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“Fire in The Blood”: A Ghastly Patents Vs Patients War – for Pricing Freedom?

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International award winning documentary film, ‘FIRE IN THE BLOOD’ could possibly set a raging fire in your blood too, just like mine. It made me SAD, REFLECTIVE and ANGRY, prompting to share ‘MY TAKE AWAYS’ with you on this contentious subject, immediately after I put across a brief perspective of this yet to be released film in India.

FIRE IN THE BLOOD is an intricate tale of ‘medicine, monopoly and malice’ and narrates how western pharmaceutical companies and governments aggressively blocked access to low-cost HIV/AIDS drugs in African countries post 1996, causing ten million or more avoidable deaths. Fortunately, in the midst of further disasters in the making, some brave-hearts  decided to fight back.

The film includes contributions from global icons, such as, Bill Clinton, Desmond Tutu and Joseph Stieglitz and makes it clear that the real struggle of majority, out of over 7 billion global population, for access to life-saving affordable patented medicines is far from over. This film has been made by Dylan Mohan Gray and narrated by Academy Award winner, William Hurt.

Two trailers worth watching:

Please do not miss watching, at least, the trailer of this the sad and cruel movie by clicking on the link provided on the word ‘trailer’ above and also here. To get an independent perspective, please do watch the review of the film along with interesting interviews by clicking here.

(Disclaimer: I have no personal direct or even remotely indirect interest or involvement with this film.)

International newspaper reviews:

The NYT in its review commented as follows:

“The only reason we are dying is because we are poor.” That is the heartbreaking refrain heard twice in the documentary “Fire in the Blood,” about an urgent and shameful topic: the millions of Africans with AIDS who have died because they couldn’t afford the antiretroviral drugs that could have saved their lives. Former President Bill Clinton, the intellectual property lawyer James Love, the journalist Donald G. McNeil Jr. of The New York Times and others offer perspectives on this situation and also on the concern that pharmaceutical companies value profits over lives.”

The Guardian reviewed the film as follows:

“A slightly dry, yet solid reportage on a humanitarian disgrace: the failure of western pharmaceutical companies to provide affordable drugs to patients in the developing world. As presented, the corporate defense sounds horribly racist: that poorer Africans’ inability to read packaging or tell the time leaves them ill-suited to following any medication program… hope emerges in the form of the Indian physicist Yusuf Hamied, whose company Cipla undertook in the noughties to produce cheap, generic drugs in defiance of the Pfizer patent lawyers.”

MY TAKE AWAYS:

Discrimination between human lives?

Life, as we all have been experiencing, is the greatest miracle of the universe and most astonishing creation of the Almighty. Among all types of lives, the human lives indeed have been playing critical roles in the development and progress of humanity over many centuries. These lives irrespective of their financial status, cast, creed, color and other inequities need to be protected against diseases by all concerned and medicines help achieving this objective.

What’s the purpose of inventing medicines?

“The purpose of business is to create and keep a customer”, said the management guru of global repute,  Peter F. Drucker. What is then the purpose of inventing new medicines in today’s world of growing financial inequity? 

Further, in his well acclaimed book, “Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits”, C.K. Prahalad, explained that the world’s over five billion poor make up the the fastest growing market in the world. Prahalad showed how this segment has vast untapped buying power, and represents an enormous potential for companies, who can learn how to serve this market by providing the poor with innovative products that they need. Do the Big Pharma players have any lesson to learn from this doctrine?

R&D is not free, has costs attached to it:

Medicines protect human lives against various types of diseases. Pharmaceutical companies surely play a critical role in this area, especially the innovator pharma players, by making such medicines available to patients.

These companies identify new products largely from academic institutions and various research labs, develop and bring them to the market. This has obviously a cost attached to it. Thus, R&D cannot be considered as free and the prices of patented products should not be equated with off-patent generic drugs. Innovators must be allowed to earn a decent return on their R&D investments to keep the process of innovation ongoing, though the details of such costs are not usually made available for scrutiny by the experts in this field. 

Discourage insatiable fetish for profiteering:

Respective governments must always keep a careful vigil to ensure that earning a decent profit does not transgress into a limitless fetish for profiteering, where majority of people across the world will have no other alternative but to succumb to diseases without having access to these innovative medicines. This situation is unfair, unjust and should not be allowed to continue.

Big Pharma – strongest propagators of innovation…bizarre?

It is indeed intriguing, when patients are the biggest beneficiaries of pharmaceutical innovations, why mostly the Big Pharma MNCs, their self-created bodies and cronies, continue to remain the most powerful votaries of most stringent IPR regime in a country, though always in the garb of ‘encouraging and protecting innovation’.

Thinking straight, who do they consider are really against innovation in India? None, in fact. Not even the Government. India has under its belt the credit of many pioneering innovations over the past centuries, may not be too many in the field of medicine post 2005, at least, not just yet. Do we remember the disruptive invention of ‘Zero’ by the Indian mathematician Brahmagupta (597–668 AD) or the amazing ‘Dabbawalas’ of Mumbai?  India experiences innovation daily, it has now started happening in the domestic pharma world too with the market launch of two new home grown inventions.

Coming back to the context, India, as I understand, has always been pro-innovation, in principle at least, but is squarely and fairly against obscene drug pricing, which denies access to especially newer drugs to majority of patients, in many occasions even resorting to frivolous innovations and evergreening of patents.

Mighty pharma MNCs are increasingly feeling uncomfortable with such strong stands being taken by a developing nation like India, in this regard. Thus, expensive and well orchestrated intense lobbying initiatives are being strategized to project India as an anti-innovation entity, while pharma MNCs, in general, are being highlighted as the sole savior for encouraging and protecting innovation in India. The whole concept is indeed bizarre, if not an open display of shallow and too much of self-serving mindset. 

This analysis appears more convincing, when genuine patients’ groups, instead of supporting the pharma MNCs in their so called ‘crusade’ for ‘innovation’, keep on vehemently protesting against obscene drug pricing, across the world. 

Obscene pricing overshadows the ‘patient centric’ facade:

Obscene pricing of patented medicines, in many cases, overshadows the façade of much hyped and overused argument that ‘innovation must be encouraged and protected for patients’ interest’. This self-created ‘patient centric’ facade must now be properly understood by all.

I reckon, India has now assumed a critical mass attaining a global stature. This will not allow any successive governments in the country to change the relevant laws of the land, wilting under intense pressure of global and local lobbying and expensive PR campaigns. 

Genuine innovation must be protected:

  • Genuine innovations, as explained in the Patents Act of India, must be encouraged and protected in the country, but not without sending a strong and clear signal for the need of responsible pricing.
  • It is also a fact, though some people may have different views, that Intellectual Property Rights (IPR) encourage innovation.
  • At the same time, the real cost of R&D must be made transparent by all innovators and available for scrutiny by the experts in this field to put all doubts to rest on the subject.

When Corporate Social Responsibility (CSR) is being widely discussed globally, which has now been made mandatory in India, these players keep arguing almost unequivocally that, thinking about ‘have nots’ is the sole responsibility of the Government.

Patents guarantee market exclusivity, NOT absolute pricing freedom:

Patent gives right to the innovators for 20 years market exclusivity, but NOT absolute pricing freedom in the absence of any significant market competition in that area.

Innovator companies do argue that patented products also compete in their respective therapeutic classes. This is indeed baloney. If patented products meet the unmet needs, how can it be ‘me too’ even in a therapy class? Unless of course, insatiated fetish of Big Pharma for market monopoly with free pricing even for ‘me too’ types of so called ‘innovative products’, becomes the key motive behind such an argument.

Who benefits more with patented medicines?

Who gets benefited more with these patented medicines? Certainly a small minority living in the developed world and NOT the vast majority of the developing world.

At the same time, huge profits earned by these companies from a small minority of these patients make them so rich and inexplicably arrogant that they do not bother at all for others without having adequate deep pockets, even in India. 

Conclusion:

I have a huge problem in accepting the pharma MNCs’ argument that ‘IPR’ and lack of ‘Access’ to IP protected drugs for ‘affordability’ reasons, are unrelated to each other. For heaven’s sake, how can they be?

As I said before, absolute pricing freedom for patented drugs is obscene, if not vulgar and must be curbed forthwith with the application of intelligent and well-balanced sensible minds and also in a way, which is just for all, both the innovators and the patients.

Big pharma MNCs can no longer afford to remain just as huge profit making entities, responsible only to their shareholders, shorn of societal needs for affordable medicines, required for around six out of over seven billion human lives of the world. 

Modern society, key opinion leaders and respective governments should not allow them to shirk their responsibility in this area any more, as we move on.

If not, will narratives like ‘FIRE IN THE BLOOD’, not keep us haunting again, again and again, on similar incidents taking place in some other countries, at some other time, involving extinction of millions of precious lives for not having access to affordable new drugs? They may be ‘have nots’, so what? 

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.

 

 

Two Paintings on the Same Canvas: ‘Truth About Drug Companies’ and ‘Protecting Access to Medicines’

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As the saying goes, “Great people think alike”, many thought leaders of very high credibility across the globe, seem to think almost in similar lines when it comes to improving access to medicines for a large section of the global population.

In this article, I shall briefly focus on two such instances, both revolving around the same centerpiece – one from India and the other from the land of ‘pharmaceutical innovation’ – America.

An interesting article written recently by the well-regarded Indian expert of global stature Dr. K. Srinath Reddy, President, Public Health Foundation of India (PHFI), reiterates emphatically,  “India must protect access to medicine”.

In a more focused context related to EU-FTA, the author wrote about possible adverse impact of more stringent product patent and regulatory data protection related issues on access to generic medicines in India and other developing countries. Thus, he argued that EU-FTA should be well negotiated by India and cautioned as  follows:

“It must be remembered that India needs to protect its vital interests in any trade agreement, just as other nations strive to. Our interest lies in protecting the lives and safeguarding the health of Indians, without permitting unreasonable restrictions on our ability to produce, use and even export, generic versions of drugs the patents of which have lapsed (or where compulsory licensing has been invoked to protect public health).

India needs to tread carefully while negotiating the FTA with the EU, so that the health of the Indian people is not compromised through provisions that shackle our generic drug industry.”

The debate has assumed a global dimension:

Such raging debates on a critical public health issue, like access to medicines, are also taking place in many other countries, as I write, including America, irrespective of the fact whether these are generic or patented drugs.

Marcia Angell, M.D, a faculty of Harvard Medical School and a former Editor in Chief of the world’s leading medical journal ‘The New England Journal of Medicine’ wrote an interesting book.

In this book titled “The Truth About the Drug Companies: ‪How They Deceive Us and What to Do About It”, she makes many interesting comments on the American pharmaceutical industry on access to medicines and the kind of pharmaceutical innovations that they are involved in.

The world noticed it:

This book arrested global attention and was extensively reviewed. Since, the author wrote more specifically about the American pharmaceutical industry, following are some excerpts quoted from her book reviews in the USA:

New York Times: “A scorching indictment of drug companies and their research and business practices…tough, persuasive and troubling.”

Boston Globe: “A sober, clear-eyed attack on the excesses of Drug Company power…a lucid, persuasive, and highly important book.”

Washington Post: “Always authoritative…[this book] delivers the message—that drug-company money and power is corrupting American medicine—in a convincing, no-nonsense manner.”

Some key issues raised in the book:

Like the above article of Dr. Reddy, here also the author raises some interesting issues related to the American drug companies. I am penning below some of those issues exactly as expressed by the author (verbatim):

  • “The magic words, repeated over and over like an incantation, are research, innovation, and American. Research. Innovation. American. It makes a great story.”
  • “R&D is a relatively small part of the budgets of the big drug companies—dwarfed by their vast expenditures on marketing and administration, and smaller even than profits.”
  • “The great majority of ‘new’ drugs are not new at all but merely variations of older drugs already on the market. These are called ‘me-too’ drugs.”
  • “If I’m a manufacturer and I can change one molecule and get another twenty years of patent rights, and convince physicians to prescribe and consumers to demand the next form of Prilosec, or weekly Prozac instead of daily Prozac, just as my patent expires, then why would I be spending money on a lot less certain endeavor, which is looking for brand-new drugs?”
  • “Over the past two decades the pharmaceutical industry has moved very far from its original high purpose of discovering and producing useful new drugs. Now primarily a marketing machine to sell drugs of dubious benefit, this industry uses its wealth and power to co-opt every institution that might stand in its way, including the US Congress, the FDA, academic medical centers, and the medical profession itself. (Most of its marketing efforts are focused on influencing doctors, since they must write the prescriptions.)”
  • “Now universities, where most NIH-sponsored work is carried out, can patent and license their discoveries, and charge royalties. Similar legislation permitted the NIH itself to enter into deals with drug companies that would directly transfer NIH discoveries to industry.”
  • “Many medical schools and teaching hospitals set up “technology transfer” offices to help in this activity and capitalize on faculty discoveries. As the entrepreneurial spirit grew during the 1990s, medical school faculty entered into other lucrative financial arrangements with drug companies, as did their parent institutions.”
  • “One of the results has been a growing pro-industry bias in medical research—exactly where such bias doesn’t belong.”
  • “In the 1990s, Congress enacted other laws that further increased the patent life of brand-name drugs. Drug companies now employ small armies of lawyers to milk these laws for all they’re worth—and they’re worth a lot. The result is that the effective patent life of brand-name drugs increased from about eight years in 1980 to about fourteen years in 2000.”
  • “The biggest single item in the budget is neither R&D nor even profits but something usually called ‘marketing and administration – a name that varies slightly from company to company.”
  • “The industry is fighting these efforts—mainly with its legions of lobbyists and lawyers. It fought the state of Maine all the way to the US Supreme Court, which in 2003 upheld Maine’s right to bargain with drug companies for lower prices, while leaving open the details. But that war has just begun, and it promises to go on for years and get very ugly.”
  • “The fact that Americans pay much more for prescription drugs than Europeans and Canadians is now widely known.”
  • “There are very few drugs in the pipeline ready to take the place of blockbusters going off patent. In fact, that is the biggest problem facing the industry today, and its darkest secret. All the public relations about innovation is meant to obscure precisely this fact.”
  • “Of the 78 drugs approved by the FDA in 2002, only 17 contained new active ingredients, and only seven of these were classified by the FDA as improvements over older drugs.”
  • “While there is no doubt that genetic discoveries will lead to treatments, the fact remains that it will probably be years before the basic research pays off with new drugs. In the meantime, the once-solid foundations of the big pharma colossus are shaking.”
  • “Clearly, the pharmaceutical industry is due for fundamental reform. Reform will have to extend beyond the industry to the agencies and institutions it has co-opted, including the FDA and the medical profession and its teaching centers.”
  • “The me-too market would collapse virtually overnight if the FDA made approval of new drugs contingent on their being better in some important way than older drugs already on the market.”
  • “A second important reform would be to require drug companies to open their books. Drug companies reveal very little about the most crucial aspects of their business.”
  • “But the one thing legislators need more than campaign contributions is votes. That is why citizens should know what is really going on. Contrary to the industry’s public relations, they don’t get what they pay for. The fact is that this industry is taking us for a ride, and there will be no real reform without an aroused and determined public to make it happen.”

An opposite view:

On this an article in Forbes Magazine commented as follows:

“The problem with Angell’s arguments is that they are rife with inaccuracies and fallacies. Furthermore, she makes no accounting for changes in the industry that have occurred over the last decade.”

“It is time for those in the medical profession to spur a more truthful and factual discussion about the pharmaceutical industry and its role in the discovery and development of new medicines. The pharmaceutical industry is a key player in the evolution of healthcare and this needs to be recognized if the industry is to operate effectively.”

Conclusion:

One of the key counter arguments that very often comes up in this area, including in India is, the protection of Intellectual Property Rights (IPR) is the responsibility of the Government concerned at any cost, even if such protective measures severely restrict access to these drugs to a large population of the society across the globe, due to ‘affordability’ considerations.

It is also claimed that, to come out with innovative medicines, large pharmaceutical companies invest a huge amount of money and time towards R&D related activities.

Thus, the global innovator companies, by and large, with a few exceptions though, believe that stricter enforcement of stringent patent laws by the Governments is the only answer to foster innovation within the industry. Such stringent measures, as they argue, will help them keep investing in R&D to meet the ‘unmet needs’ of patients on a continuous basis.

However, as we have seen above, many experts, like Harvard faculty Marcia Angell and Dr. K. Srinath Reddy have strong and quite different view points. It is certain that the debate on access to affordable medicines is not going to die down, at least any time soon.

Despite all these, it is not difficult, I reckon, to identify an emerging but a clear trend indicating, the priority of the Governments to protect public health interest in the longer term, will ultimately prevail in most parts of the world, including India.

Consequently, the world will probably witness more and more new government policies and legal frameworks in this area striking a right balance between improving access to medicines and fostering innovation, as the countries move on.

That said, taking note of the above two paintings, as it were, painted on the same canvas of ‘improving access to medicines for all’, is it not amazing to note a striking similarity in the thought pattern between two highly credible and independent think tanks, belonging to the oldest and largest democracies of the planet earth, to ensure affordable medicines 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.

A Force Multiplier: An “Armageddon”: A Contender for Supremacy in the Generic Pharma World

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It is very important for any country to ensure access to most appropriate medicines for the patients as and when they require. In many disease areas such access can be remarkably improved through affordable generic drugs, which offer significant savings in cost for absence of monopolistic situation and intense competitive pressures.

In many countries like, India and China to further augment this process, the Government price control on essential medicines is already in force.

A paper titled, “Generic Medicines: Essential contributors to the long-term health of society” highlights the following facts on such drugs:

• Provide an affordable, gold standard medication for many major illnesses

• Allow access to medicines for a greater proportion of the population

• Stimulate healthy competition with the branded sector

• Deliver savings to national health bills

• Are high quality products

Generic companies also innovate:

The same paper also highlights, though innovation has been traditionally perceived as the domain of the research-based originator companies, generic medicine companies often spend significant sums on innovating and improving formulations, enhancing delivery systems and finding solutions to patient compliance issues.

It also says, the generics medicine industry spent 7 percent of revenues on R&D alone, in 2007 and created 150, 000 jobs only in the EU.

Continuous growth of generic drug industry is critical:

Taking all these factors into consideration, continuous growth of the generic drug industry is critical in ensuring broad access to medicines to the population of any country at an affordable price. Nothing else can achieve this objective.

In the developed countries like, Canada, Denmark, Germany, Netherlands, UK and even USA, large volume of generic medicines are prescribed. Most of these countries have put in place appropriate regulations that facilitate market entry of generic drugs soon after patent expiry. All of them, by and large, encourage even more prescriptions of generic medicines.

Of course, there are many instances of deliberate attempts to slow down generic entry, which I shall deal with separately at some other time.

Quality perception for generic drugs:

In many countries the general perception of efficacy and safety standards of generic drugs is still not satisfactory. In many occasions, these are reportedly prompted by well orchestrated campaigns by interested private stakeholders in this area.

However, in markets, like the EU, Canada and the USA Governments do take public awareness measures to dispel such doubt. Unfortunately not enough similar initiatives have been taken in India with tangible results. The reason could probably lie in the existence of a powerful branded generic lobby in the country, unlike many other markets of the world.

The market:

A report of Frost & Sullivan titled, “Generic Pharmaceuticals Market – A Global Analysis” stated, the global generic pharmaceuticals market registered a revenue of US$ 135.85 billion in 2010 with a growth rate of 11 percent. The top eight global markets, namely the United States, Germany, France, the United Kingdom, Canada, Italy, Spain and Japan account for 80 percent of the total generics market. The United States will continue to remain the largest market in the world for generic pharmaceuticals in value terms.

It is estimated, the global generic drug market will grow to US$ 231.02 billion by 2017 with a CAGR 9.3 percent from 2010. The key growth drivers being:

  • Patent expiration of some blockbuster drugs
  • Entry of more biosimilars
  • High growth of emerging markets
  • Cost containment measures of governments and healthcare service providers in various countries

BRIC Countries strongly defend generic drugs:

Allegation of attacks on the generic industry by the patent holders of various drugs is also heard quite frequently.

It was reported that in a TRIPS Council meeting in mid 2012 held at the World Trade Organization (WTO), India, Brazil and China defended the right of access to cheap generic medicines by poor countries, strongly resisting attempts by the US, Japan and some other developed countries to club counterfeits or copies of patented drugs with fake or spurious ones.

They also argued that infringing intellectual property rights should not be confused with sub-standard products.

Many believe that because of the reported ‘clout of India, China and Brazil’ in the WTO, this attempt may not fructify despite such attempts.

India is surging ahead:      

It is interesting to note that out of top 10 fastest growing generic companies of the world, 4 are of Indian origin namely Glenmark, DRL, Sun Pharma and Taro (owned by Sun Pharma) and 3 definitely are home grown Indian companies, as follows:        

Top 10 Fastest Growing Generic Companies of the World:

No. Company Country Sales US$ Million Growth 2011 (%) Growth 2010 (%)
1. Sagent Pharmaceuticals USA 152 106 153
2. Perrigo USA 620 80 45
3. Nichi-Iko Pharmaceutical Japan 1300 79 25
4. Watson Pharmaceuticals USA 3320 46 38
5. Glenmark India 778 37 17
6. Dr. Reddy’s Laboratories (DRL) India 1480 34 15
7. Taro Pharmaceutical Israel 436 33 11
8. Sun Pharmaceuticals India 1650 29 52
9. Veropharm Russia 156 24 28
10. Polpharma Poland 580 22 20

(Source: FiercePharma)

India the pharmacy of the developing world:

According to a recent report India is now emerging as the ‘Pharmacy of the Developing World’, as it produces a large volume of high-quality, affordable generic medicines.

The study also highlights, “as a result of tough competition from the generic players of India, the price of first-line ARVs dropped from more than US$ 10,000 per person per year in 2000 to around $150 per person per year today. This significant price decrease has helped to facilitate the massive expansion of HIV treatment worldwide: more than 80 percent of the HIV medicines used to treat 6.6 million people in developing countries come from Indian producers, and 90 percent of pediatric HIV medicines are Indian-produced.”

Another study indicates, as a result of phenomenal success of the homegrown pharmaceutical companies:

  • 67 percent of medicines exports from India go to developing countries.
  • Main procurement agencies for developing countries’ health programs purchase their 
medicines in India, where there are quality products at low prices.
  • Approx. 50 percent of the essential medicines that UNICEF distributes in developing countries 
come from India.
  • 75-80 percent of all medicines distributed by the International Dispensary Association (IDA) to 
developing countries are manufactured in India. (IDA is a medical supplier operating on a 
not-for-profit basis for distribution of essential medicines to developing countries.)
  • In Zimbabwe, 75 percent of tenders for medicines for all public sector health facilities come from 
Indian manufacturers,
  • The state procurement agency in Lesotho, NDSO, states it buys nearly 95 percent of all ARVs 
from India.

This situation is going to further improve at a galloping pace in the years ahead with proper encouragement from the Government of India.

India tops the chart for ANDAs:

India, with its rapidly growing homegrown generic players, continues to top the Chart for Abbreviated New Drugs Applications (ANDAs) with USFDA by increasing its share year after year, as follows:

Year

Global

India

India’s Share %

2007

492

133

24.1

2008

483

143

27.9

2009

419

132

31.3

2010

419

142

34.0

2011

431

144

33.4

2012

476

178

37.4

Source: Pharmabiz, January 7, 2013 / US FDA

India tops the Chart in DMFs also:

Similarly, India continues to top the Chart with its Drug Master Files (DMF) for Active Pharmaceutical Ingredients (APIs), as follows:

No. Countries Filing Type II DMF
 1. India 2759
 2. USA 1323
 3. China 870
 4. Italy 644
 5. Japan 270
 6. Spain 268
 7. Germany 266
 8. France 170
 9. Israel 170
 10. Switzerland 136

Source: Pharma Times, August 2012

Moreover, domestic pharmaceutical companies have now between themselves, around 175 USFDA and approximately 90 UK-MHRA approved manufacturing units, to cater to the needs of high quality and affordable pharma products across the world. 

India not loosing its R&D Focus:

Discovery of new drugs being the bedrock for the pharmaceutical industry, domestic Indian companies are also not loosing focus on R&D activities. The New Chemical Entity (NCE) pipeline of the homegrown companies as on 2012 is as follows:

Piramal Healthcare 23
Suven Life Sciences 14
Zydus Cadila 11
Glenmark 8
Biocon 7
Torrent Pharma 6
Sun Pharma 5
Wockhardt 5
Ranbaxy 2
Dr Reddy’s Lab 2
Others 5

Source: Citeline Intelligence Services: Pharma R&D Annual Review 2013

Is the “west pressurizing India to change tack?”

In an interesting article published in ‘The Guardian’, the author observed that the western Pharmaceutical companies are putting health of world’s poor at risk. It commented that India makes cheap medicines for poor people around the world, but the EU, pharmaceutical firms and now the US are pressuring the ‘pharmacy of the developing world’ to change track. The same sentiment was echoed in another article published in Pharma Times.

However, the experts do feel that the Government of India, mostly due to intense public pressure, is well prepared to address any such situation, come what may. Thus, despite any retarding forces coming into play, the incessant march of the home grown pharmaceutical companies in search of excellence, especially in this space, is expected to continue even at a brisker pace.

The triggering factor:

Experts opine that the reason for excellence of the domestic Indian pharmaceutical industry, especially in the generic pharma landscape, is due to the amendment of the Indian Patents Act in 1970 allowing only process patents for drugs and pharmaceuticals.

The Government of India reportedly had taken such a path-breaking decision in the 70’s to lay the foundation of a vibrant domestic pharmaceutical industry capable of manufacturing low cost and high quality modern medicines for the health security of the country leveraging latest technology, including IT.

This decision was also directed towards creation of ‘drug security’ for the country as in the 70’s India was very heavily dependent on drug imports and the domestic pharmaceutical industry was virtually non-existent. 

Conclusion:

Paying kudos to the pharmaceutical ‘Crown Jewels’ of India, many industry watchers feel that the global pharma players are now keener than ever before to work with the domestic pharma industry, in various areas of business. This augurs well for all, as it will help creating a win-win situation to add further momentum to the growth of the pharmaceutical industry of India.

Be that as it may, taken in entirety and strengthened by its well-balanced patent laws, India  will continue to have a significant force multiplier effect to emerge as a global force to reckon with, particularly in this important space.

In tandem, with other significant cutting edges, as mentioned above, India is now well poised to be an “armageddon” – a contender of supremacy as a “pharmacy of the developing economies” despite selective allegations and  detrimental efforts by some vested interests.

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 R&D Factor: “One of the Great Myths of the Industry”

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Yes, that is what the global CEO of one of the Pharmaceutical giants of the world commented in a very recent interview with Reuters. Adding further to this comment he said, “US $1 billion price tag for R&D was an average figure that includes money spent on drugs that ultimately fail… If you stop failing so often, you massively reduce the cost of drug development  … It’s entirely achievable.”

Therefore, he concluded his interview by saying that the pharmaceutical industry should be able to charge much less for new drugs by passing on efficiencies in R&D to the customers.

A vindication:

The above comment does not seem to be a one off remark. A recent study on R&D productivity of 12 top pharmaceutical companies of the world by Deloitte and Thomson Reuters highlighted that the average cost of developing a new medicine is now US$ 1.1 billion with the most successful company in the group studied incurred an average cost of just US$ 315 million, while at the other extreme, another company spent US$ 2.8 billion.

How much of it then covers the cost of failures and who pays for such inefficiencies?

Some experts have gone even further:

Some experts in this area have gone even further arguing that pharmaceutical R&D expenses are over stated and the real costs are much less.

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

However, in 2006 this figure increased by 64 per cent to US$ 1.32 billion, as reported by a large overseas pharmaceutical industry association.

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

▪    The tax exemptions that the companies avail for investing in R&D.

▪   Tax write-offs amount to taxpayers’ contributing almost 40% of the R&D cost.

▪   The cost of basic research should not have been included, as these are mostly         undertaken by public funded universities or laboratories.

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

“High R&D costs have been the industry’s excuses for charging high prices”:

In the same article the authors strongly commented as follows:

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

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

 Another perspective to the “R&D Factor”:

A book titled “Pharmaceutical R&D: Costs, Risks, and Rewards”, published by the government of USA gives another perspective to the “R&D Factor”. It articulates that the three most important components of R&D investments are:

  • Money
  • Time
  • Risk

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

This publication also highlights that the cost of bringing a new drug from ‘mind to market’ depends on the quality and sophistication of science and technology involved in a particular R&D process together with associated investment requirements for the same.

In addition, regulatory demand to get marketing approval of a complex molecule for various serious disease types is also getting more and more stringent, significantly increasing their cost of clinical development in tandem. All these factors when taken together, the authors argue, make the cost of R&D not only very high, but unpredictable too.

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

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

Even reengineered R&D model may not be sustainable:

Many research scientists have already highlighted that sharp focus in some critical areas may help containing the R&D expenditure to a considerable extent and also would help avoiding the cost of failures significantly. The savings thus made, in turn, can fund a larger number of R&D projects.

The areas identified are as follows:

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

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

Should Pharmaceutical R&D move away from its traditional models?

Thus the critical point to ponder today, should the Pharmaceutical R&D now move from its traditional comfort zone of expensive one company initiative to a much less charted frontier of sharing drug discovery involving many players? If this overall approach gains acceptance sooner by all concerned, it could lead to increase in R&D productivity significantly at a much lesser cost, benefiting the patients community at large.

Finding right pathway in this direction is more important today than ever before, as the R&D productivity of the global pharmaceutical industry, in general, keeps going south and that too at a faster pace, prompting major cuts in the absolute R&D expenditure by many, as compared to the previous year.

A global R&D spend comparison (2011 and 12):

R&D expenditures in absolute terms of the following global companies in 2011 and 2012, without drawing any relationship to their respective R&D productivity, were reportedly as follows:

Company

2012

US$ Bn.

2011

US$ Bn.

% Change

% of Sale
Roche

10.10

8.81

13.7

21.0
Novartis

9.33

9.58

(3.0)

16.4
Merck

8.16

8.46

(4.0)

17.0
Pfizer

7.90

9.10

(13.0)

13.3
J&J

7.66

7.54

1.5

11.6
Sanofi

6.40

6.24

2.5

14.1
GSK

5.95

6.01

(1.0)

15.0
Eli Lilly

5.30

5.00

5.0

23.4
AstraZeneca

5.24

5.52

(5.0)

18.8
Abbott Labs

4.32

4.12

4.7

10.8
Total

70.36

70.38

 

 

Source: Fierce Biotech, March 18, 2013

This particular table points out that five out of the reported ten companies had to spend less towards R&D in 2012 as compared to 2011 and four out of the remaining five players were able to increase their R&D spend just marginally.

Thus the same question comes at the top of mind yet again: is the current pharmaceutical R&D model sustainable and working with optimal productivity and cost efficiency for  the benefits of patients?

Towards greater sustainability of the R&D model: 

A July 2010 study of Frost & Sullivan reports, “Open source innovation increasingly being used to promote innovation in the drug discovery process and boost bottom-line”.

It underscores the urgent need for the global pharmaceutical companies to respond to the challenges of high cost and low productivity in their respective R&D initiatives, in general.

The ‘Open Innovation’ model assumes even greater importance today, as we have noted above, to avoid  huge costs of R&D failures, which are eventually passed on to the patients through the drug pricing mechanism.

‘Open Innovation’ model, as they proposed, will be most appropriate to even promote highly innovative approaches in the drug discovery process bringing many brilliant scientific minds together from across the world.

The key objective of ‘Open Innovation’ in pharmaceuticals is, therefore, to encourage drug discovery initiatives at a much lesser cost, especially for non-infectious chronic diseases or the dreaded ailments like Cancer, Parkinson’s, Alzheimer, Multiple Sclerosis, including many neglected diseases of the developing countries, making innovative drugs affordable even to the marginalized section of the society.  

“Open Innovation” is very successful in IT industry:

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

In the sphere of Biotechnology ‘Human Genome Sequencing’ is another remarkable outcome of such type of R&D model. Therefore, why not a similar model be actively pursued in a much larger scale to discover newer and innovative drugs at a much lesser cost for greater access to patients?

Issues involved:

In the evolving process of ‘Open Innovation’ in pharma there are some issues to be addressed and at the same time some loose knots to be tightened to make the process increasingly more user friendly and robust. Many experts feel that the key issues for the ‘Open Innovation’ model are as follows:

▪   Who will fund the project and how much?

▪   Who will lead the project?

▪   Who will coordinate the project and find talents?

▪   Who will take it through clinical development and regulatory approval process?

That said, all these issues do not seem to be insurmountable problems at all to add greater speed and efficiency to the process, as the saying goes, ‘where there is a will, there is a way’.

Conclusion: 

Having deliberated on this issue as above, I reckon, there is a dire need to make the process of offering innovative drugs at affordable prices to the patients sustainable over a long period of time, for the sake of all.

This can happen only when there will be a desire to step into the uncharted frontier, coming out of much beaten and a high cost tract of R&D, especially after having picked-up the low hanging fruits. Dove tailing the passion for business excellence with the patients’ interest, dispassionately, will then be the name of the game.

As the Reuters article quoting the CEO of a global pharma major points out, in addition to improvements in research, increasing global demand for medicines and the explosion in the volume of products sold in emerging markets should also contribute to lower unit costs of the innovative drugs ensuring their greater access to patients.

This process, in turn, will help fostering a win-win situation for all stakeholders, exploding “one of the great myths of the industry” – The ‘R&D Factor’.

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 Pharmacy of the Developing World’ keeps its eye on the ball to emerge as ‘The Pharmacy of the World’

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The incessant march of the home grown pharmaceutical companies of India in search of excellence, especially in the space of high quality low cost generic medicines for almost all disease areas, continues at a scorching space, probably more than ever before.

It has been recently reported  that among the top 10 fastest-growing generic companies globally, three are now from India with Sagent Pharma of the U.S topping the league table. These ‘Crown Jewels’ of India are as follows:

Company Global rank Growth %
Glenmark pharmaceuticals 5 37
Dr. Reddy’s Laboratories (DRL) 6 34
Sun Pharma 8 29

In terms of country ranking, currently India is among the top 20 pharmaceutical exporting countries of the world. It exports high quality and very reasonably priced generic drugs to around 220 countries across the world, including highly regulated markets like USA and EU.

Today India contributes around 20 percent of the total volume of global generic formulations and has registered a CAGR of 21 percent between 2005 and 2011. It is, therefore, no wonder that India is popularly called ‘The Pharmacy of the Developing World’, despite many formidable challenges from various corners.

Focus on opportunities and less of moaning:

It is worth noting that Indian pharmaceutical players have been keeping their eyes on the ball always as they keep expanding their market access globally and do not seem to let go any opportunities untried, like:

  • Large number of blockbuster drugs going off- patent
  • Product portfolio strategy with many first-to-file products.

Unlike many others, these winners do not also seem to get engaged much in moaning, which could significantly dilute their operational focus. 

Aiming the top: 

Currently, more than a third of the Abbreviated New Drug Applications (ANDA) in the U.S is being filed by the domestic Indian players.  Another industry estimate indicates that the Indian companies are filling on an average around 1000 ANDAs every year to reap a rich harvest out of the available opportunity, which will increase by manifold as about US$150 billion worth of drugs go off-patent between 2010 and 2015 as reported by the Crisil Research.

Similarly, India accounted for 45 percent in 2009 and 49 percent in 2010 of the total Drug Master Filing (DMF) for bulk drug in the US, which has reportedly increased to 51 percent in 2011. 

The key trigger factor:

Experts opine that the reason for the domestic Indian pharmaceutical industry being able to be recognized as a global force to reckon with, especially in the generic pharma landscape, is due to the amendment of the Indian Patents Act in 1970 allowing only process patents for drugs and pharmaceuticals.

The Government of India had taken such a path-breaking decision in the 70’s to lay the foundation of a vibrant domestic pharmaceutical industry capable of manufacturing low cost and high quality modern medicines for the people of the country leveraging latest technology, including IT.

This decision was also directed towards creation of ‘drug security’ for the country as in the 70’s the country was very heavily dependent on drug imports and the domestic pharmaceutical industry was virtually non-existent. 

The rich pay-off:

Though the country reverted to the product patent regime again in January 1, 2005, the critical mass that the home grown pharma industry had developed during almost thirty five years’ time in between, had catapulted India towards achieving today’s self-sufficiency in meeting the needs of affordable drugs for the ailing population of the country and perhaps including even those living beyond the shores of India.

The above ‘trigger factor’ has indeed paid a rich dividend to the country, by any yardstick. Currently India ranks third globally in terms of manufacturing of pharmaceutical products in volume.

Moreover, domestic pharmaceutical companies have now between themselves around 175 USFDA and approximately 90 UK-MHRA approved manufacturing units to cater to the needs of high quality and affordable pharma products across the world. 

The Leading Indian Pharmaceutical ‘Crown Jewels’:

The following are the leading Indian Pharmaceutical players in terms of sales:

Company Sales in US $Mn Year End
Cipla 6,368.06 March 2011
Ranbaxy Lab 5,687.33 December 2010
Dr Reddy’s Labs 5,285.80 March 2011
Sun Pharma 1,985.78 March 2011
LupinLtd 4,527.12 March 2011
Aurobindo Pharma 4,229.99 March 2011
Piramal Health 1,619.74 March 2011
Cadila Health 2,213.70 March 2011
Matrix Labs 1,894.30 March 2010
Wockhardt 651.72 December 2011

(Source: India Biz News: April 13, 2012)

Domestic Indian pharmaceutical companies currently control not only over 75 percent of the total domestic market, but also export low cost and high quality drugs to over 220 countries, as mentioned above, including  US, EU, Kenya, Malaysia, Nigeria, Russia, Singapore, South Africa, North Africa, Ukraine, Vietnam, and now Japan.

US accounts for 22 percent of the total Indian pharmaceutical exports, with Africa accounting for 16 percent and the Commonwealth of Independent States (CIS) eight percent, as reported by India Biz News: April 13, 2012.

Incessant growth story:

As reported by Dolat Capital, US generic market currently estimated at US $350 billion, is expected to grow by around 12 to13 per cent over 2011to15 period keeping the Indian pharmaceutical growth story intact, adding albeit more shin to it.

After the new healthcare reform brought in by President Barrack Obama, generic drugs now play a critical role in the US healthcare system, predominantly driven by the cost containment pressure of the government.

According to the Generic Pharmaceutical Association of US, generic medicines saved the healthcare system of the country over US$734 billion during 1999 to 2008 period. Expenditure on patented medicines being one of the fastest-growing components of healthcare costs, over a period of time, has now become a prime target for cost reduction by the US government.

‘The Guardian’ guards:

Some international experts do contemplate that potentially retarding global forces may attempt to cast their dark shadows over the well hyped ‘India Pharma Shining Story’ in the generic space of the industry from time to time, which needs to carefully guarded against and more importantly effectively negated.

In an interesting article, though in a different context, titled “Pharmaceutical companies putting health of world’s poor at risk: India makes cheap medicines for poor people around the world”, recently published in ‘The Guardian’, the author Hans Lofgren, an associate professor in politics at Deakin University, Melbourne articulates as follows:

“The EU, pharmaceutical firms and now the US are pressuring the ‘pharmacy of the developing world’ to change tack”.

Lofgren further commented: “We ought to be asking why governments in the rich world still seem happy to checkmate the lives of poor people to save their political skins. And why the pharmaceutical industry sees India as such a threat. Could it be that they detect the whiff of real competition?”

Conclusion: 

Be that as it may, after gaining the required critical mass, the shining story of the home grown pharmaceutical industry of India seems to be irreversible now, despite possible challenges as they will emerge.

Paying kudos to the pharmaceutical ‘Crown Jewels’ of India, many industry watchers feel that the global industry is now keener than ever before to take extra steps to keep the domestic pharma industry, enjoying a mind boggling over 75 percent share of the Indian Pharmaceutical Market, in the forefront and in a good humor to achieve their India objectives.

‘The Pharmacy of the Developing World’ should, therefore, continue to keep its eye on the ball keeping the flocks together and try to effectively translate it into the ‘The Pharmacy of the World’, as the global community keeps looking at this great transformation as a ‘miracle’ with much admiration and probably blended with a dash of awe and envy.

By: Tapan J Ray  

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

India: Too Enticing a Pharma Market to Ignore by the Global Players despite unhappiness

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A White-Paper, titled “Emerging Markets Today and Tomorrow: Insights on Healthcare, Pharmaceuticals and Future Trends in the BRIC Landscape”, released by a global technology and services company specializing in healthcare, Cegedim, in June, 2012 highlighted that 20 to 30 percent of the profit of the global pharmaceutical companies now comes from the emerging markets of Brazil, Russia, India and China (BRIC).

The paper also indicated that just five years ago these markets contributed a meager 5 percent of profits of the global pharma players. Hence, in the evolving paradigm getting the relationship right between these BRIC healthcare markets and the global pharmaceutical manufacturers will differentiate men from the boys.

Maintaining a flexible country-specific business strategy accompanied by a diverse product portfolio is going to be the name of the game in these potential eldorados, the authors articulated in the paper.

It is indeed absolute no-brainer for anyone to make out how critical the emerging markets are to the global pharmaceutical players in the rapidly evolving scenario, despite many tough legal and policy measures taken by the governments in these markets in favor of public health interest.

The Emerging Markets of the World:

Unlike developed markets, emerging pharmaceuticals market of the world, like, India, China, Brazil, Russia, Mexico, Turkey and Korea, are showing a robust growth rate, quite commensurate to the ascending GDP growth trend of these countries.

According to IMS, the CAGR trend of the developed and ‘Emerging Markets’ for the period of 2007–11, are as follows:

Mature Markets

CAGR 2007-11

Emerging Markets

 CAGR 2007-11
USA 4-7% China 13-16%
Canada 6-9% Korea 8-11%
Japan 2-5% Brazil 9-12%
Germany 3-6% Russia 17-20%
France 2-5% Mexico 6-9%
Italy 3-6% India 11-14%
UK 4-7% Turkey 9-12%
Spain 5-8%

(Source IMS)

Key growth drivers in the Emerging Markets:

It is worth noting, unlike the developed markets of the world, where high priced branded patented drugs drive the value growth of the industry, in the emerging markets, where investment towards R&D is relatively less, branded generic and the generic products are the key growth drivers.

Such an evolving situation has prompted large global majors like Pfizer, GSK, Sanofi, Daiichi Sankyo and Abbott Laboratories, to name a few, either to acquire large generic or biosimilar or nutraceutical drug companies or ink various interesting and win-win collaborative deals in India to maintain their global business growth. 

‘Enticing factors’ for India:

Expected ‘Enticing Factors’ for India, in my views,  will be as follows:

  • A country with 1.13 billion population and a GDP of US$ 1.8 trillion in 2011 is expected to grow at an average of 8.2 percent in the next five year period
  • Public health expenditure to more than double from 1.1 percent of the GDP to 2.5 percent of GDP in the Twelfth Five Year Plan period (2012-17)
  • Government will commence rolling out ‘Universal Health Coverage’ initiative
  • Budget allocation of US$ 5.4 billion announced towards free distribution of essential medicines from government hospitals and health centers
  • Greater plan outlay for NRHM, NUHM and RSBY projects
  • Rapidly growing more prosperous middle class population of the country
  • High quality, cost effective, fast growing domestic generic drug manufacturers who will have increasing penetration in both local and emerging markets
  • Rising per capita income of the population and relative in-efficiency of the public healthcare systems will encourage private healthcare services of various types and scales to flourish
  • Expected emergence of a robust health insurance model for all strata of society as the insurance sector is undergoing reform measures
  • Fast growing Medical Tourism
  • World class local outsourcing opportunities for evolving combo-business model of global pharmaceutical companies with both patented and branded generic drugs

Many global players are still out of step with time in India:

It appears many global pharma companies are still quite out of step with time in India and are trying hard to get a less challenging environment to grow their business in the country.

However, I reckon, all these companies ultimately willy-nilly will require coming to terms with the following current pharmaceutical business environment in India formulating fresh innovative strategies, earlier the better:

  • Pricing pressure from the government or even from the Supreme Court, which may soon include patented and imported products under price regulation
  • Current Patent Law is unlikely to change, hence threat of Compulsory Licensing (CL) for patented products with exorbitant price tags will continue to loom large
  • Pressure may build-up for technology transfer/local manufacturing of patented products
  • Close government scrutiny on pharmaceutical marketing practices
  • More stringent drug regulatory norms, especially in areas of clinical trials

Indonesia has set an example:

Just to cite a relevant example in this context, Indonesia has clearly spelt out its intention by specifying that the pharmaceutical companies marketing their products in Indonesia will need to establish local manufacturing facilities. The new rule is directed towards local job creation.

The Health Minister of Indonesia had said, “If they want to get licenses (to sell their products) they have to invest here also, not just take advantage of the Indonesian market.” The Minister further added, “They can’t just operate like a retailer here, with an office that’s three meters by three, and make billions of rupiah. That’s not fair.” It is not unlikely that India may also come out with similar requirements for the global players for more sustainable job creation.

However, U.S. Chamber of Commerce had registered a strong protest in this matter with the President of Indonesia and has urged a reversal of this decision. However, the country appears to have taken a firm stand in this matter. This is evident when in response to the report that some global pharmaceutical companies have threatened withdrawal of their business from Indonesia because of this reason, the Health Minister had retorted, “If they want to go away, go ahead.” 

Challenging to avoid current patent regime in India:

It will be extremely challenging for the global players to avoid the current patent regime in India, even if they do not like it. This is mainly because of the following reasons:

  • If an innovator company decides not to file a product patent in India, it will pave the way for Indian companies to introduce copy-cat versions of the same in no time, as it were, at a fractional price in the Indian market. Further, there would also be a possibility of getting these copy-cat versions exported to the unregulated markets of the world from India at a very low price, causing potential business loss to the innovator companies.
  • If any innovator company files a product patent in India, but does not work the patent within the stipulated period of three years, as provided in the patent law of the country, in that case any Indian company can apply for CL for the same with a high probability of such a request being granted by the Patent Controller. 

Five ‘New Strategic Changes’ envisaged:

Five new key strategic changes, in my view, are expected in the Indian pharmaceutical market over a period of time, as follows:

1. As the country will move towards an integrated and robust ‘Universal Health Coverage’ along with comprehensive health insurance systems:

  • Doctors may no longer remain the sole decision makers for the drugs that they will prescribe to the patients and the way they will treat the common diseases. Government, other healthcare providers/ medical insurance companies will start playing a key role in these areas by providing to the doctors well thought out treatment guidelines
  • For a significant proportion of the products that the pharmaceutical companies will sell, tough price negotiation with the healthcare providers/ medical insurance companies will be inevitable
  • More sophisticated pricing methodologies like Health Technology Assessment (HTA) or outcomes based pricing may be followed by the drug price regulators like National Pharmaceutical pricing Authority (NPPA).

2. An integrated approach towards disease prevention may be considered as important as the treatment of diseases.

3. A shift from just product marketing to marketing of a bundle of value added comprehensive disease management processes along with the product may be the order of the day

4. Over the counter medicines, especially originated from natural products for common and less serious illnesses may carve out a larger share, as appropriate regulations are put in place

5. Pharmaceutical Marketing Practices will come under intense regulatory scrutiny 

Some questions on long term lucrativeness of the emerging markets?

One school of thought does feel that in the long run, the emerging pharmaceutical markets, like India, may not remain as lucrative to the global pharmaceutical majors. However, that does not mean either that the companies will shut shops in india.

The key reason being, around 80 percent ‘out of pocket’ expenditure for healthcare in India, could be the key impediment to expanded access to higher priced innovative medicines, in general.

Such a situation could seriously limit the success of branded patented drugs in the country as compared to the developed markets of the world. The issue of affordability of such medicines will continue to be a key factor for their improved access in India, if the ground reality remains unchanged.

Top line business growth with Generics and Branded Generics in the emerging markets may not be sustainable enough, in the long run, for the innovator companies to adequately fund their R&D initiatives to create expected shareholders’ value. 

The opposite school of thought:

The other school of thought, however, argues that ‘out-of pocket” characteristic of India is indeed more sustainable in terms of cost containment pressure, than those markets where the government or health insurance companies cover a large part of the medical expenses for the population.

Every year around 1 percent of population comes above the poverty line in India together with a growing ‘middle income’ segment with increasing purchasing power. This cycle, in turn, will keep fueling the growth of healthcare space, contributing significantly to the progress of the pharmaceutical industry of the country. 

Conclusion:

Be that as it may, to excel in India global pharmaceutical companies will need to find out innovative win-win strategies for all the above India specific issues.

Drug pricing, public health oriented patent regime, technology transfer/local manufacturing of products and stringent regulatory requirements in all pharmaceutical industry related areas, in the interest of the general population, are expected to be the key areas to be expeditiously addressed in the business models of the global pharmaceutical companies for India.

That said, despite various tough measures taken by the government in favor of public interest, as mentioned above, India will continue to remain too enticing a pharmaceutical market to ignore by the global players probably for any time to come in future. If not, many experts believe, flourishing and dynamic domestic pharmaceutical industry will be delighted to have the whole cake and eat it too.

By: Tapan J Ray    

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

“Bad Pharma: How Drug Companies Mislead Doctors and Harm Patients”: Exploring the book to be released in the Indian context

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The title of today’s article could make some of the readers uncomfortable and angry, just as what I experienced while writing the same, being a long time follower and student of the pharmaceutical industry, both global and local.

Ethical business conduct and value standards, especially of medium, large to very large pharmaceutical corporations both in India and across the world are coming increasingly under stakeholders’ scrutiny, besides being severely criticized for non-compliance in many instances by the regulators, judiciary and public at large. We shall find many such examples over a long period of time even from within our own land.

There is no global consensus, as yet, on what is ethically and morally acceptable ‘Business Ethics and Values’ across the world, although there are some very strong common parameters that can be globally followed.

In many companies’ websites such standards are also available in their minutest details. Unfortunately, even some of those companies are also being reportedly held guilty for blatant violations of their own set standards of ethics and compliance.

This trend could prompt one to believe, sincere attempts are still lacking to ensure effective implementation of such well drafted ‘Business Ethics and Values’ in country-specific ways by many of these companies.

The most challenging obstacle to overcome in this area by the corporates, I reckon, would still remain ‘walking the talk’, owning the responsibility and taking sustainable remedial measures, at least when these violations are conclusively established followed by penal actions.

A new book with graphic details: 

In this context, ‘The Economist’ in its September 29, 2012 reviewed a book titled ‘Bad Pharma: How Drug Companies Mislead Doctors and Harm Patients’, written by Ben Goldacre, a British doctor and science writer. According to Amazon the book is due to be released on January 8, 2013.

In this book the author describes incidences of routine corruption in the healthcare system and brings out to the fore citing details of some of the following areas, how patients’ interests are being continuously and blatantly compromised by many pharmaceutical companies unabated, just for commercial gain:

  1. Pharmaceutical companies bury clinical trials which show bad results for a drug and publish only those that show a benefit.
  2. The trials are often run on small numbers of unrepresentative patients, and the statistical analyses are massaged to give as rosy a picture as possible.
  3. Entire clinical trials are run not as trials at all, but as ‘under-the-counter advertising campaigns’ designed to persuade doctors to prescribe a company’s drug.

Dr. Ben Goldacre does not spare the drug regulators also as he writes, ‘drug regulators, who do get access to some of the hidden results, often guard them jealously, even from academic researchers, seeming to serve the interests of the firms whose products they are supposed to police.’

The author also writes that ‘many studies published in reputed medical journals are written by the commercial ghostwriters, who are paid by the pharmaceutical companies and are not written by those whose names appear as the author of those studies. He laments that based on such clinical trial reports blitzkrieg expensive marketing campaigns are conducted to influence doctors prescribing such drugs.

None of the above instances is unreported in India, may be in forms which are many shades worse than what has been described by Dr. Ben Goldacre in his above book.

‘The Economist’ recommends that ‘this is a book that deserves to be widely read, because anyone who does read it cannot help feeling both uncomfortable and angry’.

India can’t delay tightening its belt any further:

The concerns of Dr. Ben Goldacre are also being expressed in India quite vocally, almost in all the areas as mentioned above. Thus India needs to tighten its regulatory systems and ensure proper implementation of all its policies, and if required framing some new ones, so that the country can come out of this quagmire which severely hurts the patients’ interests at large.

Among many others, two critical areas where such alleged corporate malpractices are being continuously reported are as follows:

I. Clinical Trials

II. Marketing Practices 

I. Ethical concerns over Clinical Trial in India are not getting mitigated:

Clinical trial system still remains a critical area of concern in India. 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.”

Because of this reason, on October 8, 2012 the Supreme Court reportedly asked the government to provide details of clinical trials being conducted across the country, which will include drug side effects and clinical trial related deaths, in which case compensation, if any, paid to the victims or to their family members.

This direction came from the apex court of the country while hearing a Public Interest Litigation (PIL) alleging Indian citizens are being used as guinea pigs during clinical trials by the pharmaceutical companies all over the country, mainly due to lack of informed consent of the enrolled patients and thereafter short changing their interest citing various reasons.

Clinical-trials process of the country is now, therefore, under intense scrutiny of the government, NGOs and also of the judiciary after a number of scandals focusing on malpractices, somewhat similar to what Dr. Ben Goldacre has highlighted in his book, as mentioned above. These series of events have recently prompted the regulators to come out with proposals of reforms in this important area, for all concerned.

The Parliament intervened:

Recently the department related ‘Parliamentary Standing Committee (PSC)’ on Health and Family Welfare presented its 59th Report 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 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.”

Regulators woke-up:

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 only 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 compliance of specified stringent conditions.

However, some experts do apprehend that such stringent system could give rise to significant escalation in the costs of clinical trials for the pharmaceutical players.

Similarly to assess right compensation for clinical trial related injuries or deaths following parameters were 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.

 II. Ethical concerns on marketing malpractices in India: 

This issue has no longer remained a global concern. Frequent reports by Indian media have already triggered a raging debate in the country on the subject, involving even the Government and also the Parliament. It has been reported that a related case is now pending with the Supreme Court for hearing in not too distant future.

In 2010, ‘The Parliamentary Standing Committee on Health’ expressed its deep concern that “the evil practice” of inducement of doctors continued because the Medical Council of India (MCI) had no jurisdiction over the pharma industry and it could not enforce the code of ethics on it.’

It was widely reported that the letter of the Congress Member of Parliament, Dr. Jyoti Mirdha to the Prime Minister Dr. Manmohan Singh, attaching a bunch of photocopies of the air tickets to claim that ‘doctors and their families were beating the scorching Indian summer with a trip to England and Scotland, courtesy a pharmaceutical company’, compelled the Prime Minister’s Office (PMO) to initiate inquiry and action on the subject.

The letter had claimed that as many as 30 family members of 11 doctors from all over India enjoyed the hospitality of the pharmaceutical company.

In addition Dr. Mirdha reportedly wrote to the PMO that “The malpractice did not come to an end because while medical profession (recipients of incentives) is subjected to a mandatory code, there is no corresponding obligation on the part of the healthcare industry (givers of incentives). Result: Ingenious methods have been found to flout the code.”

The report also indicated at that time that the Department of Pharmaceuticals (DoP) is trying to involve the Department of Revenue under the Ministry of Finance to explore the possibilities in devising methods to link the money trail to offending companies and deny the tax incentives.

Incidences of such alleged malpractices related to financial relationship between the pharmaceutical companies and the medical profession are unfolding reasonably faster now. All these issues are getting increasingly dragged into the public debate where government can no longer play the role of a mere bystander.

Taking the first step closer to that direction, Central Board of Direct Taxes (CBDT), which is a part of Department of Revenue in the Ministry of Finance has now decided to disallow expenses on all ‘freebies’ to Doctors by the Pharmaceutical Companies in India.

A circular dated August 1, 2012 of the CBDT that the any expenses incurred by the pharmaceutical companies on gifts and other ‘freebies’ given to the doctors will no longer be allowed as business expenses. 

Conclusion:

Statistics of compliance to ‘The Codes of Business Ethics & Corporate Values’ are important to know, but demonstrable qualitative changes in the ethics and value standards of an organization should always be the most important goal to drive any business corporation, the pharmaceutical industry being no exception.

The need to formulate ‘Codes of Business Ethics & Values’ and even more importantly their compliance are gradually gaining importance and relevance in the globalized business environment.

However, quite in conflict with the above initiative, at the same time, many pharmaceutical corporations across the world are being increasingly forced to come to terms with the heavy costs and consequences of ‘unethical behavior and business practices’ by the respective governments and judiciary. Unfortunately the Juggernaut still keeps moving, perhaps arising out of intense pressure for corporate business performance.

I am not quite sure though, whether such an expectation for ‘Corporate Ethics and Values’ is ‘utopian’ for the pharmaceutical industry or can be translated into reality with some amount of sincere efforts and commitment. However, if it does not happen, sooner than later, the ‘Bad Pharma’ image of the pharmaceutical industry across the world, as enunciated by Dr. Ben Goldacre in his book, will continue to linger inviting increasingly fierce public wrath along with stringent government regulatory controls and judicial interventions.

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.

Early Signal of Metamorphosis in the Global Pharmaceutical Product Patent Regime

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Before enactment of the Indian Patents Act (amended) 2005, it was widely reported that to protect ‘Public Health Interest’, the Parliament of India has ensured inclusion of a number of ‘safeguards’ including checks on ‘ever-greening’ of pharmaceutical patents and broader provisions for the grant of ‘Compulsory License’ in India.

Such provisions in the Patents Act of any country were almost non-existent at that time and eventually got translated into an eye of a storm spreading across the continents.

Most probably, none could fathom at that juncture, the magnitude of profound impact of the steps taken by the Indian Parliament on the global pharmaceutical product patent regime over a period of time, slowly but steadily. On the contrary, many expected that because of intense global pressure, at least, some of these ‘safeguards’ will subsequently be amended in favor of the innovators.

Instead and surprisingly, despite such intense pressure, especially from the U.S. and Europe, some countries gradually started following similar direction as India did in 2005.

Support of the Experts Group:

Similarly, support of the global expert groups on the above ‘safeguard’ provisions of the Indian Patent Act 2005 has now started surfacing.

This month, September 10, 2012 edition of ‘The Lancet’ featured an article titled, “India’s patent laws under pressure.” Supporting the above safeguard provisions the authors commented as follows:

“The TRIPS Agreement does not limit the grounds on which compulsory licenses can be granted, and does not prevent patent applicants from having to demonstrate enhanced efficacy for their allegedly new and useful inventions. There are many problems facing access to and rational use of medicines in India but the provisions within the country’s patent laws, if more extensively and properly applied, should help rather than hinder such access. India’s laws and experiences could provide a useful example for low-income and middle-income countries worldwide.

Interestingly, The Times of India dated September 14, 2012 in its editorial commented that

“Instead of being browbeaten by foreign multinationals and pressure from the US government, Indian drug policies should be designed to nudge them along this path, while protecting patients and the generic-drug industry. Indian pharma, like Chinese manufacturing, is a potent global force. In the 21st century we ought to move beyond rather than strengthen a system where brown and black people are denied access to life saving drugs.”

Even more recently on September 15, 2012, the business daily of India, The Hindu Business Line reported that dismissing the stay petition of Bayer on the Compulsory License (CL) granted for its Sorafenib Tosylate to Natco, the Intellectual Property Appellate Board (IPAB) comprising its Chairman, Justice Prabha Sridevan, and member D. P. S. Parmar, in the order passed on September 14, 2012 said that, “if stay is granted, it will jeopardize the interest of public who are in the need of the drug. The appellant has not made out any case for granting a stay.”

On the price of Bayer’s Nexavar, Justice Prabha Sridevan further stated that “Selling at Rs 2.80 lakh (US$ 5,100 approx.) can by no stretch of imagination satisfy the requirement of the public.”

Capturing an emerging trend with some examples:

This trend for all practical purpose started with India and may be captured as follows:

India:

Amendment of the India Patents Act in January, 2005, as mentioned above, may in all practical purpose be construed as the beginning of the changing process.

Philippines:

For a long time Philippines remained a market of the highest price medicines as compared to most other Asian countries. However, effective July 4, 2008, the country enacted a law known as “Universally Accessible Cheaper and Quality Medicines Act” reportedly  to protect public health interest. The law:

  • Directed amendment of the Patent Act to limit the monopoly of the patent owners by expanding the scope for non-patentable inventions and redefining inventive step provision, similar to section 3(d) of Indian Patents Act 2005
  • Allowed parallel importation of drugs already released in the international market as limitation to patent rights
  • Provided for the use, by the government or its authorized third party, of the invention even without the agreement of the patent owner, in cases of national emergency, circumstances of extreme urgency, public non-commercial use or inadequately met demand
  • Added ‘inadequately met demand’ as a ground for the grant of Compulsory License.

Taiwan:

In 2009, ‘Taiwan’s Intellectual Property Office (TIPO)’ amended  the Patent Act, again for public health interest, in the following areas, among others:

  • Patentability
  • Public health
  • Compulsory license

China:

The State Intellectual Property Office (SIPO) has announced that the revised version of ‘Measures for the Compulsory Licensing for Patent Implementation’ has already been made operational in China effective May 1, 2012.

Interestingly, for “reasons of public health”, such medicines can also be exported under ‘Compulsory License’ to other countries, including those members of the World Trade Organization, where life-saving treatments are unaffordable.

In tandem, China, reportedly, is in the process of further strengthening its legal framework for local manufacturing of generic equivalents of patented drugs in the country.

Argentina:

Recently Argentina reportedly  has come out with an amendment in their patent law for public health interest and has put in place new guidelines for patents, which besides others, include stringent provisions on patentability quite similar to the Section 3(d) of Indian Patents Act 2005.

Another signal from Asia though disease specific:

From May 29 – 31, 2012, over 90 representatives of government, academia, civil society and the United Nations assembled at the Regional Consultation and Planning Workshop in Bangkok  to deliberate on “Use of TRIPS Flexibilities and Access to Affordable ARVs in Asia.”

The participants felt that in the days ahead there may be several public health related issues where the governments will require making exceptions in form of sovereign decisions to Intellectual Property (IP) Rights to save millions of precious lives.

A close watch for Public Health Interest in South Africa:

It has recently been reported that in South Africa, health activists together with other stakeholders of the local pharmaceutical industry are maintaining close vigil over the possibly amendment of the country’s patent laws by the government. They argue that no such decision to be taken, which can jeopardize access to cheaper generic medicines by the marginalized section of the society.

A review by UNDP:

In a paper titled, “Five years into the Product Patent Regime: India’s response”, published by United Nations Development Program (UNDP), the authors reiterated that in compliance with TRIPS agreement, India re-introduced the product patent protection in pharmaceuticals from  January 1, 2005 by amending its Patent Laws. This development led to serious concerns at that time about the continuing ability of Indian generic companies to supply low cost and high quality medicines across the world. However, these concerns were taken seriously by the Indian Parliament, which utilized flexibilities available under TRIPS to help securing the availability, affordability and accessibility of such medicines in an uninterrupted manner.

The authors concluded by re-emphasizing their views that the Indian patent law contains robust built-in safeguards to eliminate a significant amount of ‘patent barriers’ to reasonably affordable low cost and high quality generic medicines, especially for the poor.

Opposite school of thoughts:

In a paper  titled “Strengthening the Patent Regime: Benefits for Developing countries – A Survey”, published in the Journal of Intellectual Property Rights, the authors concluded that innovativeness of developing countries has now reached a stage where it is positively impacted by a robust Intellectual Property regime. The authors further stated that a robust patent ecosystem is among other important policy variables, which affect inflow of Foreign Direct Investments (FDI) in the developing nations.

Another paper titled, “The Impact of the International Patent system in the Developing Countries”, published by the ‘World Intellectual Property Organization (WIPO)’, though a bit dated of October 2003, states that a robust national patent system in developing countries contributes to their national socioeconomic development.  The paper also highlights the experience of some developing nations, which found usefulness of a strong patent system in creation of wealth for the nation.

Conclusion:

Currently, the issue of giving priority to the public health dimension of TRIPS has become a subject of a raging debate across the world.

As a result, most of the developing countries tend to feel the need of meeting only the minimum standard as specified in the TRIPS Agreement, despite strong opposition mainly from the developed countries of the world.

As indicated in the UNDP paper quoted above, many experts are increasingly highlighting that in order to protect public health interest across the world, the Doha declaration has been a watershed agreement within the global product patent regime. It effectively plugged many loop holes providing adequate flexibilities to the sovereign governments to ensure improved access to medicines, especially for the marginalized section of the society and still being able to encourage, protect and reward innovation in a true win-win situation for all.

The examples as cited above would possibly indicate that gradually many more countries will avail the flexibilities as provided in the Doha declaration, in the years ahead. Though these are very early days, the emerging sequence of global events does send a signal of metamorphosis in the global pharmaceutical product patent regime, paving the way of yet another paradigm shift in not too distant future.

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.