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Ensuring ‘health outcomes’ based drugs prescriptions will be more beneficial for the patients in India than just ‘price control’ of drugs

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Currently the global pharmaceutical market is undergoing a metamorphosis. The concept of ‘evidence-based medicine’ is gaining ground in the developed markets of the world, making the pharmaceutical companies generate requisite ‘health outcomes’ data using similar or equivalent products. Cost of incremental value that a product will deliver is of key significance. Some independent organizations like, the National Institute for Health and Clinical Excellence (NICE)in the UK have taken a leading role in this matter.Global pharmaceutical companies using more ‘health outcomes’ data to set pricing strategies:In early 2009, reported agreements between Sanofi-Aventis, Procter & Gamble and Health Alliance as well as Merck and Cigna vindicate this point. These agreements signify a major shift in the global pharmaceutical industry’s approach to gathering and using ‘health outcomes’ data

In the Sanofi-Aventis/Procter & Gamble-Health Alliance agreement, the concerned companies agreed to reimburse health insurance companies expenses incurred for patients suffering from non-spinal bone fracture while undergoing treatment with their drug Actonel.

In the Merck/Cigna agreement, Cigna will have the flexibility to price two diabetes drugs based on ‘health outcomes’ data.

‘Outcomes-based’ pricing strategies are expected to become the order of the day, in not too distant future, all over the world.

The ground realities in India:

Medicines constitute a significant cost component of modern healthcare systems, across the world. In India, overall healthcare system is fundamentally different from many other countries, even China. In most of those countries around 80% of expenses towards healthcare including medicines are reimbursed either by the Governments or through health insurance or similar mechanisms. However, in India situation is just the reverse, about 80% of overall healthcare costs including medicines are private or out of pocket expenses incurred by the individuals/families.

Since 1970, the Government of India (GoI) has been adopting various regulatory measures like cost based price control and price monitoring to make medicines affordable to the common man. For those products, which are patented in India, it has now been reported that GoI is mulling the approach of price negotiation with the respective companies.

However, we should keep in mind that making drugs just affordable in India, where about 65% of population does not have access to modern medicines, is indeed not a core determinant of either healthcare value or proven health outcomes or both.

Cost-effective ‘health outcomes’ based doctors’ prescriptions are more important:

Spending on medicines can be considered as an investment made by the patients to improve their health. To maximize benefits from such spending will require avoidance of products, which will not be effective and the use of lowest cost option with comparable ‘health outcomes’.

For this reason many countries have started engaging the regulatory authorities to come out with head to head clinical comparison of similar or equivalent drugs keeping ultimate ‘health outcomes’ of patients in mind. A day may come in India when the regulatory authorities will also concentrate on ‘outcomes-based’ pricing. However, in Indian context these appear to be very early days.

Till then…

1. Get Standard Treatment Guidelines (STG) prepared for the diseases more prevalent in India, based on, among other data, ‘health outcomes’ studies.

2. Put the STG in place for all government establishments and private hospitals to start with.

3. Gradually extend STG in private medical practices.

4. Make implementation of STG a regulatory requirement.

Thus we need to discuss first what these STGs are.

Standard Treatment Guidelines (STG):

STG is usually defined as a systematically developed statement designed to assist practitioners and patients in making decisions about appropriate cost-effective treatment for specific disease areas.

For each disease area, the treatment should include “the name, dosage form, strength, average dose (paediatric and adult), number of doses per day, and number of days of treatment.” STG also includes specific referral criteria from a lower to a higher level of the diagnostic and treatment requirements.

For a developing country like India formulation of STGs will ensure cost-effective healthcare benefits to a vast majority of population.

In India STGs have already been developed for some diseases by the experts in those areas. These are based on review of current published scientific evidence towards acceptable way forward in diagnosis, management and prevention of various disease conditions

STGs, therefore will provide:

- Standardized guidance to practitioners.
- Cost-effective ‘health outcomes’ based services.

GoI should encourage the medical professionals/institutions to lay more emphasis and refer to such ‘heath-outcomes’ based evidences while prescribing medicines. This will ensure more cost effective ‘health outcomes’ for their patients.

Conclusions:

Such an approach for drug usage will help both the doctors and the patients, significantly, to contain the cost of treatment in general and the cost of medicines in particular. Encouraging and implementing ‘health outcomes’ based medicines prescription in India will require, above all, a change in the mindset of all concerned. The use of an expensive drug with no significant improvement in ‘health outcomes’ should be avoided by the prescribers, initially through self regulation and if required through an appropriate regulation.

By Tapan Ray

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

Improving ‘Access to Modern Medicines’ in India –Public Private Partnership (PPP) is the way forward.

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Despite various measures being taken by the Government of India (GoI) from time to time, around 65% of Indian population are not having access to modern medicines. It appears, GoI is of the view that the reason for poor ‘access to modern medicines’ to a vast majority of our population is intimately linked to the issue of ‘affordability of medicines’.To make medicines affordable to the common man, the Government took a radical step in 1972 by passing a law to abolish products patent in India. The change in paradigm at that time, encouraged domestic pharmaceutical players to manufacture and market even those latest and innovative drugs, which were protected by patents, n many countries of the world. The new ball game enabled the domestic players to highly specialize in ‘reverse engineering’ and launch generic versions of most of the New Chemical Entities (NCEs)at a fraction of the innovators price, in India.This shift in Paradigm in 1972, catapulted the Indian domestic pharmaceutical industry to a newer orbit of success. India in that process, over a period of time, established itself as a major force to reckon with, in the generic pharmaceutical markets of the world. Currently, the domestic pharmaceutical industry in India caters to around one third of the global requirement of generic pharmaceuticals.

From 1972 to 2005 domestic Indian pharmaceutical companies focused on replicating all most all blockbuster drugs, like for example, major Cox2 inhibitors (Merck and Pfizer), Viagra and Lipitor (Pfizer) etc, to low price generic substitutes and that too just within a year or two from the date of first launch of these products in the developed markets of the world.

In 1972, the Market share of the Indian domestic companies, as a percentage to turnovers of the total pharmaceutical industry of India, was around 20%. During the era of ‘reverse engineering’, coupled with many top class manufacturing and marketing strategies, domestic Indian pharmaceutical players wheezed past their multinational (MNCs) counterparts in the race of market share, exactly reversing the situation in 2009.

‘Reverse engineering’ was one of the key growth drivers of domestic pharmaceutical industry during this period. In its absence, during post IPR regime, the growth rate of branded generic industry is not expected to be as spectacular. However, the low cost ‘essential medicines’ will continue to be produced and marketed in India in future, as well.

Be that as it may, from 1972 to 2005, India could produce and offer even the latest NCEs, at a fraction of their international price, to the Indian population. There were as many as 40 to over 60 generic versions of each successful blockbuster drug of the world, in India. Cut-throat competition was intense and still it is, which keeps the average price of such medicines well under control. To further tighten its grip over pharmaceutical products pricing, GoI imposed stringent price control and price monitoring mechanism simultaneously, which are in place even today. Despite competitive pricing pressure coupled with Government price control, over nearly four decades, with a key policy focus on ‘affordability of medicines’, why then ‘access to modern medicine’ remained abysmal for a vast majority of the population of India?

To address this vexing problem, Industry Associations reported to have suggested a policy shift towards public-private-partnership (PPP) model to the Ministry of Chemicals and fertilizers in 2006-07. At that time, the Associations seem to have offered that the Pharmaceutical Industry will supply to the GoI the essential medicines at 50% of their Maximum Retail Price (MRP), to cater to the need of the common man, especially those who are below the poverty line (BPL).

However, to make this proposal effective there is a fundamental need for the Government to quickly initiate significant ‘capacity building’ exercise, initially in our primary and then in the secondary healthcare value chain. Towards this direction, the Federation of Indian Chambers of Commerce and Industry (FICCI) reported to have suggested to the Government for an investment of around US$ 80 billion to create over 2 million hospital beds.

Frugal budget allocation (1.12%) of the GoI towards healthcare as % of GDP of the country, suggests that Government is gradually shifting its role in this very important area, primarily from healthcare provider to healthcare facilitator for the private sectors to develop it further. In such a scenario, it is imperative for the government to realize that the lack of even basic primary healthcare infrastructure, leave aside other incentives, impede effective penetration of private sectors into semi-urban and rural areas. PPP model should be worked out to address such issues, effectively.

I have highlighted the remedial measures to be taken to address this situation in my article, which can be read by clicking on the following link:

http://www.tapanray.in/profiles/blogs/65-of-indians-do-not-have

Over 70 percent of our population are located in rural India. A relatively recent study indicates that despite some major projects undertaken by the Governments, like National Rural Health Mission (NRHM), about 80 percent of doctors, 75 percent dispensaries and 60 percent of hospitals are located in urban India. Another recent initiative taken by the Department of Pharmaceuticals (DoP) called ‘Jan Aushadhi’ is also orientated towards urban and semi-urban India.

I had deliberated upon the ways to increase penetration of ‘Jan Aushadhi’ in rural India, in another article, which can be read by clicking on the following link:

http://www.tapanray.in/profiles/blogs/jan-aushadhi-medicines-for

The net result of such policy initiatives, denies over 65 percent of Indian rural population from having access to quality healthcare services. Such lack of focus on rural areas, perhaps will explain the reason why only 35 percent of Indian population is having access to modern medicines.

Instead of trying to find a solution for this alarming ‘access to medicines’ problem, by limiting focus mainly on the issue of ‘affordability’ of medicines, for several decades, the Government is doing a great disservice to the common man, mainly located in the rural and semi-urban India. It is now high time that the GoI analyzes the available data to address the root cause of poor healthcare delivery, infrastructure and almost total lack of healthcare financing for all strata of Indian society.

Let me hasten to add that in no way I am trying to say that ‘affordability of medicines’ is no issue in India. All I am saying is that an integrated approach towards the root causes will quite effectively take care of ‘affordability’ issue and NOT the vice versa.

Even a problem of such magnitude can be converted into an opportunity. India can certainly be made a global hub for quality and affordable healthcare services, flashes of which we see in medical tourism initiatives.

Therefore, to address the acute problem of ‘access to modern medicines’ to a vast majority of the Indian population, GOI should reach all out to attract significant private and even foreign direct investments (FDI) through innovative Private Public Partnership initiatives. A strong will to have an ‘out of box’ solution to this critical problem is the crying need of the hour.

By Tapan Ray

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

‘Jan Aushadhi’ – ‘Medicines for the common man’ project of DoP is a great idea – is it on course?

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In mid 2008 The Government of India created a new department, ‘The Department of Pharmaceuticals’ (DoP), under the Ministry of Chemicals and Fertilisers. The new department came out with its following vision statement:“To enable Indian pharmaceuticals industry to play a leading role in the global market and to ensure abundant availability, at reasonable prices within the country, of good quality pharmaceuticals of mass consumption.”‘Jan Aushadhi’ – ‘Medicines for the common man’:

In this article, I shall submit my point of view on the second part of the above vision statement, which articulated the responsibility of the department to ensure availability of affordable modern medicine for ‘mass consumption’.

When over 70% of Indian population lives in rural areas, one can quite easily assume that such medicines will be available adequately in rural areas of the country, as well. Obviously the question that follows this admirable vision statement is how?

To respond to this question one will try to address the following two basic strategic issues:

1. Create a workable and viable business model, which can be gradually developed over a period
of time to deliver the promise

2. Create a robust supply chain network to ensure easy access of these medicines to the common
man, located even in remote rural areas.

The first part of the strategic issue has been well addressed by the DoP, within a very short period, by creating ‘Jan Aushadhi’, the medicines for the masses. Importantly, the second point, which will determine the success of the project, has not been clearly articulated.

The objectives of the ‘Jan Aushadhi’ were stated as follows:

1. To promote awareness for cost effective quality generic medicines. (However, how exactly this will be done, is yet to be known.)

2. To make available unbranded affordable quality generic medicines through private public partnership (PPP). (I support this objective from procurement perspective. However, so far as the delivery of these medicines to the common man is concerned, I would argue below:why do we reinvent the wheel?)

3. To encourage doctors in the Government Hospitals to prescribe such cost effective quality
generic medicines. (This is again just a statement of intent without considering the critical issue of its implementation in the predominantly branded generic market, like India.)

4. To help patients save significantly towards medicine cost with ‘Jan Aushadhi’ outlets.

5. A national help line is believed to be able to increase awareness level of this initiative.

The statements of intent of the DoP also highlight that the State Governments, NGOs and Charitable bodies will be encouraged to set up such generic medicine shops. It also states that the existing outlets of the Government and NGOs may also be used for this cause.

This particular decision of DoP, as I stated before, appears to be an attempt to ‘re-invent the wheel’, as it were. I shall argue on this subject, very shortly.

An open ended launch plan with inadequate market penetration compared to set objectives:

DoP announced that this scheme will be launched gradually in all the districts of India in four phases. However, for some unknown reasons, besides phase one and two, the other two phases of the launch plan have been kept by the department, as open ended as it could be, despite the Government of India’s having all wherewithals to implement this scheme with a reasonable degree of preciseness.

The four phases were decided as follows:

1. Phase 1: Amritsar Civil Hospital in November 8, 2008

2. Phase 2: Few stores in Delhi, National Capital Region (NCR), district hospitals in Mohali,
Ludhiana, Bhatinda and Jalandhar by February 28, 2009

3. Phase 3: Other districts of Punjab and some other states to be covered during 2009 and
2010

4. Phase 4: Remaining districts of the country by 2010 and 2012

I am not surprised that with such vague launch plan and an open ended timeline, the Government seems to have faltered in Phase 2 itself, when it could not go beyond Amritsar and Shastri Bhavan, Delhi outlets, by February, 28, 2009.

Arguing for the need of a course correction:

Despite being a hardcore optimist, I now get a vague feeling that the ‘Jan Aushadhi’ scheme of the DoP may not ultimately be able to achieve its cherished goals and may remain just as another good intention of the Government of India, if a course correction is not made at this stage.

The key barrier to improve access to affordable quality generic medicine to the common man, in this particular case, is not conceptualization of a project. We all know that our Government is reasonably good at it, with a good number of brilliant minds working to give a shape to it. The main weakness to translate this laudable idea into reality, in my view, falls well within the general weakness of the Government in visualizing the key barriers to the project and at the same time missing out on some of the key drivers for the same.

In this case, there seems to be some flaw in the ‘ideation’ stage of the project, as well. This flaw lies with the plan of its delivery mechanism involving state government, NGOs and various other bodies.

If procurement of cost effective quality generic medicines is not an issue, then the DoP should carefully look within the Government system to ensure easy access of such medicines to the common man.

Two grossly underutilized Government controlled ‘mass delivery systems’:

The Government of India has two very unique product distribution and delivery systems within the country with deep penetration from metro cities to even far off rural areas. These two Government owned supply and delivery chains are as follows:

1. Public Distribution System (PDS) for food grains and other essential commodities (Ration shops).

2. Indian Post Offices

Like food grains, medicines are also essential items. Why then DoP not collaborate with PDS to ensure easy access of such medicines to the common man?

Similarly, when postal department are collaborating with various other agencies to sell and distribute many types of products in rural areas, why not DoP consider this alternative, as well?

In fact, I would strongly recommend usage of both PDS and Post Offices by the DoP for deeper penetration of such medicines especially for the benefit of those 650 million people of India who do not have any access to affordable modern medicines.

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

We have many excellent minds in the DoP, I hope, they may wish to explore the possibility of effectively utilizing these two already available state controlled mass distribution systems to ensure success of the project “Jan Ausadhi” – “Medicines for the common man”.

It is worth noting that this project seems to have already started limping with its vague execution plan and a delivery system, the scaling up of which to ensure access to one billion population of our country could be a serious question mark.

By Tapan Ray

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