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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.

Even Smaller Countries Now Question Indian Drug Quality Standard

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India has over 135 US-FDA approved pharmaceutical manufacturing units, at present. This number is very significant ranking second behind the United States, and was driving the growth of generic drug exports in the top pharma market of the world. Riding on the wave of such stellar progress, a hubris seems to have set in the related operational areas of many Indian pharma players, especially the drug exporters.

This incredible ride continued, until a first major jolt shook all concerned in this business. It came first in the form of an unprecedented hefty fine for wrong doing, followed by the US- FDA ‘import bans’ of several drugs, manufactured around 44 different Indian drug-making facilities, since over the last five years.

The first major jolt:

Not so long ago, just in 2013, quality related concerns with generic drugs exported from India came to the fore, after Ranbaxy reportedly pleaded guilty and paid a hefty fine of US$ 500 million for falsifying clinical data and distributing ‘adulterated medicines’ in the United States.

Thereafter, US-FDA banned drug imports from Ranbaxy and Wockhardt, manufactured in all those facilities that failed to conform to its cGMP quality standards.

Those are the stories for generic formulations. It then covered the Active Pharmaceutical Ingredients (API) too. On January 23, 2014, USFDA notified Ranbaxy Laboratories, that it is prohibited from manufacturing and distributing APIs from its another Indian manufacturing facility in Toansa. With this step, erstwhile Ranbaxy had virtually no access to the top pharmaceutical market of the world.

Was it for raising the bar of quality norms?

Many of us felt and expressed that ‘import bans’ of Indian drugs due to failing quality parameters, manufactured in certain facilities of largely Indian pharma companies, are mostly due to higher stringent quality norms of the US-FDA, the European Medicines Agency (EMA) and the Medicines and Healthcare products Regulatory Agency (MHRA). Nevertheless, this argument does not carry much weight, as an exporter will always have to conform to the set quality standards of the importers, whatever these are. 

Indian drug regulator too made a much avoidable remark:

Unfortunately, amid such a scenario, instead of taking appropriate transparent and stringent measures, the Drug Controller General of India (DCGI) was quoted by the media saying, “We don’t recognize and are not bound by what the US is doing and is inspecting. The FDA may regulate its country, but it can’t regulate India on how India has to behave or how to deliver.”

The DCGI made this comment as the then US-FDA Commissioner Margaret Hamburg was wrapping up her a weeklong maiden trip to India, in the wake of several ‘Import Bans’ arising out of repeated cGMP violations by some large domestic generic drug manufacturers. Whereas, Hamburg reiterated the need for the domestic drug manufacturers conform to the USFDA quality standards ensuring health and safety for American patients, the DCGI’s above comment appears rather arrogant, out of tune, and was avoidable, to say the least. Instead, some serious corrective regulatory measures should have followed.

On the above comments of the DCGI, the American Enterprise Institute reportedly reacted by saying, “Indian drug regulator is seen as corrupt and colliding with pharma companies…”.

Smaller countries initiated similar action:

It now appears that this situation is going from bad to worse and malady is much deeper. Smaller countries, such as Vietnam, have recently banned products of a sizable number of domestic pharma exporters.

On September 5, 2016, a leading business daily of India reported: “Close on the heels of Prime Minister Narendra Modi’s visit to Vietnam to strengthen bilateral ties, including defense, security and trade, the ministry of commerce and industries is planning to set up a committee, along with the Central Drugs Standard Control Organization (CDSCO), to inspect Indian pharmaceutical companies which have been banned from Vietnam for exporting sub-standard drugs.”

In 2014, the Drug Regulatory Authority of Vietnam ‘red-listed’ about 50 pharma companies for alleged regulatory non-compliance in their manufacturing practices. The names included, some big names of Indian pharma industry.

Overall pharma market size of Vietnam is estimated over US$ 2 billion, and expected to grow to US$ 8 billion by 2020. A significant chunk of Vietnam’s pharmaceutical market comprises of generic drugs, where India used to be a major exporter. In the recent years, however, Indian pharmaceutical product exports to Vietnamese market have dipped considerably, reflecting the effects of the ban, with exports declining by 12 percent to US$ 146 million in 2015-16 from US$ 165 million in the previous fiscal year, the report said.

It was envisaged, especially after the Prime Minister’s visit to Vietnam, this situation will improve notably. However, just as what happened with the USFDA on related issues, there has been no change in the overall situation in this case, either.

Further, on November 23, 2016, yet another Indian Business news daily reported that 39 Indian drug companies have been blacklisted by Vietnam for quality standard violations, along with some others in Bangladesh and South Korea. The Vietnamese regulator has listed the names of all blacklisted companies on its website, without specifying in detail the exact reason behind the bans. The Indian products include, antibiotics and anti-rabies vaccine, among others. The latter was also reportedly banned by the World Health Organization (WHO), in January 2016.

What is more intriguing, despite the Union Ministry of Health and the Ministry of Commerce and Industries of India being aware of it, the issue seems to have drifted beyond reasonable control of the Indian regulators.

Some local companies still not acting:

On Feb 24, 2016, the US and the EU drug regulators reportedly called upon India’s pharmaceutical sector to step up efforts to improve manufacturing standards, and ensure the reliability of data, if it wishes to maintain its dominance in the generic drug industry. In the report, the director of the office of surveillance at the USFDA – Russell Wesdyk was quoted saying, “some Indian companies are still not taking enough steps to identify risks and failures at their firms.”

“Data integrity really sounds-off alarm bells for us. If you see data integrity on the surface, there is likely a lot going on underneath,” the foreign drug regulators reportedly commented.

These comments are profound, especially considering that India supplies about 33 percent of medicines sold in the United States, and nearly a quarter sold in the UK. Similar Indian drug quality related issues are now being raised by even smaller countries.

How safe are drugs for domestic consumption?

Many reasons may be attributed to quality concerns on Indian generics in the United States. Nonetheless, another question that surfaces alongside, if cGMP violations can take place for drug exports, despite rigorous compliance checks by the foreign drug regulators, what could possibly happen when the same system is so tardy in India? Are we consuming safe and effective drugs, whenever required, even within the country?

No one seems to have the right answer to this question, be because of various reasons. One such reason, out of various others, could well be how robust is data quality generated by the contract manufacturing companies? These are the core quality related issues, and can’t just be wished away, under any pretext.

Some examples:

On November 12, 2013, the DCGI was quoted saying that the investigative team of the drug regulator concluded that all the data submitted by Puducherry-based contract drug manufacturer ‘GuruFcure’, while seeking approval for manufacturing seven fixed dose combination drugs, are ‘fabricated’ and not ‘authentic’.

‘GuruFcure’, which started operations in 2007, and calls itself “one of the leading pharmaceutical formulation manufacturers in India”, reportedly used to manufacture drugs for some leading pharma MNC and Indian companies, such as: Abbott, Alkem, Glenmark, Wockhardt, Unichem, Intas Pharma, among others.

Though, as per the above media report, Wockhardt and Glenmark said that they were no longer associated with ‘GuruFcure’ at that time, the fact remains, they did market drugs produced by this contract manufacture in the past, and the patients consumed those drugs against doctors’ prescriptions. The saga continues unabated, even today.

On November 28, 2016, a major national English daily reported with a video clip that, following a crackdown since March this year, the drug regulators of seven states have alleged that 27 medicines, sold by 18 major drug companies in India, including Abbott, GSK, Sanofi, Sun Pharma, Cipla, Torrent, Alkem, Emcure and Glenmark Pharma, are of substandard quality, citing grounds such as false labelling, wrong quantity of ingredients, discoloration, moisture formation, failing dissolution test and failing disintegration test. Such allegations, though supported by laboratory test results, needs to brought to their logical conclusion. This is mainly because, media reports of this nature fuel lurking apprehension on the overall drug quality standards in India, leading to serious compromise with patients’ health and safety.

Conclusion:

Against this rather gloomy backdrop, a ray of hope comes from a report that CDSCO has started training Indian drug manufacturers in good manufacturing practices, as it tries to address concerns of the USFDA, and other drug regulators, effectively.

Quoting the DCGI, who has now apparently resolved to put together proper practices and regulation in place for the pharma industry, the report says that CDSCO has hired 500 personnel, and is expected to further train employees of other units, to ensure that high quality medicines are manufactured in the country.

These officials will visit drug manufacturing hubs of the country over the next three to four years and train employees in producing quality medicines, following proper procedures and maintaining records. I hope, this will include contract manufacturers too. The question would remain: What happens when these regulatory lapses do not take place out of ignorance or lack of experience or expertise, but are purely intentional to cut corners?

Alleged dubious quality of many drugs manufactured in India is a critical issue, both within the country and with several foreign drug regulators, such as US-FDA, EMA and MHRA, among others. It affects all those who consume such drugs.

Today, even smaller countries are questioning Indian drug quality to protect their patients’ health interest. Thus, everything, when clubbed together, sends a strong signal to the Indian drug regulator to come out of its denial mode, walk the talk, and act decisively to safeguard the interest of Indian patients too.

By: Tapan J. Ray

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

 

India Needs More Integrated, High Quality E-Commerce Initiatives In Healthcare

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In the digital space of India, many startups have been actively engaged in giving shape to a good number interesting and path breaking ideas, especially since the last ten years. One such area is ‘electronic commerce’ or ‘e-commerce’.

In the e-commerce business, particularly the following business model is gaining greater ground and popularity:

Here, an e-commerce company plans to generate large revenue streams on hundreds and thousands of items without producing and warehousing any of these, or carrying any inventory, handling, packaging and shipping. It just collects, aggregates and provides detailed and reliable information on goods and/or services from several competing sources or aggregators, at its website for the consumers.

The firm’s strength primarily lies in its ability to draw visitors to its website, and creating a user-friendly digital platform for easy matching of prices and specifications, payment and delivery, as preferred by the buyers.

Growing e-commerce in India:

Today, e-commerce players in the country are not just a small few in number. The list even includes many of those who have already attained a reasonable size and scale of operation, or at least a critical mass. Among many others, some examples, such as, ‘Flipkart’, ‘Bigbasket’, ‘HomeShop18’, ‘Trukky’ and ‘Ola’ may suffice in this context.

Currently, these companies try to satisfy various needs of the consumers related to, such as, lifestyle, daily households, logistics, and other chores, at any time of the users’ convenience and choice, with requisite speed, variety and reliability.

Healthcare initiatives need to catch up:

Despite the overall encouraging scenario, every day in India a large number of the population, even those who can afford to pay, at least a modest amount, still struggle while going through the unstructured and cumbersome process of access to better and comprehensive health care services. The situation continued to linger, despite the ongoing game-changing digital leaps being taken by many startups in various other fields within the cyberspace of India.

Nevertheless, the good news is, it has now started happening in the healthcare space, as well, though most projects are still in a nascent stage. The not so good news is, many of these world class services, though available, are still not known to many.

The medical treatment process is complicated:

The medical treatment process is just not complicated; it is non-transparent too. There is hardly any scope for doing an easy-to-do personal research by common people to ascertain even a ballpark number on the treatment cost, with requisite details of the various processes, that a patient may need to undergo. 

Thus, in pursuit of quality health care at optimal cost in today’s complex scenario in India, one will require to get engaged in time-intensive and complicated research, first to find out, and then to effectively manage the multiple variables for access to comprehensive and meaningful information to facilitate patients’ decision making on the same. For most people, it’s still a challenge to easily collect all these details on a user-friendly platform of any credible and transparent online website.

The usual treatment process:

The usual process that any patient would need to follow during any serious illness is cumbersome, scattered and non-transparent. This is, of course, a natural outcome of the generally deplorable conditions and, in many cases, even absence of quality public health infrastructure in India, forget for the time being about the Universal Health Care (UHC). 

During such illness, one will first need, at least, a General Practitioner (GP), if required a secondary and a tertiary doctor, alongside well-equipped diagnostic laboratories. Then follows the medical prescriptions, or advice for any invasive procedure, buying the right medicines, as required for the treatment of the disease condition, and thereafter comes the desired relief, hopefully. 

Each of these steps being different silos, there were not many easy options available to most patients, in this tortuous quest for good health, but to go for expensive private health care. Currently, this entire process is over-dependent on word-of-mouth information, and various advice from vested interests.

Never before opportunity:

There seems to be an immense opportunity waiting in the wings for any e-commerce business in India, providing a comprehensive and well-integrated information network for the patients directly, enabling them to take well-informed decisions for reliable, cost-effective and high quality health care services.

This has been facilitated by increasing mobile phone usage in India. According to India Telecom Stat of January 2016, the number of mobile phone users in the country has now crossed one billion. Experts believe that a large section of these subscribers will soon be the users of smartphones.

Rapid growth of internet connectivity with the affordable smartphones, fueled by the world’s cheapest call tariffs, commensurate availability of various attractive packages for data usage, would empower the users avail integrated, comprehensive and high quality e-commerce services in the healthcare sector too, sooner than later.

Would it reduce health care cost?

A transparent system of integrated health care services could bring health care cost significantly.

For example, one can find out from such websites, not just a large number of doctors from any given specialty, including dentistry. Alongside will be available many other important information, such as, their location, availability time and fees charged.

This would help patients comparing the doctors from the same specialty, especially from the quality feedbacks published on the website. This would facilitate patients taking a well informed decision for disease treatment according to their individual needs and affordability. The same process could be followed for selecting diagnostic laboratories, or even to buy medicines.

Such open and transparent websites, after gaining desired confidence and credibility of the users, would also help generate enough competition between healthcare service providers, making the private health care costs more reasonable, as compared to the existing practices.

These e-commerce companies would arrange immediate appointments according to the convenience and needs of the patients, and also help in delivering the prescribed medicines at their door steps. 

Some initiatives around the world:

Many startups are now setting shops in this area, around the world. Just to give a flavor, I would cite a few examples, as follows, among many others:

Name Country Services
Doctoralia http://www.doctoralia.com Spain A global online platform that allows users to search, read ratings, and book appointments with healthcare professionals 
iMediaSante http://www.imediasante.com/ France Provides patients to make medical appointments from a mobile for free. 
DocASAP http://www.docasap.com United States An online platform enabling patients to book appointments with the doctors and dentists of their choice.
Zocdoc https://www.zocdoc.com/ United States Solves patient problems with instant online appointment booking, provides verified reviews and tailored reminders.
Lybrate.com https://www.lybrate.com/ India Provides access to a verified online doctor database of over 90,000 medical experts, including in Ayurveda and Homeopathy, for appointments and to ask any question.
Practo http://www.practo.com/ India An online platform for patients to find and book appointments with doctors. Doctors use Practo Ray software to manage their practice.  

An Indian example:

In this sphere, one of the most encouraging Indian examples would be the Bangalore based Practo Technologies Private Ltd. This startup debuted in 2008, and in a comparative yardstick, has been the country’s most successful business in this area, so far. Its key stated goal has been bringing order to India’s rather chaotic health care system.

Currently, Practo connects 60 million users, 200,000 doctors and 10,000 hospitals. According to a May 27, 2016 report of Bloomberg Technology, Practo website is used to book over 40 million appointments, every year.

This e-commerce company also offers online consultations, and home deliveries of medicine. Its software and mobile applications link people and doctors, as well as hospital systems, so that they can effectively manage the visits and billing, while helping patients find physicians and access their digital medical records.

At present, Practo offers services in 35 cities, and plans to extend that to 100 by the end of this year. The company reportedly is now expanding in Indonesia, the Philippines and Singapore, with a future expansion plan in Latin America, starting with Brazil in March 2016.

How would India shape up?

Although, these are still the early days, according to Grand View Research Inc., based in San Francisco in the United States, the global healthcare information technology market is right on track to reach US$ 104.5 billion by 2020. Increasing demand, especially from the middle income population for enhanced healthcare facilities, and introduction of technologically advanced systems, are expected to boost the growth of this industry.

Increasing rural penetration of e-commerce on integrated health care, would be a major growth booster for this industry in India.

Besides its distant competitor Lybrate, Practo does not have any tough competition in India, at present. However, the scenario may not remain the same, even in the near future. 

Keeping an eye on this fast growing market, two former top executives from India’s e-commerce leader – Flipkart are launching their own health-tech startup creating a new rival for Practo, according to the above Bloomberg report. Thus, it is a much encouraging fast ‘happening’ situation in the interesting digital space of the country. 

Conclusion:

Evolution of Indian e-commerce in health care is an encouraging development to follow. It would offer well-integrated, comprehensive and cost-effective health care services to many patients. Gradually penetration of this digital platform, even in the hinterlands of India, would help minimize quality health care related hassle of many patients, along with a significant reduction of out-of-pocket health expenditure cost.

Interestingly, there is no dearth of doomsayers against such novel initiatives, either. A few of them even say, it doesn’t make sense for the doctors to list themselves in the e-commerce directory for the patients to find them, as the patients desperately need them for any medical treatment, in any case. Others counter argue by saying that acquiring patients online should be a preferable way for doctors to maximize their income, among others, especially by eliminating the referral fees, which many specialists in India require paying for the source of referral.

However, I reckon, a larger number of credible and transparent e-commerce websites for integrated healthcare services, all in one website, would enhance competition, bring more innovation, and in that process delight many patients in India. Never before it was so promising, as the country is making a great progress in the smartphones’ usage, along with Internet access, in the country. The unique facility of free search for medical care services would also help patients immensely in choosing quality, and cost effective medical treatment interventions that would suit their pocket. 

To achieve this goal, the highly competitive digital process of integration and aggregation of requisite pre-verified latest information on different health care service providers and aggregators, in the most innovative and user-friendly way, would play a crucial role. In tandem, delivering the prescribed medicines at the patients’ door steps in strict compliance with the regulatory requirements, would really be a treat to follow in the rapidly evolving digital startup space of India.

The name of the game is ‘Idea’. The idea of offering innovative, well-integrated, comprehensive, user-friendly, and differential value delivery digital platforms for healthcare e-commerce. It shouldn’t just overwhelmingly be what the sellers want to force-feed, but where the majority of patients on their own volition can identify the differential values, and pay for these, willingly.

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.

An Emerging Yo-Yo Syndrome With Biosimilar Drugs

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Competition from Biosimilar drugs poses a threat of a combined revenue loss of estimated US$ 110 billion of those pharma players who are still enjoying market monopoly with patented biologic brands. This is expected to surely happen, in the long run, if the signals picked up from the evolving scenario continue to stay on course.

Simply speaking, generic versions of original biologic drugs are termed as Biosimilars. These are large protein molecules, created from living organisms following complex processes. Thus, it is significantly more expensive to develop and market biosimilar drugs, as compared to any small molecule generic chemical ones. 

Hurdle creation and the core intent: 

Despite these complexities, for quite some time, global original biologic drug players had initiated intense campaign to create tough hurdles in the process of regulatory and marketing approval for biosimilar drugs, predominantly raising safety concerns. A simultaneous campaign was also launched among doctors and the payers in the developed countries, stoking the same fear, to forestall the overall acceptance of biosimilar drugs.

When drug regulators of different countries are solely responsible to ensure patient safety of any drug, why are the global pharma companies, and their trade associations are continually shouting from the roof top expressing concerns in this regards? It is often seen that such campaigns become more intense, when it comes primarily to block or delay the entry of biosimilar, many generic drugs and some IP related issues in a country. Umpteen number of such examples are available from India, Europe, United States and many other countries. Many would agree that in such cases, the core intent is as important as the issue.

I discussed on those hurdle creating campaigns in my article in this Blog, on August 25, 2014, titled, “Scandalizing Biosimilar Drugs With Safety Concerns”. Hence won’t dwell on that again here.

The campaign yielded results:

This campaign of global bio-pharma majors to restrict the entry of lower priced biosimilar drugs into the market, immediately after patent expiry, has been successful to a great extent, so far. Let me now give below a recent example, from credible sources, to vindicate this point.

Although, the world’s number 1 drug in sales – Humira (Adalimumab), with a turnover of US$ 15 Billion in 2015 (IMS Health), is going off patent in December 2016, no biosimilar version of Adalimumab is ready, just yet, to compete with this profit churning blockbuster biologic brand, in the United States. More interestingly, according to another report dated July 14, 2016 of the Wall Street Journal (WSJ), even on the verge of its product patent expiration this year, U.S. sales of Humira rose 32 percent to US$ 2.2 billion in the first quarter this year, with over 16 percent jump in its prescription volume.

It is worth noting, Humira was first approved in 2002, and has long been one of the most profitable drugs, globally, contributing around 60 percent of Abbvie’s total revenue even in the last year.

The industry may well argue, in a situation like this, how can a pharma company possibly decide to remain within the ambit of just patent protection, even if it leads to sacrificing other stakeholders’ interest? That’s a ‘business ethics’ issue, and is beyond the scope of this article.

The beginning of a yo-yo syndrome:

At the very outset, let me mention that the term ‘yo-yo syndrome’ has been coined to refer to something that moves up and down quickly, or something that changes repeatedly between one level and another.

Keeping this into perspective, some of the big bio-pharma companies, such as, Amgen, which have been, reportedly, trying hard to block the on-time entry of biosimilar drugs, through litigations and lobbying, could stand as good examples in this area.

For instance, Amgen, on the one hand, seem to be vigorously shielding its over US$10 billion of annual biologic sales from the biosimilar competition through powerful lobbying. Whereas, on the other, it commenced developing its own biosimilar drugs, to reap a rich harvest from the available opportunities.

According to an Associated Press report on July 12, 2016, a panel of Food and Drug Administration advisers of the United States has voted unanimously in favor of Amgen’s version of AbbVie’s Humira. While not binding, the recommendation could help the USFDA approval of the knockoff drug.

According to reports, the companies now working on Humira biosimilars, include Novartis, Mylan and Baxter.

India did it, but a tough road ahead:

On December 9, 2014, international media flashed across the world a great news item from the Indian pharma industry: “The first biosimilar of the world’s top-selling medicine Humira (adalimumab) of AbbVie has been launched in India by Zydus Cadila.” That said, let me hasten to add that Humira does not have a valid product patent protection in India.

Yet another good news is, according to a Press Release of Biocon dated July 15, 2016, its India made Insulin – Glargine was launched in Japan on the same day by its partner FUJIFILM Pharma Co., Ltd. (FFP).

These are excellent developments, and music to many ears. However, on the flip side, intense legal battle on various regulatory grounds against the Indian biosimilar drug players, by the makers of original biologic to protect their own turf of market monopoly, has also commenced with associated acrimony.

Earlier, the Swiss drug major – Roche had objected to Biocon’s referring to Herceptin at an international scientific conference, related to clinical trial results of its own ‘biosimilar’ version Herclon (trastuzumab).

On April 2016, responding to Roche’s complaint, the Delhi High Court ordered changes to the packaging labels of the brands sold by Biocon, and other bio-pharma companies in India, such as, Reliance Life Sciences and Mylan. The court also raised questions about the DCGI’s approval processes for biosimilars, and restrained the companies from using Roche’s data related to the manufacturing process, safety, efficacy and tests.  

More recently, this issue between Roche and Biocon, over breast cancer drug trastuzumab has reportedly taken another acrimonious turn with both the companies approaching the Delhi High Court on charges of contempt of court.

Roche reportedly also alleged contempt over Biocon using the name ‘Herceptin’ in the approval process of its trastuzumab drug in the United States. According to reports, Biocon is currently conducting Phase III clinical trials for marketing approval of its trastuzumab in the U.S.

Thus, to carve out a niche in the biosimilar space of the world, Indian pharma has made some good progress. Alongside, taking note of many contemporary factors and development in this area, a lurking apprehension too did creep in. It raises an awkward and uncomfortable question – do the Indian companies have pockets deep enough to overcome the expensive legal and regulatory challenges thrown by the global biologic drug makers to protect their market monopoly status for expensive drugs, much longer than what they deserve?

Let me keep my fingers crossed.

Critical global speed-bumps for biosimilar entry:

Besides, many other hurdles, as I highlighted in my article of August 25, 2014, the intricate patent shield beyond original patent expiry, is a major speed bump for biosimilar drugs’ smooth global market entry. 

Maintaining the same example of Humira, a well crafted patent-shield strategy was implemented to extend market monopoly of this brand, at least for another decade. Although, the main patent of Humira expires in December 2016, it is reportedly well shielded, at least, with 70 other patents till 2027, as many reports indicate.

This is possible because, according to a January 19 2016 report by Bloomberg, the U.S. patent office in the same month rejected Amgen’s effort to knock out two patents on AbbVie’s anti-inflammatory bestseller Humira. Amgen hoped to get its Humira competitor to market by 2017. This is a bad news for other biosimilar drug makers too.

Nevertheless, the good news is, in May 2016, the Patent Trial And Appeal Board (PTAB) announced that it would embark on a review of Coherus’ challenge of Humira’s ’135 methods patent. Experts believe, even if it the PTAB upturns Humira’s IP shield, AbbVie could appeal, which could take another year or so.

Recent status:

So far, after the biosimilar guidelines were put in place for the first time in the United States, a Novartis version of Amgen’s Neupogen, got USFDA approval in March 2015, only after so many delays and protracted litigations. Novartis is also trying to to do the same for Amgen’s Enbrel. Pfizer too won the U.S drug regulator’s approval in April 2016 for a version of Johnson & Johnson’s Remicade, but the product is still not available for sale.

Currently, some constituents of Big Pharma, such as, Amgen, Novartis and Pfizer have started warming up for manufacturing copycat versions of blockbuster original biologic drugs of other companies.

High quality biosimilars:

These new biosimilars are of top quality. Even USFDA could not find any meaningful differences in the key parameters, such as, efficacy, safety, potency and purity, between the original biologic drugs and their biosimilar versions.

According to a July 12, 2016 Bloomberg report, in several cases USFDA finds the clinical results of biosimilar drugs are robust enough to support ‘extrapolation’. This could support approval of these biosimilar drugs for all indications that the original biologic brands treat, without requirement of separate clinical trials for each, facilitating the approval process and accelerating their market entry.

With these developments, the high voltage lobbying campaigns of the original biologic makers, and their trade associations, both to the drug regulators and doctors, are expected to lose steam, if not ultimately die down altogether. 

However, the protracted and fierce legal battles of the originators, creating various intricate patent shields, to enjoy a brand monopoly for a much longer period, are expected to continue, if not turn fiercer.

The question of price advantage with biosimilars:

Currently the cost advantage provided by the biosimilar drugs over the original biologics, does not come anywhere near to what we see for small molecule generic drugs, post patent expiry. 

For example, Zarexio of Novartis has been priced 15 percent less than the original Neupogen of Amgen. It is generally believed that in the united states this difference would continue to be around 15 to 30 percent, in the near future. Whereas in Europe, the difference is higher, as the governments regulate their prices.

In India too, the difference in the pricing trend is currently, more or less, similar. 

Nonetheless, the above report of Bloomberg had quoted the global CEO of Novartis Joe Jimenez saying that biosimilar drugs would eventually cost 75 percent less than the original biologics. 

Let’s hope so.

Conclusion:

The powerful constituents of Big Pharma who decided to delay, if not stall the entry of biosimilar drugs for vested interest, have now started adopting a dual strategy. They did not have any other choice either, after President Obama’s fulfillment of his election promise with the ‘Affordable Care Act’, which, among others, facilitated charting the regulatory pathway for entry of biosimilar drugs in the United States, for the first time ever. 

Thus, on the one the one hand, these companies continued crafting robust patent-shields to extend market monopolies, even beyond the original patent expiries, through protracted and complicated litigations. While, on the other, started moving with great speed to develop biosimilar versions of the original blockbuster biologic drugs of other players, as they go off patent. This is mainly to cash-in the golden opportunities, which otherwise would go to different players.

India has made an entry into this space, but would still require a lot to do, including winning the expensive legal battles, in order to be recognized as a global force to reckon with, in the biosimilar segment.

To facilitate rapid growth, and universal acceptance of biosimilar drugs, for patients’ interest across the world, it will be interesting to follow the spread of the ‘yo-yo syndrome’ of the original biologic drug makers, as we move on.

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.

PE Investment In Pharma: The Changing Need Of Due Diligence

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From an international perspective, a Bain & Company report of April 2016 highlighted setting a new healthcare M&A record in the year 2015. During this year the total deal value was over 2.5 times higher than the average annual deal value of the previous decade. The report also mentioned that the Asia-Pacific Region grew in the same year by about 40 percent, fuelled by a number of activities in India and China. 

Commenting on India, the Bain report specifically mentioned that during the year, the Private Equity (PE) investors prioritized their investments in the country, not just targeting the global demand for pharmaceuticals, but also based on rapid domestic demand growth.

More popular targets in India were tertiary care, specialty care and laboratories. This is vindicated by TPG’s investment of US$146 million for a minority stake in Manipal Health, which operates multi-specialty and teaching hospitals in the country. Similarly, The Carlyle Group made a minority investment in the pathology lab chain – Metropolis Healthcare. This trend is expected to continue in the coming years and would in all probability include pharma companies of various sizes, with high performance or with high future potential.

In this article, I shall focus only on generic pharma companies in India.

A changing need of due diligence:

Despite some major uncertainties in the generally thriving domestic generic pharma market, this sector has the potential and possibility to come under the radar of many PE investors during the coming years.

However, in this scenario, to embrace success with lucrative returns, I reckon, there is a changing need of due diligence to follow, before suitable pharma companies are appropriately targeted. Conventional pharma due diligence, however stringent it is, may not capture appropriately the high-impact, up and down sides of long term business sustainability for the desired return on investments.

The rationale:

Consideration of significant cost savings in the pharma value chain won’t be just enough, any longer, to tide over any unforeseen rapid downturn in many pharma company’s business performances in the country.

This is largely because, many pharma companies in India have been thriving, so far, taking full advantage of some major loopholes in the regulatory area, including clinical trial; ethical marketing strategy and practices; overall generic product portfolio selection; new generic product developments; besides many others.

The need of a changing format of pharma due diligence in India is largely prompted by this prevailing scenario, even in the midst of stellar success of some companies, and plenty of lush green shoots, as they appear to many. 

The process of tightening the loose knots has commenced:

All these loose knots are expected to be tightened by the governments, sooner or later. In fact, while watching the intent of the Government and from some of its recent actions, it appears that the process has just commenced. Public and judicial pressure in these areas would also increasingly mount, with several related and major Public Interest Litigations (PIL) still remaining pending before the Supreme Court of India.

A few examples in this critical area: 

Thus, for any successful PE investments, especially for relatively long term, alongside conventional areas of due diligence, several non-conventional, but high business impact areas, need to be effectively covered for the Indian generic pharma companies, in general. Following are just a few examples in this critical area:

  • Business practices that the promoters personally believe in and practice
  • Belief and practices of key company personnel
  • Quality of regulatory approval
  • Product portfolio scrutiny
  • Marketing demand generation process and its long-term sustainability
  • Ability to introduce high-tech formulations with differentiated value offerings
  • Ability to come out with cost-effective manufacturing processes
  • Are Independent Directors, if any, really ‘Independent’?

I shall now very briefly try to illustrate each of the above points.

I. Business practices that the promoters personally believe in:

A large number of successful generic pharma companies are directly or indirectly driven, or in all practical purposes managed, and in several cases even micromanaged by the company promoters. Many experts have opined, though a craftily worded handbook of ‘corporate governance’ may exist in many of these companies, on the ground, promoters’ thoughts, belief, ethical standards, business practices and work priorities may easily supersede all those. 

The practice of good governance on the ground, rigid compliance with all rules, laws and regulations may quite often go for a toss. The employees implementing promoter’s decisions, may try their level best to record everything perfectly and as required. Nevertheless, sometimes regulators do succeed to ferret out the fact, which leaves an adverse impact on the business, in multiple ways.

Recent reports of the US-FDA on ‘data fudging’ in the drug manufacturing process, product quality standards and also in Clinical Trials, would illustrate this point. According to a 2015 EY Report on data integrity, ‘Import Alerts issued against Indian plants in 2013 accounted for 49 percent of the total 43 imports alerts issued by the US FDA worldwide.’

In some successful generic pharma company’s repetition of such incidences has also been reported. In my view, for recurrence of ‘data fudging’, no promoter of the concerned companies can possibly wash his/her hands off, putting all the blame on concerned employees, and the system.

A situation like this necessitates personal due diligence for promoters. It will help ascertain the persons’ business integrity, alongside the company performance as a whole. Accordingly, the PE investors would be able to flag those critical soft areas, which are key determinants for long-term sustainability of any pharma generic business in the country. 

II. Belief and practices of key company personnel:

The findings of the above EY Report also suggest, while most of the generic pharma company professionals are aware of the current Good Manufacturing Practices (cGMP) guidelines, more than 30 percent had still received ‘Inspectional Observations’ from the regulators in the last three years.

This fact calls for due diligence on another critical issue, and that is on the belief and practices of the key company personnel in the new product development, manufacturing, drug quality, marketing, supply chain management, and also covering their interaction with key regulatory and other Government personnel. These are soft issues, but with potential to make the whole business topsy-turvy, virtually overnight.

Conventional due diligence based on the company records may not always reflect the real situation within the organization.

III. Quality of regulatory approval: 

To illustrate this point, let me give the example of a launch of a ‘new drug’ in India. 

A ‘new drug’ has been defined in the Drugs and Cosmetics Acts in India, as any new drug substance which is being introduced for the first time in India, including any off-patent generic molecule, with the permission of only the Drug Controller General of India (DCGI). A ‘new drug’ shall continue to be considered as ‘new drug’ for a period of four years from the date of its first approval or its inclusion in the Indian Pharmacopoeia, whichever is earlier.

Thus, for even for any generic pharma product, be it a single ingredient or a ‘Fixed Dose Combination (FDC)’, if a marketing license is granted by any State Drug Controller, whatever may be the reason, despite the product being a licensed one, it will deem to be unauthorized as the DCGI’s approval was not obtained during the valid period of the 4 years, as per the Act.

Hence, a proper due diligence on the ‘quality of regulatory approval’ to detect presence of any such successful products in the product portfolio, would enable the PE investors in India to flag a possible risk of a future ban, inviting adverse business impact.

IV. Product portfolio scrutiny:

This scrutiny may not be restricted to some conventional areas, such as, to find out the ratio between the price control and decontrol products, leaving future scope to improve the margin. It may also focus on many other important India-specific areas.

One such area could even be the non-standard FDCs in the product portfolio. Some of these FDCs could also be approved by the state drug controllers earlier, scrupulously following the drug laws and rules. However, if the medical rationale of any of these successful products can’t be credibly established, following the global standards, the risk of a future ban of such products would loom large.

Another area could be the percentage of those products in the product portfolio, where the medical claims are anecdotal, and not based on scientific data, generated through credible clinical trials. 

One may draw a relevant example from the Nutraceutical product category. Although, these products are high margin and currently do not come under price control, the stringent regulatory demands for this category of products have already started coming. Strict conformance to the emerging regulatory requirements of both the DCGI of FSSAI may be cost intensive, squeeze the margin, could also pose a great challenge in the conventional demand generating process. I hasten to add that such decision would possibly be dictated by the time scale of PE investment, and the risk-appetite of the investors.                                                            

Yet another example prompts the need to check the quality of generic brands in the product portfolio. According to the Drugs and Cosmetics Act of India, some of these brands would merit to be categorized as drugs. In practice, the company concerned could well be surreptitiously classifying those as nutritional supplements, or Nutraceuticals, with the support of some State Drug Controllers and promoted accordingly, simultaneously avoiding any risk of drug price control. 

V. Marketing demand generation process and long-term sustainability:

This assumes critical importance in the pharma industry, especially when the Government is mulling to give the current voluntary ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’ legal teeth, by making it mandatory for all. As I understand, besides other penal action, in serious cases of gross violations of the code, even the marketing license of the offender may get suspended, or cancelled. Thus, compliance to UCPMP would be critical to business performance. Thus, the level of compliance of a company in this regard could well be a part of the due diligence process of the PE investors.

It is also important to understand, whether the pharma generic target asset is predominantly buying doctors’ prescriptions through various dubious means to increase its brand off-takes, or the prescription demand generation process primarily stands on robust pillars of a differentiated value delivery system. The latter is believed to be more desirable for sustainable long term business success.

It is also important to understand, whether the strategic marketing process adopted by the company can withstand robust ethical, legal and regulatory scrutiny, or it is just an outward impressive looking structure, unknowingly built as ‘House of Cards, waiting to be collapsed anytime, sooner or later.

I would now give just a couple of other examples in this area, out of so many – say, a health product, which has been categorized as a drug by the drug authority, is freely advertised in the media, at times even with top celebrity endorsements. This strategy is short term, may eventually not fly, and is certainly not sustainable in the longer term, avoiding regulatory scrutiny. Another example, big brands of Nutraceuticals are being promoted with off-label strong therapeutic claims, and have become immensely successful because of that reason.

VI. Ability to introduce formulations with high-tech value offerings:

India is basically a branded generic market with huge brand proliferations of each molecule, or their FDCs. Just like any other brand, for business success and to overcome the pricing barrier, differentiated value offerings are essential for long term success of any branded generic too. This differentiation may be both tangible and intangible. However, if such differentiation is based on high-technology platforms, it could provide a cutting edge to effectively fight any cut throat competition. Thus, appropriate due diligence to ascertain the robustness of the ability to introduce high-tech formulations with differentiated value offerings, would be an added advantage.

VII. Ability to come out with cost-effective manufacturing processes: 

This is not much new. Many PE investors would possibly look at it, in any case. Just like formulations, ascertaining similar ability to come out with cost-effective manufacturing processes to improve margin would also be very useful, especially for long term investments.

VIII. Are Independent Directors, if any, really ‘Independent’?

If the target company has ‘Independent Directors’ in its Board, as a mandatory legal requirement or even otherwise, there is a need to dispassionately evaluate how independent these directors are, and what value they have added to the company or capable of providing in the future, according to their legal status in the Board.

True independence, given to the high caliber ‘Independent Directors’ in the Board of promoter driven pharma companies, could usher in a catalytic change in the overall business environment of the company. It would, consequently, bring in a breath of fresh air in the organization with their independent thoughts, strategic inputs and involvement in the key peoples’ decisions.

As it is much known, that a large number of ‘Independent Directors’ are primarily hand-picked, based on their unqualified support to the Indian promoters. Many board resolutions, in various critical business impact areas, are passed as desired by the powerful promoters, may be for short term interest and fire fighting. In that process, what is right for the organization for sustainability of business performance, and in the long term interest of all the company stakeholders, may get sacrificed.

When this happens in any target company, mainly for short term business success, taking advantage of regulatory loopholes and inherent weaknesses in the system, a flag needs to be raised by the PE investors for further detailed analysis in the concerned areas.

Conclusion:

Going forward, it appears to me that PE investors would continue to look for attractive pharma investment opportunities in India, though with increasing level of competition. These investors would include both global and local PE firms. Some of them may like to stay invested for longer terms with lesser regulatory and other associated risks and a modest return, unlike a few other high risk takers, sniffing for commensurate windfall returns. 

In India – today’s land of seemingly unparalleled economic opportunities, the PE players should also take into consideration the prevailing complexities of the domestic pharma industry seriously and try to analyze the same properly, for appropriate target asset identification. Many successful local generic players may outwardly project sophisticated, and high standard of business practices. However, these need to be ascertained only through a structured format of India-specific due diligence process.

Corporate governance processes, regulatory compliance, marketing practices and financial reporting systems of many of these companies, may not pass the acid test of stringent expert scrutiny, for long term sustainability of business.

This mainly because, a number of generic pharma companies in India have been thriving, taking full advantage of some major loopholes in the regulatory area, marketing practices, overall product portfolio selection and new generic product development areas, besides many others.

These successful domestic drug companies have indeed the potential and overall attractiveness to come under the radar of many PE investors, who, in turn, should also realize that all the loose knots, fully being exploited by many such companies, are expected to be tightened by the governments, sooner or later.

Keeping this possibility in perspective, to embrace success with lucrative returns, I reckon, there is a changing need of due diligence to follow by the PE investors for right valuation, and much before any pharma generic company is identified by them.

That done, the Indian generic pharma market could soon emerge as an Eldorado, especially for those PE investors, who are looking for a relatively long term attractive return on investments.

By: Tapan J. Ray 

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

 

‘Indian Drug Control World’s Weakest: Pharma Trade Bodies Working At Cross Purposes’

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“In the entire world, I think our drug control system probably is the weakest today. It needs to be strengthened,” said the Secretary of the Department of Pharmaceuticals (DoP) – V K Subburaj at an event in New-Delhi on April 19, 2016. 

In his speech, the Secretary also singled out the pharma industry associations for working in opposite directions, adding that “if we take one decision, it is appreciated by one but the other one criticizes us”.

This is indeed an irony. Such scathing comments from an important and a top Government official indeed stand out. This is primarily because, in the midst of the prevailing scenario, where a large section of the Government is saying ‘we are the best’ or ‘best among the worst’ or, at least, ‘fast improving’, a seemingly helpless key decision maker for the pharma industry was constrained to publicly say, what he had said, as above.

Nonetheless, public expressions, such as these, coming from a top Government official well-captures the sad and pathetic scenario of the systemic failure of pharma industry regulators to bring order in the midst of continuing chaos. Virtually free-for-all business practices, blatantly ignoring the patients’ health and safety interest in the country, continue to thrive in a self-created divisive environment.

Unsparing remarks in two critical areas:

As reported by the ‘Press Trust of India (PTI)’, the DoP Secretary, with his unsparing remarks, publicly expressed his anguish for the delay in taking remedial measures, at least in the two critical areas of the pharma industry in India, as follows:

  • Questionable quality of drugs
  • Questionable pharma marketing practices 

He also highlighted, how just not some Government Departments, but the pharma trade associations, which are formed and fully funded by the pharma players, both global and local, are working at cross-purposes to perpetuate the inordinate delay in setting a number of things right, to satisfy the healthcare needs of most patients.

I briefly dwelled on this critical conflict in my article in this blog of March 28, 2016 titled, “Ease of Doing Pharma Business in India: A Kaleidoscopic View”

A. Questionable quality of drugs:

There wasn’t enough debate in the country on the questionable drug quality in India. It began when the US-FDA started banning imports of a number of medicines in the United States from several drug manufacturing facilities in India. These pharma plants are of all sizes and scales of operations – large, medium, small and micro.

Almost on a regular basis, we now get to know, both from the national and international media, one or the other pharma manufacturing facility in the country, has received the ‘warning letter’ from the US-FDA on its ‘import ban’.

Dual drug manufacturing quality standards?                                            

The spate of ‘Warning Letters’ from the US-FDA have brought to the fore the existence of two different quality standards of drug manufacturing in India:

  • High quality plants dedicated to exports in the well-regulated markets of the world, such as, the United States, following the US-FDA regulations.
  • Other plants, with not so stringent quality standards of the Drug Controller General of India (DCGI), cater to the needs of the Indian population and other developing non-regulated markets. 

In this situation, when many Indian manufacturers are repeatedly faltering to meet the USFDA quality standards, the following two critical questions come up:

  • Are the US-FDA manufacturing requirements so stringent that requires a different compliance mindset, high-technology support, greater domain expertise and more financial resources to comply with, basically for protection of health and safety of the American patients?
  • If so, do the Indian and other patients from not so regulated markets of the world, also deserve to consume drugs conforming to the same quality standards and for the same reason? 

Answers to these questions are absolutely vital for all of us.

Pharma associations working at cross-purposes? 

Considering this from the patients’ perspective, there lies a huge scope for the pharma associations, though with different kind of primary business priorities, to help the Government unitedly in resolving this issue.

It appears from the deliberation of the DoP Secretary that the health ministry is already seized of the matter. The concerned departments are also apparently batting for quality, and trying to strengthen some specific capacity building areas, such as, increasing the number of inspectors and other drug control staff.

Reports also keep coming on the poor quality clinical trial data in India, including data fudging, as was recently detected by the foreign drug regulators. Intriguingly, nothing seems to be changing on the ground. In these areas too, the industry can unitedly try to protect the innocent patients from the wrongdoers, demonstrating enough credible and publicly visible real action.

From the anguish of the DoP Secretary on the critical quality related issue, it appears, there is a huge task cut out for the Indian drug regulators to ensure uniform and high drug quality standards for health and safety of all Indian patients’, just as their counterparts in America.

It is unfortunate to note from his observation that pharma industry associations are not visibly working in unison on many such issues in India.

B. The UCPMP:

The Edmund J. Safra Center for Ethics of Harvard University, while deliberating on “The Pharmaceutical Industry, Institutional Corruption, and Public Health” dwelled on the legal, financial, and organizational arrangements within which the pharmaceutical industry operates. It said, this situation sometimes creates incentives for drug firms and their employees, that conflict with the development of knowledge, drug safety, the promotion of public health, and innovation. More importantly, they also make the public depend inappropriately on pharmaceutical firms to perform certain activities and this leads to institutional corruption.

Illustrating from Professor Marc Rodwin’s project, the article said pharma players provide substantial discretionary funding for important medical activities, such as, continuing medical education, medical research, medical journals, and professional medical societies, which can encourage unwanted and undesirable compromise and bias in favor of their interests.

The same sentiment was also well-captured in an editorial of the well-reputed international medical journal BMJ of June 25, 2014. It unambiguously articulated, “Patients everywhere are harmed when money is diverted to the doctors’ pockets and away from priority services. Yet this complex challenge is one that medical professionals have failed to deal with, either by choosing to enrich themselves, turning a blind eye, or considering it too difficult.”

The editorial underscored the point that success in tackling corruption in healthcare is possible, even if it is initially limited, as anti-corruption bodies in the United Kingdom and US have shown to a great extent. With this, BMJ planned to launch a campaign against ‘Corruption in Medicine’, with a focus on India.

The DoP initiative:

Initiating a step in this direction, on December 12, 2014, the DoP announced details of the ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’, which became effective across the country from January 1, 2015. The communique also said that the code would be voluntarily adopted and complied with by the pharma industry in India for a period of six months from the effective date, and its compliance would be reviewed thereafter on the basis of the inputs received.

Not a panacea:

It is worth noting, since the last three and a half decades, ‘Code of Pharmaceutical Marketing Practices’, prepared by various global pharma trade associations and most of the large global pharma companies individually, have come into existence purported for strictest voluntary adherence. These are being relentlessly propagated by them and their trade associations, as panacea for all marketing malpractices in the drug industry. Squeaky clean ‘pharma marketing codes’ for voluntary practices can be seen well placed in the websites of almost all large global pharma players and their trade associations.

The concept of a pharma marketing code and its intent are both commendable. However, the key question that follows: are all those working in practice? If the answer is yes, why then mind boggling sums in billions of dollars are being paid as settlement fees by a large number of global pharma companies for alleged colossal marketing malpractices in different countries of the world?

Mandatory UCPMP:

As happens with any other voluntary pharma marketing code of a global drug company or their trade associations, however mighty they are, similar non-compliance was detected by the DoP with voluntary UCPMP.  This gross disregard on the code, apparently prompted the DoP making the UCPMP mandatory, with legal implications for non-compliance, which could possibly lead to revocation of marketing licenses. 

A move in this direction, obviously necessitated meaningful discussion of the DoP with all stakeholders, especially the pharma trade associations. According to the Secretary, the discussions got unduly protracted, crippling his decision making process to put the mandatory UCPMP in place, soon.

Divergent views of pharma associations?

Thus, it is now quite clear that one of the reasons for the delay in making the UCPMP mandatory is the divergent views of various pharma trade associations.

In the Secretary’s own words, “To take an example of uniform marketing code, we thought we could arrive at a common solution. But even after 7-8 meetings, we failed to come to a conclusion. It’s only now that we have arrived at a code.” 

However, the bottom-line is, as on date, we don’t know when would the mandatory UCPMP come into force in India.

Conclusion:

The reverberation of virtual helplessness in the recent utterances of the Secretary of the DoP, has naturally become a cause of great concern, especially for the patients. There is still no sign of early resolution of the critical issue of dubious quality, both in the drug manufacturing and clinical trials in India.

The concerned ministries would require to demonstrate unwavering will and unflagging zeal for good governance with accountability, to set things right, without any further delay. When US-FDA can, why can’t the DCGI succeed in doing so? The Government is expected to ensure that justice prevails in this area, for the patients’ sake, soon enough.

Similarly, wrong doings in pharma marketing practices also need to be addressed by the DoP, initially making the UCPMP mandatory having strong legal teeth, to start with, notwithstanding the fact that the trade associations mostly work at cross-purposes, in this area too.

As I hear from the grapevine, especially the MNC trade associations, both inside and outside the country, are trying hard to take, especially, the owners of the large Indian pharma companies on board, in several ways, basically to further their crusade on various self serving issues, such as dilution of Indian Patents Act.

That said, taking serious note of the observation of the DoP Secretary that the Indian drug control is the “weakest in the world”, together with the challenges that he is facing in containing pharma marketing malpractices, I hope, the honorable Prime Minister’s Office (PMO) may wish to intervene soon, in order to promptly contain these snowballing public health menace.

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.

Ease of Doing Pharma Business in India: A Kaleidoscopic View 

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Ensuring ease of doing any ethical business activity in India, is a new focus area of the Government and is very rightly so. Creating ease of doing ethical pharma business too, falls under this overall national objective.

In this article, restricting myself to the drug sector, I shall deliberate on various aspects, which are now being considered by the pharma industry, related to the ‘ease of doing pharma business in India’. My discussion would cover all subsets of pharma players, irrespective of whether they fall under Multinational (MNC) or purely homegrown Indian companies, with different scales of operations – large, medium, small, or micro. 

To help the Government facilitating the ‘‘ease of doing pharma business in India’, it is just not enough to make the business models for all subsets of the Indian pharma sector looking ethical, conforming to all relevant laws, policies, rules and norms. Each pharma player need also to maintain an ongoing strict internal vigil, religiously, to ensure that the requirements of high quality clinical development, manufacturing and selling practices for effective, safe and rational medicines, are properly understood and strictly followed by all the employees within the organization.

A Kaleidoscopic View:

The above situation is something that ought to happen, as the Government keeps striving to improve the ‘ease of doing pharma business’ in India. However, while looking through a Kaleidoscope, as it were, the colors of industry expectations in this area keep changing rapidly, as the new contentious issues keep emerging. Consequently, the ground reality of assessing the same, by a large section of the pharma players in India, seems to veer only around different types of just self-serving demands, expecting those to act as a powerful tailwind pushing their business interests rapidly forward.

Such expectations keep surfacing, rather frequently, from all the subsets of the pharma industry, be they MNCs and their trade associations or the Companies of purely Indian origin and their trade bodies. The accusation to the Government pertaining to all these issues, is a common one: ‘Where is the ease of doing pharma business in India?’

Citing even some recent incidents, they are voicing with equal gusto, that the root causes of all these problems lie miles outside the pharma industry. The causative factor, they indicate, is rooted at the very doorsteps of the Government, as its ministries initiate tough action to root out corruption in the pharma industry as concurrent measures, disturbing their business comfort zones, and upsetting the apple carts. 

The Government has its task cut out:

I hasten to add that I have no intention to paint it as a confrontation between the Government and the pharma industry, in any way. The Government is also facing the brunt from the various stakeholders, relentlessly, for its utter negligence of public health care, and public expenditure over it.

The impact of this Government indifference, though also comes on the patients, the industry does not seem to have much to crib over it as a direct impediment to the ‘ease of doing pharma business’ in India.

Probably as a diversionary tactic, the industry keeps using this critical Government inaction in the hope of diverting the public, or media attention from its own alleged business malpractices, even at a time when these are being covered both by the national and international media, regularly. Nevertheless, the industry credibility on these issues, seems to have started waning fast, as the genie is out of the bottle.

A common punching bag of all industry dissatisfaction on the Government:

It is worth noting that despite some key differences between the MNC and Indian pharma companies, which I shall discuss later, the common punching bag of the industry dissatisfaction on various Government decisions, always has been the lack of ‘ease of doing pharma business’ in the country.

This discontentment may be well justified. I have no qualms about it. However, when this dissatisfaction gets tagged with some recent Government action, taken to protect public health interests and does not have much to do with the ‘ease of doing ethical pharma business’, many eyebrows are obviously raised.

Against some of these critical patient-centric actions, the industry continues to express its annoyance in unison, while for some other Government decisions, it speaks in different voices – some are happy ones, and the others are not so. However, the common thread of expression of all such dissatisfactions is always linked with the lack of ‘ease of doing business’ in India.

A. Where the pharma Industry in India speaks in unison: 

I shall now give two major examples of the key Government decisions, that have irked the entire pharma industry immensely, and makes it voicing that those Government actions grossly violate the fundamental requirements of its smooth running of business. Is that fair? Let me analyze that below with these two examples:

1. Drug price control:

The industry, by and large, opines that individual drug company should be allowed to decide the way it would price any drug, as the market forces, especially for generic drugs, would determine its price.

Indian Parliament, the Supreme Court of India, the Government in power at different times, most of the independent experts and the NGOs, on the contrary, consider drug price control is necessary in India, especially for essential drugs. It makes high quality essential medicines affordable and accessible to the general population.

National Pharmaceutical Pricing Authority (NPPA) has also announced and explained that the competition does not work on controlling prices for pharma products, where the consumers are not the decision makers. The key prescribing decision makers for the patients are the doctors, who are mostly and unethically influenced by the drug companies having vested interest in making such decisions. This unholy nexus has been widely alleged globally, and also established through umpteen number of studies of high credibility.

Nevertheless, the doctors, from across the globe, including in India, have long disputed that any payments, if and when they receive from pharmaceutical companies, have no relationship to how they prescribe drugs.

A March 17, 2016 study of ProPublica has conclusively established that: “The more money doctors receive from drug and medical device companies, the more brand-name drugs they tend to prescribe. Even a meal can make a difference.” This study may be in the context of the Unites States, but India in this in this regard is no exception, as captured even in the parliamentary Committee reports.

Thus, conceding to high voltage pharma advocacy, made on the pretext of ‘encouraging innovation’ and ‘ease of doing business in India’, if any Government contemplates the abolition of drug price control in India is, it would make not just essential drugs inaccessible to a large section of society, but encourage blatant corrupt practices. This caution has come, besides many others, also from a Parliamentary Committee report, unambiguously. Incidentally, the present Government too strongly speaks against corruption, in any form.

Thus, I reckon, if the industry believes that the price control of essential drugs, which are for public health interest, goes against ease of doing pharma business in India, so be it.

2. Manufacturing and selling of irrational FDCs:

A Fixed Dose Combination (FDC) drug may appear irrational to drug regulators and well-qualified experts, after necessary scientific scrutiny, for various reasons. This may happen, primarily because of the following reasons:

  • When the medical rationale of the FDC along with the ingredient details, submitted to the regulatory authority for marketing approval, are considered scientifically inappropriate.
  • When the evolving medical science establishes the irrationality of the FDC after a period of time.
  • When the analysis of ‘Adverse Drug Event’ reports from the ongoing Pharmacovigilance studies signals a red alert.
  • Widespread uncontrolled misuse or abuse of FDCs, where the consumers’ health risks far outweigh the drug benefits, as provided in the drugs Act, for public health interest.
  • Some regulatory loopholes were misused by the drug manufacturers in the past to get the irrational FDCs approved by the State Drug Authorities, violating the new FDC regulatory approval Policy.

Any irrational FDC so identified by the drug regulators and experts, by putting a system of scrutiny in place, must be banned forthwith, in public health interest. There should not be any scope of negotiation with drug manufacturer to make the bans effective.

Incidentally, realizing the gravity of public health risks posed by irrational FDCs, even the NPPA has reportedly decided to review afresh all new applications for price fixations of FDC and examine their safety and efficacy profile.

Moving towards this direction, the NPPA Chairman, has reportedly sent back more than 200 applications for price fixation of FDCs, instructing the concerned manufacturing and marketing companies to apply again with a declaration that their formulations are not “irrational.” It was also reported that the price regulator has also brought under the lens third-party drug makers and pharma companies that outsource to them, to check illegal sales of irrational FDCs and spurious drugs.

Two key questions being raised now:

Despite all these, the industry keeps repeating, especially, the following two questions, which are worth looking at, one by one: 

1.  Why is the ban now?

I discussed the issue of FDC ban in my previous article in this Blog on March 21, 2016 titled, “The Recent Ban On Irrational FDCs: History Repeats Itself”.

In the above article, I also argued that large section of the industry and its associations are protesting against the Government ban of 344 irrational FDCs, and questioning vigorously, even outside the Delhi High Court – ‘why is the ban now?’

The point ‘why now’ is absolutely irrelevant, as not taking any action ever, against a wrong doing ignored over a long period time for whatever reasons, does not confer any regulatory legitimacy to an irrational FDC formulation to be considered as a rational one for all time to come, and thereby, exposing patients to serious health risks, knowingly.

2.  Why is this ban so sudden, and in some cases after decades?

Sudden banning of drugs, which are in the market for a long time, is not a recent Indian phenomenon in India. In 2011, according to a report, in the world’s largest pharma market – the United States, the FDA banned 500 prescription drugs that had been on the market and working for decades. USFDA ban also happened suddenly, and that includes cough syrups too.  Thus, it is intriguing, why is this fuss created by the Industry in India now? 

In the midst of it, one odd, knee-jerk, apparently ‘spoon-fed’ and ill-informed editorial in some Indian business daily, raises more questions about its real intent, rather than help finding answers to the poorly sketched problems.

I would hope, the Government would stay firm and be able to convince the Delhi High Court today, i.e. on March 28, 2016, with its robust data-based arguments, accordingly.

Be that as it may, in my perspective, if the industry still believes that bans of irrational FDCs to protect public health interest, as decided by the independent experts after long and structured deliberations, would go against ‘ease of doing pharma business’ in India, so be it. 

B. Where the pharma industry in India speaks in different voices:

As stated above, there are several other key areas, where the MNC and Indian Pharma players have sharp differences in their perspectives. Despite these differences, the aggrieved section does not even blink a bit to attribute those Government actions to the lack of ‘ease of doing pharma business’ in the country.

 In this area, I shall give just the following three examples: 

1. The Patents Act:

MNCs say that section 3 (d) of the Indian Patents Act 2005, which is aimed at curbing patent ever-greening or frivolous inventions, is against the ease of doing business in India. However, the Indian Pharma players, do not think so, at all. Similar disagreement also exists in other critical areas too, such as, ‘Data Exclusivity (DE)’ and ‘Compulsory Licensing (CL)’.

Thus, in my opinion, if some ‘public health interest’ related provisions of the robust Indian Intellectual Property (IP) Act, such as, section 3 (d), DE and CL, are considered as going against the ‘ease of doing pharma business in India’ by the MNCs, so be it.

2. Mandatory Uniform Code of Pharma Marketing Practices (UCPMP):

Need to have a mandatory UCPMP, though, is reportedly supported by the MNCs, Indian pharma players do not seem to be quite in sync with this idea. I am not sure, whether the delay in the announcement of mandatory UCPMP, almost in every 3 months, has any coincidence with it or not. However, the reality is, no one still knows clearly, when would it definitely come, if at all.

Media reports on pharma MNC support to mandatory UCPMP, and repeated reiteration that its members in India rigidly follow the IFPMA Code of Marketing Practices, though commendable, seem to grossly lack in credibility.

Interestingly, despite the existence of this code and high-decibel vouch for its rigid conformance, maximum number of MNCs have been fined billions of dollars, by the Government in various countries, for alleged gross marketing and other business malpractices. It has been happening over a long period of time, and is being reported by the international media, frequently.

What is really happening, especially, on the so called total support of ethical marketing practices by the MNCs? Are they trying to create just good optics by craftily framing and supporting such showpiece codes, and blatantly defying these to achieve self-serving goals? The voice gets shriller, even when they are being levied hefty fines, after getting caught red handed, as reported by the global media? I guess, the future would ultimately unfold the reality. But would it, at all?

The Indian Scenario: 

Even in India, such alleged marketing malpractices involving even a top pharma MNC have often been reported by the media. Just to illustrate, “Prescribe a drug maker’s medicine and get a free vacation”, reported a news article. There are several other similar reports too. Hence, the credibility of pharma MNC statements regarding strict conformance to ethical marketing codes, ably formulated by the well-known pharma trade associations, such as, IFPMA, appears to be very low, if exists at all.

The well-reputed medical Journal BMJ in one of its articles titled, “Corruption ruins the doctor-patient relationship in India”, published on May 8, 2014, expressed serious concern on this issue.

It concluded that corruption, kickbacks and the nexus between doctors and pharmaceutical firms are rampant India. This eventually prompted the BMJ, in June 2014, to launch a campaign reportedly called ‘Corruption in Medicine’.

On this issue, way back in May 08, 2012, even the Indian Parliamentary Standing Committee on Health and Family Welfare in its 58th Report, placed before the Parliament on May 08, 2012, expressed its serious concern.

Indian lawmakers, recommended in the report that the Department of Pharmaceuticals (DoP) should take decisive action, without further delay, in making the UCPMP mandatory, so that effective checks could be ensured on ‘huge promotional costs’ and the resultant add-on impact on medicine prices. Unfortunately, despite a change in the Government in 2014, UCPMP has still not been mandatory.

It is anybody’s guess, despite all these reports, what type of external pressure, if at all, the DoP is still facing to put in place a robust mandatory UCPMP with strong deterrent measures.

Under this backdrop, in my view, if mandatory UCPMP having enough teeth, to curb ongoing blatant marketing malpractices to protect patients’ health interest in India, is considered by any as going against the ‘ease of doing pharma business in India’, so be it. 

3. Drug manufacturing quality:

Enough discussions have already been made on import ban of USFDA from over 45 drug manufacturing facilities of Indian Companies, of all sizes and scale of operations, on the ground of drug quality standards. USFDA considered drugs manufactured in those banned facilities are unsafe for the consumption of American patients. Some other foreign drug regulators, from the developed countries, have also taken similar action.

Taking advantage of this development, it was reported that attempts are indirectly being made to establish that MNC marketed generic drugs are superior to similar ones, manufactured even by the large Indian drug producers.

The fact, apparently, is quite different. MNCs operating in India has not come under the USFDA scanner in this regard as much, probably not because of their far superior drug manufacturing quality standards in India, as compared to even the best of their Indian counterparts. I reckon, it is mainly because, very few MNC drug manufacturing facilities in India export India manufactured drugs for consumption in the United States. 

It may not, therefore, make any real sense to conclude that MNC marketed generic drugs in India, either manufactured my themselves or under loan & license or under a third party, are generally better in quality than the similar ones manufactured even by the large Indian manufacturers. 

In any case, I feel that there is a huge scope for Indian drug regulators to ensure uniformly high drug quality standards. This is necessary for Indian patients’ health and safety. There also should be stringent regular quality audits in all drug manufacturing facilities in India, where non-conformance with prescribed standards would attract serious punitive measures. The Union Ministry of Health, together with the State Governments would require increasing the number of auditors accordingly.

However, the reality is, many Indian drug manufacturers have expressed that maintaining stricter drug manufacturing standards (cGMP) would involve huge expenditure, which they will not be able to afford. Consequently, this would go against the ‘ease of doing pharma business’ in India.

Again, in my view, if the stringent regulatory requirements for maintaining high drug manufacturing standards in India to protect public health interest, is considered as going against the ‘ease of doing pharma business’ in India, so be it.

Conclusion:

Improving ‘ease of doing pharma business’ in India is an absolute necessity, just as all other businesses. Pharma sector deserves it very badly too, as it has been experiencing excruciating delay in multiple regulatory clearances. Single window clearances of all applications, with a much greater sense of urgency, without bureaucratic red tapes and avoiding other unnecessary delays, is certainly the way forward for India. It would require urgent policy reforms, maintaining a right balance between, public, consumers and business interests.

Pharma sector is not all villain, either, by any yardstick. It is instrumental in saving and improving the quality of lives of so many people across the globe, since a very long time, with its both innovative and generic medicines. All must acknowledge it, and the Government does it too, openly, several times. 

That said, the space of focus of the pharma industry appears to be getting increasingly narrowed down to more of its self-serving acts, and in their hard selling, through hugely expensive advocacy campaigns, even at the huge cost of attracting frequent self-defeating scathing criticisms, across the world.

At the same time, the Governments in different times hugely disappointed its citizens, in charting a clear road map for quality and affordable health care for all in India, along with appropriate budgetary allocations and policy reforms, and thereafter, in its implantation with military precision.

However, that doesn’t mean, in any way, while facilitating ‘ease of doing pharma business’ in India, the Government would turn a blind eye on the rapidly breeding corruption in the pharma business practices, and give in to unjustified industry muscle-flexing, sacrificing the health interest of its citizens in the country.

While looking through this Kaleidoscope, it appears to me, if the pharma sector considers the appropriate Government actions to protect public health interest, against the unacceptable industry practices, would also go against the ‘ease of doing pharma business’ in India… Well, so be it.

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.

 

For Drug Safety Concern: “Whistleblower’s Intention Should Be Nationalistic”

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In the recent weeks, three significant developments related to the Pharmaceutical Industry in India, have triggered rejuvenated concerns in the following critical areas: 

A. Overall drug safety standards in the country

B.  Self serving interest, rather than patients’ interest, dominate the prescribing decisions

C. Government assurance to American Trade Organization on ‘Compulsory License (CL)’ in India. 

These important issues fall under three key regulatory areas of India, as follows:

  • The Central Drugs Standard Control Organization (CDSCO)
  • The Medical Council of India (MCI)
  • The Indian Patent Office

It is worth mentioning here that the Department Related Parliamentary Committee on Health and Family Welfare in its 59th Report, placed before both the houses of the Parliament on May 08, 2012, on the functioning of the Central Drug Standards Control Organization (CDSCO), begins with the following observations:

Medicines apart from their critical role in alleviating human suffering and saving lives have very sensitive and typical dimensions for a variety of reasons. They are the only commodity for which the consumers have neither a role to play nor are they able to make any informed choices except to buy and consume whatever is prescribed or dispensed to them, for the following reasons:

  • Drug regulators decide which medicines can be marketed
  • Pharmaceutical companies either produce or import drugs that they can profitably sell
  • Doctors decide which drugs and brands to prescribe
  • Consumers are totally dependent on and at the mercy of external entities to protect their interests.

Most importantly, all these concerns, if not properly clarified and appropriately addressed by the Government, soon enough, have the potential to create an adverse snowballing impact on the uniform access to affordable quality medicines, for all sections of the society in India.

Under this backdrop, I shall discuss in this article briefly, my perspective on each of these critical areas, as they are today, and not just the drug safety concerns.

The headline of this article is expected capture not only the prevailing mood of some key regulators, but also their inertia to address critical healthcare concerns and above all how the core public health related issues are getting lost, and the trivial ones are gradually occupying the center stage.

A. Overall drug quality and safety  standards in India:

A Public Interest Litigation (PIL) suit, filed against the Drugs Consultative Committee and the Central Drugs Standard Control Organization (CDSCO), was listed on the Supreme Court website for hearing on March 11, 2016.

The PIL has been filed by one Dinesh Thakur, requesting the Supreme Court to lay down guidelines by which manufacturers could be made liable for violating drug standards and also give a direction to the government to set up a ‘Drug Approvals Review Committee’ for examining criminality in the manner in which faulty drug approvals were granted. 

Many may recall that the same Dinesh Thakur worked for Ranbaxy from 2003 for two years, and is now the Chief Executive of MedAssure Global Compliance based in Florida, US. Thakur’s Company now advises pharma manufacturers on drug safety and quality standards.

As reported by Reuters, Thakur had earlier exposed how the erstwhile largest drug maker of India, Ranbaxy Laboratories, failed to conduct proper safety and quality tests on drugs and lied to regulators about its procedures. Consequently, USFDA fined Ranbaxy US$500 million for violating federal drug safety laws, and making false statements to the US regulator.

This news report further states: “Indian Parliamentary Committee, thereafter, reportedly demanded an investigation and the drugs regulator committed to one in 2013. Thakur received a statement from the health ministry last year, seen by Reuters, showing no inquiry had begun.”

On the last Friday, however, the Supreme Court of India refused to entertain this PIL of Dinesh Thakur, saying it does not have time to adjudicate academic issues, such as, need for guidelines to regulate quality of medicines.                                                  

The core issue:

The core issue here is not at all the above PIL, not at the very least. The issue is the much reported concern being expressed, over a period of time, regarding the drug safety standards in India. The reasons include breach of of data integrity, and gross violation of the ‘Good Manufacturing Practices’ standards. Such instances are being detected, almost regularly, by the foreign drug regulators, in several manufacturing facilities run by many large and small Indian drug producers.

It is well vindicated by the fact that around 45 Indian drug manufacturing plants have been banned by the USFDA alone, from shipping generic drugs to the United States, as these were considered unsafe for consumption of patients in the US. Some other foreign regulators too had taken similar action, citing similar reasons. The USFDA website specifies the details of gross violations made in each of these cases.

Ironically, all such facilities can manufacture and sell their drugs in India, as they conform to the quality requirements of the Indian drug regulator. Consequently, the Indian patients consume even those medicines, which are considered unsafe by the USFDA for American patients, innocently, as and when prescribed by the doctors.

Arising out of these incidents, when asked about the drug safety standards in India, and the public health-safety, instead of giving credible and action oriented answers for public reassurance, some of the apparently brazen replies of the DCGI are quite stunning for many stakeholders, both within and outside the shores of India.

I would now quote below just a few of those replies, just as examples. 

“…Whistleblower’s Intentions Should Be Nationalistic” -  DCGI:

According to Reuters, it has received the following response from the Drug Controller General of India (DCGI), on the above PIL related to the drug safety standards in India:

“We welcome whistleblowers, we have got great respect, but their intentions should be genuine, should be nationalistic… I don’t have any comment on this guy.”

Thus, many industry watchers feel that in a situation like this, the honorable Supreme Court of India would possibly require to intervene, just as what it did on alleged ‘Clinical Trial’ malpractices in the country or for drug price control, solely for public health interest.

The same attitude continues:

Such brazen response of the Central Drug Regulator, and that too on a serious subject, is indeed bizarre. It becomes increasingly intriguing, as the same attitude continues without any perceptible meaningful intervention from the Ministry of Health.

For example, on February 22, 2014, in the midst of a more intense scenario on a similar issue, instead of taking transparent and stringent measures, the DCGI was quoted by the media commenting:

“We don’t recognize and are not bound by what the US is doing and is inspecting. The FDA may regulate its country, but it can’t regulate India on how India has to behave or how to deliver.”

On February 26, 2014, presumably reacting to the above remarks of the DCGI, the American Enterprise Institute reportedly commented, “Indian drug regulator is seen as corrupt and colliding with pharma companies…”

Such apparently irresponsible and loose comments keep continuing, despite the 2012 report of the Parliamentary Committee of India alleging collusion between some pharmaceutical companies and officials of the CDSCO, which oversees the licensing, marketing and trials of new drugs. The report also commented that the agency is both chronically under-staffed and under-qualified.

Some possible remedial measures:

As the saying goes, “better late than never”, considering all these continuing developments, it is about time to reconsider some of the key recommendations of Dr. R. A. Mashelkar Committee on a similar subject and make amendments in the relevant Act accordingly, soon, to facilitate creation of a robust with high accountability ‘Central Drugs Authority (CDA)’. It would introduce a centralized licensing system for drug manufacturing, along with stringent drug safety standards; besides, sale, export and distribution of drugs. Perhaps, the draft bill on CDA is now lying in the heap of archival documents with the change in Government.

Why does India need CDA?

I believe, the formation of a robust CDA with high accountability, besides meeting with drug safety concerns, would provide the following significant benefits, both to the Industry and also to the Government:

  • Achieving uniform interpretation of the provisions of the Drugs & Cosmetics Act & Rules
  • Standardizing procedures and systems for drug control across the country
  • Enabling coordinated nationwide action against spurious and substandard drugs
  • Upholding uniform quality standards with respect to exports to foreign countries from anywhere in India
  • Implementing uniform enforcement action in case of banned and irrational drugs
  • Creating a Pan-Indian approach to drug control and administration
  • Evolving a single-window system for pharmaceutical manufacturing and research undertaken anywhere in the country.

B.  Self serving interest dominates the prescribing decision: 

That the self serving interest, rather than patient interest, dominate the prescribing decision, was vindicated by a key announcement of the Medical Council of India (MCI) last month.

In February 2016, apparently succumbing to continuous and powerful external pressure, the MCI announced an amendment in a clause of its Code of Ethics Regulations 2002, exempting doctors’ associations from the ambit of its ethics code, as applicable to doctors now across the country. Prior to the amendment, this section used to read as: “code of conduct for doctors and professional association of doctors in their relationship with pharmaceutical and allied health sector industry”.                      

In other words, it means that the professional associations of doctors will no longer come under the ambit of ethics regulations, legitimizing their indulgence in the identified unethical and corrupt practices, by receiving gifts in cash or kind from the pharma or healthcare industry.

A large section of the key stakeholders believes that this amendment would help creating an additional large space for the pharmaceutical marketing malpractices to thrive, unabated, at the cost of patients.

The latest report of the Parliamentary Standing Committee on MCI:

In its 92nd Report, the Department-Related Parliamentary Standing Committee on Health and Family Welfare titled, “The Functioning of Medical Council of India”, presented to the Rajya Sabha and laid on the Table of Lok Sabha on 8th March, 2016, the Committee observed on this amendment as “an action that is ethically impermissible for an individual doctor cannot become permissible, if a group of doctors carry out the same action in the name of an association.”

The report also noted the failure of MCI to instill respect for a professional code of ethics in the medical professionals and take disciplinary action against doctors found violating the code of Ethics, etc.

The Committee called for a complete restructuring of the MCI, since it believes that the Council has failed as a regulator of medical education and the profession. Casting serious aspersions on the functioning of the MCI, the house panel of the Parliament recommended that the Act under which the MCI was set up be scrapped and a new legislation be drafted “at the earliest”. 

The report castigated the health ministry:

The lawmakers castigated the Health Ministry in this report saying, “The committee also finds it intriguing that instead of intervening to thwart attempts of MCI at subverting the system, the ministry meekly surrendered to MCI.”

While summing up, the report states, “the Committee exhorts the Ministry of Health and Family Welfare to implement the recommendations made by it in this report immediately and bring a new Comprehensive Bill in Parliament for this purpose at the earliest.”

How will it pan out now?

I reckon, it will now be immensely interesting now for all concerned to follow, how does the Government deal with this report to curb, among others, the strong interference of mighty and powerful vested interests to continue with the rampant pharma marketing malpractices, at the cost of patients in India.

C. Reported Government assurance on ‘Compulsory License’: 

On March 3, 2016, a media report quoted a submission by the US Chamber of Commerce to the office of the US Trade Representative (USTR) as follows:

“While the Government of India has privately reassured (American) industry that it would not use compulsory licenses for commercial purposes, a public commitment to forgo using (this) would enhance legal certainty for innovative industries.”

This is an interesting development, primarily because there are a number of legal provisions for granting Compulsory Licenses (CL) in the Indian Patents Act 2005, including, when a drug is not widely available, extremely expensive and some other situation. In some these provisions, law should follow its own course and there is no legally permissible scope for Government’s administrative interference. Grant of CL for Nexavar of Bayar is one such example, and incidentally, that’s the sole CL that India has granted, so far, from the date of amendment of the country’s Patents Act in 2005. 

Thus, a blanket assurance of not invoking any of the provisions of the CL, as provided in the Indian Patents Act 2005, if true, would possibly require to pass through intense legal scrutiny, as that would adversely impact the access to key medicines in a necessary situation, for the public health interest.

So far, India has amply demonstrated to all, time and again, that the country does not grant a CL at the drop of a hat. That situation should continue to encourage and protect innovation. 

Nevertheless, “a written public commitment to forgo using the CL provisions for enhancing legal certainty for innovative industries,” as demanded by the US Chamber of Commerce, appears to be unreasonable, goes against the spirit of India’s Patents Act, and perhaps is not legally tenable either, unless the IP Act is amended accordingly in the Parliament.

Conclusion:

All these three areas, as discussed above, are critical from the healthcare perspective of the country.

Ironically, while deliberating on the subject, the capability, credibility and competence of some of the key regulators of the country, are being repeatedly questioned. These doubts emanate not just from Tom, Dick and Harry, but from an illustrious spectrum of constitutional institutions of India, spanning across the lawmaking Parliament, through its various committee reports, to the ultimate legal justice provider – the Supreme Court of India, through is various orders and key observations.

Regrettably, in this specific space, which is primarily related to healthcare, nothing seems to be changing on the ground, since long. The same tradition continues, without any visible sense of urgency, even from the Government.

On the contrary, we now read a new genre of comments, even from a key regulator, on the stakeholder concerns. For example, reacting to concern on drug safety standards, instead of articulating tangible actions to usher in a perceptible change, the chief action taker reportedly specified a totally judgmental and an outlandish requirement: “…Whistleblower’s intentions should be Nationalistic.”

Together with these incidents, the key public healthcare concerns of India too, are now apparently getting drowned in the high decibel ‘Nationalistic’ versus ‘Anti-nationalistic’ cacophony. But, the hope still lingers… for a change…for our nation’s sound health!

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.