPR Chapter of the TPP.

30,000-word IP chapter of the leaked documents, besides others, reportedly contains proposals to increase the term of drug patents beyond 20 years, and lower global standards for patentability.

TPP and patents:

When it comes to the issue of access to affordable medicines for a vast majority of the global population, the overall patent ecosystem of a nation and how evergreening of patents with monopolistic high pricing are addressed, automatically enter into the broader framework of intense public and stakeholders’ discourse.

Article 8.1 of the draft agreement sets-forth the availability of patents, and provides that “patents shall be available for any new forms, uses, or methods of using a known product; and these may satisfy the criteria for patentability, even if such invention does not result in the enhancement of the known efficacy of the product.”

Interestingly, TRIPS agreement, on the other hand, specifies that patents are available “provided that the invention is new, involves an inventive step and is capable of industrial application.”

In that sense, the above provision in the Article. 8.1 is quite inconsistent with the patent laws of many TPP member countries, and especially India.

Consequently, experts have raised serious concerns about the impact of TPP on the IP laws of a country, in general, as it may extend the scope of drug patents, preventing free distribution of cheaper generic drugs to the needy patients.

Impact on access to medicines:

As stated earlier, there have been serious apprehensions that TPP would adversely impact the access to medicines.

According to widely reported leaked drafts of TPP negotiations, the US is demanding aggressive IP provisions in the agreement. It is believed, if accepted, these would directly undermine public health safeguards available in international law, making it harder for TPP member countries to gain access to cheaper generic drugs.

Many experts in this field reportedly construe, these stringent IP provisions that the US is demanding may be categorized as ‘TRIPS-plus’ and have the following serious impact adversely impacting access to medicines :

Make it impossible to challenge the validity of a patent before it is granted

Lower the requirements for patentability, so that minor alterations of existing medicines can be  given additional protected monopoly status, even if the alteration offers no therapeutic benefit

Require the patenting of diagnostic, therapeutic and surgical methods

Lengthen patent monopolies for pharmaceutical firms so that they keep generics out and inflate drug prices for longer periods of time

Make it harder for generic manufacturers to obtain regulatory approval for their drugs

Create additional monopolies based on clinical data

Impose new forms of IP enforcement that give customs officials excessive powers to impound legitimate generic medicines

Impose higher prices on national pharmaceutical reimbursement programs

Allow pharmaceutical companies to sue governments and limit governments’ abilities to effectively set prices for medicines and legislate in the interest of public health.

Discord within key TPP member countries:

Though Australia is one of the key signatories of TPP, in February 2015, the Medical Journal of Australia also commented that the leaked draft of the agreement includes patenting standards that would delay cheaper drugs.

Quoting the Medical Journal of Australia, ‘The Guardian’ too reiterated: “The most recently leaked draft of the international trade deal includes provisions proposed by the US that would further protect the monopoly pharmaceutical companies hold over drugs, and delay cheaper versions from entering the market. The draft agreement sets in stone low patenting standards, which allow drug companies to practice ‘evergreening’ – when a pharmaceutical company tries to maintain its market monopoly on a drug for longer by applying for extra patents. This prevents other companies entering the market with cheaper versions of the same medicine and imposes large and unnecessary costs on the health system and consumers.”

Similarly, across Canada, people are speaking out about the TPP. They are rallying against the secrecy of the 12-country negotiations and the corporate agenda behind the deal.

On February 12, 2015 legislators in seven of the 12 TPP countries issued the following joint statement about the negotiations:

“We, the undersigned legislators from countries involved in the negotiation of the Trans-Pacific Partnership Agreement, call on the Parties to the negotiation to publish the draft text of the Agreement before any final agreement is signed with sufficient time to enable effective legislative scrutiny and public debate.”

In Canada, the federal NDP and the Green Party of Canada endorsed the above statement. It is the simplest of demands for democracy on a “trade” deal that threatens to undermine the very notion of the public good, by giving corporations more power to undermine public policy.

As stated above, Brunei, Malaysia, Singapore and Vietnam are also negotiating hard to get incorporated somewhat similar to Indian IP rules in the TPP agreement.

Though not in the areas of access to medicines, Japan too expressed its concerns on TPP impacting its agriculture sector. Protests are forthcoming in the copyrights area, as well.

Apprehensions catching-up in the US too:

May 19, 2015 Bloomberg report also indicates, specifically from the pharmaceutical industry perspective, some key stakeholders are worried about the effects of more open markets on drug pricing that could increase their costs and “Foreign corporations or subsidiaries will be able to challenge a number of public health programs.”

In a letter of May 12, 2015 to the House and Senate, the Alliance for Retired Americans has reportedly underscored the possibility of this grave danger to them, if TPP comes into effect.

On May 21, 2015, Reuters reported, just 13 out of 44 Democrats (of President Obama’s own Party) backed the legislation in the Senate’s second procedural vote on last Thursday.

Earlier, a group of over 30 legal academics reportedly sent a letter to the US Trade Representative, expressing “profound concern and disappointment at the lack of public participation, transparency and open government processes in the negotiation of the intellectual property chapter of the TPP”.

Other important areas of criticism:

Other key areas of criticism of TPP are as follows:

Excessive emphasis on trade issues that have remained unresolved or unaddressed at the WTO due to differences between developed and emerging markets.

Adopting a negotiating style reflecting the US regulatory approach to international trade

Allowing companies to sue foreign governments, which would allow them to dodge health and environmental standards.

Giving shape to a geo-political road map of the US that supports its strategic rebalancing towards Asia.

A strange mélange:

An article published in the April 9, 2015 edition of Forbes, titled “TPP Is A Mistake”, very appropriately describes TPP as a strange mélange of 12 members countries that includes five from the Americas (Canada, Chile, Mexico, Peru and the US), five from Asia (Brunei, Japan, Malaysia, Singapore and Vietnam), along with Australia and New Zealand.

In terms of populations, the total American contingent which stands at 535 million, more than half the total population of the Americas (947 million), is significantly larger than the Asian population figures which amount to no more than 256.6 million (285 if one adds Australia and New Zealand), compared to Asia’s total population of 4.3 billion: almost half of the Asian contingent is accounted for by one member – Japan, the articles states.

In this article, former Malaysian Prime Minister Tun Dr Mahathir Mohamad, the architect of Malaysia’s impressive economic growth and development during his tenure from 1981 to 2003, was quoted saying:

“The strongest campaigner of TPP is America … which seeks … to contain China and to safeguard its own economic interests by exploiting all resources from small but growing independent nations such as Malaysia”.

He further adds, “TPP is not a fair or free trade partnership, but an agreement to tie down nations with rules and regulations that would only benefit American conglomerates”.

Is TPP more than just a trade agreement?

Many experts feel, that TPP is basically a geopolitical tool to contain China with ‘trade’ as its façade.

The votaries of TPP argue that it aims to achieve a very high standard trade agreement and thus the reason of keeping China out of it is not geopolitical. Other Asian nations, including China, can apply and qualify for membership once they commit to meeting these high standards, they reiterate.

The above argument does not seem to be a robust one, as that would mean, a sizable proportion of its smaller current members, such as, Vietnam, already conform to so called ‘high standards’, as required for the TPP agreement.

Besides geopolitical issue, many are also questioning whether TPP is what the developing countries need, especially, at this stage of their development.

Conclusion:

One may quite pertinently ask, in what way TPP is relevant to India?

TPP is relevant to India in the sense that it is expected to eventually mature into a regional trade agreement covering the entire Asia-Pacific region.

Be that as it may, if I restrict myself only to the drug patent related area of the proposed pact, it appears, unless the damaging provisions in the concerned chapters are removed through negotiations before the agreement is finalized, the TPP would possibly turn out to be the most harmful trade pact ever, especially from the perspective of access to medicines in the developing countries of the worlds.

May 2015 issue of ‘amfAR’ – The Foundation for AIDS Research based in Washington DC of the United States captured the essence of possible healthcare related issues with TPP – the pact of a strange mélange of 12 member countries, with the following words:

“By providing avenues for pharmaceutical companies to extend IP protection beyond what is required by current international standards, the TPP could greatly delay the entrance of generic competition for much-needed medicines and keep prices high. Doing so would continue an unacceptable and dangerous trend of irrevocable expansion of IP protections at the expense of access to medicines and would serve as a justification for even more aggressive measures in future FTAs.”

By: Tapan J. Ray

The Curious Imbroglio: Innovation, IPR, India and ‘Uncle Sam’

Posted on May 4, 2015 by Tapan Ray

Last week, the Office of the United States Trade Representative (USTR) released the “2015 Special 301 Report”, which is its annual review of the global state of Intellectual Property Rights (IPR) protection and enforcement.

While looking through the Kaleidoscope of business interests of the United States, variegated changing patterns of a wide variety of country-specific observations can be noted in this report.

It is widely believed that the report ‘pontificates’ about the adequacy and effectiveness of IPR protection and enforcement of its trading partners against USTR’s own yardstick, hinting unhesitantly at the possible consequences, if found lacking.

USTR reviewed seventy-two (72) trading partners for this year’s Special 301 Report, and placed thirty-seven (37) of them on the ‘Priority Watch List’ or ‘Watch List’. Thirteen (13) countries – Algeria, Argentina, Chile, China, Ecuador, India, Indonesia, Kuwait, Pakistan, Russia, Thailand, Ukraine, and Venezuela, are on the ‘Priority Watch List’. These countries will be the subjects of particularly intense bilateral engagement during the coming year.

India specific significant elements of the 2015 Special 301 Report include the following:

Increased bilateral engagement in 2015 between the United States and India on IPR concerns, following the 2014 Out-of-Cycle Review (OCR) of India on this issue.

India will remain on the ‘Priority Watch List’ in 2015, but with the full expectation of US about substantive and measurable improvements in India’s IPR regime for the benefit of a broad range of innovative and creative industries.

The US offered to work with India to achieve these goals.

No OCR at this time for India, but US will monitor progress in India over the coming months, and is prepared to take further action, if necessary.

The 2015 report also highlights:

“While it is impossible to determine an exact figure, studies have suggested that up to 20% of drugs sold in the Indian market are counterfeit and could represent a serious threat to patient health and safety.”

According to media report, a senior Commerce & Industry Ministry official has commented, “India is disappointed at being featured yet again in the US ‘Priority Watch List’ of weak IPR countries. But it is not worried.”

Recent Action by India:

In October 2014, almost immediately after Prime Minister Modi’s return to India from the US, the Government formed a six-member ‘Think Tank’ to draft ‘National IPR Policy’ and suggest ways and legal means to handle undue pressure exerted by other countries in IPR related areas.

The notification mandated the ‘Think Tank’ to examine the current issues raised in such reports and give suggestions to the ministry of Commerce & Industry as appropriate.

However, the domestic pharma industry, many international and national experts together with the local stakeholders, continue to strongly argue against any fundamental changes in the prevailing robust patent regime of India.

In the same month, the Department of Industrial Policy and Promotion (DIPP) constituted a six-member ‘Think Tank’ chaired by Justice (Retd.) Prabha Sridevan to draft the ‘National IPR Policy’ of India. Taking quick strides, on December 19, 2014, the Think Tank’ released its first draft of 29 pages seeking stakeholders’ comments and suggestions on or before January 30, 2015. A meeting with the stakeholders was also scheduled on February 5, 2015 to take it forward.

Possible reasons of US concern on the draft ‘National IPR Policy’:

As I discussed in my blog post of January 19, 2015 titled, “New “National IPR Policy” of India – A Pharma Perspective”, I reckon, there are three possible key areas of concern of American pharma industry against Indian patent regime. However, in the draft National IPR Policy India seems to have stood its ground in all those areas.

The draft IPR policy responded to those concerns as follows:

Concern 1: “India’s patentability requirements are in violations of ‘Trade Related Aspects of Intellectual Property Rights (TRIPS)’ Agreement.” (Though it has not yet been challenged at the WTO forum)

Draft IPR Policy states: “India recognizes that effective protection of IP rights is essential for making optimal use of the innovative and creative capabilities of its people. India has a long history of IP laws, which have evolved taking into consideration national needs and international commitments. The existing laws were either enacted or revised after the TRIPS Agreement and are fully compliant with it. These laws along with various judicial pronouncements provide a stable and effective legal framework for protection and promotion of IP.”

A recent vindication: On January 15, 2015, Indian Patent Office’s (IPO’s) rejection of a key patent claim on Hepatitis C drug Sovaldi (sofosbuvir) of Gilead Sciences further reinforces that India’s patent regime is robust and on course.

Gilead’s patent application was opposed by Hyderabad based Natco Pharma. According to the ruling of the IPO, a new “molecule with minor changes, in addition to the novelty, must show significantly enhanced therapeutic efficacy” when compared with a prior compound. This is essential to be in conformity with the Indian Patents Act 2005. Gilead’s patent application failed to comply with this legal requirement.

Although Sovaldi ((sofosbuvir) carries an international price tag of US$84,000 for just one treatment course, Gilead, probably evaluating the robustness of Sovaldi patent against Indian Patents Act, had already planned to sell this drug in India at a rice of US$ 900 for the same 12 weeks of therapy.

It is envisaged that this new development at the IPO would prompt entry of a good number of generic equivalents of Sovaldi. As a result, the price of sofosbuvir (Sovaldi) formulations would further come down.

However, reacting to this development Gilead has said, “The main patent applications covering sofosbuvir are still pending before the Indian Patent Office…This rejection relates to the patent application covering the metabolites of sofosbuvir. We (Gilead) are pleased that the Patent Office found in favor of the novelty and inventiveness of our claims, but believe their Section 3(d) decision to be improper. Gilead strongly defends its intellectual property. The company will be appealing the decision as well as exploring additional procedural options.”

For more on this subject, please read my blog post of September 22, 2014 titled, “Gilead: Caught Between A Rock And A Hard Place In India”

Concern 2: “Future negotiations in international forums and with other countries.”

Draft IPR Policy states: “In future negotiations in international forums and with other countries, India shall continue to give precedence to its national development priorities whilst adhering to its international commitments and avoiding TRIPS plus provisions.”

Concern 3: “Data Exclusivity or Regulatory Data Protection.”

Draft IPR Policy states: “Protection of undisclosed information not extending to data exclusivity.”

I discussed a similar subject in my blog post of October 20, 2014 titled, “Unilateral American Action on Agreed Bilateral Issues: Would India Remain Unfazed?”

Confusion with the Prime Minister’s recent statement:

It is worth noting that in end April 2015, Prime Minister Narendra Modi reportedly remarked to align India’s patent laws with “international standards”.

What the Prime Minister really meant by patent laws with “international standards” could be of anybody’s guess. This is because, even the World Trade Organization (WTO) considers Indian Patents Act compliant to TRIPS Agreement, which has been globally accepted as the ‘Gold Standard’ in the realm of IPR…unless, of course, Prime Minister Modi intends to accept ‘TRIPS Plus’ provisions for India, under US pressure and at the cost of health interest of majority of Indian patients.

It is noteworthy though, his own Ministry of Commerce & Industry has categorically emphasized and re-emphasized several times in the past that India’s patent regime is fully TRIPS compliant.

To add greater credence to this argument, the noted free market economist and Professor of Economics at Columbia University – Arvind Panagariya, who has recently been appointed to run Prime Minister Narendra Modi’s new NITI Aayog, has also endorsed it in his published articles, unambiguously.

As usual, leaving nothing to chance, immediately after the above remark of the Indian PM to align India’s patent laws with “international standards”, the USTR urged India to ‘expeditiously undertake’ initiatives stated by PM Modi, flashing across a long list of changes that the US wants to get incorporated in the Indian IP Acts and policies.

Pressure for amendment of Indian Patent Law:

From the intensity of pressure that the US Pharma industry is generating on the US Government, it is clear that American pharma industry will not be satisfied till Modi Government brings in changes in the Indian Patents Act 2005, as dictated by its constituents.

At the top of much publicized US wish list on IPR, features abolition of Section 3(d) of the Indian patent law. This provision of the Act denies patents to frivolous and incremental innovations without offering any significant value to the patients in terms of improved clinical efficacy of the drug. Many would term such innovation as attempts towards evergreening of patents through minor molecular manipulation or similar other means. This kind of innovation gives already a very high priced blockbuster drug another full term of patent monopoly, often with even higher price, at the cost of patients.

Pressure for a relook at the National IPR Policy:

In fact, the USTR 2015 report, also asks India to have yet another round of consultations with stakeholders before finalizing its IPR policy. This is widely construed as an attempt on the part of the US Government and industry to conclude their unfinished IPR agenda for India.

Whether Modi Government would be bullied by the American Pharma industry to succumb to its pressure at the cost of the Indian patients and going against the national and international experts’ opinion, only time would tell.

Benefits of Innovation and India:

India has amply demonstrated time and again that it does understand the value and benefits of innovation in different facets of life and business. The country endeavors to protect it too, according to the law of the land. However, there are still some procedural loose knots existing in the IPR environment of the country.

As stated above, for effective remedial measures in those areas, a ‘Think Tank’ has already been constituted by Modi Government to formulate a robust and comprehensive National IPR Policy.

In this context, a media report quoted a senior official from the Union Ministry of Commerce & Industry saying, “We hope this year we can convince the US that our laws are drafted in a way so as to protect both our consumer and industry’s interest. The new IPR policy that we are coming out with will take care of any anomalies or vagueness in our existing regime and make it tight and also fast-track clearances of patent applications.”

Would there be a ‘Ghost Writer’ for Indian IPR Policy?

The first draft of the policy has already been circulated in January 2015 and discussed in the following month with the stakeholders. However, American Pharma industry does not seem to be satisfied with its overall content, leave aside the nitty-gritty.

Going by this development some apprehends that a powerful lobby group probably wants to be the ‘Ghost Writer’ for the IPR Policy of India. Coincidentally enough, we also see the USTR blowing hot and cold on this critical issue…blowing hot through its ‘Special 301 Report’ and cold by praising Prime Minister Modi’s remark to align India’s patent laws with “international standards”.

India should play a catalytic role in changing the drug innovation model:

A paradigm shift in the drug innovation model can materialize only when there will be a desire to step into the uncharted frontier…coming out of the comfort zone of much familiar independent money spinning silos of all kinds of drug innovations…from break-through drugs to me-too varieties. Dove tailing scientific and business excellence with patients’ health interest, dispassionately, would then be the name of the game.

Though arduous, playing a catalytic role to bring out this transformation sooner, is extremely important for India. This is because, drug innovation with significant value addition would continue to remain as critical as access to important medicines for all, in perpetuity. India understands that just as clearly as USTR …for its ‘make in India’ campaign or otherwise. No well-orchestrated and spoon-fed pontification required in this area…uncalled for.

Conclusion:

The bottom line is, the US Pharma industry continues to flex its muscle relentlessly under the very often used, misused and even abused façade that India does not understand the value of innovation.

On the other hand, the general sentiment in this area, both national and international, favors India.

As the new Vice Chairman of NITI Aayog of India, Dr. Arvind Panagariya wrote, “India must call the US’ bluff on patents,” it’s indeed time to demonstrate the same, once and for all.

However, in the context of upholding patients’ health interest in India, a lurking fear does creep in, after PM Modi’s well publicized recent remark to align India’s patent laws with “international standards”, especially when Indian Patents Act 2005 is already TRIPS compliant, according to WTO requirements.

That said, in the midst of a raging debate involving innovation, IPR, India and ‘Uncle Sam’, the moot question that floats at the top of mind is:

Has seemingly tough-minded Prime Minister Modi already yielded to ‘Uncle Sam’s’ bullying tactics to effect changes in an otherwise robust Indian patent regime, and that too at the cost of health interest of needy patients of the country?

By: Tapan J. Ray

“Make in India” Image of Pharma Needs An Early Makeover

Posted on April 20, 2015 by Tapan Ray

“It is never too late to be what you might have been” - George Elliot

The chronicle of events since the last couple of years or so, related to ‘Make in India’ image of the local drug industry, have been instrumental to significantly slowing down the scorching pace of pharma exports growth of the country.

The Union Ministry of Commerce estimates that India’s export of drugs and pharmaceuticals may hardly touch US$16 billion in 2014-15, against US$14.84 billion of last financial year. This would mean that pharma exports growth would just be around 5 percent, against the projected number of 10 percent for the year. This is a significant concern, as pharma exports contribute around 40 percent to the total value turnover of the sector.

Despite this fact and couple of other important reasons, as I shall discuss below, about 45 percent of listed pharma stocks in India have reportedly more than doubled in the past one year. The current tail wind in the domestic pharma market could possibly have contributed to this aberration.

According to AIOCD Pharmasofttech AWACS, the last financial year started in April 2014 with 7.3 percent domestic retail pharma growth, which accelerated to 20.9 percent in March 2015, as the year ended.

High level of optimism and positive sentiments, thus generated in this process, possibly prompted many to ignore even some of the critical storm signals for the domestic pharma industry in its totality.

Declining pharma exports growth – A key challenge:

In 2014, pharmaceutical exports contributed 39 percent to the sector’s total value turnover. Consistently strong export performance over the last few decades, has catapulted the local drug industry in the not so common trajectory of the net foreign exchange earner for India. It is worth noting, though pharma exports grew at a rate of just 1.2 per cent to reach in 2013-14, it registered a CAGR of 21 percent over the last decade.

Some analysts estimate, the chances of Indian pharma exports touching even US$16 billion in 2014-15 are indeed challenging, especially considering low growth recorded by some of the large Indian pharma companies, including Ranbaxy, Dr. Reddy’s Laboratories and Lupin, especially in the US market.

Mounting pricing pressure:

Consolidation process of pharmacy players in the US market is also affecting the profit margins of the Indian drug exporters.

Some key examples are:

Global alliance among three large pharmacy distributors – Walgreen, Alliance Boots and Amerisource –Bergen, in early 2013

Joint venture between the second largest US wholesale distributor, Cardinal Health, and CVS Caremark in December 2013

US pharmacy McKesson’s announced acquisition of US distributor Celesio in January 2014.

On April 9, 2015, Bloomberg reported that Walgreens Boots Alliance Inc.’s acting Chief Executive Officer Stefano Pessina has expressed his intent to do more deals, just months after being on the saddle of the biggest US drugstore chain.

As a result, a few dominant pharmacy players emerged with hard bargaining power, exerting tough pricing pressures on the generic drug companies and that too in a market that has been facing already facing cutthroat generic price competition.

Consequently, according to published reports, the prices of generic drugs, in general, declined by around 20 to 30 per cent over the past 19 months, in the US.

Vulnerability in the key market:

According to IBEF March 2015, the United States (US) has been the prime importer of pharmaceuticals from India, accounting for over 25 per cent of Indian pharmaceutical exports, followed by the European Union and Africa at second and third positions, respectively.

India exports over US$4 billion of pharmaceutical products to the US, out of its annual exports of around $15 billion. Large domestic companies, such as Ranbaxy, Sun Pharma and Lupin account for around US$3 billion of exports to the US and the balance comes from a large number of other Indian pharma players.

Government sites 3 reasons:

According to the Union Ministry of Commerce, there are reportedly three key reasons for the pharma export falling short of target in the financial year 2014-15, namely:

- Delayed regulatory approvals

- Consolidation of pharmacy players in North America (discussed above)

- Steep depreciation of currencies in emerging markets such as, Russia, Ukraine and Venezuela

A major controllable concern seems to be out of total control:

While articulating the above three factors, the Union Ministry of Commerce seems to have missed out a very important one that has been instrumental in perpetuating the recent slow down of Indian pharma exports, significantly. It is very much a controllable too, unlike the other three, though appears to be virtually out of total control of the domestic pharma companies.

Fortunately, media kept harping on it. PTI News of January 11, 2015 reported, while Indian pharma exports expected to touch a turnover US$16 billion in 2014-15, many Indian pharmaceutical companies continue to face regulatory action by the USFDA for alleged violation of ‘Good Manufacturing Practices (GMP)’ and other irregularities at the respective drug manufacturing facilities in different parts of the country.

This report observed, a number of Indian drug-makers, including Ranbaxy, Sun Pharma, IPCA Labs, Wockhardt and Dr. Reddy’s Laboratories faced sanctions of the USFDA over different issues ranging from hygiene levels in the plant and concealment of data on failed tests to even fabrication of records. As a result, in several cases, these companies have been barred from selling their drugs in the US and other countries.

The issue involves the very top:

Sun Pharma, post acquisition of Ranbaxy, tops the pharma league table in India with around 9 percent of domestic market share.

It is much well known though, that the US drug regulator has already imposed a ban on import of medicines into the US, produced at its key constituent Ranbaxy’s India-based factories. Earlier, certain drugs produced at its Dewas plant of Ranbaxy were also barred from export to the entire EU region for non-compliance to GMP norms.

On its own, the acquirer – Sun Pharma has also faced USFDA ban on import of products made at its Karkhadi plant in Gujarat.

Taking all these into consideration, one can probably argue that the ‘Make in India’ issue for Indian pharma is humongous and quite a widespread one. Its adverse impact is very much palpable even at the very top.

The root cause:

The root cause of non-conformance of specified GMP standards probably dwells deep within the mindset of the concerned companies, as comes in the narrative of a whistleblower. In that case, the speed of progress of Indian pharma exports’ revival, alongside the industry image makeover, would possibly face a strong and silent headwind.

Pharma sector needs a health check:

On April 16, 2015, ET Intelligence Group commented that “High-flying pharma sector may be in need of a health check”, further reinforcing the case for re-rating of, especially, the export-oriented pharma sector.

The report underscored, that foreign brokerages Bank of America Merrill Lynch and CLSA have flagged concerns about valuations in pharma priced to perfection leaving little room for error. According to data from Bloomberg, since last week, ‘buy’ recommendations by analysts have dropped in stocks like Sun Pharma, Lupin, Cipla, Ipca Labs, Cadila Healthcare, Aurobindo Pharma and Torrent Pharma.

Smacks of irrational exuberance?

The article emphasized that the pharma growth story has now moved to being one that ‘smacks of irrational exuberance’.

The unprecedented interest in the sector has had the effect of shirking off negatives, like regulatory clamps by US FDA, price control, and currency fluctuations in the emerging markets and delay in drug approvals in the US.

The saga still continues:

Triggered by a whistleblower report and confirmed by a number of different adverse plant audit findings, the USFDA has stepped up scrutiny of India make generic drugs, over the last two years. It is worth noting that Indian generic drug players supply round 40 percent of such medicines sold in the United States.

As we discuss the subject, Indian pharma players continue to receive the warning letters from the USFDA, related to breach of GMP standards.

Lamentably enough, significant parts of the same continue to be the data integrity issues. Even in 2014, some large domestic players including, Sun Pharmaceuticals, Cadila Pharma and Orchid Pharma came under scrutiny of the US drug regulator.

Most recently in March 2015, USFDA banned most imports from the Ipca plants, in Pithampur in Madhya Pradesh and Silvassa in Dadra and Nagar Haveli, for non-compliance of GMP standards. Earlier, in January 2015, the US regulatory agency reportedly banned imports from another Indian manufacturing plant of Ipca.

India tops the list on the US import alerts:

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

Unfortunately, despite intense local and global furore on this subject, the Central Drugs Standard Control Organization (CDSCO) of India, very strangely, do not seem to be much concerned on this critical issue, at least noticeably enough, besides making some occasional public statements on its working together with the USFDA in this regard.

I discussed similar subject in my blog post of September 29, 2014 titled “Make in India…Sell Anywhere in The World: An India Pharma Perspective.

Conclusion:

As it appears to me, the USFDA import bans related to breach of GMP standards, including ‘Data Integrity’, are mostly unrelated to knowledge deficiency of any kind – technical or otherwise, in the teams handling large drug manufacturing plants of India.

The details, as listed in the USFDA website, indicate that a large number of such incidents are related to falsification of data in the critical documentation process.

Earlier in this article, I termed the problem as very much controllable with the right kind of mindset to set things right, without probably resorting to cost-saving short cuts.

Prime Minister Modi, even during his very recent trips to France, Germany and Canada, passionate appealed to all, including pharma investors both local and global, to “Make in India” and “Sell Anywhere in The World” (exports). This call deserves to be responded with the right spirit and mindset and not just with lip services.

Failure to effectively address the patients’ safety requirements related issues of the foreign drug regulators, such as USFDA, and any direct or indirect attempt to categorize this plight as international ‘conspiracy’ of any kind, could jeopardize India’s interest in pharma exports, for a much longer while.

There is not even an iota of doubt today that “Make in India” image of Indian pharma has suffered a huge set back, at least in the largest and most valuable pharmaceutical market of the world.

As the well acclaimed English novelist George Elliot once said, “It is never too late to be what you might have been”, Indian pharma industry urgently needs an image makeover in this critical area…through a demonstrable change in mindset for doing things right…in every occasion and situation, always.

This is critical, as loss of credibility and reputation too frequently can push a pharma company virtually out of major international business for good… its current clout, might and financial power, not withstanding.

By: Tapan J. Ray

Pharma Sales Communication: Would ‘Cafeteria Approach’ Be More Productive Today?

Posted on March 23, 2015 by Tapan Ray

For sales communication, quality of access of pharma Medical Representatives (MRs) to many important and busy doctors has been steadily declining over the past several years, all over the world, and India is no exception.

This is mainly because the number of patients coming to these busy practitioners is fast increasing and the doctors are trying to see all these patients within the same limited time that was available to them in even earlier days. In tandem, their other obligations of various kinds, personal or otherwise, are also overcrowding the same highly squeezed time space.

In a situation like this, increasing number of MRs, which has almost doubled in the past decade, is now fiercely competing with each other to get a share of lesser and lesser available time of the busy doctors.

Added to this, a gross mismatch between the inflow of doctors with similar prescription potential and ever increasing inflow of patients, is making the situation even worse.

According to a study done by CMI Communication Media Research, about half of physicians restrict visits from MRs in one-way or another.

Thus the critical question that needs to be answered now, from purely pharma sales and marketing perspective is:

How to make sales communication effective to such busy medical practitioners in this extremely challenging scenario?

Pharma players are trying to respond:

This pressing issue has prompted many pharma companies, across the globe, to reevaluate their traditional sales communication models, which are becoming increasingly expensive as a result of diminishing commensurate returns from the MR calls.

Some drug companies have also introduced interesting digital interventions, though within the same traditional pharma sales communication process, to add speed and novelty, especially in sales administration and its execution processes.

Experimentations are visible even in India:

In India too, pharma companies are trying with several different approaches, in various combinations to make the prescription generation process through sales communication more productive.

Some pharma players also tried to push up the overall sales productivity through additional rural market coverage. In this regard, a 2012 report of ‘IMS Consulting’ states, acknowledging the seriousness around rural consumers, many drug companies in India are now expanding their sales operation to Tier IV cities and below. Quite a few of them even succeeded in their endeavor to create profitable business models around the hinterland and rural geographies.

These pharma players believe that extra-urban geographies require different approaches, though with the same traditional sales communication models. These approaches include, different product portfolio, distribution-mix, pricing/packaging and promotional tools, considering majority of the doctors are not as busy as their counterparts in the metro cities and large towns.

Initial strategic changes:

The above ‘IMS Consulting’ paper also highlights a few of the initial changes in the following lines:

Business Unit Structure (SBU): To bring more accountability, manage evolving business needs and use equity of organization for reaching to the middle of the accessible pyramid.

Therapy Focus Promotion: Generally seen where a portfolio is specialized, therapy focused, and scripts are driven through chosen few doctors; generally in chronic segment.

Channel Management: Mostly adopted in OTC /OTX business; mature products with wider portfolio width.

Hospital Task Force: Exclusively to manage hospital business.

Specialty Driven Sales Model: Applicable in scenarios where portfolio is built around 2 or 3 specialties.

Task Force: Generally adopted for niche products in urban areas, such as fertility clinics or for new launches where the focus is on select top rung physicians only.

Out-Sourced Sales Force: Generally used for expansion in extra-urban geographies or with companies for whom medico marketing is secondary (such as OTC or Consumer Healthcare companies).

Pharma MNCs took greater strides:

In addition, to increase sales revenue further, many innovator pharma MNCs engaged themselves in co-promotion of their patented products, besides out-licensing. A few of them pushed further ahead by adopting newer innovative promotional models like Patient Activation Teams, Therapy Specialists, or creating patient awareness through mass media.

Brand value augmentation offering a mix of tangibles and intangibles:

Realizing quickly that patients are increasingly becoming strong stakeholders in the business, some of the pharma MNCs also started engaging the customers by extending disease management services to patients administering their products.

This is indeed a clever way of augmenting the brand perception, through a mix of well-differentiated tangible and intangible product related value offerings.

These pharma MNCs engage even the patients by providing a basket of services at their home. Typical services include:

Counseling
Starter kits
Diagnostic tests
Medical insurance
Personalized visits
Exercising equipment
Emergency help
Physiotherapy sessions
Call centers for chronic disease management

Related doctors are reported about the status of the patients and the patients do not require paying anything extra for availing these services from the MNC pharma companies.

Despite all these, declining productivity of the traditional pharma sales communication models continue, predominantly from the extremely busy and very high value medical practitioners/experts/specialists, as mentioned above.

Communication preferences of busy doctors need to be factored-in:

From the above facts, it appears that pharma sales communication is usually tailored to focus on customer/market types and characteristics, rather than emerging unique customer preferences towards medium of sales communication and also differentiated message requirements for specific brands.

Should status quo be maintained?

Probably not, as many still believe that MR’s quality of access to doctors for productive sales communication would continue to remain a critical issue and become increasingly complex.

Even in this changing scenario, pharma companies, by and large, have kept the basic communication medium and traditional process of messaging unchanged, except some digital tweaking here or there. Some of these innovative means and user-friendly digital interfaces, at times, may attract quality attention to sales communication for top of mind brand recall by the doctors.

Is it enough? Again, probably not, as there is an urgent need to exploring various other medium and new ways of delivering strong and effective tailor-made brand messages, based on hard data of painstaking research.

e-marketing started taking roots, though in bits and pieces:

In 2013, facing this challenge of change, Pfizer reportedly started using digital drug representatives to market medicines, leaving the decision in doctors’ hands as to whether they would want to see them.

Prior to that, in 2011, a paper published in the WSJ titled, “Drug Makers Replace Reps With Digital Tools” stated that pharmaceutical companies in the United States are downsizing their sales force with increasing usage of iPad applications and other digital tools for interacting with doctors.

Lot many other fascinating experimentations with pharma e-marketing have now commenced in several places of the world, many with considerable initial success.

However, most of these efforts seem to be swinging from one end of ‘face-to-face’ sales communication with doctors, to the other end of ‘cyber space driven’ need-based product value sharing with customers through digital toolkits.

Two key questions:

All these experimentations and developments with various pharma sales communication models would probably prompt the following two key questions:

Whether or not traditional sales approach would continue to be as relevant as opposed to digitally customized sales applications?

Whether or not MRs would continue to remain as relevant in all areas of pharma prescription generation process, in the years ahead?

Not an ‘Either/Or’ situation:

According to AffinityMonitor™ 2014 Research Report, pharmaceutical and biotech companies have today at their disposal more than a dozen of promotional channels to include in their strategy, including traditional methods, like detailing and speaker programs, and digital ones, including email, microsites and videos.

The report states, every doctor engages with these channels in his or her own unique manner. Some physicians want to interact with MRs; others restrict MR details and instead get information from their peers. One doctor might regularly use a mobile application for product information, often during a patient consultation. Conversely, another physician, who might work in the same practice, would rarely wish to surf the Web for information. And some doctors simply won’t engage with any sales communication no matter what the channels are.

Thus, ‘one size fits all’ type of sales communication, delivered even by the best of MRs, is not likely to be productive in the changing macro environment.

Many facets of communication preferences:

Today, there are many facets of doctors’ choices and preferences to brand value communication medium.

As AffinityMonitor 2014 Research Report states, based on the availability of time and interest, each doctor engages with these channels in his or her own unique manner. For example, some doctors may want to interact with the MRs, while some others may restrict MR’s product details. A few others may prefer getting information from their peers, instead

Since doctors’ engagement with pharma brands is critical for the drug companies, it has now become absolutely imperative for them to know individual affinities of the doctors in this regard, or what channels and processes each physician would typically prefer to get engaged with a brand, directly or indirectly.

Pharma companies should, therefore, gather this particular information doctor-wise, to customize both the medium and the message for effective brand value communication, accordingly.

A shift to ‘Cafeteria Approach’:

Taking all the above research inputs into consideration, it appears, when many busy physicians’ doors appear closed to traditional pharma sales communication, drug companies should have the keys to unlock them with ‘Cafeteria Approach’ of sales communication, purely based on customer research. This approach would offer the ‘difficult to meet doctors’ a variety of choices regarding both the medium and also the message, that would best suit their temperaments, needs, time and interests, as discussed above.

It is important to repeat, to ensure productive outcome of the ‘Cafeteria Approach’, customized sales communication strategy for each important and otherwise busy doctor should purely be based on contemporary customer research.

Sales force remains the top channel out of several others:

According to AffinityMonitor Research Study, though MR’s quality access to busy doctors has declined steadily over the past decade, the sales force still remains the top channel for physician engagement, closely followed by ‘Digital’ ones.

Overall, around 47 percent of all Health-Care Providers (HCPs) consider ‘face-to-face’ promotion as one of the top three channels, which includes about 80,000 physicians, who favor the sales force as their second or third-strongest channel.

Of the 514,000 HCPs examined in AffinityMonitor Research Study, 162,000 show the strong affinity for ‘face-to-face’ promotion, 118,000 for digital push and 65,000 for digital pull or personal remote channels.

Increasing just ‘Sales Force Effectiveness’ not enough:

Thus, generally speaking, even the best of global sales force excellence programs could at best increase the MR productivity primarily for these 47 percent of doctors.

Brand sales communication reach and effectiveness to a large number of rests of the doctors would, therefore, call for innovative thinking and willingness to chart the uncharted frontiers.

Conclusion:

The decline in pharmaceutical MR’s quality of access to physicians for sales communication is now well documented. For example, in 2008, 23 percent of US doctors had restrictions on MRs, but that number rose to 49 percent in 2014, according to AffinityMonitor Research Study.

Therefore, the knowledge of whether a doctor would like to engage with traditional sales communication method by seeing a MR, or would just prefer to get his/her required information through any digital medium, is critical for success in the new ball game of generating increasing number prescriptions for any pharma brand.

Majority of the doctors’ choices would, in all probability, involve MRs, while a notable number of other choices may probably be independent of MRs.

In any case, that’s not going to be the main issue, as MRs are not going to disappear – not in any foreseeable future and would continue to remain a critical part of the overall pharmaceutical selling process, all over the world.

However, closely following the emerging trend, I reckon, ‘Cafeteria Approach’ is worth considering for effective customized brand communication, ensuring productive sales outcome.

By: Tapan J. Ray

India’s ‘National Health Policy 2015′ Needs Wings To Fly

Posted on January 12, 2015 by Tapan Ray

Ensuring ‘access to healthcare for all’ has remained a key well-articulated good intent of all the successive Governments in India, cutting across the political regimes, since 1983.

The Union Ministry of Health & Family Welfare published the first “National Health Policy (NHP)”, in 1983, which was endorsed by the Indian Parliament in the same year. The policy categorically enunciated the following:

“India is committed to attaining the goal of ‘Health for All by the Year 2000 A.D.’ through the universal provision of comprehensive primary healthcare services”.

For the first time after independence, this document captured the key directions and dimension of the national health policy such as, the creation of infrastructure for primary healthcare; close co-ordination with health-related services and activities (like nutrition, drinking water supply and sanitation); active involvement and participation of voluntary organizations; provision of essential drugs and vaccines; qualitative improvement in health and family planning services; provision of adequate training; and medical research aimed at the common health problems of the people. However, it did not elaborate much about the Universal Health Care (UHC).

Abysmal public expenditure to meet the key goal of NHP 1983:

The NHP 1983, which was revised in 2002, recommended an increase in public health expenditure to 2.0 percent of GDP in 2010.

The 12^th Fiver Year Plan of the Government of India again acknowledged that the health sector expenditure by the central and state governments, both plan and non-plan will have to be substantially increased during the plan period. It also stated that the health expenditure was increased from 0.94 per cent of GDP in the 10th Plan to 1.04 per cent in 11th Plan and it should be increased to 2.5 per cent of GDP by the end of 12th Five Year Plan period.

That said, the bottom-line is, the current public spending on health is stagnating around 0.9 percent of the GDP. Leave aside implementation of the 1983 NHP goal of providing “Health for all by the year 2000 A.D”, even in 2015, India continues to grapple with the challenges for ensuring availability, accessibility, affordability and quality of comprehensive healthcare to all, though various governments have come and gone during this period. India’s rank in the Human Development Index (HDI) also remains at pitiful 136 out of 187 countries and despite improvements, India is likely to miss some key MDG targets in 2015.

Pockets of improvements – mostly grossly inadequate:

In the midst of gloom and doom in the health space of India, the 57 page draft NHP 2015 captures some of commendable improvements, as well, and very rightly so, which I am not going to repeat in this article.

A June 2013 report of IMS Institute also acknowledges that the extent of change and improvement in India’s healthcare system over the past decade is remarkable. The Government of India’s initiatives, as well as private sector actions and public-private-partnership programs, have contributed to this progress. Yet a lot more remains to be done.

The report highlights the following areas, which are worth taking note of:

The physical accessibility of public or private healthcare facilities is a challenge in rural areas. By contrast, in urban areas, accessibility is less of a challenge due to more facilities being available.

An increasing proportion of the population is using private healthcare  facilities for both in-patient and out-patient treatments. Long waiting times and absence of diagnostic facilities are among the main reasons private healthcare facilities are chosen over public centers for in-patient treatment. For out-patient treatment, the availability or doctors and quality of care are cited as reasons for selecting a private healthcare facility. However, patients would readily switch to public healthcare centers if these issues were addressed, the research report states.

The cost of treatment at a public healthcare facility is much more affordable than at a private center. However, due to lack of physical reach, availability of quality treatment and other practices, patients are forced to use more expensive private facilities, thus exacerbating affordability challenges. The majority of Out of Pocket (OoP) expenses are due to medicines.

Overall, while there are pockets of improvements, significant healthcare access challenges continue to exist for the Indian population, especially in rural areas.

OoP expenses on health is one of the highest in India:

Out of Pocket (OoP) expenditure on health is one of the highest in India at 61.7 percent, as acknowledges by the draft NHP 2015, as well. This is against 35.3 of China, 30.6 of Brazil, 44.6 of Sri Lanka, 61.3 of Bangladesh, 14 of Thailand, 8.9 of United Kingdom and 11.8 of the United States. The reason being, due to lack of access to cheaper and quality public health facilities, a vast majority of the Indian population is forced to turn to expensive private healthcare providers, as confirmed by the IMS Institute in its above report..

Suggested framework for a comprehensive view of healthcare access:

The same June 2013 report of IMS Institute states that healthcare access has varying meaning in different countries, especially across developing and developed economies. In the developed economies, it is often equated to the access status of healthcare insurance, whereas in the developing economies, it is viewed primarily across two dimensions: the physical reach of a healthcare facility, and affordability to the patient.

Thus, it is important to build a framework that would provide a comprehensive view to healthcare access. The framework should be able to define healthcare access in the Indian context, aided by other parameters that are key in ensuring quality treatment to a patient.

The framework also allows understanding of each component of healthcare access separately, including inter-dependencies.

According to IMS Institute, healthcare access has 4 key dimensions as follows:

Physical Reach:

This component defines physical accessibility of a requisite healthcare facility, i.e. availability of a healthcare facility having an out-patient department (OPD) for common ailments, and an in-patient department (IPD) for hospitalization. These facilities may either be public or private in nature. Physical reach is defined as the ability to enter a healthcare facility within 5 kilometers (5km) from the place of residence or work.

Availability/Capacity:

This component defines availability of the requisite healthcare resources to provide patient treatment, i.e. doctors, nurses, in-patient beds, diagnostics, consumables, etc. The availability is governed by minimum specifications defined by the Government of India for public healthcare facilities, and international organizations such as W.H.O.

Quality/Functionality:

This component defines the quality of the healthcare resources available at the point of patient treatment.

Affordability:

This component defines the ability of a patient to afford complete treatment for the illness or disease.

Draft NHP 2015 – ‘Health is a fundamental right’:

Though the above parameters were not quite considered, as such, to define access to healthcare, the new government has done a good job with the draft NHP 2015, while updating NHP 2002. The new draft has evoked good interest among the stakeholders as healthcare has become very costly in India and continues to go north, steadily, as mentioned above.

The draft has covered lots of ground related to health, spanning across the change in the nature of the nation’s disease burden from communicable to non-communicable diseases, shortage of human resources in health sector and right up to the use of information and communication technology. It’s a hard fact that low investment in public health has been placing India consistently at the lower rungs of the development indices.

Against the backdrop of paltry public expenditure on health, the Union Ministry of Health and Family Welfare through its draft National Health Policy, 2015 (NHP 2015) has proposed making health a fundamental right, similar to denial of health an offence.

The draft policy reiterates, “Many industrialized nations have laws that do so. Many of the developing nations that have made significant progress towards universal health coverage, such as Brazil and Thailand, have done so, and … such a law is a major contributory factor. A number of international covenants to which we [India] are joint signatories give us such a mandate – and this could be used to make a national law. Courts have also rulings that, in effect, see health care as a fundamental right — and a constitutional obligation flowing out of the right to life.”

The draft NHP 2015 even states, “The Centre shall enact, after due discussion and on the request of three or more states a National Health Rights Act, which will ensure health as a fundamental right, whose denial will be justiciable.”

The new draft policy acknowledges that primary healthcare of date covers not more than 20 per cent of the health needs and that a very high OoP health expenditure (over 61 percent on medicines) is pushing nearly 63 million people into poverty every year.

One of the key features of the new draft policy is an universal medical insurance scheme that will be virtually free for the poor and affordable for the rest. The government expects the stakeholders to send their comments and suggestions on the draft policy by February 28, 2014.

However, the draft NHP 2015 does not deliberate on some other important areas, such as specific time-bound commitments on public investments, insurance cover on outpatient treatments & care and appropriate regulations for the private sector to contain healthcare costs.

Cut on current year health budget raises may eyebrows:

In the midst of the prevailing lackluster public healthcare scenario, just in the last month (December 2014), the government has reportedly ordered a US$ 948 million (20 percent) cut in its 2014-15 healthcare budget due to fiscal constraints.

It is worth mentioning that at 0.9 percent of GDP, India’s public health expenditure is already among the lowest in the world, as compared to compared to 2.7 percent in China, 4.2 percent in brazil, 1.4 percent in Bangladesh, 1.6 percent in Sri Lanka, 2.9 percent in Thailand and 8.5 percent in the United States.

In addition to the healthcare budget, the finance ministry has reportedly also ordered a spending cut this year for India’s HIV/AIDS program by about 30 percent to US$ 205.4 million.

A report from Reuters, quoting one of the health ministry officials, stated that this budget cut could crimp efforts to control the spread of diseases. More newborns die in India than in poorer neighbors such as Bangladesh, and preventable illnesses such as diarrhea kill more than a million children every year.

Needs wings to fly:

The draft NHP 2015 has come thirteen years after the previous NHP 2002 and following a 20 percent cut even on the paltry budgetary allocation on public health of this financial year. Thus, many skeptics ponder whether this well drafted NHP 2015, pregnant with many great promises, would ever see the light of the day.

The skepticism gets further reinforced, when the draft NHP 2015 says that to achieve its objectives the budgetary allocation on health would be increased to 2.5 percent of the GDP. The Government proposes to rely mostly on general taxation, besides creating a health cess similar to that of education cess, for effective implementation of this health policy. The draft indicates that 40 percent of this budget would come from central expenditure.

A quick reading of the following text from the Reuter’s report makes the scenario even more intriguing:

“The retrenchment (budget cut) could also derail an ambitious universal healthcare program that Modi wants to launch in April. The plan aims to provide all citizens with free drugs and diagnostic treatments, as well as insurance benefits.

The cost of that program over the next four years had been estimated at 1.6 trillion rupees (US$ 25 billion). The health ministry officials had been expecting a jump in their budget for the coming year, in part to pay for this extra cost.

‘Even next year we don’t think we’ll get a huge amount of money,’ said one official, adding that it was now unclear how the new program would be funded.”

Thus, the key point to ponder now: Would the NHP 2015 have wings to fly?

Is India just producing various documents on health without action?

Not too long ago, in October 2010, the Government of India constituted a ‘High Level Expert Group (HLEG)’ on Universal Health Coverage (UHC) under the chairmanship of the well-known international medical expert Prof. K. Srinath Reddy. The HLEG was mandated to develop a framework for providing easily accessible and affordable health care to all Indians.

The HLEG Report defined UHC as follows:

“Ensuring equitable access for all Indian citizens, resident in any part of the country, regardless of income level, social status, gender, caste or religion, to affordable, accountable, appropriate health services of assured quality (promotive, preventive, curative and rehabilitative) as well as public health services addressing the wider determinants of health delivered to individuals and populations, with the government being the guarantor and enabler, although not necessarily the only provider, of health and related services”.

I discussed this subject in my blog post of December 12, 2011, titled “Health being a basic human right, the proposal for Universal Health Coverage augurs well for India”

Most probably, this excellent HLEG report on UHC has already become an archival material for the posterity to refer, if and when required.

Interestingly, despite governments of different political dispensation ruling the country since 1983, the key goal of the NHP 1983 to ‘provide healthcare to all by the year 2000’ continues to haunt us over the last three decades.

Public healthcare infrastructure, especially in rural India, still remains grossly inadequate.

In most of the villages in India, primary health facilities, if available, (except in some progressive states), continue to be shoddy, fragile and is gasping for breath, as it were. Recent examples of Bilaspur (Chhattisgarh) sterilization tragedy in November 2014, when 15 women died or the incident of last week in Chatra district of Jharkhand, where about 40 women allegedly underwent sterilization under torchlight, would vindicate this point.

Much hyped program of “free essential drugs for all, from the government hospitals” has not been universally implemented, just yet…again due to financial resource constraints and paucity of other wherewithal.

Conclusion:

Currently, none of the newer constitutional rights, such as right to food, education and employment, enacted by the lawmakers for the well being of the concerned people of the country, is functioning as desired for various financial and administrative reasons. Even making adequate budgetary provisions for all these projects continue to pose a great challenge, both for the central and the state Governments.

Overall, NHP 2015 is a well-drafted and comprehensive policy document. It analyses the successes and failures of the past quite well, with a proposal of making health as a fundamental right. However, the status and experience with the other fundamental right-based legislations in India, do not fuel much optimism in this critical area, at least, as of now.

Consequently, the draft NHP 2015 does not appear to be more than a lucid narration of good intents, just what the NHP 1983 and 2002 did. Next month’s Union budget allocation for the financial year 2015-16 for health, calculated as a percentage of India’s GDP, would hopefully bring more clarity in this area.

Additionally, other important areas such as, specific time-bound commitments on public investments for health; extensions of medical insurance cover to even outpatient treatments & care and appropriate regulations for the private sector to contain healthcare expenditure, are worth considering in the NHP 2015.

Shorn of all these, would the National Health Policy 2015 have its wings to fly?

By: Tapan J. Ray

A Great News! But…Would This ‘Golden Goose’ Lay Golden Eggs?

Posted on December 15, 2014 by Tapan Ray

On December 9, 2014, international media flashed across the world a great news item from the Indian pharma industry:

“The first biosimilar of the world’s top-selling medicine Humira (adalimumab) of AbbVie has been launched in India by Zydus Cadila.”

This exhilarating news has undoubtedly got frozen in time flagging a well-cherished moment of pride for the Indian pharmaceutical industry. Along side, taking note of many contemporary factors in this area, a lurking apprehension too does creep in. It raises an awkward and uncomfortable question – would this ‘Golden Goose” born out of a laudable ‘reverse engineering’ effort be able to lay ‘Golden Eggs’, signaling its global commercial success for the company?

In this article, I shall try to dwell on on this important issue.

In one my earlier blog posts of August 25, 2014 titled, “Scandalizing Biosimilar Drugs With Safety Concerns”, I discussed another related concern in this area.

Born a ‘Golden Goose’:

Just to recapitulate, the original product Humira (Adalimumab) of Abbvie, a fully human anti-TNF alpha monoclonal antibody was first globally approved for marketing in 2002. Since then Humira has emerged as the most preferred therapy to reduce the signs and symptoms of patients suffering from moderate to severe rheumatoid arthritis, moderate to severe polyarticular juvenile idiopathic arthritis, psoriatic arthritis, ankylosing spondylitis, moderate to severe Crohn’s disease and moderate to severe ulcerative colitis. However, Humira is not available in the Indian market, at present.

Zydus Cadila has announced that its biosimilar version of Humira (Adalimumab), has been approved by the Drug Controller General of India (DCGI) and will be marketed under the brand name ‘Exemptia’ for the treatment of autoimmune disorders as indicated for Humira.

As claimed by the company, ‘Exemptia’ is a ‘fingerprint match’ with the original drug Humira in terms of purity, safety and potency. Zydus Cadila has also stated that the novel non-infringing process for Adalimumab and a novel non-infringing formulation have been researched, developed and produced by scientists in its own Research Centre.

With this the world took note of the ‘Golden Goose’, born out of brilliant ‘Reverse Engineering’ in India. However, the apprehension of many continued to linger: Would this ‘Golden Goose’ be able to lay ‘Golden Eggs’?

The product and the price:

According to an estimate, over 12 million patients in India suffer from the above chronic conditions of autoimmune disorders, which progressively deteriorate and lead to lifelong pain and in some cases, even disability. To treat these indications, Exemptia is recommended as a 40 mg subcutaneous injection once every alternate week. Patients normally would have to take the treatment for six months.

Media reports indicate that ‘Exemptia’ of Zydus Cadila will be priced in India equivalent to US$ 200 a vial against Humira price in the United States of US$ 1,000. Initial overall reaction for this local price does not seem to be quite favorable for India.

The global market:

A recent report from Thomson Reuters indicates, as blockbuster drugs with sales turnover of around US$100 billion lose patent protection, the global biosimilars market is expected to grow around US$ 25 billion by the end of the decade.

According to a 2013 report of the credit rating agency Fitch, eight of the current 20 top-selling global pharmaceuticals are biologics that will face patent expiry by 2020.

EvaluatePharma reported that the current the anti-rheumatics market makes up the second largest treatment area by sales, with worldwide revenues of US$ 41.1 billion, closely behind the oncology therapy area, which registered sales of US$68 billion in 2012 with a high growth rate.

The report also states, despite biosimilar entry Anti-rheumatics segment is expected to record a Compound Annual Growth Rate (CAGR) of 4 percent with a turnover of around S$52.1 billion in 2018.

The local potential:

Over the last several years, China and India have been emerging as the promising destinations for international outsourcing of biopharmaceutical manufacturing. In the recent times, China and India are reportedly showing promises to become the industry’s top potential destinations for offshoring over the next five years, ahead of traditional bio manufacturing hubs in the US and Western Europe.

More than 40 biosimilar products are now available in the Indian market. Over 10 pharma players are competing in this area with around 15 epoetin, 8 G-CSF and 4 insulin “biosimilars”, besides a few others.

Although India has the second largest USFDA approved drug manufacturing plants next to the United States, none of the products manufactured in these facilities can possibly be considered as “true biosimilars”.

Humira expected to remain strong:

EvaluatePharma also forecasts that Humira of AbbVie would continue to remain the best selling drug of the world at least till 2018 with sales of US$12.8 billion, despite its US patent expiry in 2016.

Moreover, to succeed Humira that will go off patent between end 2016 and 2018 (Europe), AbbVie reportedly has seven new drugs in clinical development for Rheumatoid Arthritis. These patented new drugs could also significantly cannibalize the sales of Humira.

Physicians’ attitude towards biosimilars:

According to an October 2014 Report of IMS Institute from Europe’s perspective, within each country’s health system, physicians display a range of attitudes and behaviors that influence their prescribing of biosimilars.

IMS observed three broad segments of prescribers as follows:

Conservative prescribers: These doctors tend to be late adopters of new technologies, are more likely to follow published clinical treatment guidelines, and may not be aware of or educated on the availability of potential use of biosimilars.

Open-minded prescribers: This archetype includes physicians who tend to be the most responsive to new information about treatment options, particularly where experience and knowledge of biologics may be low and educational program can be effective in impacting usage.

Enterprising prescribers: This segment of prescribers is most likely to search out information from all sources, and be open to trying different options for patient care including biosimilars as well as innovative treatments.

In addition to these archetypes, the report states, physicians’ attitudes and prescribing behavior may also be influenced or determined by prescribing guidelines, if any, the use of prescribing incentives, as well as the use of promotional activities by either originator or biosimilar manufacturers.

The US biosimilar challenge:

According to reports, despite two pharma players filing biosimilar applications at the USFDA, there are still many issues to be sorted out in this space by the drug regulator of the country.

Though an interchangeable biosimilar in the United States still appears to be several years away, there are initiatives in some American states to restrict interchangeable biosimilar for substitution against the reference product.

Moreover, USFDA’s draft guidance on clinical pharmacology of May 2014 has invited strong adverse comments from the innovator companies, lobby groups and the industry associations.

However, just in the last week, both the innovator companies and biosimilar manufacturers have reportedly agreed to support state legislation that allows pharmacies to automatically substitute biosimilars for corresponding branded biologics. But pharmacies must give prescribers a heads up afterward “within a reasonable time.”

For biosimilars makers, it’s a big improvement on the alternative, as the biotech developers wanted to require pharmacists to check with doctors before making the switch.

That said, the USFDA is yet to determine exactly how to classify biosimilars and their “reference products” as interchangeable. This guidance for classification would be necessary for the above mentioned pharmacy switches. This guidance is important especially for the statutory language, which dictates that interchangeability is proven for “any given patient”. This could also be construed as requiring studies in all the approved indications for a brand name biologic, i.e. Humira has around five different indications.

Thus, the path ahead still remains challenging for the biosimilar players in the United States, and more so for the Indian Companies, as compared to other global pharma majors with deep pockets.

Several other Humira biosimilars under development too:

As indicated earlier, the US and Europe patents of Humira with worldwide sales of US$ 11.02 billion in 2013 would expire by end 2016 and 2018, respectively. Thus, the product has become among the most sought-after biosimilar target prototypes for many pharma and biotech companies across the world.

The global biotech major Amgen has already indicated that its ABP 501 biosimilar has shown comparable efficacy and safety to Humira (adalimumab) in a late-stage trial in patients with moderate-to-severe plaque psoriasis after treatment duration of 16 weeks. The product, reportedly, has also matched Humira in stimulating immune response in patients.

Experts believe, Amgen could be in a position to compete directly with Humira when it loses patent protection, if similar results are obtained in the second phase III trial.

Moreover, according to available reports, Boehringer Ingelheim, Sandoz (Novartis) and Coherus are also progressing well with the development of Humira biosimilars.

Zydus Cadila expects that in 2019 it would be ready to launch the biosimilar of Humira (Adalimumab) in the United States.

Marketing challenges for biosimilars:

Today, the global biosimilars market is indeed in a nascent stage, even for the Indian players.

For successful commercialization of biosimilars, I envisage, a well-crafted hybrid marketing-model of small molecule generics on the one hand and large molecule biologics of the originators’ on the other would be appropriate, in the years ahead.

In the early marketing phase, biosimilar marketers are expected to follow the same branding, communication and detailing strategies of the originators, which ultimately would transform into a generic matrix as more players chip in with the price competition intensifying.

Unlike small molecule generics, affordable price of a biosimilar would be just one of the many critical considerations for its commercial success in the biologics market.

Sustained efforts and initiatives to allay safety concerns with biosimilars among both the doctors and also the patients would be a dire necessity. Providing in-depth medical, technical and domain knowledge to the sales team should never be compromised, though these would require additional initial investments. Post marketing surveillance or pharmacovigilance for biosimilars must be ongoing, even in India. Here too, Indian players do not seem to be very strong, as yet.

Thus, unlike small molecule generics, marketing a large molecule biosimilar would require clear, razor sharp and focused strategies across the value chain to unlock its true potential. Crafting impactful value propositions, avoiding complexities, for each stakeholder, would decide the commercial fate of the product.

‘Made in India’ issue for pharma needs to be addressed expeditiously:

High credibility clinical trial data and manufacturing quality standards would also play a decisive role, especially for India made biosimilars.

This is mainly due to widespread reports of frequent USFDA allegations related to falsification and doctoring of manufacturing data in several manufacturing plants of India.

Ethical and quality issues for drugs made in India, such as these, assumed even greater dimension, as the regulators in France, Germany, Belgium and Luxembourg reportedly suspended marketing approval for 25 drugs over the genuineness of clinical trial data from India’s GVK Biosciences. This is yet another blow to ‘Made in India’ image for medicines, which has arrested the global attention, for all the wrong reasons, just the last week.

Conclusion:

Considering all the above points, let me now try to make a fair personal guess on whether or not the ‘Golden Goose’ would be successful enough to lay ‘Golden Eggs’, as required by the company.

Firstly, in the Indian perspective, the key point that strikes me is the cost of a treatment course with ‘Exemptia’ per patient in the country. On a rough calculation, it comes around Rs. 1,50,000 per course/per patient. This appears rather high according to the income level of an average Indian.

However, Zydus Cadila expects sales between Rs.1 billion (US$16.16 million) and 2 billion for ‘Exemptia’ only from the Indian market.

I reckon, with relatively high per course treatment cost with Exemptia, it may be quite challenging for the company to achieve this goal in the domestic market.

Thus, the global success of this biosimilar brand would mainly depend on its degree of success in the United States and Europe, post patent expiry of Humira.

Going by the possible availability of other Humira biosimilars from manufacturers with robust global marketing muscle, skill sets, experience and other wherewithal, the path of global success for Exemptia of Zydus Cadila, if the company decides to fly solo, appears to be strewn with many odds.

I would now stick my neck out to zero in with specificity in this area, while envisaging the possible future scenario.

Considering the evolving macro scenario together with the commercial success requirements in this space, I reckon, despite presence of several possible competitors of Humira biosimilars, including one from Zydus Cadila, the biotech domain expertise of Amgen, fuelled by its marketing muscle, would in all probability make its ABP 501 biosimilar the toughest competitor to Humira after its patent expiry in the US and Europe…and then…why doesn’t it try to succeed in India too?

By: Tapan J. Ray

PILMAN

A Tapan Ray Website

Tag Archives: Pharmaceuticals

Health Care in India: Disrupt The Status Quo

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TPP: Discord Within A Strange Mélange And Impact On Access To Medicines

The Curious Imbroglio: Innovation, IPR, India and ‘Uncle Sam’

“Make in India” Image of Pharma Needs An Early Makeover

Pharma Sales Communication: Would ‘Cafeteria Approach’ Be More Productive Today?

India’s ‘National Health Policy 2015′ Needs Wings To Fly

A Great News! But…Would This ‘Golden Goose’ Lay Golden Eggs?