Tag Archives: PHC

For Affordable Access To Quality Healthcare in India, Invest Where The Mouth Is

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On September 25, 2018, well-hyped Ayushman Bharat – National Health Protection Scheme (AB-NHPS), touted as the largest health scheme in the world, was launched in India. Prior to its launch, while announcing the scheme on August 15, 2018 from the Red Fort,Prime Minister Narendra Modi said: “The healthcare initiatives of the government will have a positive impact on 50 Crore Indians,” as it aims to provide a coverage of Rs 5 lakh per family annually, benefiting more than 10 Crore poor families.

Before this scheme was introduced, there were several public funded health schemes in India, introduced by different governments, like National Rural and Urban Health Mission (NRHM and NUHM), Rashtriya Swasthya Bima Yojana etc. Reports also capture that since independence efforts were ongoing in this area. But none worked, due to shoddy implementation. Let’s await the outcome of yet another new health scheme, introduced by yet another government – AB-NHPS.

According to the Government Press Release of January 11, 2019: Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (PMJAY) aims to provide health coverage during secondary and tertiary hospitalization of around 50 Crore beneficiaries, allocating a sum of up to Rs. 5 Lakh per family per year. The key words that need to be noted is ‘the health coverage during hospitalization’. It also doesn’t cover primary care. Interestingly, some of the larger states, such as Punjab, Kerala, Maharashtra, Karnataka and Delhi are, reportedly, yet to come on board, Odisha has refused to be a part of the scheme.

Conceptually, the above new health initiative, aimed at the poor, is praiseworthy.  However, its relevance in reducing a significant chunk of one of the highest, if not the highest, ‘Out of Pocket (OoP’) expenses towards health in India, raises more questions than answers.

This is because, whether annual ‘OoP’ for health, incurred by the country’s poor population, goes more for hospitalization than Primary Health Care (PHC) involving common illnesses, is rather clear today. In this article, I shall dwell on this subject, supported by credible published research data.

But ‘the Primary Health Care (PHC) is in shambles’:

Since the focus of (AB-NHPS) on ‘secondary and tertiary hospitalization’, one may get a feeling that the primary public health care system in India is, at least, decent.

But the stark reality is different. The article titled, ‘Five paradoxes of Indian Healthcare,’ published inThe Economic Times on July 27, 2018 describes the situation eloquently. It says: ‘While the Supreme Court has held health care to be a fundamental right under Article 21 of the Constitution…The fundamental aspect of health care – the primary health care is in shambles. There is only one primary health care center (often manned by one doctor) for more than 51,000 people in the country.’

In addition, the World Bank Report also flags: ‘The tenuous quality of public health assistance is reflected in the observation that 80 percent of health spending is for private health services, and that the poor frequently bypass public facilities to seek private care.’ Although, World Bank underscored this problem sometime back, it persists even today, sans any significant change.

PHC has the potential to address 90 percent of health care needs:

For the better health of citizens, and in tandem to contain disease progression that may require hospitalization for secondary and tertiary care, government focus on effective disease prevention and access to affordable and high quality PHC for all, is necessary. ‘Evidences gathered by the World Bank have also highlighted that primary care is capable of managing 90 percent of health care demand, with only the remaining 10 percent requiring services associated with hospitals.’

Another article titled, ‘Without Primary Health Care, There Is No Universal Health Coverage,’ published in Life – A HuffPost publication on December 14, 2016, also vindicates this point. It emphasized: ‘Primary health care (PHC) has the potential to address 90 percent of health care needs. However, country governments spend, on average, only one third of their health budgets on PHC.’ The situation in India is no different, either.

This basic tenet has been accepted by many countries with ample evidences of great success in this direction. Curiously, in India, despite the public PHC system being in shambles, the government’s primary focus is on something that happens only after a disease is allowed to progress, virtually without much medical intervention, if at all.

Key benefits of a strong PHC system:

As established by several research papers, such as one appeared in the above HuffPost publication, and also by other research studies, I am summarizing below the key benefits of having an affordable and strong PHC network in the country:

  • Can manage around 90 percent of the population’s health care need, patients would require hospitalization for specialists care only 10 percent of the time.
  • Can help people prevent diseases, like malaria or dengue, alongside effectively assist them in managing chronic conditions, such as hypertension or diabetes, to avert associated complications that may require secondary or tertiary care.
  • At the country level, a strong PHC system would help detect and screen illnesses early, offering prompt and effective treatment. The system, therefore, will support a healthier population, and would ‘offer much more than simple reduction of the costs of a country’s health.’
  • A country can ensure greater health equity by providing PHC advantages of greater accessibility to the community, and across the social gradient.
  • In short: ‘The continuity and doctor–patient relationships offered by family oriented primary care, alongside the patient education, early intervention and treatment, chronic disease management, counseling and reassurance offered to patients would be impossible to provide in a secondary care setting.’

Thus, establishing a robust network of high-quality public PHC facilities in the country is a necessity. Simultaneously, patients should be made aware of visiting the nearest PHC as their first stop for affordable treatment, when they fall ill.

Annual ‘OoP expenses’ more on ‘out-patient care’ than ‘hospitalization’:

For illustration, I shall provide examples from just two studies, among several others, which found, average ‘OoP expenditure’ per family in a year, is more for ‘out-patient care’ than ‘hospitalization.’

Since long, ‘OoP expenditure’ on hospitalization was being considered as the most important reason for impoverishment. Probably, this is the reason why various governments in India, had launched various health schemes, covering hospitalization expenses of a large section of the poor population in the country. The most recent one being – Ayushman Bharat-National Health Protection Scheme (AB-NHPS), often termed as ‘Modicare’, launched in September 25, 2018.

That total ‘OoP expenses’ are more on ‘out-patient care’ than ‘hospitalization’ was emphasized even in the 2016 research article titled, ‘Out-of-Pocket Spending on Out-Patient Care in India: Assessment and Options Based on Results from a District Level Survey,’ published online by PLoS One on November 18, 2016.

Highlighting that ‘OoP spending’ at ‘Out-Patient Departments (OPD)’ or in clinics by households is relatively less analyzed compared to hospitalization expenses in India, the results indicate:

  • Economically vulnerable population spend more on OPD as a proportion of per capita consumption expenditure.
  • ‘Out-patient care’ remains overwhelmingly private and switches of providers -while not very prevalent – is mostly towards private providers.
  • High quality and affordable public providers tend to lower OPD spending significantly.
  • Improvement in the overall quality and accessibility of government OPD facilities still remains an important tool that should be considered in the context of financial protection.

Let me now cite the second example – analyzing the 60th national morbidity and healthcare survey of the National Sample Survey Organization (NSSO), the study found, ‘outpatient care is more impoverishing than inpatient care in urban and rural areas alike.’

Expert committee’s recommendations for focus on ‘primary care’ went unheeded:

That the government focus on public health care should be on PHC, along with prevention and early management of health problems, was recommended by ‘The High-Level Expert Group Report on Universal Health Coverage, for India.’ This committee was instituted by the then ‘Planning Commission’ of the country on November 2011. The report also suggested, such measures would help reduce the need of secondary and tertiary care, significantly. But not much attention seems to have been paid even on these critical recommendations.

Conclusion:

Going by what Indian government says, I believe, its ultimate goal is providing access to affordable Universal Health Care (UHC), for all. That’s indeed commendable. But as various research papers clearly indicates, the country will first ‘need to invest in a ‘primary-care-centered’ health delivery system, if universal access to health care is to be realized, ultimately.

From this perspective, Ayushman Bharat – National Health Protection Scheme (AB-NHPS) may be a good initiative. But it does not seem to merit being the primary focus area of the government in public health care. And, not more than establishing high quality and robust ‘primary health care’ infrastructure, across the country, for all. Nor will AB-NHPS be able to address higher average of out-of-pocket ‘outpatient expenses’ of those people who need help in this area, the most.

Considering the critical public health care issue in India holistically, I reckon, for providing affordable access to health care for all, the top most priority of the Government should be to invest first where the mouth is – to create affordable primary healthcare infrastructure of a decent quality, with easy access for all.

By: Tapan J. Ray   

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

Does Healthcare Feature In Raisina Hill’s To-Do List?

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At the Capitol Hill, while addressing the joint session of the United States Congress, on June 08, 2016, our Prime Minister Mr. Narendra Modi well articulated the following, in his inimitable style:

“My to-do list is long and ambitious. It includes a vibrant rural economy with robust farm sector; a roof over each head and electricity to all households; to skill millions of our youth; build 100 smart cities; have a broadband for a billion, and connect our villages to the digital world; and create a 21st century rail, road and port infrastructure.”

This ambitious list is indeed praiseworthy. However, as the Prime Minister did not mention anything about health care infrastructure, while referring to rapid infrastructure development in India, it is not abundantly clear, just yet, whether this critical area finds a place in his ‘to-do’ list, as well, for ‘We The People of India’.

This apprehension is primarily because, no large scale, visible and concrete reform measures are taking place in this area, even during the last two years. It of course includes, any significant escalation in the public expenditure for health.

Ongoing economic cost of significant loss in productive years:

“The disease burden of non-communicable diseases has increased to 60 per cent. India is estimated to lose US$ 4.8 Trillion between 2012 and 2030 due to non-communicable disorders. It is therefore critical for India to transform its healthcare sector,” – says a 2015 KPMG report titled, ‘Healthcare: The neglected GDP driver.’ 

This significant and ongoing loss in productive years continues even today in India, handicapped by suboptimal health care infrastructure, and its delivery mechanisms. Such a situation can’t possibly be taken for granted for too long. Today’s aspiring general public wants the new political leadership at the helm of affairs in the country to address it, sooner. A larger dosage of hope, and assurances may not cut much ice, any longer.

Transparent, comprehensive, and game changing health reforms, supported by the requisite financial and other resources, should now be translated into reality. A sharp increase in public investments, in the budgetary provision, for healthy lives of a vast majority of Indian population, would send an appropriate signal to all.

As the above KPMG report also suggests: “It is high time that we realize the significance of healthcare as an economic development opportunity for national as well as state level.”

Pump-priming public health investments:

With a meager public expenditure of just around 1.2 percent of the GDP on health even during the last two years, instead of rubbing shoulders with the global big brothers in the health care area too, India would continue to rank at the very bottom.

Consequently, the gaping hole within the healthcare space of the country would stand out, even more visibly, as a sore thumb, escaping the notice, and the agony of possibly none.

With around 68 percent of the country’s population living in the rural areas, having frugal or even no immediate emergency healthcare facilities, India seems to be heading towards a major socioeconomic imbalance, with its possible consequences, despite the country’s natural demographic dividend.

According to published reports, there is still a shortage of 32 and 23 percent of the Community Health Centers (CHC) and the Primary Health Centers (PHC), respectively, in India. To meet the standard of the World Health Organization (WHO), India would need minimum another 500,000 hospital beds, requiring an investment of US$ 50 Billion.

Moreover, to date, mostly the private healthcare institutions, and medical professionals are engaged in the delivery of the secondary and tertiary care, concentrated mostly in metro cities and larger towns. This makes rural healthcare further challenging. Pump-priming public investments, together with transparent incentive provisions for both global and local healthcare investors, would help augmenting the process.

Help propel GDP growth:

As the above KPMG report says, the healthcare sector has the ability to propel GDP growth via multiple spokes, directly and indirectly. It offers a chance to create millions of job opportunities that can not only support the Indian GDP growth, but also support other sectors of the economy by improving both demand and supply of a productive healthy workforce.

Three key areas of healthcare:

Healthcare, irrespective of whether it is primary, secondary or tertiary, has three major components, as follows: 

  • Prevention
  • Diagnosis
  • Treatment 

Leveraging digital technology:

As it appears, leveraging digital technology effectively, would help to bridge the health care gap and inequality considerably, especially in the first two of the above three areas.

A June 06, 2016 paper titled, ‘Promoting Rural Health Care: Role of telemedicine,’ published by the multi-industry trade organization -The Associated Chambers of Commerce and Industry of India (ASSOCHAM) said: “With limited resources and a large rural population telemedicine has the potential to revolutionize the delivery of healthcare in India.”

As the report highlighted, it would help faster diagnosis of ailments, partly address the issues of inadequacy of health care providers in rural areas, and also the huge amount of time that is now being spent in physically reaching the urban health facilities. Maintenance of the status quo, would continue making the rural populace more vulnerable in the health care space, than their urban counterparts.

The study forecasted that India’s telemedicine market, which has been growing at a compounded annual growth rate (CAGR) of over 20 per cent, holds the potential to cross US$32 million mark in turnover by 2020, from the current level of over US$15 million.

According to another report, currently, with around 70 percent overall use of smartphones, it is quite possible to give a major technology enabled thrust for disease prevention, together with emergency care, to a large section of the society.  

However, to demonstrate the real technology leveraged progress in this area, the Government would require to actively help fixing the requisite hardware, software, bandwidth and connectivity related critical issues, effectively. These will also facilitate keeping mobile, and other electronic health records.

Disease treatment with medicines:

To make quality drugs available at affordable prices, the Indian Government announced a new scheme (Yojana) named as ‘Pradhan Mantri Jan Aushadhi Yojana’, effective July 2015, with private participation. This is a renamed scheme of the earlier version, which was launched in 2008. Under the new ‘Pradhan Mantri Jan Aushadhi Yojana’, about 500 generic medicines will be made available at affordable prices. For that purpose, the government is expected to open 3000 ‘Jan Aushadhi’ stores across the country in the next one year i.e. 2016-17.

The question now is what purpose would this much hyped scheme serve?

What purpose would ‘Pradhan Mantri Jan Aushadhi Yojana’ serve?

Since the generic drugs available from ‘Jan Aushadhi’ retail outlets are predominantly prescription medicines, patients would necessarily require a doctor’s physical prescription to buy those products.

In India, as the doctors prescribe mostly branded generics, including those from a large number of the Government hospitals, the only way to make ‘Jan Aushadhi’ drugs available to patients, is to legally allow the retailers substituting the higher priced branded generic molecules with their lower priced equivalents, sans any brand name.

Moving towards this direction, the Ministry of Health had reportedly submitted a proposal to the Drug Technical Advisory Board (DTAB) to the Drug Controller General of India (DCGI), for consideration. Wherein, the Ministry reportedly suggested an amendment of Rule 65 of the Drugs and Cosmetics Rules, 1945 to enable the retail chemists substituting a branded drug formulation with its cheaper equivalent, containing the same generic ingredient, in the same strength and the dosage form, with or without a brand name.

However, in the 71st meeting of the DTAB held on May 13, 2016, its members reportedly turned down that proposal of the ministry. DTAB apparently felt that given the structure of the Indian retail pharmaceutical market, the practical impact of this recommendation may be limited.

For this reason, the ‘Pradhan Mantri Jan Aushadhi Yojana’, appears to be not so well thought out, and a one-off ‘making feel good’ type of a scheme. It is still unclear how would the needy patients derive any benefit from this announcement.

Conclusion:

On June 20, 2016, while maintaining the old policy of 100 per cent FDI in the pharmaceutical sector, Prime Minister Modi announced his Government’s decision to allow foreign investors to pick up to 74 per cent equity in domestic pharma companies through the automatic route.

This announcement, although is intended to brighten the prospects for higher foreign portfolio and overseas company investment in the Indian drug firms, is unlikely to have any significant impact, if at all, on the prevailing abysmal health care environment of the country.

Hopefully, with the development of 100 ‘smart cities’ in India, with 24×7 broadband, Wi-Fi connectivity, telemedicine would be a reality in improving access to affordable healthcare, at least, for the population residing in and around those areas.

Still the fundamental question remains: What happens to the remaining vast majority of the rural population of India? What about their health care? Poorly thought out, and apparently superficial ‘Pradhan Mantri Jan Aushadhi Yojana’ won’t be able to help this population, either. 

With the National Health Policy 2015 draft still to see the light of the day in its final form, the path ahead for healthcare in India is still rather hazy, if not worrying. 

As stated before, in the Prime Minister’s recent speech delivered at the ‘Capitol Hill’ of the United States earlier this month, development of a robust healthcare infrastructure in the country did not find any mention in his ‘to-do’ list.

Leaving aside the ‘Capitol Hill’ for now, considering the grave impact of health care on the economic progress of India, shouldn’t the ‘Raisina Hill’ start pushing the envelope, placing it in one of the top positions of the national ‘to-do’ list, only to protect the health interest of ‘We The People of India’?

By: Tapan J. Ray

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

With Free Medicines In, Would The New Government Revisit ‘Universal Health Coverage’ Soon?

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Friday last, the new Union Health Minister Dr. Harsh Vardhan reportedly announced that the his ministry would soon start work on distributing free medicines through public hospitals across the country.

For this purpose the Minister would soon call a meeting of the State Health Ministers to integrate this policy with the National Health Mission (NHM). The said meeting will be held under the framework of the Central Council of Health (CCH), which also includes professional experts.

A commendable beginning:

This decision of Dr. Harsh Vardhan would revive a plan that the former Prime Minister Manmohan Singh had promised in his Independence Day speech to the nation in 2012, but could not be implement due to paucity of adequate fund. Implemented effectively, the above scheme has the potential to significantly reduce the Out-of-Pocket (OoP) expenditure on healthcare in India.

According to a 2012 study of IMS Consulting, expenditure on medicines still constitute the highest component of OoP expenses in OP care, though its percentage share has decreased from 71 percent in 2004 to 63 percent in 2012.  Similarly for IP care, the share of medicines in total OoP has also marginally decreased from 46 percent in 2004 to 43 percent in 2012.

However, it is worth noting that still 46 percent of patients seeking healthcare in public channels purchase medicines from private channels for non-availability. The new scheme hopefully would resolve this issue with sincerity, care and a sense of purpose.

For early success in this area, experts recommend that up and running Tamil Nadu and Rajasthan models of this scheme, which are most efficient and cost effective, should be replicated in rest of the states.

Recently announced drug procurement system through Central Medical Services Society (CMSS) after hard price negotiation with the manufacturers, and distribution of those drugs free of cost from the Government hospitals and health centers to the patients efficiently, could further add value to the process.

The cost and span:

Planning Commission estimated that a countrywide free generic drug program would cost Rs 28,560 Crore (roughly around US$ 5 Billion) during the 12th Five-Year Plan period. The Centre will bear 75 percent of the cost while the states would provide the rest. Under the previous government plan, 348 drugs enlisted in the National List of Essential Medicines 2011 (NLEM 2011) were to be provided free at 160,000 sub-centers, 23,000 Primary Health Centers, 5,000 community health centers and 640 district hospitals.

“Universal Health Coverage” – Still remains the holistic approach:

That said, despite its immense importance, “distribution of free medicines” still remains just one of the key elements of Universal Health Coverage (UHC). It is expected that the new government would take a holistic view on the UHC agenda, sooner, to provide comprehensive healthcare services, including preventive care, to all citizens of the country.

According to another recent media report, the new Health Minister has already expressed a different viewpoint on this subject. Dr. Harsh Vardhan has reportedly said:

“I am not in favor of taxpayers’ money being used to push a one-size-fits-all health policy. From this morning itself, I have started contacting public health practitioners to know their minds on what should be the road ahead.”

Without deliberating much on the roll out of UHC as of now, the Minister promised that the government would work to provide ‘health insurance coverage for all’ through a National Insurance Policy for Health.

This statement is significant, because until recently, the ‘high level’ understanding was that the country, at least directionally, is in favor of public funded UHC, which was defined 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”.

The groundwork started with ‘The HLEG Report‘ :

Just to recapitulate, in October 2010, the Planning Commission of India constituted a ‘High Level Expert Group (HLEG)’ on UHC under the chairmanship of Dr. Prof. K. Srinath Reddy, President of the ‘Public Health Foundation of India (PHFI)’. The group was mandated to develop a framework for providing easily accessible and affordable health care to all Indians.

HLEG in its submission had suggested that the entire scheme would be funded by the taxpayers’ money for specified sets of healthcare services and for additional services commensurate health insurance coverage may be purchased by the individuals. Accordingly, to ensure a modest beginning of the UHC, in the 12th Five Year Plan Period, public expenditure on health was raised to 2.5 percent of the GDP.

UHC guarantees access to essential free health services for all:

Because of the uniqueness of India, HLEG proposed a hybrid system that draws on the lessons learnt from within India, as well as other developed and developing countries of the world.

The proposal underscored that UHC will ensure guaranteed access to essential health services for every citizen of India, including cashless in-patient and out-patient treatment for primary, secondary and tertiary care. All these services will be available to the patients absolutely free of any cost.

UHC provides options to patients:

Under the proposed UHC, all citizens of India would be free to choose between public sector facilities and ‘contracted-in’ private providers for healthcare services. It was envisaged that people would be free to supplement the free of cost healthcare services offered under UHC by opting to pay ‘out of pocket’ or going for private health insurance schemes.

What exactly is the new Health Minister mulling?

If the new Health Minister is mulling something different to provide similar healthcare coverage to Indians, let me now explore the other options adopted by various nations in this area.

As we know, UHC is a healthcare system where all citizens of a country are covered for the basic healthcare services. In many countries UHC may have different system types as follows:

  • Single Payer: The government provides insurance to all citizens.
  • Two-Tier: The government provides basic insurance coverage to citizens and allows purchase of additional voluntary insurance whenever a citizen wants to.
  • Insurance Mandate: The government mandates that insurance must be bought by all its citizens, like what happened in the USA in 2010 under ‘Obamacare’.

The Global scenario:

As per published reports, all 33 ‘developed nations’ (OECD countries) have UHC in place. America was the only exception, till President Barack Obama administration implemented its ‘path breaking’ healthcare reform policy in 2010 against tough political opposition.

India is already too late in providing UHC:

Based on an article titled, ‘ Analyzing our economy, government policy and society through the lens of cost-benefit’ published in ‘True Cost’, following is the list that states in which countries the UHC is currently in place and from when:

Country Start Date of Universal Health Care System Type
Norway 1912 Single Payer
New Zealand 1938 Two Tier
Japan 1938 Single Payer
Germany 1941 Insurance Mandate
Belgium 1945 Insurance Mandate
United Kingdom 1948 Single Payer
Kuwait 1950 Single Payer
Sweden 1955 Single Payer
Bahrain 1957 Single Payer
Brunei 1958 Single Payer
Canada 1966 Single Payer
Netherlands 1966 Two-Tier
Austria 1967 Insurance Mandate
United Arab Emirates 1971 Single Payer
Finland 1972 Single Payer
Slovenia 1972 Single Payer
Denmark 1973 Two-Tier
Luxembourg 1973 Insurance Mandate
France 1974 Two-Tier
Australia 1975 Two Tier
Ireland 1977 Two-Tier
Italy 1978 Single Payer
Portugal 1979 Single Payer
Cyprus 1980 Single Payer
Greece 1983 Insurance Mandate
Spain 1986 Single Payer
South Korea 1988 Insurance Mandate
Iceland 1990 Single Payer
Hong Kong 1993 Two-Tier
Singapore 1993 Two-Tier
Switzerland 1994 Insurance Mandate
Israel 1995 Two-Tier
United States 2010 Insurance Mandate

In-sync with the concept, probably with different means:

From the above statement of the new Health Minister, it appears that to provide healthcare coverage to all citizens of India, his ministry would work towards developing a National Health Insurance Policy. He also expressed that his ministry wants to focus on preventive healthcare.

Preventive healthcare being an integral part of UHC, it could well be that Dr. Harsh Vardhan wants to follow ‘Single Payer’ type of UHC system type.

Another school of thought:

However, another school of thought opines that a government owned efficient public healthcare system with adequate infrastructural facilities provides healthcare to patients almost free of cost as compared to the “insurance mandated” one.

This is mainly because, to address respective healthcare needs currently the patients have either or a mix of the following two choices:

  • Use public health facilities: Available virtually at free of cost if accessible, but quality is mostly questionable.
  • Use private health facilities: Virtually unregulated, much better services, though available mostly at high to very high cost.

Thus, these groups of experts believe that provision of universal health insurance for treatment at the expensive private facilities may not be cost effective even for the government, if these are not adequately regulated with appropriate stringent measures.

In absence of all those measures, the new Health Minister could consider taking a decision in favor of tax-funded UHC, with appropriate budgetary provisions and investments towards improving country’s healthcare infrastructure and its delivery mechanism for all.

Conclusion:

Be that as it may, there is not even an iota of doubt that India needs ‘Universal Health Coverage (UHC)’, like any OECD or other countries of the world for its citizens, sooner. Just distributing free medicines through public hospitals across the country for all, without a holistic approach such as UHC, may not yield desired results.

From the initial deliberations of Dr. Harsh Vardhan, it appears that UHC would soon not just be revisited, but receive a new thrust too, from the no-nonsense minister, probably leaning more towards private participation than with a public funded one, contrary to what was proposed by the HLEG.

Does it matter really? Well…

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.

RHDS: A Simmering Promise in Despondency

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Eric Topol, a leading cardiologist who has embraced the study of genomics and the latest advances in technology to treat chronic disease says, “We’ll soon use our smartphones to monitor our vital signs and chronic conditions in future.”

By clicking on this video clipping, you can watch how Dr. Topol in his talk titled “The Wireless Future of Medicine”, highlights several of the most important wireless devices in medicine’s future – all helping to keep more patients out of hospital beds.

In achieving similar objectives, India’s potential is indeed immense. The good news is, though in India Internet penetration has just crossed 16 percent of its total population, in absolute numbers this percentage reportedly works out to nearly 10 times the population of Australia. According to a report released by the Internet and Mobile Association of India (IMAI) and IMRB, there will be around 243 million internet users in India by June 2014, overtaking the US as the world’s second largest internet base after China. This situation must be leveraged to improve access to healthcare in the country significantly.

‘Remote Healthcare Delivery Solutions (RHDS)’

However, for several other reasons the situation is quite challenging in India. Out of its total population of over 1.2 billion, nearly 72.2 percent live in the hinterland and remote rural areas spreading across over 700,000 villages. In all these places, despite huge prevalence of diseases, inadequate healthcare infrastructure and delivery mechanisms offer an ideal backdrop to explore innovative healthcare solutions such as, ‘Remote Healthcare Delivery Solutions (RHDS)’ or ‘Telemedicine’. In that endeavor, smartphones could play a key role in improving access to healthcare for a very large number of population.

The World Health Organization (WHO) has defined ‘Telemedicine’ as:

“The use of information and communications technology (ICT) to deliver healthcare, particularly in settings where access to medical services is insufficient.”

Thus, to effectively improve access to healthcare, especially in rural India, RHDS holds a great promise.

A complex mix:

Healthcare space in India is generally a complex mix of issues related to access, availability, affordability and quality of healthcare, compounded by inadequate public healthcare infrastructure and delivery system on the one hand and expensive private healthcare facilities on the other. The degree of this complexity is rather stark in rural areas.

In a situation like this, RHDS holds a great promise to satisfy healthcare needs of the hinterland and rural India, as this would entail effective medical care, despite understaffed Primary Healthcare Centers (PHCs) and undertrained healthcare staff, with low start-up costs.

Equipped with modern Internet enabled technologies, RHDS would facilitate transmission of patient related information through SMS, email, audio, video, or other image transmissions, like MRI and CT Scans to relevant specialists of different disciplines of medical sciences located in other places. With RHDS, these specialists can monitor even blood pressure or blood glucose levels of patients on computer screens without examining them in person.

Key advantages:

The key advantages of a structured and well committed implementation of RHDS or ‘Telemedicine’ in india are as follows:

  • Elimination of many costs, including travel expenses for specialists and patient transfers – especially in a critical health situation, improving access to quality healthcare.
  • Reduction of feeling of isolation of the rural medical practitioners by upgrading their knowledge through Tele-education or Tele-Continuing Medical Education (CME) programs.

RHDS in India:

In India, RHDS initiative in form of telemedicine commenced more than a decade ago in 1999, when the Indian Space Research Organization (ISRO) deployed a SATCOM-based telemedicine network across the country. ISRO’s telemedicine program has now been reportedly enhanced to multi-point systems with a network of 400 centers across India.

The good news is, besides Department of Information Technology, the Ministry of Health & Family Welfare and many state governments, some well-reputed medical and technical institutes, corporates and academia have also started taking active interest in this area, especially oriented for the rural population of India.

In this context it is worth mentioning that in March 2014, Biocon Foundation reportedly partnered with Canara Bank and the Odisha Government for an e-healthcare program that aims at setting up of diagnostic facilities in PHCs to improve healthcare access to  51,000 villages.

Simultaneously, the Department of Information Technology has put in place the ‘Standards for Telemedicine Systems’ and the Ministry of Health & Family Welfare has constituted the National Telemedicine Task Force to provide further thrust to RHDS in India,.

To cite an example, US based World Health Partners (WHP) have reportedly set up an extensive Tele-Medicine network in the state of Uttar Pradesh (UP), which has received almost 35,000 calls in two years requesting for services. After receiving the calls, the patients requiring intervention were directed to WHP’s franchisee clinics in the respective areas. This model included three areas namely, Meerut, Bijnor and Muzzafarnagar.

Apollo group, Narayana Hruduyalaya, Aravind Eye Hospital and Asia Heart Foundation are also running similar system in India. Unfortunately, none of these or even all put together can extend such facilities to patients across the whole of India, just yet.

The Market:

According to a report of Infinity research the global market for telemedicine is around US$ 9 billion with a CAGR of 20 percent. However, another report quoting KSA Technopak indicates that the Indian market is currently relatively very small with a market size of around US$ 7.5 Million. Considering future growth opportunities, as deliberated here, RHDS market holds a great promise.

Telemedicine or RHDS market is classified based on the type of technology and services used and usually analyzed on the basis of telemedicine applications, such as Tele-consultation, Tele-cardiology or Tele-dermatology etc. However, Tele-consultation reportedly dominates the telemedicine services market.

To give an idea of its market potential, the BRIC (Brazil, Russia, India and China) telemedicine market was reportedly at US$ 200.5 million in 2009 and was expected to expand at a CAGR of 15.8 percent from 2009 to 2014.

The telemedicine technology market segment forms the largest segment of the overall BRIC telemedicine market and is expected to be US$ 307.4 million by end 2014 with a CAGR of 16.6 percent from 2009 to 2014. The services segment in the overall BRIC telemedicine market is expected to reach US$ 111 million in 2014 with a CAGR of 13.8 percent.

The Challenges in India:

Again there are following two critical challenges in this areas:

  • The biggest challenge is undoubtedly the broadband Internet connectivity.
  • Transmitting patients’ medical records through Internet could infringe upon patient privacy giving rise to ethics related issues, besides avoidable litigations.

I reckon, these concerns can be well addressed, if both the private healthcare providers and the Government together resolve and chart a time-bound pathway to improve access to quality healthcare in a cost effective manner to a large majority of Indian population.

Conclusion:

Various public and private RHDS solution providers are gradually getting actively engaged, though incoherent way, to create awareness about telemedicine in the country. This  brings with it a never before hope of ensuring access to quality healthcare to almost the entire population of the country.

A survey conducted in the United States highlighted that 85 percent of patients expressed satisfaction with their telemedicine consultation. Back home in India, a similar study in Odisha reported a satisfaction rate as high as 99 percent post telemedicine consultation.

Having a large base of medical and IT manpower with requisite expertise in RHDS, India holds a great promise to become a major telemedicine hub even for its neighboring countries, transforming the healthcare delivery scenario in all those places significantly.

Bundling all these, together with the increasing use of Internet enabled smartphones as explained by Dr. Eric Topol in his video clipping above, RHDS does offer a simmering promise in an otherwise despondent healthcare scenario of India.

By: Tapan J. Ray

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

A Ten Step Strategy Prescribed

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In India, there are various hurdles to address the healthcare issues in a comprehensive way. Though, these do not seem to be insurmountable, the country needs a clear time-bound grand strategy to squarely address this vexing concern, which also has its consequent socioeconomic fallout.

If we look at the history of development of the industrialized countries of the world, we shall easily be able to fathom that all of them not only had heavily invested, but even now are investing to improve the socioeconomic framework of the country where education and health are the center pieces. Continuous reform measures in these two key areas are proven key drivers of economic growth of any nation.

Just as focus on education is of utmost importance to realize the economic potential of any country, so is the healthcare. It will be extremely challenging for India to realize its dream of becoming one of the economic superpowers of the world, without a sharp strategic focus and significant resource allocation in these two areas.

The World Health Statistics:

As reported by the ‘World Health Statistics 2011′, India spends around 4.2 percent of its Gross Domestic Product (GDP) on health, which is quite in line with other BRIC countries like, China and Russia.This has been possible mainly due to increasing participation of the private players in the healthcare sector and not so much by the government.  The following table on ‘Health Expenditure’ will highlight this point:

 

Type Brazil Russia India China
Exp. on Health (% of GDP)

8.4

4.8

4.2

4.3
Govt. Exp. on Health(% of Total Exp. on Health)

44

64.3

32.4

47.3
Pvt. Exp. on Health (% of Total Exp. on Health)

56

35.7

67.6

52.7
Govt. Exp. on Health (% of Total Govt. Exp.)

6

9.2

4.4

10.3
Social Security Exp. on Health (% of General Govt. Exp. on Health)

-

38.7

17.2

66.3

Key healthcare goals:

As articulated in a recent paper titled ‘Meeting the Challenges of Healthcare Needs in India: Paths to Innovation’, the key healthcare goals of any country have been described as follows:

  •  Improved quality of care and population health as measured by life expectancy and other measures of wellness
  • Cost containment and pooled risk-sharing by the population to allow financial access to care as well as avoid catastrophic ruin
  • Provide access to care in an equitable manner for all citizens

Specifically to India one of the key challenges to healthcare is ‘Universal Access’ to care and health equity. However, in terms of pure concept the country has a universal healthcare system, where theoretically any citizen is entitled to avail the public health facilities irrespective of socioeconomic status. Unfortunately, the reality is far out of the line.

Health is a ‘State subject’:

In Indian system, health is primarily a state subject and the Central Government deals with:

  •  Health related policies
  • Health related regulations
  • Initiatives related to identified disease prevention and control

Whereas, each state needs to take care of:

  • Healthcare administration
  • Healthcare delivery
  • Healthcare financing
  • Training of personnel related to healthcare

The system:

Primary Health Centers (PHCs) of India located in the cities, districts or rural villages are expected to provide medical treatment free of cost to the local citizens. The focus areas of these PHCs, as articulated by the government, are the treatment of common illnesses, immunization, malnutrition, pregnancy and child birth. For secondary or tertiary care, patients are referred to the state or district level hospitals.
The public healthcare delivery system is grossly inadequate and does not function, by and large, with an optimal degree of efficiency, though some of the government hospitals like, All India Institute of Medical Science (AIIMS) are among the best hospitals in India.

Most essential drugs, if available, are dispensed free of cost from the public hospitals/clinics. Outpatient treatment facilities available in the government hospitals are either free or available at a nominal cost. In AIIMS an outpatient card is available at a nominal onetime fee and thereafter outpatient medical advice is free to the patient.

However, the cost of inpatient treatment in the public hospitals though significantly less than the private hospitals, depends on the economic condition of the patient and the type of facilities that the individual will require. The patients who are from Below Poverty Line (BPL) families are usually not required to pay the cost of treatment. Such costs are subsidized or borne by the government.

Private sector is expensive:

That said, in India health facilities in the public sector being inadequate, generally under-staffed and under-financed, a large section of population still does not have access to affordable modern healthcare. As a result, more often than not, common patients are compelled to go to expensive private healthcare providers. Majority of the population of India cannot afford such high cost private healthcare, though comes with a much better quality.

Thus, as things stand today the public sector actually provides just about 20% of actual care services. The balance is catered by the private sector.

A great potential:

A 2012 report  on ‘Indian Healthcare Industry’ indicates that in 2010 the size of the industry was around US$ 50 billion and is expected to register a turnover of US$ 140 billion in 2017 with a CAGR of 15 percent. This growth momentum, despite all these, positions India as one of the most lucrative markets within the developing countries of the world. On a global perspective as well, healthcare industry is one of the fastest growing segments clocking a turnover of US$ 5.5 trillion in 2010.

Growth drivers:

The main drivers of growth for the Indian healthcare industry are considered as follows:

  • Second highest growing economy in the world
  • Changing demographic profile
  • Increasing disposable income
  • Higher incidence of Non-infectious Chronic Diseases (NCD)
  • New investment avenues
  • A large talent pool
  • Cost-effective human resource

Besides above, other growth drivers are as follows:

  • Increased penetration of pharmaceuticals in the rural markets
  • Increased export potential for low cost and high quality generic pharmaceuticals, as a large number of patents are going to expire in the next 5 years
  • Emergence of various health cities and also single specialty clinics offering quality healthcare
  • Health insurance portability is expected to increase the penetration of insurance, improve quality of service and raise competition among insurers to retain customers
  • Telemedicine: E-healthcare in rural areas is gaining popularity with the involvement of both
    public and private players like, ISRO, Mazumdar Shaw Cancer Center and Narayana Hrudayalaya. Some telecom companies like, Nokia and BlackBerry are also contemplating to extend the use of mobile phones for remote disease monitoring as well as diagnostic and treatment support. Introduction of 3G and in the near future 4G telecom services will
    further enhance opportunities of e-healthcare through mobile phones, expanding the field of healthcare.

Promising sectors:

Within the healthcare industry, the most promising sectors are:

  • Pharmaceuticals
  • Hospitals and Nursing Homes
  • Medical equipment
  • Pathological labs and other diagnostic service providers

According to the Investment Commission of India, the healthcare sector of the country has registered a robust CAGR of over 12 percent during the last four years and the trend is expected to be ascending further.

Quite in tandem, other important areas of the healthcare sector, besides pharmaceuticals, have also recorded impressive performance as follows:

Areas Growth %
Hospitals/Nursing Homes 20
Medical Equipment 15
Clinical Lab Diagnostics 30
Imaging Diagnostics 30
Other Services (includes Training & Education; Aesthetics & Weight loss; Retail Pharmacy, etc.) 40

                                                                                                                            Government initiatives:

On its part, the Indian government is also in the process of giving a thrust to the healthcare sector as a whole by:

  • Increasing public expenditure on healthcare from 1 percent to 2.5 percent of GDP in the 12th Five Year Plan Period
  • Encouraging public-private partnerships (PPP) in hospital infrastructure and R&D
  • Encouraging medical tourism
  • Attracting Indian and foreign players to invest in Tier-II and Tier-III cities with huge untapped market potential. For example:

-  Expansion of major healthcare players in tier-II and tier-III cities of India like, Apollo, Narayana Hrudayalaya, Max  Hospitals, Aravind Eye Hospitals and Fortis

- BCG Group will reportedly open shortly a multidisciplinary health mall that would provide a one-stop solution for all healthcare needs starting from doctors, hospitals, ayurvedic centers, pharmacies including insurance referral units at Palarivattom in Kochi, Kerala.

BCG’s long-term plan, as reported in the media, is to set up a health village spanning across an area of a 750,000 sq. ft. with an estimated cost of US$ 88.91 million. Along the same line, to set up more facilities for diagnostic services in India, GE Healthcare reportedly has planned to invest US$ 50 million for this purpose

  •  Introduction of the ‘National Commission for Human Resources for Health Bill 2011( NCHRH Bill 2011)’, which will bring all independent bodies like the Medical Council of India (MCI), the Dental Council of India (DCI), the Pharmacy Council of India (PCI) and the Nursing Council of India (NCI) under a centralized authority for a more cohesive action.

Attracting FDI:

According to the Department of Industrial Policy & Promotion (DIPP), the healthcare sector is undergoing significant transformation and attracting investments not only from within the country but also from overseas.

The Cumulative FDI inflow in the healthcare sector from April 2000 to October 2012, as per DIPP publications, is as follows:

Sector FDI   inflow (US$ million)
Hospital and diagnostic centers 1482.86
Medical and surgical appliances   571.91
Drugs and pharmaceuticals  9775.03

(Source: Fact Sheet on FDI – April 2000 to October 2012, DIPP)

Job creation:

The trend of new job creation in the healthcare sector of India is also quite encouraging, as supported by the following facts:

The Healthcare sector in India recorded a maximum post-recession recruitment to a total employee base of 36, 21,177 with a new job creation of 2, 73, 571, according to ‘Ma Foi Employment Trends Survey 2012’.

  •  Despite slowdown in other industries, in the healthcare sector the new job creation continues at a faster pace.
  • With many new hospital beds added and increasing access to primary, secondary and tertiary / specialty healthcare, among others, the ascending trend in job creation is expected to continue in the healthcare sectors of India in the years ahead.

A Strategy Prescribed:

Though the report of the High Level Expert Group (HLEG) on the ‘Universal Health Coverage (UHC)’ is already in place, without going into the implementability issues of the report in this article, I would like to propose a ten pronged approach towards a new healthcare reform process to achieve the national healthcare objectives:

1. The government should focus on its role as provider of preventive and primary healthcare to all, through public hospitals, dispensaries and PHCs, including free distribution of essential medicines.

2. In tandem, the government should play the role of enabler to create Public-Private partnership (PPP) projects for secondary and tertiary healthcare services at the state and district levels with appropriate fiscal and other incentives.

3. PPP also may be extended to create a robust health insurance infrastructure urgently.

4. The insurance companies will be empowered to negotiate with concerned doctors, hospitals and other organizations, all fees payable by the patients to doctors, hospitals, for diagnostic services etc., including cost of medicines for both inpatients and outpatients treatment, with the sole objective to ensure access to affordable high quality healthcare to all.

5. Create an independent regulatory body for healthcare services to regulate and monitor the operations of both public and private healthcare providers/institutions, including the health insurance sector.

6. Levy a ‘healthcare cess’ to all, for effective implementation of this new healthcare reform process.

7. Effectively manage the corpus thus generated to achieve the healthcare objectives of the nation through the Healthcare Services Regulatory Authority (HSRA).

8. Make HSRS accountable for ensuring access to affordable high quality healthcare to the entire population of the country together with a grievance redressal mechanism.

9. Make HSRS accountable, its operation transparent to the civil society through HSRS website and cost-neutral to the government, through innovative pricing model based on economic status of an individual.

10. Allow independent private healthcare providers to make reasonable profit out of the investments made by them

Conclusion:

All the ten steps prescribed as above, will help ensure a holistic approach to healthcare needs of India and reduce prevailing socioeconomic inequalities within the healthcare delivery systems of the country.

Rapidly growing urban centric five-star private healthcare initiatives are welcome but these are now just catering to the privileged few, perpetuating the pressing healthcare issues unanswered.

Only a well-orchestrated, comprehensive, time-bound and holistic approach is capable of addressing the humongous healthcare needs of India and at the same time providing much required growth momentum to the Indian healthcare industry, positioning India as one of the most lucrative healthcare hubs within the emerging economies of the world.

By: Tapan J Ray

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

Hysteria on Corporate Lobbying in India

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The ‘hysteria’ on ‘Corporate Lobbying’ influencing the key policy decisions of India, reverberated in the corridors of power of the Indian Parliament last week with consequent media attraction and triggering a raging public debate.

On Monday, December 10, 2012 the Upper House of the Indian Parliament reportedly expressed itshuge concern over a lobbying disclosure in the United States related to a contentious government policy decision India.

Taking part in the debate a distinguished Member of the Parliament and an eminent lawyer Mr.Ravishankar Prasad reportedly articulated, “Lobbying is illegal in India and is a kind of bribe. If Wal-Mart has said that hundreds of crores of rupees were spent on India, then it is a kind of bribe.Government should tell who was given this bribe.”

Responding to the opposition demand on this subject, the Government has already ordered a judicial probe on this allegation.

Corporate Lobbying:

The term ‘Lobbying’ has been defined  as “a form of advocacy with the intention of influencing decisions made by the government by individuals or more usually by Lobby groups; it includes all attempts to influence legislators and officials, whether by other legislators, constituents, or organized groups”.

April 21, 2012 edition of ‘The Economist’ in an article titled. “The Chamber of Secrets - The biggest business lobby in the United States is more influential than ever”, reported that ‘Americas first chamber of commerce was founded in Charleston in 1773.

Many a times the key issues of corruption, morality and ethics are being used with ‘lobbying’ activity. However, following two different perceptions remain generally associated with this terminology:

  • Corporates or people with mighty socioeconomic power, by themselves or through their industry bodies, corrupt the laws to serve a self-serving agenda by bending or deflecting them away from general fairness to majority of the population. 
  • It gives an opportunity to defend minority interest against corruption and tyranny of the majority.

An article published in the ‘The Washington Post’ on August 14, 2011 argued that “Blame for financial mess starts with the corporate lobby” in America.

In a recent book titled, “Time to Start Thinking – America and the Specter of Decline”, the author described how the big money in America has almost completely bought over the political process along with a pen picture of the organized lobbying group continuing to wield their mighty power despite reported ban of this activity in the ‘White House’ by President Barrack Obama.

Lobbying is legal in many countries:

It is worth mentioning that lobbying is a legal activity in many countries, such as, the United States of America, Europe and Canada. In the US, many Indian companies, including the government of India have been lobbying since so many years to present their cases and argument with the American law and policy makers.

When President Obama came to power in the US, it was reported: ‘one of the first acts of the Obama administration in office was to have an executive order which prohibited the Obama Administration either from hiring lobbyists – those who had lobbied within two years of joining the administration or allowing people who had left the Obama administration to service lobbyists for two years. The idea is that you want to break the chains where there is undue influence of special interest groups upon the government’.

‘Disclosure’ required in the US:

In the US, lobbying being recognized as a legitimate business activity, the companies are required to inform all such activities through quarterly disclosure reports to the US Senate.

In America, in 2012 alone and only in Washington DC there were  reportedly 12,016 active registered lobbyists, who spent a whopping US$ 2.45 Billion for lobbying activities . Similarly, as per publishedreports, there are currently an estimated 15,000 individual lobbyists and 2,500 lobbyist organizations in Brussels to seek favorable business decisions through the legislative process of the European Union.

It has been reported that in the U.S. lobbying is a huge and established industry. This is quite contrary to Indian situation, where lobbying has not been legalized and the activity, going by general perception, ‘smacks of illegal gratification and is ravished by corruption scandals like 2G scams”.

 Indian corporates also lobby in the US:

Records with the US House of Representatives reportedly show that around 27 Indian companies have spent money on lobbying in the US. Some examples are as follows:

  • Reliance Industries (RIL): Unspecified issue
  • Tata Sons:
  • Ranbaxy Lab,
  • The National Association of Software and Service Companies (Nasscom )
  • Wipro
  • Gems and Jewellery Export Promotion Council, among others.

 Some sensational recent reports:

Following are some sensational recent reports on Corporate Lobbying:

The ‘Pharma Letter’ in its in its March 29, 2012 edition reported that “New research reveals that the pharmaceutical industry lobby is spending more than 40 million Euros (US$ 53.5 million) annually to influence decision making in European Union.”

Back home ‘Live Mint  (The wall Street Journal)’ reported on October 6, 2011 as follows:

“Wal-Mart has disclosed earlier, “discussion related to India FDI (Foreign Direct Investment)” as one of the issues in its lobbying with the US lawmakers in the first two quarters of 2011, during which it spent nearly US$ 4 million on various lobbying activities.”

On December 13, 2012, ‘The Telegraph‘ reported that in a recent regulatory disclosure in the United States, Walmart has stated that it spent US$ 25 million in the last four years on lobbying for, among other its hopes for “enhanced market access for investment in India”.

Not legalized in India:

As stated above, though Lobbying is considered a legal business activity in many countries, in India it is still not considered as a legally and recognized business activity. However, many industrial sectors have formed their respective associations primarily for lobbying with the government, which is generally termed as ‘advocacy’.

A recent article published in the India Law Journal titled, ‘Corporate Lobbying and Corruption-Manipulating Capital’ articulates that “lobbying is the preferred means for exerting political influence in developed countries and corruption the preferred one in developing countries. However, lobbying and corruption are symbiotic in nature as both are ways of obtaining help from the public sector in exchange for favors.”

The article further states that corporate lobbying or advocacy has expanded in India mostly as intensive briefings and presentations to the ministers and senior bureaucrats, though it is not yet recognized in a statutory or non-statutory form in the country.

Thus, right from the debate on Bofors Guns to the telephone tapes of high profile lobbyist Niira Radia related to 2G telecom scam and then Tatra trucks scam of the Indian Army and now on Walmart debate in the Parliament, one gets a clear feel that corporate lobbying falls in a grey zone under the Indian law.

Difference between ‘Lobbying’ and ‘Advocacy’:

According to the article titled, ‘Lobbying and Advocacy—Similarities and Differences, published by Charity Lobbying for the Public Interest’, when nonprofit organizations advocate on their own behalf, they seek to positively affect majority of the society, whereas lobbying refers specifically to advocacy efforts that attempt to influence policy or legislation of a country by interested groups, irrespective of its best outcome to the society.

More debate:

In a very recent reported debate published on December 15, 2012 titled, “Is lobbying an acceptable business practice? “, one distinguished professional said, ‘While lobbying can be considered routine, the response to it should not be, as it can be deeply harmful to our country’.

In the same debate, another equally distinguished person commented, ‘Lobbying may be a legitimate activity subject to strict regulatory oversight in the US. But in India, it a sophisticated alibi for the more brazen bribe-giving, what with cash still ruling the roost with its subterranean links lubricating all sections of the economy.”

More controversy:

Not so very long ago, some consumer activists from the civil society vehemently protested against the ‘Intellectual Property Conferences’ held in India, which were allegedly sponsored by some interested groups in a guise to influence the policy makers and the judiciary of India.

It was widely reported that the consumer activists viewed these IP summits, organized by the George Washington University Law School of USA as ‘attempts to influence sitting judges on patent law enforcement issues that are pending in Indian courts.’

In a letter dated February 26, 2010 addressed to Shri Anand Sharma, Minister of Commerce and Industry of India, over 20 NGOs demanded transparency and more information on such meetings and wanted the government of India ‘to put a stop to such industry sponsored lobbying with Indian judges and policymakers to promote their own requirements for intellectual property and to lobby for either law amendments or even to plead their cases currently pending before, various courts and the Indian Patent Office.”

In raising their concerns, the civil society groups argued that the posture adopted by the lobbyists and their supporters is to “force India to adopt greater standards” of IP protection “beyond the mandatory levels” required by the WTO, which may ‘go against public health interest of India’.

 The need for a middle path:

 In the current volatile scenario, it is quite reasonable to expect that lobbying activities in India, especially after the current uproar in the Parliament, may come under greater scrutiny both by the media and the government. The intervention of the courts against ‘Public Interest Litigation  (PIL)’ cannot also be ruled out.

However, it is also believed by many that long-term interest of India is expected to ultimately prevail in this closely watched raging debate with the acceptance of a middle path.

A strong argument in favor of lobbying/advocacy:

As stated above, there is also a strong argument in support of lobbying or advocacy, based on the following grounds:

  • In a democratic country like India, people from across the spectrum, including the industries and its associations, should have the right to convey their views to policy makers.
  • Lobbying should be regarded as a “fundamental basis to express a point of view”, industry included.
  • Trying to influence the government is a natural process by all, including the civil society, other stakeholders and the industry alike.

 Regulating lobbying activities – An option:

Considering the fast changing environment and arising out of some recent very sensational lobbying related financial/policy scams in India, as mentioned above, the moot question, as is being raised by many across the country is: “Should the government regulate lobbying activities in the country with appropriate regulations?”

Surrogate lobbying:

The instances of ‘surrogate lobbying’ by the industries with funds coming from various parts of the world are also being raised by the civil society, media and recently by the Government. The contentious issue became the subject of a heated debate related to ‘Kudankulam Nuclear Power Plant’ in Tamil Nadu.

In February 2012, Prime Minister Manmohan Singh’s reportedly charged that foreign NGOs for stoking protests with foreign funds at the ‘Kudankulam Nuclear power Plant’ for vested interests and ordered further investigation by the Ministry of Home Affairs to track the trails of funds.

As a result of all these developments, the Government is reportedly becoming increasingly more vigilant against direct or indirect ‘foreign hand’ through surrogate lobbying in the policy related issues of the country, against majority interest of the society. The ‘Walmart saga’ is a case in point, at this stage.

Industry observers have opined, probably many other forms of surrogate lobbying are currently operational in India, which needs to be thoroughly probed and in case of any illegal activity, the perpetrators must be brought to justice, sooner than later, whether it is related to ‘Kundamkulam Nuclear Power Plant’ or any other .

Examples of political fall-out of lobbying activities:

On June 1, 2012, FiercePharma  reported as follows:

“The cat is out of the bag so to speak with the disclosure of memos today detailing the level of drug industry support for passage of President Obama’s prized healthcare reform”

It continued to state, “Big Pharma came around to support the original bill, trading about $80 billion in additional taxes and some price rebates to federal programs for an expanded pool of insured.”

Back home in India, The Outlook Magazine reported on June 6, 2010 on the political fall-out of lobbying related to 2G telecom spectrum allocation scam in India as follows:

“Since Outlook  published extracts from the CD of Radia’s phone conversations (submitted to the court) taped by the I-T department and put the 140 conversations up on its website, there has been a raging debate on what they tell us about the role of lobbyists in the 2G spectrum allocation scam, how the media interplays in such a system, and how our political class and retired bureaucrats are more often than not willing partners in the game.”

“These debates do not detract from the aim of punishing the guilty behind the 2G scam; rather they raise disturbing questions we all have to answer. Who is this woman who can speak to the “highest and mightiest” in this country in this way? From where does she draw her power? And what does it tell us about our society? When ‘Outlook’ asked her, whether she would like to give her version of these recent events, Radia SMSed back: “No. Thank You.” This is her story..”

Conclusion:

Despite a long history of regulated and legalized lobbying in the US, there are still severe criticisms even in that country about the way lobbying activities have worked there in the past so many decades. India has plenty to learn from such experiences.

In the prevailing situation within India many experts often question, whether the economic/ other critical policy decisions of the country are mostly based on what the local population would require or depend on the money power of vested interests or business houses within and outside the country to influence such decisions.

To eliminate any possibility of illegal gratification, directly or indirectly or in any other manner or form, the process of lobbying or advocacy should be made absolutely transparent for all through appropriate rules and regulations, legally acceptable lobbyists and an appropriate disclosure mechanism for all such related expenses, just as exists in the United States of America.

In absence of these transparent and robust measures, lobbying or advocacy will continue to be perceived not just as an illegitimate activity, but also an ignoble and dubious profession in the eyes of majority living in India.

The fantastic vocabulary of ‘Good Governance’ should not be used just for others to practice. It is a time to ‘walk the talk’ for all stakeholders, including the government to douse histrionics of various kinds like, what happened last week on ‘Corporate Lobbying in India’.

By: Tapan J Ray

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

A NEW Study on Ballooning Pharma R&D Cost: Exploring a Sustainable Model for Greater Patients’ Access

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The high-decibel debate on increasing prices for patented drugs affecting patients’ access to innovative medicines gets a new fuel. A brand new study dated December 2012 carried out by the Office of Health Economics (OHE), UK, which was partly supported by a grant from AstraZeneca, estimated that the cost of developing new medicine has risen by ten times from US$100 million in the 1970s to as high as US$ 1.9 billion in 2011.

The study identifies the following key reasons for a galloping increase in the cost of research and development:

  • Inflation-adjusted investments
  • Sharp increase in the rate of failure
  • Stringent regulatory demands together with scientific complexity
  • Longer time for clinical development
  • Significant increase in the cost of capital

 Another recent study goes even beyond:

Many experts have gone even further on this subject, arguing that pharmaceutical R&D expenses are over stated and the real cost is much less.

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

However, in 2006 the same figure increased by 64 per cent to US$ 1.32 billion, as reported by a pharmaceutical industry association. Maintaining similar trend, if one assumes that the R&D cost will increase by another 64 per cent by 2012, the cost to bring a new drug to the market through its discovery and development stages will be around US $2.16 billion. This will mean a 2.7 times increase from its year 2000 estimate, the article articulates.

The important caveat:

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

  •  The tax exemptions that the companies avail for investing in R&D.
  • Tax write-offs amount to taxpayers’ contributing almost 40% of the R&D cost.
  • The cost of basic research (should not have been included), as these are mostly done in public funded universities or laboratories.

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

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

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

 A positive side of the story:

The book  titled “Pharmaceutical R&D: Costs, Risks, and Rewards”, published by the government of USA states that the three most important components of R&D investment are:

  • Money
  • Time
  • Risk

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

This publication also highlights that the cost of bringing a new drug from ‘mind to market’ depends on quality and sophistication of science and technology involved in a particular R&D process together with associated investment requirements for the same. In addition, regulatory demand to get marketing approval of a complex molecule for various serious disease types are also getting more and more stringent, significantly increasing their cost of clinical development simultaneously. All these factors when taken together make the cost of R&D not only very high, but unpredictable too.

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

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

 The ground reality: R&D productivity is going south

 That pharmaceutical R&D productivity is fast declining has been vindicated by ‘2011 Pharmaceutical R&D Factbook’ complied by Thomson Reuters, the key highlights of which are as follows:

  •  21 new molecular entities (NMEs) were launched in the global market in 2010, which is a decrease from 26 NMEs of the previous year.
  • 2010 saw the lowest number of NMEs launched by major Pharma players in the last 10 years
  • The number of drugs entering Phase I and Phase II clinical trials fell 47% and 53% respectively during the year.

 According to findings of the latest review of ‘Pharmaceutical R&D returns performance’ by Deloitte and Thomson Reuters of December 2012, the R&D Internal Rate of Return (IRR) of leading pharmaceutical companies has fallen for a second successive year to 7.2 percent in 2012 from 7.7 percent in 2011.

High cost of failure:

By challenging the status quo, Andrew Witty, the global CEO of GlaxoSmithKline (GSK) in his speech  in Mumbai on September 27, 2011 to the members of the Indian pharmaceutical industry commented that the cost of over a billion dollar to bring a new molecule to the market through its discovery and development stages is “unacceptable.” He attributed such high R&D expenses to the ‘cost of failure’ by the industry.

Witty said, “High in-house failure rates are slowing progress on pricing affordability… We need to fail less and deliver more”.

He commented during his deliberation that success in reducing the R&D cost to make innovative drugs more affordable to the patients of all income levels, across the globe, will be the way forward in the years ahead.

 Conventional thinking and an unsustainable model:

Research scientists have already articulated that sharp focus in the following areas may help containing the R&D expenditure to a great extent and the savings thus made, in turn, can fund a larger number of R&D projects:

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

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

 Exploring a seemingly ‘Sustainable Model’:

Should Pharmaceutical R&D move from the traditional models to a much less charted frontier?

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

‘Open Innovation’ model, they proposed, will be most appropriate in the current scenario to improve not only profit, but also to promote more innovative approaches in the drug discovery process.  Currently, on an average it takes about 8 to 10 years to bring an NCE/NME to market with a cost of around U.S$ 1.9 billion.

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

In the sphere of Biotechnology Human Genome Sequencing is another remarkable outcome of such type of R&D model.

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

 ‘Open Innovation’:

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

In ‘Open Innovation’, the key component is the supportive pathway of its information network, which is driven by three key parameters of:

  •  Open development
  • Open access
  • Open source

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

Making innovative drugs affordable through ‘Open Innovation’:

The key objective of ‘Open Innovation’ in pharmaceuticals is to encourage drug discovery initiatives at a reasonably cheaper price, especially for Non-infectious Chronic Diseases (NCD) or the dreaded ailments like Cancer, Parkinson’s, Alzheimer, Multiple Sclerosis etc. and also many neglected diseases of the developing countries, to make innovative drugs affordable even to the marginalized people of the world.  

 Multiple benefits:

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

  •  Bringing together the best available minds to tackle “extremely challenging” diseases
  • Speed of innovation
  • Risk-sharing
  • Affordability

 The key barrier: Shared IPR

Industry observers feel that the key barrier to ‘Open Innovation’ is that IPR needs to be shared. Hence, large innovator companies, by and large, have not evinced much commercial interest in this initiative as yet. Other issues for ‘Open Innovation’ model are:

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

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

 The Global initiatives on ‘Open Innovation’:

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

 Indian initiative:

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

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

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

 Conclusion:

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

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

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

Thus, many experts argue, high prices of new patented drugs, giving rise to low access to majority of patients, at least, in the developing world, should by and large be attributed to high R&D cost. They feel, such ballooning increase in research and development expenditures is commercially unsustainable even in the medium term.

Many thought leaders now believe, despite hard commercial consideration related to IPR, which perhaps has to be amicably sorted out willy-nilly in the long run, ‘Open Innovation’ concept could well be an important commercial model for tomorrow’s global R&D initiatives. This sustainable model would possibly address the issue of improving access to innovative affordable Medicines to a larger number of patients of the world, meeting their unmet medical needs, more effectively and with greater care.

By: Tapan J Ray

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

Revocation and Denial of Patents on Patentability Ground in India: The Fallout and the Road Ahead

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On November 26, 2012, the Intellectual Property Appellate Board (IPAB) reportedly denied patent protection for AstraZeneca’s anti-cancer drug Gefitinib on the ground that the molecule lacked invention.

The report also states that AstraZeneca suffered its first setback on Gefitinib in June 2006, when the Indian generic company Natco Pharma opposed the initial patent application filed by the global major in a pre-grant opposition. Later on, another local company, GM Pharma, joined Natco in November 2006.

After accepting the pre-grant opposition by the two Indian companies, the Indian Patent office (IPO) in March 2007 rejected the patent application for Gefitinib citing ‘known prior use’ of the drug. AstraZeneca contested the order through a review petition, which was dismissed in May 2011.

Prior to this, on November 2, 2012 the IPAB revoked the patent of Pegasys (Peginterferon alfa-2a) – the hepatitis C drug of the global pharmaceutical giant Roche. Interestingly Pegasys was granted patent protection across the world.

Though Roche was granted a patent for Pegasys by the Indian Patent Office (IPO) in 2006, this was subsequently contested by a post-grant challenge by the large Indian pharma player – Wockhardt and the NGO Sankalp Rehabilitation Trust (SRT) on the ground that Pegasys is neither a “novel” product nor did it demonstrate ‘inventiveness’ as required by the Patents Act of India.

It is worth noting, although the IPO had rejected the patent challenges by Wockhardt and SRT in 2009, IPAB reversed IPO’s decision revoking the patent of Pegasys.

Similarly the patent for liver and kidney cancer drug of Pfizer – Sutent (Sunitinib), which was granted by IPO in 2007, was revoked by the IPAB in October, 2012 after a post grant challenge by Cipla and Natco Pharma on the ground that the claimed ‘invention’ does not involve inventive steps.

A twist and turn:

However, on November 26, 2012 in a new twist to this case, the Supreme Court of India reportedlyrestored the patent for Sutent. Interestingly, at the same time the court removed the restraining order, which prevented Cipla from launching a copy-cat generic equivalent of Sunitinib.

The key reason:

All these are happening, as the amended Patents Act 2005 of India includes special protections for both patients and generic manufacturers by barring product patents involving ‘incremental’ changes to existing drugs. This practice is called “evergreening” by many.

It is worth noting, such ‘incremental innovations’ qualify for the grant of patents across the world including, Europe, Japan and the USA and that reason prompted initiation of a raging debate throwing strong arguments both in favor and against of this issue, though the subject conforms to the law of the land.

‘Incremental innovation’ still a contentious issue in India:

As on today in the Indian Patents Act 2005, there is virtually no protection for ‘incremental innovation’, as the section 3(d) of the statute states as follows:

“The mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.

Explanation: For the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy.”

The apprehension:

A published report on ‘Patentability of the incremental innovation’ indicates that Indian Patents Act 2005 was formulated by the policy makers keeping the following points in mind:

  • The strict standards of patentability as envisaged by TRIPS pose a challenge to India’s pharmaceutical industriy, whose success depended on the ability to produce generic drugs at much cheaper prices than their patented equivalents.
  • A robust patent system would severely curtail access to expensive life saving drugs.
  • Grant of a product patents should be restricted only to “genuine innovations” and those “incremental innovations” on existing medicines, which will demonstrate significantly increased efficacy over the original drug.

Is it ‘MNC Interest’ versus ‘Indian Interest’ issue?

Many domestic stakeholders reportedly are looking at this particular subject as  ‘MNC Interest’ versus ‘Indian Interest’ in the realm of intellectual Property Rights (IPR). While others holding opposite view-points counter it by saying, this is a narrow and unfair perspective to address the much broader issue of fostering innovation within the Indian pharmaceutical industry helping capacity building, attracting talent and investments, while creating an IPR friendly ecosystem for the country in tandem.

Incidentally many MNCs, as reported by a section of the media, have demonstrated proven long-standing commitment to India, as they have been operating in the country with impeccable repute for a much longer period than most of the domestic pharmaceutical players, if not all, spanning across all scale and size of operations.

Are the patent challenges under section 3(d) being used as a ‘business strategy’?

Some observers in this field have expressed, although ‘public health interest’ is the primary objective for having Section 3(d) in the Indian Patents Act 2005, many generic companies, both local and global, have already started exploiting this provision as a part of their ‘business strategy’ to improve business performance in India.

This game seems to have just begun and may probably assume unhealthy dimension, if not openly debated and appropriate remedial actions are taken, as will deem necessary by the law makers keeping in view the long term, both global and local, implications of the same.

The beginning of the dispute:

As we know, way back in 2006 IPO refused to grant patent to the cancer drug Glivec of Novartis on the ground that the molecule is a mere modification of an existing substance known as imatinib. However, Novartis challenged the decision in the Supreme Court of India and in September, 2012, the final arguments in the Glivec case commenced. The matter is now sub judice.

Experts have opined that this interesting development has put Section 3(d) of the Indian Patents Act 2005 to an ‘Acid Test’ and the final verdict of the apex court will have the last say on the interpretation of this much talked about section of the statute.

Industry observers from both schools of thought – pro and against, are now waiting eagerly for the final outcome of this long standing dispute with bated breath, as it were.

Differing view points on impact:

Though the domestic stakeholders, including the local pharmaceutical industry, by and large, have expressed satisfaction with the law having taken its own course, the adversely affected companies articulated their strong disappointments with the developments. These companies argue, since valid patents were granted across the world for all these products, they had deployed significant financial and other resources starting from the regulatory approval process to market launch of such products in India with reasonable confidence.

Now with the such revocation and denial of patents, the concerned companies feel that  they will have to suffer significant financial losses besides high ‘Opportunity Costs’ for these molecules in India.

Interestingly, neutral observers have reportedly opined that this contentious issue, if not addressed appropriately and sooner by the government keeping in view the global business climate, will ultimately leave a lasting negative impression on the global community regarding the quality of IP ecosystem and investment climate in India, which consequently could lead to far reaching economic consequences extending even beyond the pharmaceutical industry of the country.

However, most of the local stakeholders advocate that there is no need to have a relook at it, in any way.

Opposition from the domestic industry:

It has been reported that a detailed study commissioned by the ‘Indian Pharmaceutical Alliance (IPA)’ and authored by Mr. T. C. James, Director, National Intellectual Property Organization, and a former bureaucrat in the ‘Department of Industrial Policy and Promotion (DIPP)’, articulated as follows:

“There is no clinching evidence to show that without a strong patent protection regime innovations cannot occur, that minor incremental innovations in the pharmaceutical sector do not require patent protection and that Section 3(d) of the Patents Act is not a bar for patenting of significant incremental innovations.”

In his report Mr. James also criticized large ‘Multinational Companies (MNCs)’ for “exploring strategies to extend their hold on the market, including through obtaining patents on minor improvements of existing drugs.”

The author continues to argue in favor of the section 3(d) the as follows:

  • It will be incorrect to conclude that Section 3 (d) is not compatible with TRIPS Agreement.
  • It has stood the test of time and does not introduce any unreasonable restrictions on patenting.
  • It is a major public health safeguard as it blocks extension of patent period through additional patents on insignificant improvements paving the way for introduction of generics on expiry of the original patent.
  • Pharma companies need to be given incentives for undertaking more research and development, but removing section 3(d) will be counterproductive.
  • A good marketing strategy for the companies would be to concentrate on R & D in diseases which are endemic to countries like Brazil, China and India which are fast emerging as major economies.

IPA challenges: 86 pharmaceutical patents granted by IPO fall under Section 3(d):

A study by the Indian Pharmaceutical Alliance (IPA) indicates that 86 pharmaceutical patents granted by the IPO post 2005 are not breakthrough inventions but only minor variations of existing pharmaceutical products and demanded re-examination of them.

Possible implications to IPA challenge:

If the argument, as expressed above in the IPA study, is true by any stretch of imagination, in that case, there exists a theoretical possibility of at least 86 already granted product patents to get revoked. This will indeed be a nightmarish situation for innovators of all caste, creed and colors, irrespective of national or multinational background.

Recapitulation of ‘Revised Mashelkar Committee Report’:

In August 2009, the Government accepted the revised report of the ‘Mashelkar Committee’, which observed the following:

1. “It would not be TRIPS compliant to limit granting of patents for pharmaceutical substance to New Chemical Entities only, since it prima facie amounts to a statutory exclusion of a field of technology.”

2. “Innovative incremental improvements based on existing knowledge and existing products is a ‘norm’ rather than an ‘exception’ in the process of innovation. Entirely new chemical structures with new mechanisms of action are a rarity. Therefore, ‘incremental innovations’ involving new forms, analogs, etc. but which have significantly better safety and efficacy standards, need to be encouraged.”

Could it have an impact on FDI?

Keen observers of these developments have reportedly expressed that revocation of granted patents or denial of patents on patentability criteria for the molecules, which hold valid patents elsewhere in the world, is sending a very negative signal to the global community and vitiating, among others, the Foreign Direct Investment (FDI) climate in the country. However, many local experts interpret this observation as mere ‘posturing’ at the behest of the MNCs’ interest.

The point to ponder:

The innovator companies have been arguing since quite some time that innovation involving any New Chemical Entity (NCE) never stops just after its market launch. Scientists keep working on such known molecules to meet more unmet needs of the patients within the same therapeutic class.

They substantiate their argument by citing examples like, after the discovery of beta-blockers, incremental innovation on this drug continued. That is why, from non-cardio-selective beta-blockers like Propranolol, the world received cardio-selective beta-blockers like Atenolol, offering immense benefits and choices to the doctors for the well being of patients.

Thus, global innovators reiterate very often that such examples of high value ‘incremental innovation’ are important points to ponder in India.

Patent challenge is a legal process, but…:

The proponents of ‘no change required in the Section 3(d)’ argue with gusto that ‘Patent Challenge’ is a legal process and the law should be allowed to take its own course.

However, the opposition counter-argues that the main reason in favor of Section 3(d) being that the provision will prevent grant of frivolous patents and the ultimate fallout of which will result in limited access to these drugs due to high price, is rather difficult to accept. This, they point out, is mainly because the Government is now actively mulling  a structured mechanism of price negotiation for all patented drugs to improve their access to patients in India.

Conclusion:

The spirit of ‘public health interest’ and avoidance of frivolous patents behind Section 3(d) of the Indian Patents Act is indeed commendable.

However, exclusion of almost all kinds of ‘incremental innovation’ for not meeting the very subjective and highly discretionary ‘efficacy’ criterion in the above section could prove to be counterproductive in the long run, even for the domestic players. The reason being, many such innovations will help enhancing safety, efficacy and compliance, besides other properties, of already existing molecules meeting various unmet needs of the patients.

Looking from a different perspective altogether, restrictive provisions in Section 3(d) could well go against the public health interest in the longer term, especially when the government is considering a mechanism of price negotiation for the patented drugs in India, as stated above.

Thus weighing pros and cons of both the arguments, in the finer balance of probability in terms of net gain to India as a nation, I reckon, appropriate legislative amendment in the section 3(d) of the Indian Patents Act 2005 will give a much required boost and incentive to pharmaceutical research and development in India.

This long overdue course-correction, if dealt with crafty win-win legal minds, will be able to protect not only high value “incremental innovations” of all innovators, global or local, in pursuit of significantly better and better drugs for the patients of India, but at the same time will effectively address the genuine apprehensions of ‘evergreening’ through frivolous patents.

…Or else should we wait till the final verdict of the Supreme Court comes on the Glivec case of Novartis?… Keeping my fingers crossed.

By: Tapan J. Ray

 

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