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Replication of ‘Old Paradigm’ of the developed pharmaceutical markets is unlikely to yield results in the evolving new paradigm of India

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“Health leaps out of science and draws nourishment from the society around it”

- Gunnar Myrdal (Swedish Nobel Laureate Economist)

The success concoction of the global pharmaceutical industry for India, by and large, still remains to be sustained attempts in various forms of replication of the ‘Old Paradigm’ of the developed world, even when a ‘Public Health Interest’ oriented new paradigm has started evolving in the country, faster than ever before.

Very interestingly, efforts to arrest this paradigm change still continue, even when healthcare related government policies are getting more and more ‘Public Health Interest’ oriented under increasingly assertive public opinion, together with healthcare cost containment initiatives of various governments also in the OECD (Organization for Economic Co-operation and Development) countries.

Commercial and public relations strategies for replication or recreation of more or less similar business excellence environment of the developed pharmaceutical markets of the world now in India, though some may say is possible and would work, but in my view is highly improbable, at least in the foreseeable future. To be equally successful in India, creation of India centric robust and differentiated business models, broadly aligning with the new evolving paradigm of the country, could probably make more commercial sense for all concerned.

“See things as they are, not way you want them to be”:

“Maintain and sharpen your intellectual honesty so that you’re always realistic. See things as they are, not way you want them to be”, wrote the Management Guru – Mr. Ram Charan in his book titled, ‘Execution: The Discipline of Getting Things Done’ co-authored by Larry Bossidy. In the same book the authors deliberated on ‘The 10 Greatest CEOs Ever’.

One of these 10 greatest CEOs ever, George Merck of the global pharmaceutical giant Merck & Co articulated his vision for the Company way back in 1952 as follows:

“Medicine is for people, not for the profits.”

George Merck believed, the purpose of a corporation is to do something useful, and to do it well, which also ensures decent profits.

I have personally witnessed the Merck (MSD) employees to start their business presentations quoting the above famous vision, even today. George Merck’s vision, I reckon, is more relevant today than any time in the past.

In the same context, another very senior official of a global pharmaceutical major was quoted in the Harvard Business Review in its April 28, 2010 edition saying:

“As western pharmaceutical companies consider how to be successful in emerging markets, they must address two key questions:

  • How will we bring high-quality health care to patients wherever in the world they may live?
  • How do we effectively manage the transformation of the traditional pharmaceutical business model to one that meets the diverse range of needs of the emerging markets?”

He further said, “Our approach to providing patients with access to our medicines is evolving. We have extended a flexible-pricing strategy for middle-income countries to improve the affordability of our medicines and increase access for patients with lower income levels, while remaining profitable.”

Though some companies have been able to carefully pick up this important signal and strategize accordingly, many others still prefer to follow ‘their own ways’.

Increasing healthcare consumption of India attracting global players:

Along with the economic progress of India, healthcare consumption of the population of the country is also increasing at a reasonably faster pace. According to McKinsey India Report, 2007, the share of average household healthcare consumption has increased from 4 per cent in 1995 to 7 per cent in 2005 and is expected to increase to 13 per cent in 2025 with a CAGR of 9 per cent, as follows:

Share of Average Household Consumption (AHC) (%)

Household Consumption 1995 2005 E 2015 F 2025 F

CAGR %

1.

 Healthcare

4

7

9

13

9

2.

 Education & Recreation

3

5

6

9

9

3.

 Communication

1

2

3

6

12

4.

 Transportation

11

17

19

20

7

5.

 Personal Products and Services

4

8

9

11

8

6.

 Household Products

2

3

3

3

5

7.

 Housing & Utilities

14

12

12

10

5

8.

 Apparel

5

6

5

5

5

9.

 Food, Beverages & Tobacco

56

42

34

25

3

(Source; McKinsey India Report 2007)

From this study, it appears that among all common household consumption, the CAGR of ‘healthcare’ at 9 percent will be the second highest along with ‘education’ and ‘communication’ topping the growth chart at 12 percent.

As per this McKinsey study, in 2025, in terms of AHC for ‘healthcare’ (13 percent) is expected to rank third after ‘Food & Beverages’ (25 percent) and ‘transportation’ (20 percent).

Thus, AHC for ‘healthcare’ shows a significant growth potential in India, over a period of time. Hence, this important area needs to attract as much attention of the policymakers, as it is attracting the pharmaceutical players from all over the world, to help translate the potential into actual performance with requisite policy, fiscal support and incentives.

Such a scenario in the pharmaceutical space is difficult to ignore by any player with an eye for the future.

Sectoral break-up of the Healthcare Industry:

Even while looking at the sectoral break-up of the healthcare industry, the significant share of the pharmaceutical industry should be quite enticing to many global companies.

According to IDFC Securities 2010, the sectoral break-up of the US$ 40 billion healthcare industry is as follows:

Industry

%
Hospitals

50
Pharma

25
Diagnostics

10
Insurance & Medical Equipment

15

(Source: IDFC Securities Hospital Sector, November 2010)

A promising market:

Pharmaceutical market of India holds an immense future promise already being globally recognized as one of the fastest growing healthcare markets of the world. All components in the healthcare space of the country including hospital and allied services are registering sustainable decent growth, riding mainly on private investments and now fueled by various government projects, such as:

  1. National Rural Health Mission (NRHM)
  2. National Urban Health Mission (NUHM)
  3. Rashtriya Swasthya Bima Yojana (RSBY)
  4. Universal Health Coverage (UHC)
  5. Free Medicine from the Government hospitals
  6. Centralized procurement by both the Central and the State Governments

Supported by newer, both public and private initiatives, like:

  • Increase in public spending on healthcare from 1.0 per cent to 2.5 per cent of GDP in the 12th Five Year Plan period
  • Increasing participation of the private players in smaller towns and hinterland of the country
  • Wider coverage of health insurance
  • Micro-financing
  • Greater spread of telemedicine
  • More number of mobile diagnosis and surgical centers

Need to strike a right balance:

The pharmaceutical companies need to strike a right balance between ‘Public Health Interest’ and their expectations for a high margin ‘free market-like’ business policies in India.

Pharmaceuticals come under the ‘Essential Commodities Act’ in India, where government administered pricing for all drugs featuring in the ‘National List of Essential Medicines 2011’ is expected and cannot be wished away, at least, for now.

Despite all these concerns, India still remains a promising market for the pharmaceutical players, both global and local. McKinsey & Company in its report titled, “India Pharma 2020: Propelling access and acceptance realizing true potential” estimated that the Indian Pharmaceutical Market (IPM) will grow to US$ 55 billion by 2020 and the market has the potential to record a turnover of US$ 70 billion with a CAGR of 17 per cent during the same period.

Domestic Pharmaceutical Industry has come a long way:

Domestic pharmaceutical companies have positioned themselves as formidable forces to reckon with, not just locally but in the global generics market too.

Currently India:

  • Ranks 3rd in the world in terms of pharmaceutical sales volume.
  • Caters to around a quarter of the global requirements for generic drugs.
  • Meets around 70 per cent of the domestic demand for Active Pharmaceutical Ingredients (API).
  • Has the largest number of US FDA approved plant outside USA
  • Files highest number of ANDAs and DMFs
  • One of most preferred global destinations for contract research and manufacturing services (CRAMS)

Patients are still being exploited:

Unfortunate and deplorable incidences of exploitation of patients, mainly by the private players, are critical impediments to foster growth in quality healthcare consumption within the country.

In this context, ‘The Lancet’, January 11, 2011 highlighted as follows:

“Reported problems (which patients face while getting treated at a private doctor’s clinic) include unnecessary tests and procedures, rewards for referrals, lack of quality standards and irrational use of injection and drugs. Since no national regulations exist for provider standards and treatment protocols for healthcare, over diagnosis, over treatment and maltreatment are common.” 

Prevailing situation like this calls for urgent national regulations for provider-standards and treatment-protocols, at least for the common diseases in India and more importantly their stricter implementation across the country by both the global and local players.

Pharmaceutical key business processes in India are almost a ‘free-for-all’ type:

Despite many challenges and damning reports of the Indian Parliamentary Standing Committees, overall key business processes in India are something like ‘free-for-all’ types, mainly because of the following reasons:

  • No pan-India voluntary or mandatory code exists for ethical Sales and Marketing practices
  • Many regulatory controls and standards are reportedly below par
  • Regulatory control on clinical trials done in India is reportedly sub-standard. In many cases even  adequate compensation towards trial related deaths is reportedly not paid to the victims families by the companies, mostly fixing responsibilities to the ‘Ethics Committees’.

Key factors to take note of in the changing paradigm:

While looking at the big picture, the global pharmaceutical players, I reckon, should take note of the following factors while formulating their India- specific game plan to be successful in the country without moaning much:

  • At least in the short to medium term, it will be unrealistic to expect that India will be a high margin / high volume market for the pharmaceutical sector in general, unlike many other markets, across the world.
  • India will continue to remain within the ‘modest-margin’ range with marketing excellence driven volume turnover.
  • The government focus on ‘reasonably affordable drug prices’ may get extended to patented products, medical devices / equipment and other related areas, as well.
  • Although innovation will continue to be encouraged in the country, the amended Patents Act of India is ‘Public Health Interest’ oriented and different from many other countries. This situation though very challenging for many innovator companies, is unlikely to change in the foreseeable future, even under pressure of various “Free Trade Agreements (FTA)”.

Government no longer accepts that medicine prices are cheapest in India:

Pharmaceutical companies in India will be constrained to live with the continuing focus of the government and also of the civil society on ‘reasonably affordable medicines’ irrespective of the fact whether they are generic or patented.

The Department of Pharmaceuticals has reportedly started comparing the Indian drug prices with international equivalents in terms of the ‘purchasing power parity’ and ‘per capita income’ and not just their prevailing prices in various developed markets converted to rupees.With such comparisons the government has already started voicing that prices of medicines in India are not the cheapest but on the contrary one of the costliest in the world.

The above argument though interesting, worth taking note of, by all concerned to successfully chart-out their respective game plans for India.

A recent media report highlighted that an inter-ministerial group constituted for regulating prices of patented medicines in India has recommended using a per capita income-linked reference pricing mechanism for such products.

The above news item also mentions that Tarceva, a Roche lung cancer drug, costs Rs 1.21 lakh in Australia and France while it costs Rs 35,450 in India. But when adjusted for per capita income, which is significantly more in these countries compared with India, the price falls to Rs 10,309 and Rs 11,643, respectively, for both countries as indicated below:

Country India France Australia
Per capita gross national income (PCGNI) (US$) 3260 33940 38510
Ratio of PCGNI of other countries to India 1 10.4 11.8
Eriotnib (Tarceva) 100 mg price in India (Rs.) 35450 121085 121650
Eriotinib (Tarceva) 100 mg Price in terms of weighted PCGNI (Rs) 35450 11643 10309
Sunatinib (Stutent) capsule 50 mg (Rs)       46925 363216 310384
Sunatinib (Stutent) 50 mg price in terms of weighted PCGNI (Rs)              46925 34925 26303

(Source: The Economic Times, August 16, 2012)

Government encouraging R&D Focus on the diseases of the poor:

Many in India, including ‘Council of Scientific & Industrial Research (CSIR)’ feel that the pharmaceutical R&D activities should also focus on the diseases of the poor, which constitute the majority of the global population.

However, global pharmaceutical companies argue that greater focus on the development of new drugs for the diseases of the poor should not be considered as the best way to address and eradicate such diseases in the developing countries. On the contrary, strengthening basic healthcare infrastructure along with education and the means of transportation from one place to the other could improve general health of the population of the developing world quite dramatically.

The counterpoint to the above argument articulates that health infrastructure projects are certainly very essential elements of achieving longer-term health objectives of these countries, but in the near term, millions of unnecessary deaths in the developing countries can be effectively prevented by offering more innovative drugs at affordable prices to this section of the society.

Recognition of India’s healthcare priorities is important:

Despite chaos in many areas, as mentioned above, a paradigm change in the way pharmaceutical business to be conducted in India, is slowly but surely taking place, where replication of any western business model could be counterproductive. The strategy has to be India specific, accepting the priorities of the countries, even with all its ‘warts and moles’

Participative strategies should yield better results:

To achieve excellence in the pharmaceutical market of India, there is a dire need for all stakeholders to join hands with the Government, without further delay, to contribute with their global knowledge, experience and expertise to help resolving the critical issues of the healthcare sector of the nation, like:

  • Creation and modernization of healthcare infrastructure leveraging IT
  • Universal Health Coverage
  • Win-Win regulatory policies
  • Creation of employable skilled manpower
  • Innovation friendly ecosystem
  • Reasonably affordable healthcare services and medicines for the common man through a robust government procurement and delivery system

Right attitude of all stakeholders to find a win-win solution for all such issues, instead of adhering to the age-old blame game in perpetuity, as it were, without conceding each others’ ground even by an inch, is of utmost importance at this hour. 

It is high time for the Government of India, I reckon, to reap a rich harvest from the emerging lucrative opportunities, coming both from within and the outside world in the healthcare space of the country. Effective utilization of this opportunity, in turn, will help India to align itself with the key global healthcare need of providing reasonably affordable healthcare to all.

Conclusion:

Thus in my view, just replication of the ‘Old Paradigm’ of the developed pharmaceutical markets is unlikely to yield results in the new evolving paradigm of India.

In this rapidly changing scenario, the name of the game for all players of the industry, both global and local, I believe, is recognition of the changing market dynamics of India, active engagement in the paradigm changing process of one of the most important emerging pharmaceutical markets of the world and finally adaptation to the countries changing aspirations and priorities to create a win-win situation for all.

By: Tapan J Ray

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

Nutraceuticals with Therapeutic Claims: A Vulnerable Growing Bubble Protected by Faith and Hope of Patients

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Today a growing number of particularly the aging population wants to live a healthy life without consuming much of chemical drugs, which in turn is becoming a key growth driver for nutraceutical products across the world. Further, increasing interest towards preventive healthcare and self-medication with ‘Over The Counter (OTC)’ products are the additional factors boosting the growth of the nutraceutical products market in India.

It has been reported that by 2020, the number of senior citizens (60 plus age group) is expected to exceed 1.0 billion, with around 70% of them living in the developing world. This further highlights the growth potential of the nutraceutical industry in countries like India with rising per capita income.

Evolution of the terminology ‘Nutraceuticals’:

Dr. Stephen DeFelice of the ‘Foundation for Innovation in Medicine’ coined the term ‘Nutraceutical’ from “Nutrition” and “Pharmaceutical” in 1989. The term nutraceutical is now being commonly used in marketing for such products but has no regulatory definition, other than dietary or nutritional supplements.

It is interesting to note that the dietary supplement industry defines nutraceuticals as, “any nontoxic food component that has scientifically proven health benefits, including disease treatment and prevention.”

Perhaps because of this reason, it is very often claimed by the manufacturers of nutraceutical products that these are not just dietary supplements, but also help prevention and/or treatment of many disease conditions.

In India, nutraceuticals are being promoted to and even prescribed by the medical profession, not just as nutritional supplements but also with off-label claims for the treatment of disease conditions, like arthritis, osteoporosis, cardiology, diabetes, pain management etc.

Are nutraceuticals then ‘Nutritional Supplements’ or ‘Medicines’?

When for any nutraceutical, claims are made either for cure of a specific disease condition or for prevention of a particular ailment, the product assumes the status of a drug substance, which needs to be approved by the drug regulator with undisputed and demonstrable evidence of efficacy and safety on patients.

Thus, the questions that may be very appropriately raised, whether or not such product claims are backed by robust clinical data for efficacy and safety on long term use and whether or not such data have also been published in the peer review journals? The answer will probably be an unambiguous ‘No’.

Unfortunately, clinical trial data proving efficacy and safety are not required for nutraceutical products to get their marketing approval in India, as long as the manufacturers do not put any medicinal or therapeutic claims both on the product label and also in their promotional literature.

However, in practice, making off-label therapeutic claims for nutraceutical products in general, though illegal, are more a routine than exceptions in India.

Relaxed regulatory process for marketing approval of Nutraceutical Products:

As stated above, nutraceutical products do not go through the rigors of stringent regulatory process as followed for the marketing approval of any drug with similar claims. Due to this reason, nutraceutical products currently fall within a grey zone, which has not yet gone through intensive scientific scrutiny for their safety and efficacy on patients, in general.

Ethical issues:

As a result of such relaxed regulatory framework, the nutraceutical products industry also prompts to flag many ethical issues, which include concerns over inadequate disclosure of science based information particularly on the surrogate therapeutic claims based merely on anecdotal evidence, as a part of intensive off-label sales and marketing efforts on their part.

Off-label therapeutic claims for any product are even otherwise illegal in India, like in many other countries.

Appropriate measures by the Government need to be put in place sooner, not only to plug the regulatory loopholes for off-label therapeutic claims, but also to ensure that marketing malpractices are not followed by their manufacturers to boost the sales turnover. This is necessary keeping especially the health outcomes and safety of the patients in mind.

How effective and safe are the nutraceuticals?

As stated above, currently many nutraceuticals are being directly promoted just like any other modern medicines, in the garb of nutritional supplements, to the medical profession, but with illegal claims and intent without being supported by data that can pass through scientific or regulatory scrutiny.

Thus the questions that one can raise logically are as follows:

  • What happens when the nutraceutical products fail to live up to the tall claims made by the respective manufacturers on their efficacy and safety profile?
  • Are these substances safe, just because not enough data has been generated on their toxicity profile?

The New Zealand Medical Journal  (Vol. 118 No 1219 ISSN 1175 8716) in an article titled, “Lead poisoning due to ingestion of Indian herbal remedies” reported about dangerous and life threatening lead poisoning as follows:

“We believe that our cases of lead poisoning was predominantly due to ingestion of lead contaminated Indian herbal medicines, and it is the first such case to be reported in New Zealand.”

Similarly, Times Health in its March 15, 2010 reported that dangerous “lead poisoning in Indian children in the Boston area were linked to consumption of Indian spices.”

Taking lessons from all these, incidence like ‘Tylenol tragedy’ must not be allowed to be repeated in India, the risk of which primarily lies within inadequate quality and safety standards arising out of overall gross deficiency in the product security measures for many of such substances.

Importance of robust clinical data for therapeutic claims:

Therapeutic efficacy of a drug in the treatment of a disease condition is established with pharmacokinetic, pharmacodynamics, other pre-clinical and clinical studies. Some experts believe that these studies are very important for nutraceutical products, as well, especially when therapeutic claims are made on them, directly or indirectly, as these substances are also involved in a series of reactions within the body.

Similarly, to establish any long term toxicity problem with such products, generation of credible clinical data including those with animal reaction to the products, both short and long term, using test doses several times higher than the recommended ones, is critical. These are not usually followed for nutraceutical products in India, even when therapeutic claims are being made.

The experts, therefore, quite often say, “A lack of reported toxicity problems with any nutraceutical should not be interpreted as evidence of safety.”

Should Nutraceuticals also follow ‘Evidence-Based Medicine (EBM)’ standards?

The term and concept of EBM originated at McMaster University of Canada in early 1990 and has been defined as “the integration of best research evidence with clinical expertise and patient values” (Sackett, 2000).

EBM is thus a multifaceted process of systematically reviewing, appraising and using clinical research findings to aid the delivery of optimum clinical care to patients. EBM also seeks to assess the strength of evidence of the risks and benefits of any particular treatment claim.

Thus many global pharmaceutical companies believe that EBM offers the most objective way to determine and maintain consistently high quality and safety standards of healthcare products in the healthcare practice.

EBM concept, I reckon, is important in the context of nutraceuticals too, because over a period of time more and more users of nutraceuticals will tend to look for authentic scientific evidence within a clinical set up for such products. It is about time that EBM standards are followed for nutraceutical products, as well, by the regulators.

Global pharma companies focus on EBM:

So far, the large global pharmaceutical players have been focusing mainly, if not only on EBM. Companies like, GlaxoSmithKline (GSK), were reported to have discontinued marketing those products, which do not fall under ‘Evidence Based Medicines (EBM)’, even in India.

Nutraceuticals market:

The global nutraceuticals market is currently estimated to be around US$ 117 billion and expected to reach US$ 177 billion by 2013 with a CAGR of 7%, driven mainly by ‘functional foods’ segment with a CAGR of 11%. The top countries in this category are Japan, USA and Europe with the former two together enjoying around 58% market share of the total nutraceuticals consumption of the world.

In 2009 Indian nutraceuticals market was around US$ 1.0 billion growing at 5% (IMS), around 55% of which being functional foods. As per IMS about 2800 brands were competing in the nutritional market in 2009.

The prices of most nutraceuticals products with off-label therapeutic claims, being outside government price regulations in India, are usually quite high.

Although India’s current market share of the global nutraceuticals market is around 1%, a report from PwC predicts that India will join the league of top 10 by 2020, primarily driven by the ‘functional foods’.

The status of nutraceuticals in the USA:

In the USA, Congress passed the ‘Dietary Supplement Health and Education Act’ in 1994. This act allows ‘functional claims’ to Dietary supplements without drug approval, like “Vitamin A promotes good vision” or “St. Johns Wort maintains emotional well-being”, as long as the product label contains a specific disclaimer that the said claim has not been evaluated by the FDA and that the product concerned is not intended to diagnose, treat, cure or prevent disease.

The above Act bestows some important responsibility on the doctors in particular, who are required to provide specific and accurate scientific information for nutraceutical products to their patients. This process assumes critical importance as the patients would expect the doctors to describe to them about the usefulness of nutraceutical products as alternatives to approved drugs. In such cases, if any doctor recommends a dietary supplement instead of pharmaceutical products, the doctor concerned must be aware of the risk that the patient’s health may suffer, for which the affected patient could sue the doctor for malpractice.

It is difficult to understand why is the Indian regulator not following, at least, the above practices in the country.

Only ‘Patented Traditional Medicines’ will soon require mandatory clinical trials:

Here comes possibly the beginning of a refreshing change in the drug regulatory mindset for nutraceuticals in the country.

It has recently been reported  that all new traditional medicines will need to undergo clinical trials before their regulatory marketing approval in India.

However, it has also been clarified that “such products will include only the new patented drugs and not the classical formulations that find mention in India’s ancient texts, some of which are 5,000 years old.”

However, it defies scientific logic, when one argues that anecdotal evidence of last 5,000 years should be accepted as robust data for proven efficacy and safety of nutraceutical products on patients, especially during their longer term use, for the reasons as mentioned above.

Thus, this initiative of the government though commendable, will by no means ensure safety and efficacy of existing nutraceutical products making therapeutic claims – off-label or otherwise in their sales and marketing promotion to the medical profession.

An immediate action:

Nutraceutical products, wearing a tag of providing desirable therapeutic benefits with less or no side effects as compared to conventional medicines, is showing just a moderate growth in India, despite being within a favorable pricing and a relaxed regulatory environment.

As deliberated above, it may take some time for the drug regulator to grant marketing approval of nutraceutical products with therapeutic claims based only on robust clinical data for efficacy and safety. Till such time this happens, the Drugs Controller General of India (DCGI) without fail should make a statement, something like the following, mandatory on the packaging of all nutraceutical products, just as what has been done by the US-FDA:

“All claims made for this product have not been evaluated by the DCGI and the product is not intended to diagnose, treat, cure or prevent any disease.”

Conclusion:

I reckon, the nutraceutical products segment with surrogate or off-label therapeutic claims, is just a growing bubble, as it were, which continues to be well protected by faith and hope of the patients, in the absence of stringent drug regulatory measures for substantiation of specific medicinal claims with predictable efficacy and safety profile.

This bubble could easily burst… decisively, if generation of clinical data on safety and efficacy ever becomes mandatory regulatory requirements for getting marketing approval of nutraceutical products in India claiming therapeutic benefits, off-label or otherwise. In which case, to meet those stringent drug regulatory requirements, commensurate increase in price for such products could indeed make commercial survival of this industry extremely challenging.

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.

Should India allow use of Compulsory License as a common tool to improve access to medicines?

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Compulsory License (CL) is generally considered a very important provision in the Patent Act of a country to protect public health interest not only by the governments, but also by a large number of experts across the globe and the intelligentsia within the civil society.

The key objectives:

The key objectives of the CL provisions in the statute are to:

  • Rectify any type of market failure
  • Discourage abuse of a patent in any form by the patent holder

WHO hails CL provisions:

‘The World Health Organization (WHO)’ says that ‘the provision for Compulsory Licenses (CL) is a critical element in a health-sensitive patent law’. It emphasized that CL constitutes an effective mechanism to:

-     Promote competition

-     Increase affordability of drugs, while ensuring that the patent owner obtains compensation

for the use of the invention

-     Lack or insufficiency of working of patent

-     Remedy of anti-competitive practices

-     National emergency

-     Government use for non-commercial purpose

-     Other public interest grounds

WHO also recommends the use of CL for any “abuse of patent rights”. This is primarily to ensure that drug prices remain consistent with local purchasing power.

Even ‘UNAIDS’ have recommended the use of CL, as provided under the TRIPS Agreement, where countries have the right to issue such licenses.

Views of R&D based pharma companies:

It is well known that the provisions for the grant of CL other than national emergencies have been generally opposed by the research-based pharmaceutical industry on the grounds that they discourage investments on R&D.

Despite such opposition, most developed countries have CL provisions in their law, which the respective governments can use to promote competition and access to medicines.

Provisions for CL in TRIPS Agreement:

While TRIPS agreement does not limit the grounds or reasons for granting CL, countries can only use those grounds which are allowed by their own national legislation. The development of appropriate national legislation is therefore crucial.

TRIPs further states that the conditions under which a compulsory license is granted should be regulated in accordance with the TRIPs Agreement (Article 31), under a number of conditions aimed at protecting the legitimate interests of the right holder.

Examples of CL provisions in some important countries:

China: Quite close on the heel of grant of Compulsory License (CL) to Bayer AG’s expensive Kidney and Liver cancer drug Sorafenib Tosylate to the domestic Indian manufacturer Natco by the Indian Patent Office, as provided in the Indian Patent Law, China amended its own Patent Law allowing Chinese pharmaceutical manufacturers to make cheaper generic equivalent of patented medicines in the country not only during ‘state emergencies’, but also in ‘unusual circumstances’ or ‘in the interests of the public’.

U.S: Patent law does not provide for CL, which is allowed under the antitrust law. US has been granting CL to remedy anti-competitive practices and for governmental use, including national security.

Canada:  The country introduced CL for drugs, way back in 1923. Canada has granted number of CLs and a robust generic pharmaceutical industry exists in that country.

France: French law authorizes CL when medicines are “only available to the public in insufficient quantity or quality or at abnormally high prices”.

Israel: In Israel a CL can be granted, “if it is necessary to assure the public of a reasonable quantity of a product capable of being used as a medicament, to manufacture a medicament or a patented process for manufacturing a medicament.”

Brazil:  The country will grant CL in cases of “national emergency or public interest, declared by the Federal Executive Authorities. A temporary nonexclusive compulsory license can be granted if necessary. Brazil defines Public Health interest to include “public health protection, satisfying nutritional requirements, protection of the environment and other areas of fundamental importance to the technological or social and economic development of the country.”

Very few CLs granted between 1995-2012:

Despite having the provisions for the grant of CL in many countries, not many CLs have been granted across the world from 1995 to date. The details are as follows:

Country Medicine CL granted in
Israel Hepatitis B Vaccine October 1995
Italy Imipenem (antibiotic) June 2005
Italy Sumatripan Succinate (migraine) February 2006
Canada Oseltamivir (influenza) July 2006
Brazil Efavirenz (HIV/AIDS) May 2007
Thailand Erlotinib, Docetaxel (cancer) January 2008
India Sorafenib Tosylate (cancer) March 2012

Source: DNA, March 9, 2012

India joins the league in 2012:

Indian Patent Office granted a Compulsory License (CL) for Sorafenib Tosylate (Nexavar of Bayer Corporation) to Hyderabad based Natco Pharma Limited under the provisions of Section 84 of the Indian Patents Act. Nexavar is used for treatment for liver and kidney cancer.

The Compulsory License, first of its kind granted in India, enables Natco to sell the drug at a price not exceeding Rs. 8880 (US$ 178 approx.) for a pack of 120 tablets (one month’s therapy) against Rs. 284,428 (US$ 5,690 approx.) being the cost of Nexavar sold by Bayer before the CL was granted to Natco. The license is valid till the expiry of the patent on 2021.

The order on CL also makes it obligatory for Natco to supply the drug free of cost to at least 600 needy and deserving patients per year.

The grant of CL generated adverse impact from many developed nations of the world, as was expected by many.

However, welcoming the order Natco reportedly commented, “This opens up a new avenue of availability of life savings drugs at an affordable price to the suffering masses in India.”

Does grant of CL for non-NLEM products make sense in India?

Currently all government healthcare initiatives in India are focused on ‘The National List of Essential Medicines 2011 (NLEM 2011)’, be it drug price control, free distribution of medicines to all through government hospitals/health centers or even much hyped, ‘Universal Health Coverage’ proposal.

In this situation, another school of thought says that by granting CL to Natco for Sorafenib Tosylate (Nexavar of Bayer), which does not fall under NLEM 2011, hasn’t India diluted its focus on essential drugs? More so, when NLEM 2011 features quite a good number of anti-cancer drugs, as well.

The other side of the argument: Is CL a viable solution to improve access in the developing nations?

International Policy Network (IPN) in an article titled, “Compulsory licensing no solution to health problems in poor countries – say experts from India, Argentina, Canada and South Africa” stated that patents and other forms of Intellectual Property (IP) are an essential component in economic development of any emerging economy, which needs to be well protected by the governments.

The article further opines that any form of interference with IP by the grant of CL or even price controls will undermine investments and cause more harm than good. The paper, therefore, calls for stronger protection of IP across the world.

Yet another paper  titled, “The WTO Decision on Compulsory Licensing – Does it enable import of medicines for developing countries with grave public health problems”, states that flexibility of innovator companies to adjust prices according to purchasing power of the people of different countries is constrained by the following two reasons:

  • A genuine risk that medicines sold at lower prices in the developing countries will be re-exported to high income markets.
  • Many high income developed countries also regulate the prices of medicines at the national level. There is a high risk that these countries will use prices in the developing markets as external reference pricing.

Thus, the author argues, in both the above situations, patented medicine prices will be undermined in the most important markets, making it difficult for the research-based companies to use prices only of high income countries to fund R&D costs for the discovery of new medicines.

Fostering innovation in India:

The healthcare industry in general and the pharmaceutical sector in particular have been experiencing a plethora of innovations across the world, not only to cure and effectively manage ailments to improve the quality of life, but also to help increasing overall disease-free life expectancy of the population with various types of treatment and disease management options.

Innovation being one of the key growth drivers for the knowledge economy, the creation of an innovation friendly ecosystem in India calls for a radical change in our mind-set.

From process innovation to product innovation, from replicating molecules to creating new molecules- a robust ecosystem for innovation is the wheel of progress of any nation, and India is no exception. It is encouraging to hear that the Government of India is working towards this direction in a more elaborate manner its 12th 5 year plan.

However, the question that is being raised now: will frequent grant of CL vitiate the attempt of the government to create an innovative culture within the pharmaceutical industry in India. 

CL will not arrest increasing ‘OoP’ for healthcare in India:

While India is making reasonable strides in its economic growth, the country is increasingly facing constraints in proving healthcare benefits to a vast majority of its population with ballooning ‘Out of Pocket (OoP)’ expenditure of around 78 per cent of its population.

This is mainly because of the following reasons:

  1. Absence of ‘Universal Health Coverage’
  2. Lack of proper healthcare financing and insurance system for all strata of society
  3. Difficulty in managing the cost of healthcare even when the country is providing generic drugs for a sizable part of the world market

One finds some good initiatives though, for population Below the Poverty Line (BPL) and hears about the success of ‘Rashtriya Swasthya Bima Yojna (RSBY)’ and other health insurance schemes through micro health insurance units, especially in rural areas. It has been reported that currently around 40 such schemes are active in the country.

As the disease pattern is undergoing a shift from acute to chronic non-infectious diseases, OOP on healthcare will increase further.

Currently health insurance schemes only cover expenses towards hospitalization. Ideally, medical insurance schemes in India should also cover domiciliary or in-patient treatment costs and perhaps loss of income too, along with hospitalization costs, if India wants to bring down the OoP for its population or at least till such time the ambitious ‘Universal Health Coverage’ project gets translated into reality.

Greater focus of the Government in these areas, many believe, will help increasing access to essential medicines very significantly in India, rather than frequently granting CL, as is being envisaged by many, especially for drugs, which are outside NLEM 2011.

Access to patented medicines unlikely to be addressed effectively despite frequent grant of CL: 

As we know, access to healthcare comprises not just medicines but more importantly healthcare infrastructure like, doctors, paramedics, diagnostics, healthcare centers and hospitals . In India the demand for these services has outstripped supply. There is a huge short fall in ‘Healthcare Manpower’ of the country as demonstrated in the following table:

Target

Actual

Shortfall %
Doctors

1,09,484

26,329

76
Specialists

58,352

6,935

88
Nurses

1,38,623

65,344

53
Radiographers

14,588

2,221

85
Lab Technicians

80,308

16,208

80

Source: Rural Health Statistics 2011 in 12th Plan draft chapter

Thus, there is an urgent need to have a holistic approach with the ‘Universal Healthcare’ in developing adequate healthcare infrastructure, efficient delivery system for medical supplies and creation of a talent pool of healthcare professionals and paramedics, to ensure access to healthcare for all the citizens of the country.

Without all these how will the diseases be diagnosed and the patients be treated for ailments, frequent grant of  CL not withstanding? 

Conclusion:

Be that as it may, the prices of medicines in general and the patented drugs in particular will continue to remain highly sensitive in most parts of the world, if not all, which some astute Global CEOs of the pharmaceutical majors have already contemplated.

One of these Global CEOs very aptly commented, “Pharmaceutical industry, too, on its part, needs to metamorphose to strike a balance in delivering affordable and innovative medicines. It is unacceptable to hear of the US$1billion cost to develop a drug, which includes the cost of failure. We need to fail less often and succeed more often.”

He reiterated, “Pharma companies need to understand that just because you have a patent, people don’t suddenly have money in their pockets, or can afford American prices.”

In the same context another Global CEO said, “Our strategy is really to have affordable medicines because in emerging markets you do not have government reimbursement. So you have to have medicines that people can afford to pay for.…I do not want us to be a colonial company with a colonial approach where we say we decide on the strategy and pricing. If you have to compete locally then the pricing strategy cannot be decided in Paris but will have to be in the marketplace. People here will decide on the pricing strategy and we have to develop a range of products for it.”

Keeping all these developments in view, as I said before, the contentious issue of the price of medicines cannot just be wished away across the world, which is perhaps more relevant now than ever before.

This is irrespective of the fact whether the country provides likes of ‘Universal Health Coverage’ or is driven by OoP expenditure by the majority of its population. Gone are those days, as articulated by the above Global CEOs, when a single global price for a product will be acceptable by all the nations across the world. India seems to be moving to this direction cautiously but steadily. 

It appears, responsible pricing and effective working of patents are the only answers to respond to the CL issue in India.

Thus, I reckon, it does make sense for India to have the relevant provisions of CL in its Patent Act, not just to rectify any type of market failure, but also to discourage any possible abuse of a patent in any form by the patent holder in the country, as mentioned above.

However, it is also important for India to examine the potential negative impact of CL to foster innovation in the country and the global ramification of the same, including attraction of more ‘Foreign Direct Investments (FDI)’, which has been universally proved to be so important for the economic progress of any country, like India and China.

That said, while none can deny that all citizens of India should have access to affordable life-saving essential medicines, it appears rather impractical to envisage that routine grant of CL by the Indian Patent Office, as enumerated above by Natco et al, will be able to resolve the critical issue of improving access to essential medicines on a longer term basis in India.The decision for grant of CL, I reckon, should be taken in India only after exhausting all other access improvement measures.

As enumerated above, the use of CL as a common tool to improve access to medicines could prove to be counterproductive in the long run for India.

By: Tapan J Ray

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

The ruckus over Clinical Trials in India compels Government tightening regulations before flooring gas pedal for regional leadership

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The subject of Clinical Trials in India has created a huge ruckus, mainly for wide spread alleged malpractices, abuse and misuse of the fragile regulations of the country by the players in this field. The issue is not just of GCP or other clinical trial related standards but more of ethical mind-set and reported rampant exploitation of uninformed patients even in case of trial related injuries or death.

The Bulletin of the World Health Organization (WHO) in an article titled, “Clinical trials in India: ethical concerns” reported as follows:

“Drug companies are drawn to India for several reasons, including a technically competent workforce, patient availability, low costs and a friendly drug-control system. While good news for India’s economy, the booming clinical trial industry is raising concerns because of a lack of regulation of private trials and the uneven application of requirements for informed consent and proper ethics review.”

Damning report of the Parliamentary Standing Committee:

Recently the Department Related ‘Parliamentary Standing Committee (PSC)’ on Health and Family Welfare presented its 59th Report of 118 pages in total on the functioning of the Indian Drug Regulator – the Central Drugs Standard Control Organization (CDSCO) in both the houses of the Parliament on May 08, 2012.

The report 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 because of 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.

In this prevailing condition, the committee felt that effective and transparent drug regulation, free from all commercial influences, is absolutely essential to ensure safety, efficacy and quality of drugs keeping just one objective in mind, i.e., welfare of patients.

Some critical findings on the Drug Approval Process:

The PSC in its report made, the following critical findings, besides others:

  • “A total of 31 new drugs were approved in the period January 2008 to October 2010 without conducting clinical trials on Indian patients.
  • Thirteen drugs scrutinized by the panel are not allowed to be sold in the United States, Canada, Britain, European Union and Australia.
  • Sufficient evidence is available on record to conclude that there is collusive nexus between drug manufacturers, some functionaries of CDSCO and some medical experts.
  • Due to the sensitive nature of clinical trials in which foreign companies are involved in a big way and a wide spectrum of ethical issues and legal angles, different aspects of clinical trials need a thorough and in-depth review.”

Proper Auditing of Clinical Trials are lacking:

It is sad that that adequate focus on the ‘Clinical Trial Registry’ and even ‘Auditing of Clinical Trials’ is currently lacking in India, which are considered so important not only to maintain the credibility of the studies, but also to demonstrate their scientific integrity and ethical values.

Unfortunately, there seems to be many loose knots in the current clinical trial policy, practices and guidelines in the country, which require to be tightened by the Government to make the system efficient and transparent in the national endeavor of establishing India as one of the most favored destinations for global clinical trials.

Health Ministry recently responded:

Facing this stark reality and pressured by the Parliament, the government has recently demonstrated its intention of tightening the loose knots in the following two critical areas:

  1. Permission to conduct Clinical Trial
  2. Compensation of the Clinical Trial victims

A. “Permission to conduct Clinical Trial in India’ – the draft notification:

In response to the prevailing conundrum, ‘The Ministry of Health and Family Welfare’ of the Government of India issued a draft notification on 17th July, 2012 seeking stakeholders’ views on the ‘Permission to conduct Clinical Trial’.

The draft notification says that the licensing authority after being satisfied with the adequacy of the data submitted by the applicant in support of proposed clinical trial, shall issue permission to conduct clinical trial, subject to the following conditions:

  1. Clinical trial shall be conducted in compliance to the approved GCP Guidelines.
  2. Approval of the ‘Ethics Committee’ shall be obtained before initiation of the study.
  3. Ethical aspects of the clinical trial as described in the “Ethical Guidelines for Biomedical Research on Human Participants” published by the Indian Council of Medical Research (ICMR), shall be fully complied with.
  4. Clinical trial shall be registered at Clinical Trials Registry of India (CTRI) before enrolling the first patient in the study.
  5. Annual status report on clinical trial viz. ongoing or completed to be communicated to the said Licensing Authority.
  6. Any ‘Suspected Unexpected Serious Adverse Reaction (SUSAR)’ occurring during clinical trial shall be communicated within fourteen calendar days to the Licensing Authority and to the other investigator(s) participating in the study.
  7. In case of study related injury or death, the applicant will provide complete medical care, as well as, compensation for the injury or death and statement to this effect shall be incorporated in the Informed Consent Document. The details of compensation provided shall also be intimated to the licensing authority.
  8. The premises of sponsor/Clinical Research Organization (CRO) and clinical trial sites shall be open to inspection by the officer of Central Drugs Standard Control Organization (CDSCO), who may be accompanied by an officer of the concerned ‘State Drug Control Authority’ to verify compliance to the requirements of Schedule Y, GCP guidelines and other applicable regulation.
  9. The sponsor/ CRO, investigators shall allow officers of CDSCO who may be accompanied by an officer of the concerned ‘State Drug Control Authority’, to enter with or without prior notice, any premises of sponsor/ CRO, clinical trial site to inspect, search and seize any record, data, document, books, investigational drugs etc. related to clinical trials and provide adequate replies to any queries raised by the inspecting authority in relation to the conduct of clinical trial.

This area of the clinical trial regulations will be finalized after taking into consideration of all the comments received from the stakeholders within the specified period.

B. ‘Compensation of the Clinical Trial victims’:

To address the pressing issues in this area Central Drugs Control Organization (CDSCO) in August 3, 2012, published an interim “GUIDELINES FOR DETERMINING QUANTUM OF FINANCIAL COMPENSATION TO BE PAID IN CASE OF CLINICAL TRIAL RELATED INJURY OR DEATH”

The document articulates as follows:

“Presently there is no specific provision under Drugs and Cosmetics Rules for payment of compensation in case of clinical trial related injury or death of the subject. However, the Good Clinical Practice (GCP) Guidelines for Clinical Trials of India under para 2.4.7 provides that the research subject who suffers physical injury as a result of their participation in clinical trials are entitled to financial or other assistance to compensate them equitably for any temporary or permanent impairment or disability subject to confirmation from Ethics Committee. In case of death, their dependents are entitled to material compensation. Guidelines further provide that it is the obligation of the sponsor to pay the compensation.”

Such concerns were also raised in the Parliament and other forums regarding payment of compensation in the cases of injury or death, related to clinical trials.

CDSCO’s interim guidelines now prescribe an interesting formula, which will be used to arrive at the financial compensation for all clinical trial related injuries and deaths.

To assess right compensation for clinical trial related injuries or deaths following parameters have been mooted in the document:

  • Age of the deceased
  • Income of the deceased
  • Seriousness and severity of the disease, the subject was suffering at the time of his/her participation into the trial.
  • Percentage of permanent disability.

Prior to the above new interim guidelines of the CDSCO, there was no standardization for the financial compensation either for clinical trial injuries or for that matter even death. In the past, such compensation was expected to be decided by the ‘Ethics Committee’ on case to case basis.

As stated above, the above formula has been indicated to be an interim measure before the final notification comes into force after taking into consideration all stakeholders’ comments and suggestions on this very important subject.

Drawing a comparison with China:

Driven by the stellar economic growth together with its booming pharmaceutical industry have enabled China to position itself as an emerging hub for global clinical trials. Following are some examples of the key growth drivers in the clinical research space of China:

  • A large diverse treatment naive patient population
  • Significant cost arbitrage
  • Recent improvements in the regulatory standards
  • Reverse brain drain of Chinese-born scientists educated in the west
  • Changing disease profile
  • Incentives to conduct clinical research in the country

However, linguistic and cultural barriers that affect patient reporting, enrollment and other medical practices in China could work as major barriers to the growth of Chinese clinical trial sector.

Clinical Trials: A ‘China – India’ comparison

It has already been reported  that India is ahead of China as most favored destination for global clinical trials, although the latter is quite close and breathing on the neck of India and could well even zoom past the former, if appropriate robust regulations and their effective implementation are still not ensured in India.

I. Majority of the Top 10 Pharma Companies conduct higher number of trials in India

Sr. No. Company

Clinical Trials in India

 Clinical Trials in China
1

Astra Zeneca

10

10
2

BMS

17

6
3

Eli Lilly

17

12
4

GSK

22

14
5

J&J

20

13
6

Merck

8

5
7

Novartis

9

6
8

Pfizer

16

5
9

Roche

5

14
10

Sanofi

15

13

Total

139

98

(Source: clinicaltrials.gov, 26 Oct 2007)

II. India leads China and Russia in Cardiology and Diabetes trials

Therapy India (%) China (%) Russia (%)
Cardiology 5.38 4.93 4.48
Diabetes 3.05 2.09 2.65
Neurology 0.90 0.90 3.62
Oncology 1.59 1.01 2.32

With the highest number of diabetic patients in the World and a very large population of patients with cardiovascular disorders, India has the potential to be the destination of choice for clinical trials in these two therapy areas, as we move on.

(Source: clinicaltrials.gov, 26 Oct 2007)

III. India has a greater % of phase II and III trials while China has more of Phase I and IV

Clinical Trials in India

Clinical Trials in China
Phase I

4%

 Phase I

7%
Phase II

16%

 Phase II

9%
Phase III

65%

 Phase II

51%
Phase IV

15%

 Phase IV

33%

(Source: clinicaltrials.gov, 26 Oct 2007)

IV. Of the total Industry sponsored trials only 3.5% are carried out in India and 2.63% in China

Company

Global Trials

India + China

Astra

231

20

BMS

148

23

Eli Lilly

238

29

GSK

347

36

J&J

461

33

Merck

213

13

Novartis

440

15

Pfizer

389

21

Roche

302

19

Sanofi

209

28

Total

2978

237

 

India 3.50%
China 2.63%
Global 93.87%

India and China’s share in the Industry sponsored Global clinical trial market is miniscule

Source: clinicaltrials.gov

Overall increasing trend of Clinical Trials Initiated in India:

The following table will substantiate the above point:

Year

No. Of Clinical Trials

1999

1

2000

0

2001

6

2002

6

2003

11

2004

26

2005

141

2006

206

2007

220

2008

295

2009

189

(Source: U.S. NIH, Pharmexcil Research)

India has the potential to accelerate its pace of growth significantly:

If robust regulatory measures are put in place, addressing serious concerns on the inadequacy of clinical trial regulations in India, together with uniform requirements for informed patients’ consent and appropriate ethics review, global pharmaceutical majors can be easily attracted to India for several reasons like:

  1. Technically competent and English speaking workforce,
  2. Patient availability and huge pool of naive patients
  3. Low costs and an improving drug-control system.

Thus, quite a number of criteria, as stated above, favor India to establish itself as a global hub for clinical research. Besides, availability of a number of government-funded medical and pharmaceutical institutions with state-of-the-art facilities could be very useful for mufti-centered clinical trials in the country.

Moreover, the cost to conduct a trial in India is lower by almost 50% – 75% than in the United States or in the EU. In addition, a good communication link favors quick recruitment of patients and faster regulatory approvals. Thus, clinical trials in India could be concluded faster, offering a sharp cutting edge for effective competition.

Due to all these reasons, India is gradually attracting more collaborative contract clinical research proposals in the country. Even many global Clinical Research Organizations (CRO) have already started establishing their set up in India. This pace can be accelerated significantly with the regulatory measures, as stated above.

Conclusion:

Clinical trials are the core of research-based pharmaceutical industry. No new drug can come into the market without clinical trials, which involve both potential benefits and risks to the participants. All clinical trials are conducted with the primary aim of bringing to patients new medicines with a favorable benefit–risk ratio.

Global clinical trials being relatively new to India, no wonder there are several misconceptions on the subject. The companies conducting research need to proactively publicize their commitment to protecting the rights, safety and well-being of trial participants.

All concerned must ensure that the proposals for clinical trials are approved by the government regulatory authorities before commencement and the trials must strictly follow the prescribed norms and procedures. For Phase I-IV human trials, the rights and privileges of the participants must be explained and the trials should commence only after their informed consent. The regulatory authorities, at the same time, should also ensure that any attempt of shortcuts or to bend the system by any means is met with severe consequences.

Although the Ministry of Health has already started initiating some action, as stated above, there is an urgent need for the players in this field to reassure the public, in general, about the high ethical standards that the pharmaceutical companies and Clinical Research Organizations require to comply with and continuously practice, while conducting clinical research.

It is therefore, high time for the Government to tighten the loose knots of the Clinical Trial regulations in the country before flooring the gas pedal to help India surging ahead as a major hub in the clinical trials space of the world, significantly distancing itself from China.

By: Tapan J Ray

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

A National Regulatory Standard is necessary for MRs of the Indian Pharmaceutical Industry

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Medical Representatives (MR) form the bedrock of business success, especially for the pharmaceutical industry in India. The Job of MRs is tough and high voltage one, laced with moments of elation and sprinkles of frustration, while generating prescription demand for selected products in an assigned business territory. Though educational qualifications, relevant product and disease knowledge, professional conduct and ethical standards vary widely among them, they are usually friendly, mostly wearing a smile even while working in an environment of long and flexible working hours.

Currently, there is a huge challenge in India to strike a right balance between the level and quality of sales pitch generated for a brand by the MRs, at times even without being armed with required scientific knowledge and following professional conduct/ ethical standards, while doing their job.

It is critical for the MRs to understand scientific details of the products, its mode of action in a disease condition, precautions and side-effects in order to be fair to the job and be successful. As MRs are not just salesmen, they must always be properly educated in their respective fields and constantly hone their knowledge and skills to remain competitive.

A qualitative study:

Indian J Med Ethics, 2007 Apr-June; 4(2) reported a qualitative study to determine a wide range of pharmaceutical promotional practices by the MRs influencing prescription of medicines in Mumbai. The study highlighted:

“An unholy alliance: Manufacturers, chemists and doctors conspire to make profits at the expense of consumers and public health, even as they negotiate with each other on their respective shares of profits”.

The paper identified misleading information, incentives and unethical trade practices as methods to increase the prescription and sale of drugs. It reported, besides other points that MRs provide incomplete medical information to influence prescribing practices.

‘Code of Pharmaceutical Marketing Practices’ is necessary, but just not enough:

Gift-giving, ethical vs. unethical promotion, transparency and self-regulation appear to be the main issues in the pharmaceutical industry right across the globe. Owing to inadequate national legislation and the lack of universally accepted self-regulatory codes, the pharmaceutical industry in India has yet to tackle the problem of alleged “Unethical drug marketing practices”.

After a protracted debate on this subject by the pharmaceutical companies, in May 2011, the Department of Pharmaceuticals (DoP) came out with a draft ‘Uniform Code of Pharmaceutical Marketing Practices (UCMP)’ to address this issue squarely and effectively in India.

This decision of the government is the culmination of a series of events, covered widely by the various sections of the media, since 2004. Be that as it may, the UCMP, in my view, is just not enough to address the issue of alleged, “Unethical drug marketing practices” holistically.

A mandatory ‘accreditation/certification’ program for MRs is the need of the hour:

Countries like United Kingdom (UK) and Australia with much longer experience of dealing with pharmaceutical industry than India, have appropriate mechanisms, safeguards and legislation in place to deal with the pharmaceutical marketing practices. Even the pharmaceutical industry in the UK and Australia have controlling authorities with comprehensive standards in place to deal with proper education, professional conducts and ethics for the MRs. Similar mandatory ‘accreditation/certification’ program for MRs, in my view, is also necessary in India without any further delay.

India should learn from others to work out a robust process:

Even with such systems and regulations in place, both in the UK and Australia, some ethical issues still remain unresolved. In Australia the largest consumer organization highlights, “that it is a conflict of interest for the Code to be administered by the industry peak body.” and “it is also concerned that the sanctions available in the Code do little to prevent breaches”. United Kingdom is no exception in this regard.

Other markets are fast catching up:

Very recently in Turkey, Turkish Ministry of Health published a new pharmaceutical promotion regulation, which specifies for the first time a certification obligation for the MRs.

In Philippines, ‘MR Accreditation Program (MRAP)’ started about 8 to10 years ago. MRAP is administered by the Pharmaceutical and Healthcare Association of Philippines. The certifying examination is accredited by the Professional Regulation Commission (PRC) under its Board of Pharmacy of the Government of Philippines.

In Japan there is a certification program for the MR since 1997, which is administered by the MR Education and Accreditation Center of Japan, a public service corporation. One has to receive over 450 hours education and training in Japan to be qualified for the examination. Even after being qualified in the certification examination, at least 50 hours of continuing education is required every year to keep the certification updated that expires after 5 years.

In Germany, under German law and practice, MRs have either the status of “pharma advisors” (“Pharmaberater”) as specified in German Drugs Act or they have to pass the examination for certified MRs (“Pharmareferent”), which is accessible online.

“Pharma Advisors” have science background as a pharmacist, chemist, physician, veterinarian etc. whereas other MRs are required to obtain scientific and medicinal knowledge through suitable education and training program, which will lead to an examination for certification by the German authorities. All MRs are required to start the program within 6 months of employment in the industry and complete the five modules within 2 years.

In Canada ‘the Code of Ethical Practices’ requires the MRs to complete an accreditation course offered by the Council for Continuing Pharmaceutical Education within two years of commencing their employment.

In USA, there is no official MR certification program.

In Hungary, the MR certification program is administered officially by the Health Authority of the country.

In Indonesia, this is administered officially by the state/ governmental bodies or by the industry through an outside consulting organization, which issues certificates after successful completion of the examination.

In Argentina, MR Certification Program is required by the law of the land. In order to include the name in the ‘Registry of MR’, a qualifying degree as medical sales representative, issued by a tertiary educational institution and/or officially acknowledged training institutions, is essential.

In South Africa, they have certification only for marketing code training, which is administered by an independent Marketing Code Authority.

In Sweden, this course is administered by an external course organizer on behalf of LIF Sweden.

However, Swedish companies nowadays prefer to employ pharmacists, who do not need to take the examination.

A National regulatory standard for MRs is necessary in India:

India is now one of fastest growing emerging pharmaceutical markets of the world with 3rd global ranking in volume of production and 13th in value terms. Domestic turnover of the industry is around US$ 12.1 billion in June 2011 (IMS) representing just over 1% of the global pharmaceutical industry turnover of US$ 850 billion (IMS). Since 1970, Indian pharmaceutical Industry has rapidly evolved from almost a non-entity to meeting around 20% of the global requirements for high quality and low cost generic medicines.

Unfortunately, despite a fast evolving scenario, appropriate regulations in various areas of the industry in India have not been worked out, as yet, to derive the best mileage out of this scorching pace of growth of the industry. India still does not have a national code of conduct or regulatory standards applicable to MRs.

Only the clause 4 of ‘The Magic Remedies (Objectionable Advertisement) Act, 1954’ deals with misleading advertisements. It is about time to formulate not just a national code on pharmaceutical marketing practices, but also a mandatory accreditation program and qualifying criteria for the MRs for entire pharmaceutical industry in India, like many other countries of the world.

Central Drugs Standard Control Organization (CDSCO) of the Ministry of Health and Family Welfare of the Government of India in its website lists the “Laws Pertaining to Manufacture and Sale of Drugs in India”. However, it does not specify any regulation for the MRs nor does it recommend any standard of qualification and training for them, which is so critical for all concerned.

Conclusion:

In the above scenario, the moot question is without any comprehensive and formalized uniform national standards of educational qualification, knowledge, ethics and professional conduct being in place for the MRs, are they getting right uniform inputs, across the board, to appropriately interact with the medical profession in a manner that will benefit the patients and at the same remain within the boundary of professional conduct and medical ethics?

Thus, a National regulatory standard for MRs, I reckon, is absolutely necessary in India… sooner the better.

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.

Tapan Ray in ‘Focus Reports’, March 2011

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FR: Our last report on India dates back to 2006, right after the Patent Law was passed. What developments have you seen happening in the industry since then?

TR: There has been a paradigm shift with the Product Patent Regime coming in place in 2005. The era from 1970 to 2005 has been a very successful era of reverse engineering, when Indian manufacturers were copying and marketing innovative products in India at a fraction of their international price. Nevertheless, this also required talent, for which India had brilliant process chemists. However, the country eventually realized that reverse engineering model would not truly serve the longer term advancement of the economy in creating a conducive ecosystem to foster innovation. This realization process started in 1990 and was reinforced after signing the WTO Agreement in 1995. After the ten-year transition period, the patent law came into force in January 2005.

Since around 2005 Indian companies, which had mainly been relying on cost efficient processes, started investing in the drug discovery research. There are now at least 10 Indian companies engaged in basic research, while around 32 New Chemical Entities (NCEs) are at various stages of development.

This significant step that the country has taken so far, could not have been possible without a conscious decision to move away from the paradigm of replication to the new paradigm of innovation. More importantly, this shift has not happened at the cost of fast growing generic pharmaceutical industry in the country. Branded generics continue to grow rapidly in the new paradigm.

Today, branded generics constitute over 99% of the domestic pharmaceutical market. Of course, according to McKinsey (2007), the share of patented medicines is expected to increase to 10% by 2015. Even in that scenario 90% of the market will still constitute with branded generics in value terms.

FR: At the same time, companies are still only spending some 4% of their revenues on R&D, while internationally these numbers amount up to 12%. Many of the people in the industry seem to still see the future of India for the next 10 years to remain in manufacturing. Is innovation really the story of India right now?

TR: As I mentioned earlier, around 32 NCEs are at various stages of development from pre-clinical to Phase III. Thus, what Indian companies have achieved since 2005, is, indeed remarkable. If you now look at the investments made by the Indian pharmaceutical companies in R&D, as a percentage of turnover, you will notice an ascending trend. Though the R&D ecosystem in India cannot be compared with the developed world just yet, India is catching up.

FR: In some previous interviews we have conducted, concerns were raised over the Indian industry, saying that the local companies are selling off to international players. What is your take on this?

TR: In India, we all express a lot of sentiments and are generally emotional in nature. These are not bad qualities by any standard. However, such expressions should ideally be supported by hard facts. Otherwise these expressions cannot be justified.

Consolidation process within the industry is a worldwide phenomenon and is also taking place in India. One of the apprehensions of such consolidation process in India is that drug prices would go up, as a consequence. In my view, all such apprehensions should be judged by what has already happened in our country by now, in this area.

One example we can cite is the Ranbaxy-Daiichi-Sankyo deal, an acquisition which has not at all led to an increase in Ranbaxy’s product prices. Similarly, the acquisition of India-based Shantha Biotech by the French pharmaceutical major, Sanofi-Aventis did not lead to any increase in product prices either. It is difficult to make out how could possibly the drug prices go up when we have an effective national price regulator called National Pharmaceutical Pricing Authority (NPPA) in India? Currently, 100% of the pharmaceutical market in the country is regulated by NPPA in one way or the other.

India is currently having a drug policy which came into force way back in 1995. As per this drug policy, any company which increases its product price which are outside price control, by more than 10% in a year, will be called for an explanation by the NPPA. Without a satisfactory explanation, the concerned product – not the product category – will be brought under price control, that too for good. In addition, intensive cut-throat competition has made pharmaceutical product prices in India the cheapest in the world, even lower than in the neighboring countries such as Bangladesh, Pakistan and Sri Lanka. Moreover, if the potential to increase prices exists, why would any company wait for an acquisition in a highly fragmented pharmaceutical market in India?

Many of the concerns are, therefore, difficult to justify due to lack of factual data. In fact, on the contrary, the presence of multinational pharmaceutical companies in India is good for the country. These companies with their international expertise and resources would help India to build capacity in terms of training and creating a world-class talent pool. Indian companies, therefore, should consider to take more and more initiatives to partner and collaborate with these MNCs to create a win-win situation for India.

Another key advantage is in the area of market penetration. Market penetration through value-added innovative marketing has happened and has been happening all over the world; India should not let go this opportunity.

FR: In that case, how do you feel about some of the proposed protectionist measures such as a 49% cap on Foreign Direct Investment (FDI)?

TR: This may, once again, be related to the strong local sentiments. India needs financial reforms and wants to attract more and more FDI. The country wants to liberalize the process of FDI and, to the best of my knowledge, any step to move backward in this area should not be contemplated.

It is also worth mentioning that the acquisitions that have taken place were not of any hostile nature. Both Indian companies and MNCs have their own sets of skills, competencies and best practices. Both cost revenue and value synergy through such consolidation process could be made beneficial for the country.

Without commenting on any specific cases, I believe India has taken significant steps to encourage and protect innovation by putting in place the product patent Act in 2005. However, there are some additional steps that the Government should take to further strengthen the process, such as fast-track courts that can quickly decide on the cases of patent infringements. Another example is that when any company will apply for marketing approval for a product, the regulator will upload the same on its website. This is an easy way for other players to detect patent infringement and start taking counter-measures at an early stage. These are examples of steps that can be taken to create a proper ecosystem without amending the law.

FR: You mentioned the paradigm shift towards innovation earlier, to some extent a similar path as China. How innovative has India become in this respect and is it sufficient in terms of clinical trials and other related aspects of the sector?

TR: With regards to attracting FDI in areas such as R&D and clinical trials, India at present is far behind China. The reason for this, as said earlier, is that the country should try to analyse why the innovator companies are not preferring India to China in these areas. Simultaneously, there is a need to assess the expectations of the innovative companies from India in various areas of IPR. One such factor that is bothering the global innovative companies is the absence of regulatory data protection in India. The Government should seriously ponder over this need and take active steps towards this direction as was proposed by ” Satwant Reddy Committee in 2007.”

FR: In your view, what is the industry going to look like in the coming years?

TR: I do not expect a radical shift in the way the Pharmaceutical Industry will be operating in the next few years. Changes will take place gradually and, perhaps, less radically. The increase of the share of patented medicines to 10% of the market share by 2015 as was forecasted by McKinsey in 2007, in my opinion, is rather ambitious. We will certainly see more and more patented products in the market, but it will be slow and gradual unless corrective measures are taken to tighten the loose knots in the Patent Amendment Act 2005, as stated earlier. As more and more Indian companies will start embracing an innovation-driven business model, the strengths and the international experience of the MNCs in this area should be leveraged to catapult the Indian pharmaceutical industry to a much higher growth trajectory.

The interview is available at the following link:

http://www.pharma.focusreports.net/#state=Interview&id=0

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.

EU-FTA, TRIPS-Plus provisions, Data Exclusivity, Public Interest and India

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Business Standard in its January 27, 2011 edition reported, “Data Exclusivity still key hurdle to India-EU FTA”
Before deliberating on this important issue of “Free Trade Agreement (FTA)”, let me touch upon very briefly, for the benefit of all concerned, the pros and cons of the FTAs.
Free Trade Agreements (FTAs):
Free Trade Agreements (FTAs), as we know, are treaties signed between the governments of two or more countries, where the countries agree to partially or completely lift the import tariffs, taxes, quotas, special fees, other trade barriers and regulatory issues to allow increased business, benefitting each country.
The Pros and Cons:
Consumers of each country are the key beneficiaries of FTAs with increased supply of various products of wider choices at lesser prices with consequent increase in market competition and market penetration.
The cons of the FTAs are apprehensions that arising out of fierce competition and increasing supply of imported products at lesser prices, the demand for domestic goods decline, leaving an adverse impact on the domestic business performance with consequent job losses, especially, in the manufacturing sector. In addition, because of lower import tariff, revenue collection of the government may also get adversely affected.
The scenario is no different for the pharmaceutical sector of the country.
A recent example:
The most recent example is the FTA between India and Japan. This will include both trade and investments, increasing the bilateral trade and commerce between the two countries to around US$ 11 billion. With this Agreement, Indian pharmaceutical products will be able to get access to the highly regulated and the second largest pharmaceutical market of the world.
The key issues with EU FTA:
1. It wants to include IPR issues like Regulatory Data Protection (RDP) or Data Exclusivity (DE) 2. RDP is a TRIPS-plus provision and its inclusion will delay the launch of generics 3. Delayed launch of generics would adversely impact the ‘public interest’.
A paradigm shift has taken place in India:
As we know, January 1, 1995 ushered in a new era, when the agreement of the World Trade Organization (WTO) on Trade-Related Aspects of Intellectual Property Rights (TRIPS), became effective for its member countries. This Agreement significantly changed the international Intellectual Property (IP) regime with the introduction of the principle of minimum intellectual property standards.
This would, therefore, mean that any IP related agreement that will be negotiated subsequent to TRIPS between WTO members can only create higher than the specified minimum standards.
What is ‘TRIPS Plus’?
The ‘TRIPS-plus’ concept usually would encompass all those activities, which are aimed at increasing the level of IP protection for the right holders beyond what is stipulated in the TRIPS Agreement.
Some section of the civil society nurtures a view that ‘TRIPS Plus’ provisions could significantly jeopardize the ability, especially, of developing countries to protect the ‘public interest’.
Some common examples of ‘TRIPS Plus’ provisions:
Common examples of ‘TRIPS plus’ provisions could include:
- Extension of the patent term beyond usual twenty-year period – Introduction of provisions, which could restrict the use of Compulsory    Licenses (CL) – Delaying the entry of generics
Is section 39.3 an example of ‘TRIPS Plus’ provision?
The raging debate around Regulatory Data Protection (Data Exclusivity) as indicated under Article 39.3 of TRIPS is perhaps unique in terms of apprehension of the generic pharmaceutical industry on its possible adverse impact on their business and very recently of the Government of India because of the share of voice of the pressure groups following the EU-FTA.
Be that as it may, the moot question is, even if these provisions are ‘TRIPS Plus’, are these good for India?

Key arguments in favor of RDP in India:
1. It will not extend Patent life and promote evergreening:
However, there is hardly any evidence that RDP does not get over well before the patent expires. Thus RDP does extend the patent life of a product and hence is not ‘Evergreening’.
2. It will not delay the launch of generics because of safeguards provided in the Indian Patent Act, just like in the USA:
A robust ‘Data Exclusivity (DE)’ regime is effective in the USA since over decades. Despite DE, the world witnesses quickest launch of generic products in that country without any delay whatsoever. This has been possible in the USA, because of existence of the‘Bolar Provision’, which allows the generic players to prepare themselves and comply with all regulatory requirements, using the innovators data wherever required and keep the generic product ready for launch immediately after the patent of the innovator product expires in the country.
I reckon similar ‘Bolar like provision‘ exists in the section 107A of the Indian Patent Act. This particular section allows, in a similar way that generic entry is not delayed in India after patent expiry of the respective innovator products.
Though the generic players of India, by and large, are up in arms against RDP (protection against disclosure and unfair commercial use of the test data) in India, highest number of ANDAs are being filed by the Indian companies, just next to the USA, despite a stringent DE provisions being in force there.
Moreover, inspite of very stringent IPR regulations, Generic prescriptions are quite popular in the USA. Around 62% of the total prescriptions in that country are for generic pharmaceuticals.
Thus the key apprehension that the RDP provision in the EU-FTA will delay the launch of generic  pharmaceutical products in India and will go against ‘Public Interest’ seems to be unfounded to me.
Government report indicates RDP is good for India:
The Government of India appointed ‘Satwant Reddy Committee’ report (2007) also categorically recommended that RDP is good for the country and should be introduced in a calibrated way.The committee examined two industries:
- Pharmaceuticals – Agrochemicals
Meanwhile, a 3 year RDP for Agrochemicals has been accepted by the Government of India, vindicating the fact that even if section 39.3 is considered as ‘TRIPS Plus’, RDP, as such, is good for the country.
Thus the question whether Section 39.3 is ‘TRIPS Plus’ or not, does not appear to be relevant while discussing EU-FTA, after following the above sequence of events in India.
Conclusion:
The issue of RDP appears to me more a regulatory than an IPR related subject in EU-FTA negotiation process and should be treated as such. It means RDP is more related to the ‘Drugs and Cosmetics Act’ of India rather than the ‘Patent Act 2005′. The media hype that an IPR issue in the form of RDP is being taken up in the EU-FTA negotiation also seems to be misplaced.
Let me hasten to add that I do not hold any brief directly or indirectly for or against the EU-FTA. Neither do I wish to make any general comment on the EU-FTA as such, because the agreement will deal with various other important issues of our nation’s interest involving intensive negotiations between the sovereign countries, at the government level.
However, even without going into the merits or demerits of the EU-FTA, it appears to me that the arguments put forth by a group of people against RDP related to the EU-FTA are indeed not robust enough and possibly have been prompted more by the vested interest groups rather than the ‘Public Interest’.

By: Tapan J Ray

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

Does China provide a more robust IPR environment than India?

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Soon after the Product Patent Act was reintroduced in India effective January 1, 2005, a raging global debate commenced focusing on the robustness of the Indian Patent system. Quite often, many participants in the debate continue to compare the adequacies of the Chinese patent system with the inadequacies of the same in India.

‘The Pharma Letter’ dated October 26, 2010 published an Article captioned, “Intellectual property concerns and domestic bias hold back R&D in Asia-Pacific.”

Asia-Pacific still lags behind in terms of global R&D investments:

Unlike the common perception in India that China is attracting a significant part of the global investments towards R&D, latest data of MedTRACK revealed that only 15% of all drugs development are taking place in Asia-Pacific despite the largest growth potential of the region in the world. The Pharma Letter also reported, “In December 2009, China unveiled that it would give domestic companies making innovative products an advantage in qualifying for government purchases. This measure is likely to further limit foreign investment in product development in China, and negatively affect growth of foreign brands.”

Such type of domestic bias and protectionist’s measures are yet to be witnessed in India.

Since US is a pioneering country in the field of global R&D and its commercial interest related to such initiatives spans across the globe, let me try to analyze this subject, in this article, quoting only from official US publications.

IPR environment in China – the US perspective:

So far as the current IPR environment in China is concerned, US Embassy based in that country has commented as follows:

“Despite stronger statutory protection, China continues to be a haven for counterfeiters and pirates. According to one copyright industry association, the piracy rate remains one of the highest in the world (over 90 percent) and U.S. companies lose over one billion dollars in legitimate business each year to piracy. On average, 20 percent of all consumer products in the Chinese market are counterfeit. If a product sells, it is likely to be illegally duplicated. U.S. companies are not alone, as pirates and counterfeiters target both foreign and domestic companies”.

In the same context the following remarks of Mr. Shaun Donnelly, Senior Director, International Business policy, National Association of Manufacturers (NAM) , USA, made at the Intenational Trade Commission on June 15, 2010 on IPR environment in China, is also quite interesting:

“Unfortunately China remains Ground Zero for international product counterfeiting and Piracy. Despite considerable efforts over many years by US Government agencies and other international partners as well as Chinese Government the Progress has been minimal…. China continued to be the number one source country for pirated goods seized in the US borders accounting for 79% of the total seizures…The top sectors of IPR infringing products seized included footwear, consumer electronics, apparel, computer hardware, pharmaceuticals…”

Patent enforcement in China – the US perspective:

Regarding product patent enforcement is concerned the US Embassy in China comments:

“Though we have observed commitment on the part of many central government officials to tackle the problem, enforcement measures taken to date have not been sufficient to deter massive IPR infringements effectively. There are several factors that undermine enforcement measures, including China’s reliance on administrative instead of criminal measures to combat IPR infringements, corruption and local protectionism, limited resources and training available to enforcement officials, and lack of public education regarding the economic and social impact of counterfeiting and piracy”.

“Notwithstanding the increased number of applications, many patent owners (both foreign and domestic) continue to experience problems with infringement in China. Counterfeiting and other infringing activities are rampant, and critics frequently complain of lax enforcement of intellectual property laws. As a result, any party considering introducing a patented (or patentable) technology into China – especially one that could be easily reverse engineered or duplicated – would be well advised to proceed with extreme caution, seek legal advice from the outset, and plan fastidiously”.

Regulatory Data Protection (RDP) in India:

Regulatory Data Protection (RDP) for Pharmaceutical Products is still not in place in India, as the Government of India has already articulated that RDP is a ‘TRIPS Plus’ requirement and is non-binding to the country. The Government further reiterated that if any or more interested parties will feel that it is not so, they can certainly go to the WTO forum for the redressal of their grievances in this matter.

RDP in China – the US perspective:

However, on this subject the US feels that though RDP for a 5 year period is now in place in China, ‘inadequacies in their current regulatory environment allow for unfair commercial use of safety and efficacy data generated by the global innovator companies.”

In such a scenario the sanctity of RDP gets significantly diluted and may prove to be a virtually meaningless exercise.

Conclusion:

R. Fernando and D. Purkayastha of ICMR Center for Management Research in their article titled, “Pfizer’s Intellectual Property Rights Battles in China for Viagra” had commented as follows:

“Though the foreign research-based pharmaceutical companies were not happy with the lax IPR regime, the booming Chinese pharmaceutical market provided enough incentive for these companies to stay put and fight it out with the local firms for a share in this emerging market”.

Under these circumstances, while recommending for a world class robust patent regime in India to foster innovation in the country, if anybody wants to draw examples from China on the subject, it would indeed be foolhardy.

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.