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Pharma Policy Execution Gap Limits Access To Affordable Medicines?

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“The cost of new drugs is putting increasing pressure on people in both rich and poor countries”- was eloquently expressed in an article, titled “Why do new medicines cost so much, and what can we do about it?”. This was published by “The Guardian” on April 09, 2018.

Almost synchronically, expressing concern on this issue, the World Health Organization (W.H.O) advised the world leaders ‘to take bold new approaches’ for increasing access to medicines for all. A UN high-level panel on ‘access to medicines’ spent almost a year deliberating over related issues. The panel members were from pharma companies, as well as civil society and academics. The final report coming in September, backed de-linkage of the costs of R&D from the eventual price of the drug. Notably, the author who is also the health editor of the above publication, feels that any positive outcome in this direction is unlikely to materialize soon.

The majority of big pharma constituents, with the possible exception of GSK, whose then chief executive Sir Andrew Witty was unenthusiastic about the UN report. Probably because, it supported governments’ right to invoke ‘a get-out’ from the World Trade Organization’s TRIPS agreement. This is to bypass drug patents and make cheaper versions of the respective generic equivalents, in the interests of public health, in accordance with the 2001 Doha declaration. However, the author is hopeful that, “as happened with AIDS, each new crisis over access to medicines – whether concerning a common liver disease or a rare cancer, and particularly over the antibiotics that are under threat and vital to all our lives – is likely to put pressure on companies to find ways to bring the costs of medicines down.”

Stakeholder pressure for increasing access to medicines continues. Even in smaller developed countries, such as Switzerland, a section of the public demands that “Swiss authorities must act to make lifesaving drugs more affordable by introducing compulsory licensing.” Or, one can now see reports saying,“Irish patients are being denied access to nine drugs that are widely available across Europe, largely, on cost grounds.”

Nevertheless, regardless of mounting pressure for drawing a reasonable symmetry between cost of, especially new drugs and their improved access to patients, ongoing status-quo continues. In this article, I shall dwell on this concern from the Indian perspective, focusing on an agonizingly stark implementation-gap related to the current Indian pharma pricing policy.

Under pressure, pharma now recognizes the need for affordable drugs:

Coming under intense pressure of patients and other stakeholders, even the largest trade association of Big Pharma has recently changed its stance on this issue, though clearly sharking any responsibility for the same. It just recognized the need for affordable medicines for improved patient access to treatments by saying: “Too often patients have to fight to access breakthrough medicines that are revolutionizing how we fight disease.” It also accepted the fact that “many Americans are struggling to afford their medicines.”

“We can improve patient access and affordability by moving toward a system that prioritizes results for patients. Biopharmaceutical companies are working with insurers to develop innovative and flexible ways to pay for medicines that focus on results, lower out-of-pocket costs and enable patients to access the right treatments the first time” – it added.

What it really means: 

What it really means ‘treatment outcomes-based drug pricing’ or ‘value-based drug pricing (VBP)’. In other words, a situation where drug prices are set in line with their real and demonstrated clinical and economic value to patients, against other available products. This model will also ensure that patients’ money doesn’t get wasted from drugs that aren’t effective on them. The VBP model is, thus, significantly different from product pricing, based on ‘undisclosed’ cost of ongoing innovation for new drugs.

Is this Big Pharma’s new way to change optics?

The intent for imbibing VBP, as expressed by the above pharma association, throws open the door for discussion of its core intent. Is the intention real, or another Big Pharma way of changing general optics on the sensitive issue of new drug pricing? This doubt creeps in from the findings of some important studies on this issue. One such is an interesting paper, titled “Pricing for Survival” from KPMG. The analysis highlighted very limited application of VBP concept, and also why it is not yet viable – despite the hype being created around it.

According to KPMG, “there were 25 drugs engaged in various types of VBP with payers in the fragmented United States market as of September 2017. The problem is, these models appear to be limited in applicability to disease states with more standardized protocols and dominated by drug therapies with single indications – notably osteoporosis, diabetes and hepatitis C.” To date, VBP models seem to be facing several constraints, such as it is appealing mostly to payers that are fully integrated with healthcare delivery i.e., closed-loop payer-provider health systems or integrated delivery networks.

“The takeaway is, when it comes to specialty and orphan drugs, outcomes-based pricing simply faces too many barriers at present” – the article elaborated. Be that as it may, let me now explore the relevance of VBP in India.

Any relevance of VBP in India?

VBP has been tried in a health care environment where payers and drug companies are two critical players for access to affordable medicines, as we see in the KPMG study. Under any value-based pricing agreements for pharmaceuticals, both payers and pharma companies agree to link payment for a medicine to the value achieved, rather than volume.

Whereas, in the Indian healthcare scenario, as we are experiencing today, payers are mostly individuals.  Despite various well-publicized health schemes, expenditure on health, including drugs, remains by and large ‘out of pocket (OoP)’ – for a large Indian population. Hence, copying western framework for implementation VBP in India, would call for scores of ‘pharma – individual payer agreements.’ This would be a daunting task, if not impractical, to even try it out.

In this context, let me touch upon the Ayushman Bharat scheme that was launched by the Prime Minister on September 23, 2018, but just in one of the 29 states of India – Jharkhand. If, or as and when it will cover the entire country, the scheme is expected to bring 107.4 million families and more than 550 million people under health insurance coverage. However, the work seems to be still in progress.

There are three financing models for this scheme – insurance model, trust model and hybrid model – and the 19 states that have come on board for the scheme’s implementation in the country, have chosen a trust model, according to the Union Health Minister. The minister also reiterated: “Things are still unfolding. Only when the letters reach the beneficiaries will they understand and react.”

Nevertheless, the Union Health Minister himself, just like his counterparts in the previous governments, exhibited confidence that the country is “moving towards universal health cover with Ayushman Bharat scheme,” – as was the headline of the above media report.

Going by the past and current outcomes of several such government schemes in the country, and what the minister himself articulated on September 17, 2018, a large section of the Indian population still remains  apprehensive on the fast pan-India rollout and overall success of this ambitious health scheme. Hence, at this stage, I reckon, it may not be relevant to discuss the application of VBP model on Ayushman Bharat project. I wrote about such apprehensions in this Blog on June 18, 2018.

Having said that, VBP still remains relevant when we look at the government’s intent captured in the National Pharmaceutical Pricing Policy (NPPP) 2012,’ as I shall discuss below.

VBP and the policy implementation gap:

For making the point clearer, let me keep the Ayushman Bharat scheme aside because of its associated uncertainties. Even in the current health care environment of high OoP expenditure on drugs, especially on high priced new drugs, if one tries to make use of the VBP model, it is very much possible.

This is because, the National Pharmaceutical Pricing Policy 2012, under point 4 (XV) on ‘Patented Drugs, categorically states:  “There is a separate Committee constituted by the Government order dated February 01, 2007 for finalizing the pricing of Patented Drugs, and decisions on pricing of patented drugs would be taken based on the recommendations of the Committee.”

Curiously, even 6 years down the line, no meaningful decision has been taken on patented drug pricing in India by the successive governments. As I wrote in this Blog on December 12, 2016, Price Negotiation For Patented Drugs: Still A Policy Paralysis.

Parliamentary Standing Committee intervenes:

Six years after the constitution of the committee by the Department of Pharmaceutical (DoP), the long-awaited report was eventually submitted with a vague formula for pricing patented drugs in India. Intriguingly,the issue remained as such, until the Parliamentary Standing Committee’s August 2016 report was placed before the parliament. It strongly criticized the DoP’s efforts to recommend measures in regulating prices of life-saving patented drugs, despite government assurances for the same.

On September 23, 2016, media reported: “Upbraided by the parliamentary standing committee for its gross negligence and lackadaisical attitude, the department of pharmaceuticals has set about seeking suggestions from different ministries on price regulation of patented drugs.”

According to reports, a new inter-ministerial committee was formed thereafter, under the chairmanship of one of the Joint Secretaries of the DoP to suggest a new mechanism to fix prices of patented drugs in the country.
The other members of the committee are Joint Secretary – Department of Industrial Policy and Promotion (DIPP); Joint Secretary – Ministry of Health and Family Welfare; and Member Secretary – National Pharmaceutical Pricing Authority (NPPA). But, the saga continues – at the cost of patients’ health interest.

Conclusion:

As it appears, there still lies a clear opportunity for Indian drug pricing policy makers introduce VBP concept for patented drugs in the country. Following this model, the prices of new and innovative drugs under patents can be set in line with their real and demonstrated clinical and economic value to patients, over the available existing products. Health Technology Assessment (HTA), for example, could be an effective tool in this process.

Additionally, the VBP model could also minimize, if not eliminate the risk of patients paying a high a price for new drugs coming through incremental innovation, adding too little clinical and economic value over existing drugs. There may, of course, be some teething trouble or even important issues in arriving at consensus on value-metrics for VBP. But, this can be sorted out through meaningful engagement with concerned parties.

Strikingly, even after 6 years since the NPPP 2012 was announced, nothing tangible has been made known to stakeholders on the execution of ‘patented drug pricing policy’ in India. An avoidable policy execution gap continues, limiting access to affordable new medicines to a vast majority of the Indian population, even today.

By: Tapan J. Ray

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

Pharma Brand Building: Criticality of Enhancing End-To-End Customer Experience

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In today’s fast-changing world, the types of medicines being developed, the way technology contributes to health, and how the value of health care is calculated, are all undergoing a metamorphosis. A wave of cell and gene therapies are bending the definition of what constitutes a drug, both clinically, and in terms of expectations of outcomes, duration of treatment and costs. Global health is poised to meet a series of key turning points, and changes seen in 2018 will mark the key inflections that drive the outlook for the next five years and beyond.

These are examples of key observations, as captured in the March 13, 2018 research report, titled: “2018 and Beyond: Outlook and Turning Points,” of the IQVIA Institute (previously IMS Institute). Arising out of these, the report envisages the following key impacts on the pharma industry in the next five years – from 2018 to 2022:

  • Patent expiry impact will be 37 percent larger than the prior five years, including both small molecule and biologics.
  • New medicines’ growth will be slower in 2018 – 2022 than the period from 2013 -2017.
  • Net price levels for branded drugs will rise modestly in the United States at 2–5% per year but will fall in other developed markets.
  • Volume for existing branded and generic medicines will remain slow, with the ongoing shifts towards newer medicines over time.
  • To increase access to medicinesGovernment and other payers to focus on addressing outstanding healthcare disparities or to invest in approaches to address system inefficiencies.

Such a situation, would obviously impede performance and productivity of many pharma players – both research-based and also the generic ones, across the world, including India. Against this backdrop, I shall discuss about the criticality of ‘enhancing end-to-end customer experience’ in pharma brand building exercise. The words to specially take note of are – ‘end-to-end customer experience’ and not just in some ‘touchpoints’. This would help many pharma players to navigate through this strong headwind to remain in the organizational growth trajectory.

Not a solitary finding:

Another series of articles from Bain & Company, published on June 30, 2015, May 25, 2017, May 09 and May 23, 2018, not just reflect similar core concern, as articulated in the IQVIA article. Moreover, the barriers to deliver growth from the in-market portfolios being tough, many drug companies are using even steep price increases as a key lever to achieve their financial goals. It continues to happen, despite strong criticisms both from the public and some powerful governments, such as the United States and also India, further denting industry’s public reputation.

Pharma sales reps no longer a primary learning resource about medicines?

It also came out clearly from some of these articles that ‘doctors in many developed countries have been moving away from pharma sales representatives as a primary resource for learning about medicines.’ It’s just a matter of time, I reckon, similar situation will prevail in India. So, what do the pharma organizations do now – wait for a similar situation to arise and then act, or initiate a proactive strategic marketing process, as soon as possible?

Enhancing customer experience in pharma brand building:

To mitigate this, a new concept for improving market share is gaining ground. It suggests, the intrinsic value of a brand, and its value delivery system should enhance the customer experience during the entire treatment process with the drug. Achieving this would prompt widely capturing and in-depth analysis of targeted customer expectations, preferences and aversions. Just listening to a patient or a doctor won’t suffice, any longer, for a pharma company to succeed in business.

The February 24, 2017 article, titled “The Case For Managing By Customer Episode,” published in Forbes very aptly said, ‘companies that once relied on developing new product features and improving customer service increasingly see competitive advantage rooted in the entire experience that’s wrapped around the product.’

The same point has been corroborated in several research studies, since the last few years. For example, a 2014 survey by McKinsey & Company came out with some interesting findings. It highlighted, by optimizing customer experience at every ‘touchpoint’ – ensuring a reasonably seamless customer journey, a company can potentially increase its revenue by up to 15 percent and lower the customer service costs by 20 percent.

Another research article dated May 23, 2018, titled ‘Why “Episodes” Matter for Doctors’, published in the Pharmaceutical Executive finds that about 40 percent of a doctor’s drug recommendations are linked to how effectively a firm delivers an overall experience, as distinct from product-related attributes such as clinical data. This share rises to about 60 percent for factors within the control of the commercial organization. Doctors who give high marks for their experience with a company, are between 2.3 and 2.7 times more likely to prescribe the company’s products as those who give low marks.The authors further highlighted, loyalty scores run low, both for the average firm and for many individual episodes for the pharma industry as a whole. That’s because firms have focused mostly on pushing out sales and marketing messages through as many channels as possible.

Units of ‘customer experience’ management:

Different publications acknowledge the need to have some key unit for managing customer experience. These units are described in different names by different experts, such as ‘episode’ or ‘touchpoint’.

Bain & Company said, each ‘Episode’ covers all tasks that a customer requires to complete for fulfilling a need. For each unit of ‘episode’, the clock starts as a customer feels and identifies a related need and ends when these are met with his/her full satisfaction. ‘The sum of a customer’s episodes over time comprise the entire experience of dealing with the company.’ So far as ‘Touchpoints’ are concerned, according to  McKinsey & Company, these are the individual transactions through which customers interact with parts of the business and its offerings. It reflects organization’s accountability and is relatively easy to build into operations.

Difference between ‘episode’ and ‘touchpoint’ in ‘customer experience’ management:

There is a difference between ‘episodes’ and ‘touchpoints’. Whereas ‘touchpoints’ are each point of contact or interaction, between a business and its customers,‘episodes’ focus on end-to-end design of a specific customer-need of an organization, as they align management and the front line around the customer experience.

Many companies believe that customers will be happy with the interaction when they connect with their product, customer service, sales staff, or marketing materials. However, McKinsey found that this siloed focus on individual touchpoints misses the bigger, and more important picture: the customer’s end-to-end experience or the ‘customer journey.’ It includes many things that happen before, during, and after the experience of a product or service. The companies providing the customer with the best experience from start to finish along the journey can expect to enhance customer satisfaction, improve sales and retention, reduce end-to-end service cost, and strengthen employee satisfaction.

Thus, only by looking at the customer’s experience through his or her own eyes, throughout the entire journey taken – a company can begin to understand how to meaningfully improve its performance.

Focus areas to create an exemplary customer experience:

According to Bain & Company there are 5 imperatives to focus on to create an exemplary customer experience, which I summarize, as follows:

  • Examine the experience from the outside in – from the customer’s point of view, not the organization’s structure and processes.
  • Meet customer expectations consistently.
  • Invest to provide outstanding experiences in the areas that have the greatest impact on customer advocacy.
  • Use rapid prototypes to deliver new services to customers.
  • Develop closed-loop feedback processes, continuously refining experiences to match or exceed ever-rising customer expectations.

Conclusion:

The mediocre performance of the pharma industry, especially, since the last few years, is bothering many stakeholders.The challenges to deliver business growth from in-market portfolios, coupled with frequent backlashes for using steep product price increase as a key lever to achieve financial goals, are some of the key causal factors.

Enhancing ‘customer experience’ in the process of pharma brand building initiatives, has also caught the imagination of some players. This is commendable. Nonetheless, several research studies indicate, if these are focused on individual customer-‘touchpoint’ based strategies, which, I reckon, is rather common, the outcome may remain quite far from expectations.

What really matters, is enhancing end-to-end experience with a brand – throughout a patient’s journey for disease prevention or effective treatment or even cure. This may, for example, begin with the search for effective and affordable treatment options – participating in arriving at the right treatment – prescription of right drugs, and finally receiving continuous requisite guidance throughout the course of treatment for better management of the disease or effective cure. Thus, pharma brand building by enhancing end-to-end ‘customer experience’, now assumes a critical strategic dimension.

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.

Drug Innovation and Pharma M&As: A Recent Perspective

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The 21st CEO Survey 2018 of PwC highlights a curious contradiction. This is based on what the Global Pharma Chief Executive Officers (CEOs) had articulated regarding their business outlook for 2018 and beyond. The report says: Despite highly publicized hand wringing over geopolitical uncertainty, corporate misbehavior, and the job-killing potential of artificial intelligence, the CEOs expressed surprising faith and optimism in the economic and business environment worldwide, at least over the next 12 months.

As the survey highlights, beyond 2018, CEO sentiment turns more cautious. They expressed more confidence in revenue growth prospects over the longer term than the immediate future. In the largest pharma market in the world – the United States (US), acquisitions appeared to be the core part of the 2018 growth playbook for the CEOs. More of them plan to drive growth with new Mergers and Acquisitions (M&A) for this year. The US CEOs intent in this area came out to be more than their peers globally.

Thus, in this year we may expect to witness several M&A deals, at least by the pharma majors based in the US. As the saying goes, the proof of the pudding is in the eating, the success of any strategic M&A process should get clearly reflected in its revenue, profit and cost synergies over a period of time, consistently.

In this article, I shall try to look back, and attempt to fathom the net outcome of M&As in the pharma sector. Its key drivers for the global and Indian pharma players are somewhat different, though. In this piece, I shall focus on the M&A activities of the global companies, and my next article will focus on the Indian players in this area.

2018 – best start to a year of healthcare deal making:

The finding of the 21st CEO Survey 2018 that more global pharma CEOs plan to drive growth with new M&A for this year, has been reiterated in the January 22, 2018 issue of the Financial Times (FT). The article titled “Big Pharma makes strongest start to M&A for a decade” writes: “Healthcare companies have announced almost $30bn of acquisitions since the beginning of the year in the sector’s strongest start for deal making in more than a decade, as Big Pharma scrambles to replace ageing blockbusters by paying top dollar for new medicines.”

Big names involved and the reasons:

On February 18, 2018, an article published by the BSIC wrote, the M&A value in the healthcare sector recorded its strongest start to a year in more than a decade, excluding 2000, with almost USD32bn of global deals announced since the start of January 2018. Of these USD32bn, Sanofi SA and Celgene Corporation performed almost a combined USD26bn value of acquisitions for the American Bioverativ Inc. the cell therapy provider Juno Therapeutics, respectively.

As many would know, the FT also wrote in the above piece that Sanofi is trying to offset declining sales of its top-selling insulin – Lantus, which has lost market share following the introduction of cheaper biosimilar versions. Celgene is preparing for the loss of patent protection on its top cancer medicine, Revlimid, which will face generic competition from 2022 at the latest.

Is new drug innovation a key driver of M&A?

The core intent of M&A is undoubtedly creating greater value for all the stakeholders of the merged entity. Nevertheless, such value creation predominantly involving the following two goals, revolve around new drug innovation activities, as follows:

  • New value creation and risk minimization in R&D initiatives
  • Acquisition of blockbuster or potential blockbuster drugs to improve market share and market access, besides expanding the consumer base.

There could be a few other factors, as well, that may drive a pharma player to go for a similar buying spree, which we shall discuss later in this article.

However, in the international scenario, with gradually drying up of R&D pipeline, and the cost of drug innovation arguably exceeding well over USD 2 billion, many companies try to find easier access to a pipeline of new drug compounds, generally at the later stage of development, through M&A.

Thus, I reckon, one sees relatively higher number of big ticket M&As in the pharmaceutical industry than most other industrial sectors and that too, very often at a hefty price.

At a hefty price?

To give an example, the year 2018 has just begun and the pharma acquirers have agreed to pay an average premium of 81 percent – a number that is well above the 42 percent paid on average in 2017, according to Dealogic. The examples are the 63.78 percent bid premium paid by Sanofi SA on Bioverativ Inc. and the 78.46 percent premium paid by Celgene Corporation to acquire Juno Therapeutics.

A key reason of paying this kind of high premium, obviously indicate an intent of the acquirer to have a significant synergy in drug innovation activities of the merged company.

Do drug innovation activities rise, or decline post M&A?

A paper titled “Research: Innovation Suffers When Drug Companies Merge”, published by the Harvard Business Review (HBR) on August 03, 2016 answers this question. This research involves, pre and post M&A detailed analysis of 65 pharma companies. After detailed scrutiny of the data, the authors wrote: “Our results very clearly show that R&D and patenting within the merged entity decline substantially after a merger, compared to the same activity in both companies beforehand.”

Having also analyzed companies that were developing drugs in similar therapeutic areas, but hadn’t merged, the paper recorded: “We applied a market analysis, the same one used by the European Union in its models, to analyze how the rivals of the merging firms change their innovation activities afterward. On average, patenting and R&D expenditures of non-merging competitors also fell – by more than 20% – within four years after a merger. Therefore, pharmaceutical mergers seem to substantially reduce innovation activities in the relevant market as a whole.”

‘Other critical objectives’ may also drive pharma M&A:

As I had indicated before, besides attaining synergy in innovation activities at an optimum cost through M&A, there may also be other important drivers for a company to initiate this process. One such example is available from Sanofi-Aventis merger in 2004.

Just to recapitulate, Sanofi was formed in 2004 when Sanofi-Synthélabo (created from the 1999 merger of Sanofi and Synthélabo) acquired Aventis (the result of the 1999 merger of Hoechst and Rhône-Poulenc).

A June 2016 case study of the Sanofi-Aventis merger titled ‘Does M&A create value in the pharmaceutical sector?’, and published by HEC Paris – considered a leading academic institution in Europe and worldwide, brings out the ‘other factors’ driving pharma M&A.

The research paper says that Sanofi-Aventis deal ‘is the perfect example of the paramount importance that external factors have on M&A activity, which sometimes are more critical than the amount of value created from a particular deal.’ It further says, ‘facing a changing pharmaceutical industry (heightened competition and consolidation trend), Sanofi-Synthélabo decided to merge with Aventis as a defense strategy.’

This strategy ensured, even if the merger had not ended being a successful one, it would achieve the following two ‘other critical factors’:

  • Manage to save Sanofi-Synthélabo from being acquired and disappearing.
  • Comply with the French government pressure to create a national champion in the pharma industry, to ultimately benefit the French population.

Conclusion:

In the pharma business, M&A has now become a desirable strategic model for shareholder value creation. In the global perspective, one of the most important drivers for this initiative is, greater and less expensive access to new drug innovation or innovative new drugs, beside a few others, as discussed above.

In-depth expert analysis has also shown that “R&D and patenting within the merged entity decline substantially after a merger, compared to the same activity in both companies beforehand.”  Moreover, as other independent researchers have established that inside the merged companies, there’s a great deal of disruption in many areas, including people, besides the global drug market getting less competitive with declining number of players.

Pharma M&As may well be any stock market’s dream and could a boost the merged company’s performance in short to medium term. But the important points to ponder are:  Does it help improve drug innovation or its cost related issues over a reasonably long time-frame? Does it not ultimately invite even more problems of different nature, creating a vicious cycle, as it were, putting the sustainable performance of the company in a jeopardy?

By: Tapan J. Ray  

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

Pharma Stakeholder Sentiment: Back to Square One?

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Is it fair to push out the core purpose of an important process, or rather a mission, unfairly? Whether we like it or not, it happened that way, over a period of time.

Way back on December 01, 1950, George W. Merck (President and Chairman Merck & Co., Inc.1925-1957), epitomized the core purpose of the drug innovation process. This is something, which apparently was possible only for him to articulate exactly the way he did.

On that day, while addressing the students and the faculty at the Medical College of Virginia, Richmond, George Merck said: “We try to remember that medicine is for the patient. We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered it, the larger they have been.”

To many of us, it may sound more as an altruistic statement, and not really coming from a businessman who wants to excel in the financial performance of the organization. Interestingly, that was not the case, either. Merck removed any possible ambiguity in his statement by stating categorically: “In doing this, it will be as a business­ man associated with that area of the chemical industry which serves chiefly the worlds of medicine and pharmacy.”

In this article, I shall deliberate on whether or not the core purpose of drug innovation, as articulated by George Merck in 1950 has been pushed out of the mind of the stakeholders for good.

Management Guru – Peter Drucker’s similar observation:

It is worthwhile to recapitulate at this stage that around the same time, the Management Guru – Peter Drucker also made a similar observation, which is relevant even today. He said: “Because the purpose of business is to create a customer, the business enterprise has two – and only two basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

Interestingly, when the word ‘customer’ is replaced with ‘patients’, George W. Merck’s iconic statement fits so well even in the realm of business management, including drugs and pharmaceuticals.

Signs of the core purpose of new drug discovery getting pushed out:

The core purpose of new drug innovation in pharma business, as articulated by a top industry pioneer – ‘Medicine is for the patient and not for the profits’, was pushed out eventually, regardless of its reasons. Today’s core purpose of the same process has seemingly become just the opposite of that – ‘Medicine is only for the patient who can afford it – to maximize profit.’

This change in the core purpose was visible in a large number of instances. For example, when the then Bayer CEO Marijn Dekkers reportedly said: ‘Our cancer drug is for rich westerners, not poor Indians.’  However, his exact wordings were “we did not develop this product for the Indian market, let’s be honest. We developed this product for Western patients who can afford this product, quite honestly.” If so,the question that comes up: why then Bayer fought so hard and spent so much of money, efforts and time to keep selling this specific product in India – exclusively?

In any case, this statement from the highest echelon of one of the top global pharma players is a contentious one, especially against George Merck’s articulation, or even Peter Drucker’s for that matter, on the same. By the way, Dekkers made this commentat the Financial Times Global Pharmaceutical & Biotech Conference in December in December 2013.

A wind of change?

The hope for a wind of change flickered when in an interview, Andrew Witty,the erstwhile global CEO of GlaxoSmithKline (GSK), signaled a totally contrasting view of his company. Witty said: “GSK is committed to offering all its new drugs in India at affordable prices.”

Much prior to this, on March 14, 2013 he told a conference on healthcare in London that: “It’s not unrealistic to expect that new innovation ought to be priced at or below, in some cases, the prices that have pre-existed them.” He further expressed: “The pharmaceutical industry should be able to charge less for new drugs in future by passing on efficiencies in research and development to its customers.”

Witty era is also over now. He retired from GSK at the age of around 53 on March 31, 2017. Perhaps his refreshing patient-centric thoughts would also not find any takers within the industry. Nonetheless, in March 2018, the same issue resurfaced in an interesting article, followed by a few other related developments.

Call for socializing drug development?

The issue, which is not just limited to high prices for new patented drugs, is much broader. An interesting article titled, “Developing drugs wasn’t always about profit, and it shouldn’t be now”, was published in Quartz- a news website owned by Atlantic Media, brings to the fore the same key point, yet again. It makes some profound observations, such as socializing drug development. The word ‘socializing’ may not be quite acceptable to many, though. Nevertheless, it raises some critical issues worth pondering over, such as:

  • Faith in the power of money pervades our modern medical system. Pharmaceutical companies aren’t evil (usually). They just choose to make the most profitable drugs, not the drugs of greatest value to society.
  • For example, despite antimicrobial resistance being a global threat, pharma companies have largely abandoned new antibiotic development on the eminently sensible principle that they are money-losers. Promising narrow-spectrum antibiotics – agents that precisely target pathogens and spare “good” bacteria - languish in development limbo because there is no hope that they might churn as much profit as several other drugs.

It’s high time, I reckon, to adequately address the dire need for a reliable supply of the medicines that make a vibrant modern society possible. All stakeholders, including the pharma industry, globally, would require putting their heads together in charting out a clear and time bound pathway for its effective resolution, soon. Otherwise, sheer gravity and the complexity of the situation may prompt the policy makers to move towards ‘socializing drug development,’ much to the dismay of many of us.

Hospitals creating nonprofit generic drug company:

On January 18, 2018, The New York Times (NYT), published an article titled “Fed Up With Drug Companies, Hospitals Decide to Start Their Own,” highlighted a novel initiative to address the prevailing situation, in their own way, without depending on others.

It reported, for many years, several hospital administrations have been expressing frustration when essential drugs like heart medicines have become scarce, or when prices have skyrocketed because investors manipulated the market. Now, about 300 of the country’s largest hospital systems are taking an aggressive step to combat the problem. They plan to go into the drug business themselves, in a move that appears to be the first on this scale.

‘The idea is to directly challenge the host of industry players who have capitalized on certain markets, buying up monopolies of old, off-patent drugs and then sharply raising prices, stoking public outrage’, the article elaborates.

‘Price of medications has soared, so have pharma profits’:

‘Big Pharma is jacking up prices for one reason – because it can,’ says a CNN Article, published on April 04, 2018. The article further emphasizes: “As the price of medications has soared, so have pharmaceutical company profits. Total sales revenue for top brand-name drugs jumped by almost $8.5 billion over the last five years. The Government Accountability Office (GAO) reported that 67% of drug manufacturers boosted their annual profit margins between 2006 and 2015 – with profit margins up to 20% for some companies in certain years.”

It further writes, “Not only have pharmaceutical companies reaped outsized profits from these price hikes, so have their CEOs. According to a USA Today analysis, the median compensation package for biotech and pharmaceutical CEOs in the Standard & Poor’s 500 was 71% higher than the median compensation for S&P 500 executives in all industries in 2015.”

Conclusion:

This is happening the world over. But its degree varies. In those countries where there are drug price regulators, only a small percentage of the total pharma market by value comes under price regulation, the rest of the products enjoy virtually free pricing freedom.

Would this ground situation change on its own any time soon? There is no specific answer to this question, yet. Moreover, there doesn’t seem to be none around in the pharma industry today with the stature and articulated vision like George Merck. He started from the very basic. Drawing the ‘square one’, he clearly defined the core purpose of discovery, manufacturing and marketing of medicines. Today’s pharma industry, by and large, seems to be charting in other newly drawn squares. Maximizing profit is now considered a key objective of achieving the core purpose – and not an outcome of achieving the core purpose of pharma business.

However, there are some very early signs of several stakeholders’ sentiment changing in this regard. Are they moving back to the basic – square one?

From the chronicles of the past several years on this issue, pharma industry does not seem to be on the same page with those stakeholders, just yet. If they do, a humongous health worry of a vast majority of the global population could be effectively addressed, as many believe.

The reverberations of this sentiment, though rather faint, can be felt in many countries, including the United States, and not just in the developing world, such as 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.

Drug Price Control And National Health Security

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‘Without Providing Affordable Medicines, There Can’t be Health Security’, said the Union Minister of Chemicals and Fertilizers of India, as reported on September 22, 2017. Although, the Minister made this remark while discussing Government price control on cardiac stents in India, let me dwell on the subject based on the above news headline by asking: Is drug price control improving access to medicines for greater ‘Health Security’ of the country?

It’s no rocket science to understand that making affordable drugs ‘available’ in requisite quantity for all, is essential, basically, for improving ‘access’ to medicines. Nevertheless, the mere availability of drugs is no guarantee for their improving access to all.

If we take a closer look at the well-articulated key objectives of the Ministry of Chemicals and Fertilizers, under which both the Department of Pharmaceutical (DoP) and the National Pharmaceutical Pricing Authority (NPPA) belong, this dichotomy will be easier to fathom.

The key objective of the ‘National Pharmaceutical Pricing Policy: 2012’, which is operational today, reads as: “To put in place a regulatory framework for pricing of drugs so as to ensure availability of required medicines – “essential medicines” – at reasonable prices even while providing sufficient opportunity for innovation and competition to support the growth of the industry, thereby meeting the goals of employment and shared economic well-being for all. The reasons are further elaborated later in the Policy Document.”

Similarly, according to the NPPA, one of the key objectives of drug price control in India is to ensure abundant availability, at reasonable prices of essential and life-saving and prophylactic medicines of good quality. Hence, the current key focus of the DoP and NPPA, on paper, does not go beyond making ‘affordable drugs available for all.”

Thus, the crucial point to ponder: Is ongoing drug price control, improving even availability of medicines for all to attain greater ‘health security’ of the country, as the Union Minister underscores?

A course correction without flagging the new course:

The Draft Pharma Policy 2017 makes an important course correction to address this critical issue. It expresses its objective in this important area slightly differently, by adding the word ‘accessible’, as: “Making essential drugs ‘accessible’ at ‘affordable prices’ to the common masses.”

Intriguingly, the draft remains mute, when it boils down to answering the fundamental question, how would this new policy improve access to affordable drugs for the common masses, without having any jurisdiction to improving access to overall health care? That turf, unquestionably, belongs to the Ministry of Health. Thus, I reckon, achieving this modified goal, in its totality, is no more than a rhetoric.

Would better availability guarantee greater patient access to drugs?

As things stand today, it is quite unlikely to happen. The broad process of improving access to health care in a holistic way, is enshrined in the  National Health Policy 2017, which is already in place. It assures the nation of progressively achieving ‘Universal Health Coverage (UHC)’. It outlines measures to improve the availability, access and affordability for quality secondary and tertiary care services, with significant reduction in ‘out of pocket expenditure’ on health care. The policy also emphasizes that this process would considerably reduce the proportion of households experiencing catastrophic health expenditures, and consequent impoverishment.

The silo mentality won’t work:

Although, the Ministry of Health is primarily responsible for meeting universal access to health care, which includes drugs, the Ministry of Chemicals and Fertilizers too, shoulders a crucial responsibility in this area. Thus, attaining the Health and Pharma policy goals – individually, collectively and meaningfully, both these Ministries need to work closely together, along with the State Governments, in the true spirit of cooperative federalism. The silo mentality has not worked and won’t work, ever, to meet health aspirations of the people.

Access to health care – a prerequisite to improving access to affordable drugs:

As I see it, access to health care for all is a prerequisite to improving access to affordable drugs for country’s ‘health security’. Without providing access to requisite health care, making affordable drugs available for all, does not make much sense, if at all. This is because, patients will buy or get medicines only when a medical or paramedical professional will advise and prescribe them what to buy while treating any particular ailment.

Is the key pharma policy goal anywhere near its target?

Be that as it may, let me now try to gauge whether even the current key goal of the pharma policy to make an increasing quantity of affordable drugs available to more number of the population is anywhere near its target or not.

Capturing the impact of the present pharma policy on the ‘health’ of Indian pharma industry, the Annual Report 2016-17 of the Department of Pharmaceuticals (DoP) acknowledges that owing to the Government’s efforts to make medicines affordable, the domestic Pharma market witnessed a slowdown in the ongoing financial year. The industry registered a decline in growth of 7.4 percent over the corresponding figure for 2014 -15, with a similar aftermath in its financial performance.

Interestingly, a Press Release of Ministry of Chemicals and Fertilizers of September 27, 2016 claims that ‘ceiling prices’ of 464 formulations fixed after announcement of NLEM, 2015 and Revised Schedule-I, resulted in savings of Rs 2288 crore for consumers. Let me also add that a September 22, 2017 tweet of the same Union Minister gives a much higher number in this regard, which includes cardiac stents, though.

Fair enough, in that increasing patient access to affordable drugs ought to get reflected in the reasonable incremental volume growth of the Indian Pharmaceutical Market (IPM), at least, of those products, which feature in the National List of Essential Medicines (NLEM)? Contrary to this expectation, according to an article published by ‘Pharmabiz’ website on the CPhI India Special supplement in December 2016, ‘over the past 3 years (FY 2013 – FY 2016), the IPM has grown at a CAGR of ~ 11%, much lower than its historical average growth rate of 15%.’

Thus, both the private retail audit data, and also the submission of the DoP clearly indicate that this has not happened, as a desired outcome of drug price control.

Drug price regulations aren’t irrelevant either:

My above argument doesn’t also mean that drug price control, or stringent price monitoring, or tough price negotiation – in whatever way one may call it, is of no use; even where Universal Health Care (UHC) is up and running. This is regardless of whether this universal care is insurance driven, as in the United States, or state funded, as in the United Kingdom. As I said before, access to health care for all is a prerequisite to improving access to affordable drugs. I stressed this point briefly in one of my recent articles published in this blog, while focusing on another important development.

Drug price regulation in the UHC countries:

In case of insurance driven UHC, insurance companies or related payers, or even the regulators, mostly enforce stringent control on drug prices, as is currently happening in the United States. This fact is vindicated by a May 29, 2017 report that indicates: “The pharma industry, under the constant glare of the US drug regulator, has to contend now with pricing pressures in the American market.” The report further highlighted: “From Sun Pharma and Lupin to Glenmark, Dr. Reddy’s and the others, price erosion in generic drugs has been a common anguish as they declared their results for the fourth quarter ended March 31. For some of these companies, more than 40 per cent of their revenues come from the US market. The developments came at a time new launches in the US – at least for some of them – have taken a hit because of regulatory action. Pricing pressure in generics is not new, but this has exacerbated in recent times, with experts warning of further deterioration.”

Similarly, where the UHC is funded by the State, such as in the United Kingdom, prices of branded pharmaceuticals supplied to the National Health Service (NHS), are controlled either by the ‘Pharmaceutical Price Regulation Scheme (PPRS)’ or by the ‘Health Service Branded Medicines Regulations 2008’. The situation is no different virtually in the entire Europe.

Moreover, in Japan, where UHC functions so immaculately, the regulatory officials of the country announced in December, as reported on 7th March 2017, the Government plans to review drug prices more frequently –  annually for all therapies and quarterly for the newest, and most expensive ones that are used widely. Over recent months, the price of Opdivo, a blockbuster cancer drug from Bristol-Myers Squibb Co. and Japan’s Ono Pharmaceutical Co., was halved in Japan following a 32 percent cut in April for Gilead Sciences Inc.’s hepatitis cure Sovaldi, the report said.

In addition, an OECD report dated January 16, 2017 observes: “The proliferation of high-cost medicines and rising drug prices are increasing pressures on public health spending and calling into question the pharmaceutical industry’s pricing strategies. Governments need to work with the industry and regulators to define a new approach to the development and use of new health technologies that encourages innovation while also delivering more affordable and value for money treatments.”

Hence, drug price regulations aren’t irrelevant, either in India or even in countries with a robust UHC system in place, not just yet.

The rationale behind drug price control in UHC countries and India:

The major difference in the rationale of drug price control between the countries with UHC and others, such as India is as follows:

  • UHC countries extend health coverage between 80 to 100 percent of the population, on an average, with a very low percentage of ‘out of pocket expenses’ on drugs. Hence, the Government and other payers want to keep their own cost of drugs within a reasonable limit with drug price control, though its methodology varies from country to country.
  • On the other hand, in countries, such as India, where UHC is not available, over 70 percent of the population incur ‘out of pocket’ expenses on health care – and over 60 percent of which is spent on drugs. Hence, the Government intends to ensure a significant reduction in ‘out of pocket expenditure’ towards medicines, by trying to make more affordable drugs available to many through drug price control.

Conclusion:

All health care related policy measures of the Government are important for the nation. As I know, the related discussion papers are circulated by the Government only after several informal and ongoing discussions on the subject with the stakeholders, and considering other feedbacks received in that process.

Despite this general mechanism, several points of draft proposals, or even the final policy, are often not liked by all, triggering a raging debate and inviting stringent criticisms, including disagreement from other ministries. For example, according to reports: “Even as Prime Minister Narendra Modi announced the government’s intention to ensure access to affordable medicines, the government policy think tank NITI Aayog seems to be pushing for greater deregulation of drug prices and to disempower India’s drug price regulator.” Just as many others, I also often participate in such debates.

That said, improving not just availability, but in tandem with greater access to affordable drugs, would play a key role to foster overall ‘Health Security’ of the country. Drug price control or its equivalent measures, alone, does not improve access to affordable drugs, except shaving off significant revenue and profit of the pharma companies. Whether the appropriate terminology in this case would be ‘profit’ or ‘profiteering’, is part of a separate debate, altogether.

Neither, impeccable sets of pharma and health policies, implemented in-silo by the two different ministries, will help achieve this goal. As is well researched, an excellent policy with shoddy or improper implementation, fetches far worse outcome than an average policy when implemented well, and in close coordination with other policies having common goals. This holds good even while striving for a robust ‘Health Security’ for the country.

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.

 

High Innovation-Cost Makes Cancer Drugs Dear: A Fragile Argument?

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Cancer is a major cause of high morbidity and mortality in India, just many other countries, according to a report of the World Health Organization (W.H.O). While deaths from cancer worldwide are projected to continue to rise to over 1.31 million in 2030, the Indian Council of Medical Research (ICMR) estimates that India is likely to have over 1.73 million new cases of cancer and over 8,80,000 deaths due to the disease by 2020 with cancers of breast, lung and cervix topping the list.

 Cancer treatment is beyond the reach of many:

Despite cancer being one of the top five leading causes of death in the country, with a major impact on society, its treatment is still beyond the reach of many. There are, of course, a number of critical issues that need to be addressed in containing the havoc that this dreaded disease causes in many families –  spanning across its entire chain, from preventive measures to early diagnosis and right up to its effective treatment. However, in this article, I shall focus only on the concern related to affordable treatment with appropriate cancer with medicines.

To illustrate this point, I shall quote first from the address of the Chief Minister of Maharashtra during inauguration of Aditya Birla Memorial Hospital Cancer Care Center on November 26, 2016. He said: “Cancer is the dreadful disease of all the time and for Maharashtra it is a big challenge as we are infamously at number two position in cancer cases in the country as after Uttar Pradesh, most cases are found here.” Incidentally, UP is one of the poorest state of India.

Underscoring that the biggest challenge before the technology is to bring down the cost of the cancer treatment and make it affordable and accessible for all, the Chief Minister (CM) further observed, “although, technological innovation has increased in last one decade, the accessibility and affordability still remain a challenge and I think, we need to work on this aspect.”

A new cancer drug launch vindicates the CM’s point:

The Maharashtra CM’s above statement is vindicated by a national media report of September 13, 2017. It said, Merck & Co of the United States have launched its blockbuster cancer drug ‘Keytruda’ (pembrolizumab) in India, around a year after its marketing approval in the country. Keytruda is expected to be 30 percent cheaper, compared to its global prices, costing Rs 3,75,000 – 4,50,000 to patients for each 21-day dose in India.

The point to take note of, despite being 30 percent cheaper, how many Indian patients will be able to afford this drug for every 3 weeks therapy? Doesn’t it, therefore, endorse the CM’s above submission? Well, some may argue that this exorbitant drug price is directly linked to high costs for its innovation and clinical development. Let me examine this myth now under the backdrop of credible research studies.

Cancer drugs are least affordable in India – An international study:

On June 6, 2016, by a Press Release, American Society of Clinical Oncology (ASCO) revealed the results of one of the largest analyses of differences in cancer drug prices between countries worldwide. The researchers calculated monthly drug doses for 15 generic and eight patented cancer drugs used to treat a wide range of cancer types and stages. Retail drug prices in Australia, China, India, South Africa, United Kingdom, Israel, and the United States were obtained predominantly from government websites. The study shows that cancer drug prices are the highest in the United States, and the lowest in India and South Africa.

However, adjusting the prices against ‘GDPcapPPP’ – a measure of national wealth that takes into consideration the cost of living, cancer drugs appeared to be least affordable in India and China. The researchers obtained the ‘GDPcapPPP’ data for each country from the International Monetary Fund and used it to estimate the affordability of drugs.

Why are cancer drug prices so high and not affordable to many?

The most common argument of the research based pharma companies is that the cost of research and development to bring an innovative new drug goes in billions of dollars.

The same question was raised in a series of interviews at the J.P. Morgan Healthcare Conference, published by the CNBC with a title “CEOs: What’s missing in the drug pricing debate” on January 11, 2016, where three Global CEOs expressed that the public is getting overly simple arguments in the debate about drug pricing. All three of them reportedly cited three different reasons altogether, as follows:

  • Eli Lilly CEO said, “Some of the noise you hear about drug pricing neglects the fact that we often must pay deep discounts in a market-based environment where we’re competing in many cases against other alternative therapies, including those low-cost generics.”
  • Pfizer CEO took a different approach by saying, “if you look at the market, about a decade ago, 54 percent of the pharmaceutical market was genericized; today 90 percent is genericized.”
  • However, as reported by CNBC, Novartis CEO Joseph Jimenez, focusing on innovation and in context on cancer drugs, argued “innovation has to continue to be rewarded or we’re just not going to be able to see the kind of breakthroughs that we have seen in cancer research, specifically regarding the uses and benefits of the cancer-fighting drug Gleevec. We continued to show that the drug was valuable in other indications in cancer and so we needed to be reared for that innovation and we’re pricing according to that.”

Is drug innovation as expensive and time intensive as claimed to be?

An article titled, “The high cost of drugs is the price we pay for innovation”, published by the World Economic Forum (WEF) on March 28, 2017 reported, “15 spenders in the pharmaceutical industry are investing about US$3 billion in R&D, on average, for each successful new medicine.”

The November 18, 2014 report on the ‘Cost of Developing a New Drug,’ prepared by the Tufts Center for the Study of Drug Development also announced: “The estimated average pre-tax industry cost per new prescription drug approval (inclusive of failures and capital costs) is: US$ 2,558 million.”

Not everybody agrees:

Interestingly, Professor of Medicine of Harvard University – Jerry Avorn questioned the very basis of this study in the article published in the New England Journal of Medicine (NEJM) on May 14, 2015. It’s not just NEJM even the erstwhile Global CEO of GSK – Sir Andrew Witty had questioned such high numbers attributed to R&D cost, around 5 years ago, in 2013. At that time Reuters reported his comments on the subject, as follows:

“The pharmaceutical industry should be able to charge less for new drugs in future by passing on efficiencies in research and development to its customers. It’s not unrealistic to expect that new innovation ought to be priced at or below, in some cases, the prices that have pre-existed them. We haven’t seen that in recent eras of the (pharmaceutical) industry, but it is completely normal in other industries.” Quoting the study of Deloitte and Thomson Reuters on R&D productivity among the world’s 12 top drugmakers that said the average cost of developing a new medicine, including failures, was then US$ 1.1 billion, Witty remarked, “US$ 1 billion price-tag was one of the great myths of the industry.”

A decade after Sir Andrew’s comment, his view was virtually corroborated by yet another research study, published this month. The study reemphasized: “The Tufts analysis lacks transparency and is difficult to judge on its merits. It cannot be properly analyzed without knowing the specific drug products investigated, yet this has been deemed proprietary information and is governed by confidentiality agreements.” I shall discuss this report briefly, in just a bit.

The latest study busts the myth:

The latest study on the subject, titled “Research and Development Spending to Bring a Single Cancer Drug to Market and Revenues After Approval”, has been published in the ‘JAMA Internal Medicine’ on September 11, 2017. It busts the myth that ‘high innovation-cost makes cancer drugs dear,’ providing a transparent estimate of R&D spending on cancer drugs. Interestingly, the analysis included the cost of failures, as well, while working out the total R&D costs of a company.

The report started by saying: “A common justification for high cancer drug prices is the sizable research and development (R&D) outlay necessary to bring a drug to the US market. A recent estimate of R&D spending is US$ 2.7 billion (2017 US dollars). However, this analysis lacks transparency and independent replication.”

The study concludes: “Prior estimates for the cost to develop one new drug span from US$ 320.0 million to US$ 2.7 billion. We analyzed R&D spending for pharmaceutical companies that successfully pursued their first drug approval and estimate that it costs US$ 648.0 million to bring a drug to market. In a short period, development cost is more than recouped, and some companies boast more than a 10-fold higher revenue than R&D spending—a sum not seen in other sectors of the economy. Future work regarding the cost of cancer drugs may be facilitated by more, not less, transparency in the biopharmaceutical industry.” The researchers also established that ‘the median time to develop a drug was 7.3 years (range, 5.8-15.2 years).’

“Policymakers can safely take steps to rein in drug prices without fear of jeopardizing innovation”:

NPR – a multimedia news organization and radio program producer reported: In an invited commentary that accompanies the JAMA Internal Medicine analysis, Merrill Goozner, editor emeritus of the magazine Modern Healthcare, noted that “the industry consistently generates the highest profit margins among all U.S. industries.” Goozner argues that the enormous value of patent protection for drugs far outweighs the inherent riskiness of pharmaceutical research and development, and agrees with the study authors when he writes: “Policymakers can safely take steps to rein in drug prices without fear of jeopardizing innovation,” NPR wrote.

Conclusion:

So, the moot question that surfaces: Is Pharma innovation as expensive and time consuming as claimed to be? If not, it further strengthens the credibility barrier to Big Pharma’s relentless pro-innovation messaging. Is the core intent, then, stretching the product monopoly status as long as possible – with jaw dropping pricing, unrelated to cost of innovation?

Further, incidents such as, shielding patent of a best-selling drug from low priced generic competition, by transferring its patents on to a native American tribe, probably, unveil the core intent of unabated pro-innovation messaging of major global pharma companies. In this particular case, being one among those companies which are seeking to market cheaper generic versions of this blockbuster eye drug, Mylan reportedly has decided to vigorously oppose such delaying tactic of Allergan before the Patent Trial and Appeal Board.

As a cumulative impact of similar developments, lawmakers in the United States are reportedly framing new laws to address the issue of high drug prices. For example, “California’s Senate Bill 17 would require health insurers to disclose the costs of certain drugs and force pharmaceutical manufacturers to detail price hikes to an agency for posting on a government website. The proposal would also make drugmakers liable to pay a civil penalty if they don’t follow its provisions.”

The myth of ‘high innovation-cost makes cancer drugs dear’ will go bust with such revelations, regardless of the blitzkrieg of self-serving pro-innovation fragile messaging.  Alongside, shouldn’t the Indian Policy makers take appropriate measures to rein in cancer drug prices, being free from any apprehension of jeopardizing innovation?

By: Tapan J. Ray 

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

 

Is The Global Generic Drug Market Slowing Down?

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Driven by a strong environmental headwind, both within and outside the country, several pharma companies in India have recently started raising a red flag on their future earning guidance for the stock market, though citing quite different reasons altogether. Quoting the following two recent examples, I shall illustrate this point:

“For decades, the generic drug business has followed a simple model for growth: wait for a chemical medicine to go off patent, then copy it. But 2018 promises to be one of the industry’s last big bumper crops, with $27.8 billion worth of therapies losing protection. The following year’s haul drops by almost two thirds, and the year after it shrinks even further” – reported the May 27, 2017 article in Bloomberg titled, ‘Pharma Heir Seeks a New Holy Grail as Generic Drugs Run Dry,” quoting the promoter of Glenmark.

Another May 27, 2017 article by Reuters also quoted similar business sentiment, though for a much different reason, of the world’s fifth-largest generic drug maker – Sun Pharma, following similar concerns of Dr. Reddy’s Laboratories Ltd and Lupin Ltd. Here, the promoter of Sun Pharma said, “We may even have a single digit decline in consolidated revenue for full-year 2018 versus full-year 2017.”

These red flags, though signal different reasons, prompt some fundamental questions: Is the global generic drug market, especially the US, slowing down? If so, what then is the real reason of the anticipated business slow-down of large Indian pharma players? Is it due to lesser number of patented products going off-patent in the future years, or is it due to pricing pressure in various countries, including the US, or a combination of several other factors alongside? In this article, I shall deliberate on this emerging concern.

Global generic drug market – the past trend:

Several favorable environmental factors have been fueling the growth of generic drug prescriptions across the world, and the trend continues going north. Currently, the growth of generic drug prescriptions is outpacing the same for the patented ones. According to the April 2017 research study titled “Generic Drugs Market: Global Industry Trends, Manufacturing Process, Share, Size, Growth, Opportunity and Forecast 2017-2022”, published by IMARC, the global generic drug market was valued at around US$ 228.8 Billion in 2016, growing at a CAGR of around 9 percent during 2010-2016.

This trend has been well captured in numbers, from various different angles, in the September 2016 report of Evaluate Pharma, as follows:

Global trend of prescription generic drug sales (2008-2015) 

Year 2008 2009 2010 2011 2012 2013 2014 2015
Global Rx Drug Sales (2008-15) (US$ Billion) 650 663 687 729 717 724 749 742
Growth per Year (%) +2.0 +3.5 +6.1 (1.6) +0.9 +3.5 (1.0)
Rx Generics Drug Sales (US $Billion) 53 53 59 65 66 69 74 73
Generics as % of Total Rx Drugs 8.2 8.0 8.6 9.0 9.2 9.5 9.9 9.9
% Market at risk to patent expiry or available for new generic drugs entry 3.0 4.0 4.0 5.0 7.0 4.0 5.0 6.0

(Table 1: Adapted from the report ‘World Preview 2016, Outlook to 2022’ of EvaluatePharma, September 2016)

The Table 1 shows, while the overall global sales growth of prescription drugs faltered during 2012-15 period, mainly due to after effects of patent expiry of several blockbuster drugs, the general trend of generic drug sales continued to ascend. As we shall see below, the projected trend in the succeeding years is not much different, either.

Global generic drug market – present, and projected future trend:

The global generic drug market is currently growing at a faster pace than the patented drugs, and this overall trend is likely to remain so in future too, as we shall find below.

Globally, North America, and particularly the US, is the largest market for generic drugs. According to the QuintilesIMS 2016 report, generic drugs saved patients and the US health care system US$227 billion in 2015. Although around 89 percent of the total prescriptions in the US are for generic drugs, these constitute just 27 percent of total spending for medicines. In other words, the share of patented drugs, though, just around 11 percent of total prescriptions, contribute 73 percent of the total prescription drug costs.

Backed by the support of Governments for similar reasons, Europe is, and will continue to register impressive growth in this area. Similarly, in Latin America, Brazil is the largest market for generic drugs, contributing 23 percent and 25 percent of the country’s pharma sector by value and by volume, respectively, in 2015.

Major growth drivers to remain the same:

The following major factors would continue to drive the growth of the global generic drug market:

  • Patent expiration of innovative drugs
  • Increasing aging population
  • Healthcare cost containment pressure, including out of pocket drug expenditure
  • Government initiatives for the use of low cost generic drugs to treat chronic diseases
  • Despite high price competition more leading companies are taking interest in generic drugs especially in emerging markets

India – a major global player for generic drugs:

India and China dominated the generic drug market in the Asia pacific region. India is the largest exporter of the generic drug formulations. A large number of drug manufacturing plants belonging to several Indian players have obtained regulatory approval from the overseas regulators, such as, US-FDA, MHRA-UK, TGA-Australia and MCC-South Africa. Consequently, around 50 percent of the total annual turnover of many large domestic Indian drug manufacturers comes from exports.  The top global players in the generic drug market include Teva Pharmaceuticals, Novartis AG, Mylan, Abbott, Actavis Pharma and India’s own Sun Pharma.

No significant change in the future market trend is envisaged:

When I compare the same factors that fueled the growth of global prescription generic drug market in the past years (2008-2015) with the following year (2016), and the research-based projections from 2017-2022, no significant change in the market trend is visible.

Global trend of prescription generic drug sales (2015 – 2022)

Year 2015 2016 2017 2018 2019 2020 2021 2022
Global Rx Drug Sales (2015-22) (US$ Billion) 742 778 822 873 931 996 1060 1121
Growth per Year (%) (-1.0) +4.8 +5.7 +6.2 +6.6 +7.0 +6.5 +5.7
Rx Generics Drug Sales (US $Billion) 73 80 86 92 97 103 109 115
Generics as % of Total Rx Drugs 9.9 10.3 10.5 10.5 10.4 10.4 10.3 10.3
% Market at risk to patent expiry or available for new generic drugs entry 6.0 6.0 4.0 4.0 4.0 2.0 2.0 5.0

(Table 2: Adapted from the report ‘World Preview 2016, Outlook to 2022’ of EvaluatePharma, September 2016)

The Table 2 shows, the overall global sales growth trend of prescription drugs appears a shade better in 2008-15 period, even with the after effects of patent expiry (Table 1), as compared to 2016-22. The scope for entry of new generic drugs goes below 4 percent of the total prescription drug market only in two years – 2020 and 2021. Thus, any serious concern only on this count for a long-term growth impediment of the global generic drug market, post 2018, doesn’t seem to be based on a solid ground, and is a contentious one. Moreover, the sales trend of prescription generic drugs as a percentage of the total value of all prescription drugs, hovers around 10 percent in this statistical projection, which is again a shade better than around 9 percent of the past comparable years.

What triggered the major pricing pressure?

With its over 40 percent of the total pharmaceutical produce, predominantly generic drug formulations, being exported around the world, India has become one of the fastest growing global manufacturing hubs for medicinal products. According to Pharmaceutical Export Promotion Council of India (Pharmexcil), United States (US) is the largest market for the India’s pharma exports, followed by the United Kingdom (UK), South Africa, Russia, Nigeria, Brazil and Germany.

Since long, the largest pharma market in the world – the US, has been the Eldorado of pharma business across the globe, mostly driven by the unfettered freedom of continuously charging a hefty price premium in the country. Thus far, it has been an incredible dream run, all the way, even for many large, medium and small generic drug exporters from India.

However, ongoing activities of many large drug companies, dominated by allegedly blatant self-serving interests, have now given rise to a strong general demand on the Governments in different countries, including the US, to initiate robust remedial measures, soon. The telltale signs of which indicate that this no holds barred pricing freedom may not be available to pharma, even in the US, any longer.

Self-inflicted injury?

The situation where several major Indian generic companies are in today, appears akin to an avoidable self-inflicted injury, basically falling in the following two important areas. Nonetheless, even after the healing process gets over, the scar mark would remain for some more time, till the business becomes as usual. Hopefully, it will happen sooner than expected, provided truly ‘out of box’ corrective measures are taken, and followed up with a military precision.

Huge price hikes:

According to the Reuters report of September 11, 2016, US Department of Justice sent summons to the US arm of Sun Pharma – Taro Pharmaceutical Industries Inc. and its two senior executives seeking information on generic drug prices. In 2010, Sun Pharma acquired a controlling stake in Taro Pharmaceutical Industries.

On September 14, 2016, quoting a September 8, 2016 research done by the brokerage firm IIFL, ‘The Economic Times’ also reported that several large Indian generic drug manufacturers, such as, Sun Pharma, Dr. Reddy’s, Lupin, Aurobindo and Glenmark have hiked the prices of some of their drugs between 150 percent and 800 percent in the US. These apparently avoidable incidents fuel more apprehensions in the prevailing scenario. As I wrote in this Blog on September 12, 2016, the subject of price increases even for generic drugs reverberated during the last Presidential campaign in the US, as well.

Serious compromise with product quality standards:

Apprehensions on dubious quality standards of many drugs manufactured in India have now assumed a gigantic dimension with import bans of many India made generic drugs by foreign drug regulators, such as US-FDA, EMA and MHRA. Today, even smaller countries are questioning the Indian drug quality to protect their patients’ health interest. This critical issue has started gaining momentum since 2013, after Ranbaxy pleaded guilty and paid a hefty fine of US$ 500 million for falsifying clinical data and distributing allegedly ‘adulterated medicines’ in the United States.

Thereafter, it’s a history. The names of who’s who of Indian drug manufacturers started appearing in the US-FDA and other overseas drug regulators’ import ban list, not just for failing to conform to their quality standards, but also for willful non-compliance with major cGMP requirements, besides widely reported incidents of data fudging and falsification of other drug quality related documents.

Global murmurs on generic drug quality among doctors:

There are reported murmurs both among the US and the Indian doctors on the generic drug quality standards, but for different drug types and categories.

According to the Reuters article published on March 18, 2014, titled “Unease grows among US doctors over Indian drug quality”, many US doctors expressed serious concerns about the quality of generic drugs supplied by Indian manufacturers. This followed the ‘import bans’ by the USFDA and a flurry of huge Indian drug recalls there. Such concerns are so serious, as India supplies about 40 percent of generic and over-the-counter drugs used in the United States, making it the second-biggest generic drug supplier after Canada.

While the doctors in the US raise overall quality concerns on the products manufactured by the large Indian branded generic companies, Indian doctors are quite at ease with the branded generics. They generally raise quality concerns only on generic drugs without any brand names.

Thus, a lurking fear keeps lingering, as many feel that Indian drug manufacturing quality related issues may not necessarily be confined only to exports in the developed world, such as, the United States, European Union or Canada. There is no reason to vouch for either, that such gross violations are not taking place with the medicines consumed by patients in India, or in the poorer nations of Africa and other similar markets.

In conclusion:

Sun Pharma has publicly expressed its concern that pricing pressure in the US may adversely impact its business in 2018. There doesn’t seem to be any major surprise on this statement, as many believe it was likely to happen, though for a different reason, since when the global media reported in September 2015: “FDA revokes approval for Sun Pharma’s seizure drug over compliance issues.”

As investors are raising concerns, the following comment by the Co-Chairman and Chief Executive of Dr. Reddy’s Laboratories, reported by ‘Financial Express’ on August 24, 2015, well captures the vulnerability of Indian generic drug business in this area: “The U.S. market is so big that there is no equivalent alternative. We just have to get stronger in the U.S., resolve our issues, build a pipeline and be more innovative to drive growth.”

Inadequate remedial measures could unleash this pressure to reach a dangerous threshold, impacting sustainable performance of the concerned companies. On the other hand, adequate remedial action, both strategic and operational, could lead to significant cost escalation, with no space available for its neutralization through price increases, gradually squeezing the margin. It will be a tight rope walk for many in the coming years.

As research reports indicate, the global generic drug market is not and will not be slowing down in the long term, not even in India. There may be some temporary ups and downs in the market due to pricing pressure, and the number of novel products going off-patent in some years. Nevertheless, the traditional business models being followed by some large companies may retard their respective business growth, considerably.

The pricing pressure is a real one. However, from the Indian perspective, I reckon, it’s primarily a self-inflicted injury, just as the other major one – the drug import bans on the ground of serious compromise with product quality standards. Many Indian generic drug players don’t believe so, and probably would never will, publicly.

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.

In a Quandary of Drug Quality, Price Control, Innovation and Patient Interest in India

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The patients in India have every reason to apprehend, whether the prescription drugs that they consume are efficacious, safe and conform to the government approved prices, alongside another important question: Do they affordable access to the fruits of innovation?

The regulator responsible for drug quality in India is responsible for ensuring the first two, and the drug price regulator of the country ensures the remaining two.

Apparently, both these esteemed government bodies, are sure that they are doing the best jobs in their respective areas. Moreover, in these days of social media blitzkrieg, it won’t be uncommon to witness some of them, creating hype on some issues that many feel is better avoided, and at times even contradictory in nature.

Amid this seemingly chaotic continuity of the same or a bit deteriorating scenario, patients are often caught in an unenviable footing.

In this article, I shall discuss on these concerns afresh, quoting a few recent examples. My objective is to encourage all concerned to move away from incessant hype creation by accepting the reality, as the patients feel. This is necessary, because anyone, including the regulators can fall victim of such unfettered developments, at any point of time.

Thus, it may be appropriate for all to jettison any residual arrogance or a faint shade of narcissism, before putting the nose to the grindstone to resolve these pressing issues decisively, for patients’ sake.

Are we consuming effective and safe medicines?

I raised this question first in an article titled, “Are We Taking Safe and Effective Medicines?” published in this blog on November 13, 2013. That deliberation was primarily based on US-FDA ‘import bans’ from various drug manufacturing facilities in India, involving even the top Indian pharma players. Based on their own quality and safety audits, the US regulator had concluded that drugs produced in those factories are not safe for consumption by the patients in America.

This apprehension has now almost reached its crescendo, when on February 24, 2017, probably for the first time ever, US-FDA publicly voiced its apprehension about the efficacy of medicines being sold and consumed by patients in India.  The observation came from the India director of the US-FDA in an annual conference of a large pharma trade association of some of the top domestic pharma companies. While commenting, “I do not think any one of us wants to take such drugs which lack efficacy”, the official reportedly revealed, he occasionally gets samples sent from the US embassy health unit in Delhi, and complaints are usually about the medicines not giving the desired results.

It is noteworthy, as earlier, rubbishing claims levelled by media expressing growing concern among overseas regulators over the quality of Indian made drugs, the Drug Controller General of India (DCGI) had reportedly strongly reiterated that there have been no lapse or compromise on quality parameters of the drugs manufactured throughout the country, as the efficacy of the drugs and safety of the patients have always remained the top priority of DCGI.

Yet another news article of August 22, 2016 reported that after a year-long survey involving Government, civil society and pharmacy professionals, and testing nearly 50,000 drug samples across the country during this period, the Ministry of health of India found that medicines produced in India are safe and effective. This study was kicked off in the wake of rising concerns that several medicines made in the country posed risks to patients, the report highlighted.

Should ‘Self-certification’ by industry prevail?

Intriguingly, when questions on drug quality manufactured in India, are regularly being raised by other equally responsible drug authorities, we find ‘self-certification’, in this regard, coming from all those who are expected to resolve this issue beyond an iota of doubt, always prevails.

Apparently, not just the drug regulator and the Union Ministry of Health are in a sustained denial mode, many large pharma companies also seem to be in the same mode. On March 01, 2017, the media reported, “Close on the heels of US FDA India office raising concerns over the quality of medicines marketed in India, pharma leaders came together to defend the quality of their products. There is no question of compromising quality of Indian products meant for domestic market and export, they pointed out.” This rebuttal was expected. Nevertheless, the apprehension lingers: Should such self-certification by pharma players prevail?

That said, one may try to justify this quandary by saying that effectively regulating over 20,000 domestic pharmaceutical companies, including third party and loan license manufacturers, poses a serious challenge to the DCGI and the State Drug Controllers. However, the moot point is, who has been encouraging such over-proliferation of drug manufacturing facilities over a long period of time, in any case? In that sense, whose prime responsibility is it to ensure that drugs consumed by patients in India are efficacious and safe?

The answer to these vexing questions continues to remain unanswered.

Did patients benefit from drug price control orders?

Let me first draw a brief sketch on the global perspective of price increases in generic drugs. It appears that in all those countries where there is no drug price control in place, the entire pharma industry is being adversely impacted by huge generic drug price inflation. This finding has been well captured in a study by Elsevier. It shows, between November 2013 and November 2014, out of its research sample of 4421 generic drug groups, there were price increases in 222 drug groups by 100 percent or more. In 17 drug groups price increases were taken even over 1000 percent, which include even tetracycline. With this trend sharply moving north, many patients, across the world, are struggling hard to find ways to survive in this situation. With this backdrop, I now get back to its India perspective.

I have read some media editorials questioning, just as the pharma industry, whether it is the right approach to make essential medicines affordable through drug price control in India? Nevertheless, there isn’t an iota of doubt in my mind that yes, it is, in the prevailing health care scenario of the country sans universal health care, with out of pocket expenses on medicines being the highest in the world and when market competition doesn’t bring down the price of medicines, for obvious reasons. My questions, on the contrary, will be, is drug price control being enforced in India the way it should? Are the patients getting commensurate benefits out of it? If not, why?

However, on the face of it, the answer to the question above “Did patients benefit from drug price control orders”, may appear to be an affirmative one. This is mainly because, on July 28, 2017, no less than the Union minister for Chemicals and Fertilizers, in a written reply to the Rajya Sabha reportedly conveyed that the Indian consumers have saved nearly Rs 5,000 crore due to the Government fixing the prices of essential medicines under the Drugs Price Control Order (DPCO) 2013.

The ground reality of drug price control:

Let me try to explore a bit in this area with some recent examples.

According to the data from India’s drug pricing watchdog – the National Pharmaceutical Pricing Authority (NPPA), compliance to various Drug Price Control Orders (DPCO) is far from satisfactory. Outstanding dues for non-compliance to notified ceiling prices, including penalty, from scores of pharma companies, have now reportedly piled up over the past two decades exceeding Rs. 4,551 crore (around USD 700 million). Thus, the same question haunts: Has drug price control benefitted the patients in India, as was intended to?

The situation is no different, even with DPCO 2013. On February 23, 2017, NPPA notified the ‘Suspected cases of Noncompliance of Ceiling Price by Pharmaceutical Companies,’ of 634 drugs, along with a ‘Public Notice’ for the same. This listed included the products marketed by some leading pharma companies in India, such as, Cipla, Abbott India, Alkem Labs, AstraZeneca, Dr Reddys Lab and Cadila, among many others.

Yet another fresh allegation related to drug pricing has just come to light. Interestingly, it relates to an anti-diabetic drug that falls outside DPCO 2013. On March 01, 2017, a news articled reported, “India’s drug regulator will look into allegations that four leading pharmaceutical companies are colluding to set the price of anti-diabetic drug Vildagliptin, a move that may rattle the almost Rs. 10,000 Crore (around USD 1540 million) market in the country.” Vildagliptin is a proprietary drug of Novartis, which has licensed it to three other companies. All of them sell Vildagliptin in India under their own brand names. Abbott sells it as Zomelis, USV as Jalra and Emcure as Vysov. The combined sales of these brands stood at Rs. 822 Crore (around USD 125 million) last year, the report states.

Be that as it may, the bottom line, as many believe, continues to remain unchanged, as it has always been – the patients don’t derive intended benefits due to lackluster and apparently ineffective enforcement of the drug price control in India.

Another crucial player:

Besides the two important and powerful Government authorities – DCGI and NPPA, there is another very critical player in this game – the Indian drug industry. Without whole-hearted cooperation and result-oriented action by all the three players, in tandem, nothing can possibly change this agonizing status quo, in this area.

The industry too is in a denial mode:

Quite like the other two critical constituents, who always deny any serious allegation on their actions, not being good enough to fetch the intended benefits for the patients, the drug industry too doesn’t seem to be any different. It always appears to be in a pre-programmed denial mode against all such allegations, irrespective of whether these are on drug quality, price, or on frequent misuse of the term innovation. They always try to justify their action, playing the victim card, as it were, and expecting other stakeholders to believe that they are doing right, always.

Let me now explore each of these areas separately, basically from the pharma industry perspective:

Drug quality: Pharma players, just as the Indian drug regulator, do not seem to accept that many drugs in India do not provide desirable benefits to patients, as alleged even by the US-FDA after studying some test results, following complaints from their local establishments. Many of us, at an individual level, may also have experienced just the same, and nurture the same doubt on the efficacy and safety profile of some branded generics that we consume, but have no wherewithal to prove the same. Doctors just change the brands, when any patient comes with such complaints, as Pharmacovigilance has not taken-off in the country with full steam, just yet. Thus, both the government regulators and the industry are in sync with each other, on this issue.

Drug price control: In this specific area, unlike the issue of drug quality, the respective stands of the government and the industry are poles apart. The former believes that it is working well, and the latter says, it isn’t.

The industry, as I see it, wants to project an impression that drug price control is the root cause of all evils, including compromises on drug quality, and some drugs going out of the market. The industry further highlights that drug price control offers a crippling blow to innovation, as they can’t garner enough financial resources through increased drug prices. It is another matter that they can’t possibly claim, drug price control offers a telling blow on their profit, as despite price control pharma is one of the highest profit making industry in India and globally too.

What innovation means to patients:

Interestingly, both the domestic and multinational pharma players often use the term of innovation, mostly construed as a façade, as it were, in their different advocacy initiatives, and during media outreach, as well. For global players, it primarily means innovation of new products, which offers monopolistic marketing and pricing advantage. Whereas, for generic players, it is generally process innovation, and different generic or biosimilar product development.

This is fine, but why should patients pay high drug prices, only because pharma players want to spend more on innovation, either for a new drug or a new process? I reckon, almost none will be willing to pay just for the heck of it.

Commensurate incremental price for incremental value:

Many patients, on the other hand, will be willing to pay more for any commensurate incremental value that a drug or a process will offer for a speedy recovery from illness, or to live a better quality of life, or for a lesser net treatment cost. Thus, the price of any brand is considered by stakeholders as a function of the value that it promises to offer. Consequently, brand marketing is deemed a value delivery system. For medicines, this value must be easily perceptible, quantifiable and scientific research based. Accordingly, the outcome of any such innovation should convince the regulators, doctors, hospitals and ultimately the patients – what value delivery – path breaking or incremental, for which patients need to pay commensurate incremental prices.

Various ways of ensuring it:

There are several different ways of addressing it, even for branded generics in India. For example, when branded generics of the same drug or similar FDCs of different drugs, are marketed by different companies with a huge price difference, the pharma players should necessarily submit before appropriate authorities, prior to marketing approval, all data regarding incremental and quantifiable value offerings, especially for those branded generics falling at the top of the price band. This is necessary, as an increasing number of brands in the market of the same generic molecules or the same FDCs, may not necessarily lead to greater competition with any significant impact on price. I shall argue on this point below.

What happens, generally:

For any drug falling outside price control in India, branded generic drug makers, usually set prices based on whatever each of them considers the market will accept. This consideration is highly elastic in nature, varying from a very low to a very high price, for any specific molecule and its FDCs. As I said before, it has been well-established by now that competition doesn’t play any significant role to bring down the branded generic drug prices, unlike many other consumables in different industries.

Why market competition doesn’t work for medicines?

This is primarily because, the purchasing decision for medicines does not depend on individual patients, unlike many other consumables. This decision is taken by the doctors while writing prescriptions for them. It is widely alleged, all over the world, that many important doctors are heavily influenced by the drug companies, often through dubious and highly cost intensive means, to prescribe their respective brands or branded generics in the process of treatment of a wide variety of medical conditions. In this rat race of generation of more and more prescriptions, pharma companies require to have a deep pocket to achieve their financial goals. Thus, many brands attract high prices to generate more profit and keep moving this vicious circle. Value based brand differentiation for many leading branded generics or even me-too patented products, aren’t mostly robust enough to stand any scientific or peer scrutiny. Consequently, the prescription demand of a most branded generics or me-too patented products do not have any linear relationship with the nature of market completion, and therefore, on their prices. In this perspective, setting a price for a pharma brand doesn’t depend on quantifiable value offerings for patients, as someone said before, “It is not a science. It is a feel.”

In conclusion:

The overall concern spans across several important public health and safety related issues, which also involve general quality standards of medicines, the effectiveness of drug price control, the core intent of so frequent use of the term ‘innovation’ in various pharma advocacy initiatives, including media outreach.

In this scenario, is the pharma industry, together with the drug quality and pricing watchdogs, failing to fathom the grave residual impact of continuity of this situation? In my view, this specific assumption appears too simplistic, naïve, and unrealistic. Or else, could it be that they are actually in a quandary, not being able to decide what would be the most effective actionable blueprint to resolve these issues?

I reckon, this is high time now for all concerned to accept the reality, seriously introspect on these critical issues, opt for a dip-stick expert analysis to assess the real status, and then work out a time-bound action plan with assigned accountability on the ground.

Together they may wish to address the following queries, among several others:

  • Why are they still running on a treadmill, as it were, over the last four decades, to come nearer these issues for better understanding, without moving an inch on the ground, despite public outcry?
  • Are they really in a quandary?
  • Are these concerns not an outcome of basically governance related failures?
  • Why hypes are being created all around on significant savings over out of pocket expenses on medicines because of ‘good enforcement’ of DPCOs, when it doesn’t seem so?
  • What prompts all the key players to be in a consistent denial mode on dubious drug quality standards in India, when foreign drug regulators are pointing it out in public?
  • Isn’t the term ‘innovation’ being rampantly misused, more as a major tool for advocacy to gain free pricing advantage?
  • Shouldn’t ‘Que Sera, Sera’ days change now?

By: Tapan J. Ray 

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