Tag Archives: to

Buying Physicians’ Prescriptions in Cash or Kind: A Global (Dis)Order?

Posted on by
Reply

Recently a European business lobby reportedly raised its voice alleging pharma Multinational Corporations (MNCs) in China have been ‘unfairly targeted’ by a string of investigations into bribery and price-fixing cases despite their generally ‘strong legal compliance’ and has suggested that China ‘must step back.’

Two comments of this European lobby group, presumably with full knowledge of its past records, appear indeed intriguing, first – ‘unfairly targeted’ and the second – ‘China must step back’, that too when a reportedly thorough state investigation is already in progress.

Reality is all pervasive:

However, while looking over the shoulder, as it were, an altogether different picture emerges and that reality seems to be all pervasive.

Over the past several decades, the much charted sales and marketing frontier in the pharmaceutical industry has been engagement into a highly competitive ‘rat race’ to create a strong financial transactional relationship, of various types and forms, with the physicians, who only take the critical prescription decisions for the patients. Most of the times such relationships are cleverly packaged with, among many others,  a seemingly noble intent of ‘Continuing Medical Education (CME)’ by the companies concerned.

Increasingly, across the globe, more questions are now being raised whether such pharmaceutical business practices should continue even today. These voices are gradually getting louder fueled by the recent moves in the United States to ‘separate sales and marketing related intents of the drug industry from the practice of medicine’, especially in large medical teaching hospitals, in tandem with the enactment and practice of ‘Physician Payment Sunshine Act 2010’.

A recent article titled, “Breaking Up is Hard to Do: Lessons Learned from a Pharma-Free Practice Transformation”, published in the ‘Journal of the American Board of Family Medicine’ deliberated on an interesting subject related to much talked about relationship between the doctors and the pharmaceutical players.

The authors argue in this paper that significant improvement in the quality of healthcare in tandem with substantial reduction in the drug costs and unnecessary medications can be ensured, if the decision makers in this area show some willingness to chart an uncharted frontier.

‘Questionable’ relationship in the name of providing ‘Medical Education’:

‘The Journal of Medical Education’ in an article titled “Selling Drugs by ‘Educating’ Physicians” brought to the fore the issue of this relationship between the pharma industry and individual doctors in the name of providing ‘medical education’.

The article flags:

“The traditional independence of physicians and the welfare of the public are being threatened by the new vogue among drug manufacturers to promote their products by assuming an aggressive role in the ‘education’ of doctors.”

It further elaborates that in the Congressional investigation in the United States on the cost of drugs, pharma executives repeatedly stated that a major expenditure in the promotion of drugs was the cost of ‘educating’ physicians to use their products.

The author then flagged questions as follows:

  • “Is it prudent for physicians to become greatly dependent upon pharmaceutical manufacturers for support of scientific journals and medical societies, for entertainment and now also for a large part of their ‘education’?”
  • “Do all concerned realize the hazards of arousing wrath of the people for an unwholesome entanglement of doctors with the makers and sellers of drugs?”

Financial conflicts in Medicine:

Another academic paper of August 13, 2013 titled, “First, Do No Harm: Financial Conflicts in Medicine” written by Joseph Engelberg and Christopher Parsons at the Rady School of Management, University of California at San Diego, and Nathan Tefft from the School of Public Health at the University of Washington, states:

“We explored financial conflicts of interest faced by doctors. Pharmaceutical firms frequently pay physicians in the form of meals, travel, and speaking fees. Over half of the 334,000 physicians in our sample receive payment of some kind. When a doctor is paid, we find that he is more likely to prescribe a drug of the paying firm, both relative to close substitutes and even generic versions of the same drug. This payment-for-prescription effect scales with transfer size, although doctors receiving only small and/or infrequent payments are also affected. The pattern holds in nearly every U.S. state, but it is strongly and positively related to regional measures of corruption.”

On this paper, a media report commented:

“The findings – based on recently released data that 12 companies have been forced to make public as a result of US regulatory settlements – will rekindle the debate over the limits of aggressive pharmaceutical marketing, which risks incurring unnecessarily costly medical treatment and causing harm to patients.”

A call for reform:

The first paper, as quoted above, titled “Breaking Up is Hard to Do” reiterates that even after decades, individual practitioner still remains the subject to undue influence of the pharmaceutical companies in this respect. It categorically points out:

“The powerful influence of pharmaceutical marketing on the prescribing patterns of physicians has been documented and has led to fervent calls for reform at the institutional, professional, and individual levels to minimize this impact.”

The rectification process has begun in America:

Interestingly, even in the United States, most physicians practice outside of academic institutions and keep meeting the Medical Representatives, accept gifts and drug samples against an expected return from the drug companies.

Many of them, as the paper says, have no other process to follow to become ‘pharma-free’ by shunning this hidden primitive barrier for the sake of better healthcare with lesser drug costs.

To achieve this objective, many academic medical centers in America have now started analyzing the existing relationship between doctors and the drug companies to limit such direct sales and marketing related interactions for patients’ interest.

This unconventional approach will call for snapping up the good-old financial transactional relationship model between the doctors and Medical Representatives of the Pharma players, who promote especially the innovative and more costly medicines.

An expensive marketing process:

The authors opine that this is, in fact, a very powerful marketing process, where the pharmaceutical players spend ‘tens of billions of dollars a year’. In this process more than 90,000 Medical Representatives are involved only in the United States, providing free samples, gifts along with various other drug related details.

The study reiterates that deployment of huge sales and marketing resources with one Medical Representative for every eight doctors in the United States, does not serve the patients interests in any way one would look into it, even in terms of economy, efficacy, safety or accuracy of information.

“But Don’t Drug Companies Spend More on Marketing?”

Yet another recent article, captioned as above, very interestingly argues, though the drug companies spend good amount of money on R&D, they spend much more on their marketing related activities.

Analyzing six global pharma and biotech majors, the author highlights that SG&A (Sales, General & Administrative) and R&D expenses vary quite a lot from company to company. However, in this particular analysis the range was as follows:

SG&A 23% to 34%
R&D 12.5% to 24%

SG&A expenses typically include advertising, promotion, marketing and executive salaries. The author says that most companies do not show the break up of the ‘S’ part separately.

A worthwhile experiment:

Removing the hidden barriers for better healthcare with lesser drug costs, as highlighted in the above “Breaking Up is Hard to Do” paper, the researchers from Oregon State University, Oregon Health & Science University and the University of Washington outlined a well conceived process followed by one medical center located in central Oregon to keep the Medical Representatives of the pharmaceutical companies at bay from their clinical practice.

In this clinic, the researchers used ‘a practice transformation process’ that analyzed in details the industry presence in the clinic. Accordingly, they educated the doctors on potential conflicts of interest and improved patient outcomes of the clinical practice. The concerns of the staff were given due considerations. Managing without samples, loss of gifts, keeping current with new drugs were the key concerns.

Based on all these inputs, various educational interventions were developed to help the doctors updating their knowledge of new drugs and treatment, even better, through a different process.

The experiment established, though it is possible to become “pharma free” by consciously avoiding the conflicts of interest, implementation of this entire process is not a ‘piece of cake’, at least not just yet.

Need for well-structured campaigns:

The researchers concluded that to follow a “pharma sales and marketing free” environment in the clinical practice, the prevailing culture needs to be changed through methodical and well-structured campaigns. Although, initiation of this process has already begun, still there are miles to go, especially in the realm of smaller practices.

One researcher thus articulated as follows:

“We ultimately decided something had to be done when our medical clinic was visited by drug reps 199 times in six months. That number was just staggering.”

Where else to get scientific information for a new drug or treatment?

The authors said, information on new drugs or treatment is currently available not just in many other forum, but also come with less bias and more evidence-based format than what usually are provided by the respective pharmaceutical companies with a strong motive to sell their drugs at a high price to the patients. 

The paper indicated that there are enough instances where the doctors replaced the process of getting information supplied by the Medical Representatives through promotional literature with monthly group meetings to stay abreast on the latest drugs and treatment, based on peer-reviews.

‘Academic detailing’:

In the process of ‘Academic detailing’ the universities, and other impartial sources of credible information, offer accurate information without bias, whenever sought for. In the United States, some states and also the federal government are reportedly supporting this move now, which is widely believed to be a step in the right direction.

Moves to separate sales and marketing of the drug industry from the practice of medicine:

As stated above, there are many moves now in the United States to ‘separate the sales and marketing influence of the drug industry from the practice of medicine’, especially in large medical teaching hospitals, as the paper highlights.

The study also reported that of the 800,000 physicians practicing in the United States only 22 percent practice in the academic settings and 84 percent of primary care physicians continue to maintain close relationships with the pharmaceutical companies.

Citing examples, the new report indicated various tangible steps that primary care physicians can possibly take to effectively mitigate these concerns.

Emerging newer ways of providing and obtaining most recent information on new drugs and treatment together with educating the patients will hasten this reform process.

A commendable move by the Medical Council of India:

Taking a step towards this direction, the Medical Council of India (MCI) vide a notification dated December 10, 2009 amended the “Indian Medical Council (Professional Conduct, Etiquette and Ethics), Regulations 2002″. This move was welcomed by most of the stakeholders, barring some vested interests.

The notification specified stricter regulations for doctors in areas, among others, gifts, travel facilities/ hospitality, including Continuing Medical Education (CME), cash or monetary grants, medical research, maintaining professional Autonomy, affiliation and endorsement in their relationship with the ‘pharmaceutical and allied health sector industry’. These guidelines came into force effective December 14, 2009.

With this new and amended regulation, the MCI, on paper, has almost imposed a ban on the doctors from receiving gifts of any kind, in addition to hospitality and travel facilities related to CMEs and others, from the pharmaceutical and allied health sector industries in India.

Moreover, for all research projects funded by the pharmaceutical industry and undertaken by the medical profession, prior approval from the appropriate authorities for the same will be essential, in addition to the ethics committee.

Although maintaining a cordial and professional relationship between the pharmaceutical industry and the doctors is very important, such relationship now should no way compromise the professional autonomy of the medical profession or any medical institution, directly or indirectly.

It is expected that the common practices of participating in private, routine and more of brand marketing oriented clinical trials would possibly be jettisoned as a pharmaceutical strategy input.

However, inability of the Indian regulator to get these guidelines effectively implemented  and monitored has drawn sharp flak from all other stakeholders, as many third party private vendors are reportedly coming up as buffers between the industry and the physicians to facilitate the ongoing illegal financial transactions, hoodwinking the entire purpose, blatantly.

No such government guidelines for the industry yet:

MCI under the Ministry of Health, at least, came out with some measures for the doctors in 2009 to stop such undesirable practices.

However, it is difficult to fathom, why even almost four years down the line, the Department of Pharmaceuticals of the Government of India is yet to implement its much hyped ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’ for the entire pharmaceutical industry in India.

‘Physicians payment induced prescriptions’ – a global phenomenon:

Besides what is happening in China today with large pharma MNCs alleged involvement in bribery to the medical profession soliciting prescriptions of their respective drugs, world media keep reporting on this subject, incessantly.

For example, The Guardian in its July 4, 2012 edition reported an astonishing story. Since quite some time many pharmaceutical giants are being reportedly investigated and fined, including out of court settlements, for bribery charges related to the physicians.

In another very recent article titled “Dollars for Docs Mints a Millionaire” the author stated as follows:

“The companies in Dollars for Docs accounted for about 47 percent of U.S. prescription drug sales in 2011. It’s unclear what percentage of total industry spending on doctors they represent, because dozens of companies do not publicize what they pay individual doctors. Most companies in Dollars for Docs are required to report under legal settlements with the federal government.”

In India, deep anguish of the stakeholders over this issue is also getting increasingly reverberated all across, without much results on the ground though. It has also been drawing attention of the patients’ groups, NGOs, media, Government and even the Parliament of the country. 

Another article titled, “Healthcare industry is a rip-off” published in a leading business daily of India states as follows:

“Unethical drug promotion is an emerging threat for society. The Government provides few checks and balances on drug promotion.”

Physician Payment Sunshine Act of 2010:

To partly address this issue under President Obama’s ‘Patient Protection Affordable Care Act’, ‘Physician Payment Sunshine Act’ came into force in the United States in 2010. 

Under this Act, any purchasing organization that purchases, arranges for, or negotiates the purchase of a covered drug, device, biological, or medical supply or manufacturer of a covered drug, device, biological, or medical supply operating in the United States, or in a territory, possession, or commonwealth of the United States is required to publicly disclose gifts and payments made to physicians.

Penalty for each payment not reported can be upto US$ 10,000 and the penalty for knowingly failing to submit payment information can be upto US$ 100,000, for each payment.

Centers for Medicare and Medicaid Services (CMS) has already released their ‘Physician Payment Sunshine Act’ reporting templates for 2013. The templates apply for reports dated August 1, 2013 – December 31, 2013.

Should the Government of India not consider enacting similar law in the country  without further delay?

Conclusion:

That said, these well-researched papers do establish increasing stakeholder awareness and global concerns on the undesirable financial influence of pharma players on the doctors. Product promotion practices of dubious value, especially in the name of ‘Continuing Medical Education (CME), seem to strongly influence the prescribing patterns of the doctors, making patients the ultimate sufferer.

The studies will help immensely to establish that achieving the cherished objective of a ‘pharma sales and marketing free’ clinic is not only achievable, but also sustainable for long.

The barriers to achieving success in this area are not insurmountable either, as the above article concludes. These obstacles can easily be identified and overcome with inputs from all concerned, careful analysis of the situation, stakeholder education and identifying most suitable alternatives.

Thus, I reckon, to effectively resolve the humongous ‘physician payment induced prescriptions’ issue for the sole benefit of patients, it is about time for the pharmaceutical players to make a conscientious attempt to shun the ‘road much travelled, thus far, with innovative alternatives. However, the same old apprehension keeps lingering:

“Will the mad race for buying physicians’ prescriptions in cash or kind, much against patients’ interest, continue to remain a global (dis)order, defying all sincere efforts that are being made today?  

By: Tapan J. Ray

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

 

 

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

Posted on by
Reply

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.

“New drug prices are Astronomical, Unsustainable and Immoral” – Anatomy of Unique Protests

Posted on by
Reply

Yes. The quoted sentiment captured in the headline was reportedly voiced recently by many cancer specialists, including researchers and that too in the heartland of pharmaceutical innovation of the world– the United States of America.

These specialist doctors argued:

“High prices of a medicine to keep someone alive is profiteering, akin to jacking up prices of essential goods after a natural disaster”

Thus, not just in India, high prices of new drugs have started prompting large-scale protests in various types and forms across the world. This time the above unique protest assumed an extra-ordinary dimension, with the eye of the storm being in America.

The news item highlighted quite a different type of public protest by the top doctors, originated at a major cancer center located in New York and actively supported by over 120 influential cancer specialists from more than 15 countries spanning across five continents. These crusaders, though reportedly are working in favor of a healthy pharmaceutical industry, do think, especially the cancer drug prices are beyond the reach of many.

About 30 of these doctors hail from the United States and work closely, as mentioned earlier, with pharmaceutical companies engaged in R&D, including clinical trials.

As the cost of many life saving cancer drugs are now exceeding US$ 100,00 per year, all these doctors and researchers involved in the patients’ fights against cancer, are now playing a pivotal role in resisting such high drug prices vigorously.

Examples of astonishingly high drug prices:

In the area of treating rare diseases, the situation in every sense is mind-boggling. When a drug to treat such ailments comes with a price tag of over US$ 400,000 just for a year’s treatment, it is indeed astonishingly high by any standard. Some protestors even described the cost of these drugs as ‘obvious highway robbery’ in the guise of high R&D cost, while some others would continue to wonder as to why is not there a regulatory intervention for the same?

Here below are the top 10 most expensive drugs of the world…and just hold your breath:

World’s Most Expensive Medicines

No. Name Disease

Price US$ /Year
1. ACTH Infantile spasm

13,800,00
2. Elaprase Hunter Syndrome

657,000
3. Soliris Paroxysmal nocturnal hemoglobinuria

409,500
4. Nagalazyme Maroteaux-Lamy Syndrome

375,000
5. Folotyn T-Cell Lymphoma

360,000
6. Cinryze Hereditary Angioedema

350,000
7. Myozyme Pompe

300,000
8. Arcalyst Cold Auto-Inflammatory Syndrome

250,000
9. Ceredase / Cerezyme Gaucher Disease

200,000
10. Fabrazyme Fabry Disease

200,000

(Source: Medical Billing & Coding, February 6, 2012)

The good news is protests against such ‘immoral pricing’ have started mounting.

Protests against high drug prices for rare diseases:

Probably due to this reason, drugs used for the treatment of rare diseases are being reported as ‘hot properties for drug manufacturers’, all over the world.

The above report highlighted a changing and evolving scenario in this area.

In 2013, the Dutch Government had cut the prices of new enzyme-replacement therapies, which costs as high as US$ 909,000. Similarly, Ireland has reduced significantly the cost of a cystic fibrosis drug, and the U.K. rejected a recommendation to expand the use of a drug for blood disorders due to high costs.

Soon, the United States is also expected to join the initiative to reduce high prices of orphan drugs as both the government and private insurers increasingly come under the cost containment pressure.

Yet another protest prompted cancer drug price reduction by half:

Another report highlights that last year physicians at the Memorial Sloan-Kettering Cancer Center in New York refused to use a new colon cancer drug ‘as it was twice as expensive as another drug without being better’.

After this protest, in an unusual move, the manufacturer of this colon cancer drug had cut its price by half.

Even developed countries with low out of pocket expenditure can’t sustain such high prices:

With over one million new cancer cases reportedly coming up every year in India, there is an urgent need for the intervention of the Government in this area, especially for poor and the middleclass population of the country.

Further, it is worth noting that in countries like India, where out of pocket expenditure towards healthcare is very high, as public health system is grossly inadequate, such ‘astronomical prices’ will perhaps mentally knock-down many patients directly, well before they actually die.

That said, even in those countries where out-of-pocket expenditure towards healthcare is nil or very low, respective health systems, by and large, be it public or run by other payors, will still require paying for these high cost drugs, making the systems unsustainable.

Moreover, patients on assistance program of the pharmaceutical companies, reportedly also complain that these ‘Patient Access Programs’ are always not quite user friendly.

Protests spreading beyond cancer and rare disease treatment:

The concern for high drug prices is now spreading across many other serious disease areas, much beyond cancer. It has been reported that the issue of drug prices for various other disease areas was discussed in October 2012 at the Cowen Therapeutic Conference in New York. Many doctors in this conference felt that the drugs with no significant benefit over the existing therapy should not be included in the hospital formulary.

Pressure on diabetic and cardiac drug prices:

Various Governments within the European Union (EU) are now reportedly exerting similar pressures to reduce the costs of drugs used for the treatment of diabetes and cardiac disorders. These measures are now reportedly ‘putting the brakes on an US$ 86 billion sector of the pharmaceutical industry that’s been expanding twice as fast as the market as a whole’.

It is worth noting that each nation within EU is responsible for deciding the price of a new drug, though the European Commission approves drugs for all 27 members of the EU.

Flip side of the story – Commendable initiatives of some global companies:

There is another side of the story too. To address such situation some global companies reportedly are increasing drug donations, reinvesting profits in developing countries and adopting to a more flexible approach to intellectual property related issues. However, as per media reports, there does not seem to be any unanimity within the global companies on country-specific new drug pricing issue, at least not just yet.

To encourage pharmaceutical companies to improve access to affordable drugs for a vast majority of population across the world, an independent initiative known as Access to medicine index ranks 20 largest companies of the world. This ranking is based on the efforts of these companies to improve access to medicine in developing countries.

As indicated by the World Health Organization (WHO), this Index covers 20 companies, 103 countries, and a broad range of drugs, including vaccines, diagnostic tests and other health-related technologies required for preventing, diagnosing and treating disease.

The index covers 33 diseases, including maternal conditions and neonatal infections. The top 10 companies in ‘Access to Medicine Index’ ranking for 2012 are as follows:

No. Company

Index
1. GlaxoSmithKline plc 3.8
2. Johnson & Johnson 3.6
3. Sanofi 3.2
4. Merck & Co. Inc. 3.1
5. Gilead Sciences 3.0
6. Novo Nordisk A/S 3.0
7. Novartis AG 2.9
8. Merck KGaA 2.5
9. Bayer AG 2.4
10. Roche Holding Ltd. 2.3

Source: http;//www.accesstomedicineindex.org/ranking

How high is really the high R&D cost?

A recent article published this month raises some interesting points on this subject, which I am quoting below:

  • No direct and transparent details are available from the industry for public scrutiny on the total cost of innovation.
  • What one does have access to are studies on the issue funded by pharmaceutical MNCs themselves.
  • For most NCEs, public-funded programs in the U.S largely invest in drug discovery.
  • In industry sponsored studies there is lack of transparency on the real costs of drug research and development.
  • Various tax benefits allowed under U.S. law are also ignored by industry studies.
  • Researching new drugs gives one Tax breaks to the extent of 50 per cent in the U.S. If one researches and markets an orphan drug for rare diseases, again, tax breaks are available to the tune of half the expenditure.

Further, a 2011 study by Donald W. Light and Rebecca Warburton published by the London School of Economics and Political Science indicates, “based on independent sources and reasonable arguments, one can conclude that R&D costs companies a median of US$ 43.4 million per new drug.”

It is interesting to note, the above cost estimate is a fraction of what is available from the industry source (over US$ 1.2 billion).

An interesting pricing model prescribed:

Another article recently published in the Harvard Business Review (HBR) commented, while pharmaceutical companies reportedly spend billions on research, the actual cost of manufacturing a treatment (such as a pill) is minimal. This cost structure enables pricing flexibility.

The author suggests:

  • Adopt a smarter pricing model, where a company can charge the highest price that each customer is willing to pay.
  • To implement smarter pricing that saves more lives, and brings in more revenue, the pharmaceutical industry should create a straightforward grid that specifies the annual maximum a patient should pay out of pocket on drug expenses.
  • Key variables that determine this maximum include income, family size, and their other drug costs. Patients can submit this data to a third party agency to avail discounts based on these criteria.

However, implementability of this model, especially in the Indian scenario, seems to be challenging.

Conclusion:

Despite this gloom and doom, as ‘Access to Medicine Index 2012′ indicates, some pharmaceutical companies do want to become an integral part in finding out a solution to the access problem in general. Though, there are still many more miles to cover, some companies, though small in number, are demonstrably trying to improve access to health care in the developing countries of the world.

Rising prices of new drugs in general and for dreaded disease like cancer and other rare disorders in particular have now started reaching a crescendo, not just India, but in many other countries across the world and in various forms. Probably due to this reason, currently in Europe, regulators tend to be depending more and more in the concept of cost to efficacy ratios for new drugs.

It is interesting to note, the world is witnessing for the first time and that too in the developed world that a large number of specialist doctors are protesting against this trend, unitedly and with strong words.

The anatomy of initial phase of this groundswell, many would tend to believe, signals ushering in a new era of checks and balances to set right ‘astronomical, unsustainable and immoral new drug prices’ in the patients’ fights especially against dreaded diseases, the world over.

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 Ghost Keeps Haunting: NCD Dogs Cancer in ‘Compulsory License’ Debate of India

Posted on by
Reply

In November 2012, as a part of the ‘Campaign for Affordable Trastuzumab’ for the treatment of breast cancer, a citizens’ collective, reportedly sent an ‘Open Letter’ signed by around 200 cancer survivors, women’s groups, human rights and health rights campaigns and treatment activists from across the world to the Indian Prime Minister, urging him to ensure that the breast-cancer drug Trastuzumab is made affordable for treating cancer patients in the country.

Trastuzumab was named because of the following reasons:

  • Breast-cancer affects around 28-35 per cent of all cancers among women in major cities of India.
  • No other drug against HER+2 cancer can reduce patients’ mortality as Trastuzumab and reduce the spread of malignancy to other parts of the body.
  • Majority of women with HER+2 breast cancer do not have access to a complete course of the drug, which reportedly costs anywhere between Rs 6 to 8 lakhs (US$ 11,000 to US$ 14,500).

Reaping reach harvest: 

According to a media report, three homegrown Indian companies are currently developing biosimilar drugs to this protein molecule to reap a reach harvest arising out of the emerging opportunities.

However, this is expected to be an arduous, expensive and challenging endeavor, as the concerned companies will require pursuing a complicated biotechnological route to create follow-on biologics for Trastuzumab.

The ‘Trigger Factor’: 

It is widely believed that the above ‘Open Letter’ to the Prime Minister had prompted the Ministry of Health to form an ‘Experts Committee’ to evaluate the situation and make recommendations accordingly.

Thereafter, within a short period of time, in January, 2013, in a move that is intended to benefit thousands of cancer patients, Ministry of Health forwarded the report of the above ‘Experts Committee’ to the Department of Industrial Policy and Promotion (DIPP) for its consideration to issue Compulsory Licenses (CL) for three commonly used anti-cancer drugs namely, Trastuzumab (used for breast cancer), Ixabepilone (used for chemotherapy) and Dasatinib (used to treat leukemia). Public Health Foundation of India (PHFI), among other experts, also reportedly had participated as a member of this ‘Experts Committee’,

For a month’s treatment drugs like Ixabepilone and Dasatinib reportedly cost on an average of US$ 3,000 – 4,500 or Rs 1.64 – 2.45 lakh for each patient in India.

 A ‘Technology Transfer’ discouraged: 

Such a rapid development in the CL landscape of India is indeed intriguing, especially after a voluntary announcement by Roche in 2012 that it will produce Trastuzumab and Rituximab in India through transfer of technology to an Indian contract manufacturer.

Consequently for a month’s treatment, the price of Trastuzumab will come down from around US$ 2,000 to US$ 1, 366, i.e. by 31 percent and Rituximab from around US$ 1,456 to US$ 682 i.e. by 53 percent. This was reportedly announced by none other than the Minister of State of Chemicals and Fertilizers of India Mr. Srikant Jena.

Despite this voluntary decision of technology transfer and price reduction of two life saving drugs in India by Roche, reported Government consideration for grant of CL for Trastuzumab, without getting engaged in any form of a win-win dialogue with the Company, could ultimately prove to be counter productive and may discourage further technology transfer of expensive patented drugs to India.

Increasing incidence of cancer in India: 

Cancer is just not a dreaded disease, but also making a devastating impact, financial and otherwise, on the lives and families of thousands of sufferers in India.

According to ‘The Lancet’, published on 28 March 2012, in India 556 400 people died of cancer only in 2010.

The paper also comments that only half of the estimated 9.8 million total deaths per year is captured by the CRS in India, fewer than 4 percent are medically certified, while more than 75 percent of deaths occur at home.

The Lancet study clearly highlights that most cancer patients in India die without medical attention and drugs. Cancer is, therefore, increasingly becoming a public sensitive disease area with high socioeconomic impact in the country. High treatment cost of this near terminal disease is beyond reach of majority of population in the country.

In a written reply to a question in the ‘Upper House’ of the Indian Parliament, the Minister of State for Health and Family Welfare on March 4, 2012 said that according to “Three Year Report on Population Based Cancer Registries 2006 – 08″ of the Indian Council of Medical Research (ICMR), the estimated numbers of cancer patients for 2015 and 2020 are 1.16 million and 1.27 million respectively. There is a gradual rise in the prevalence of cancer in India, though the government has initiated several measures in this area.

High incidence of breast cancer: 

As per a recent report, an estimated 1, 00,000 – 1, 25,000 new patients suffer from breast cancer every year in India and this number is expected to double by 2025.

Government is mulling CL for NCD: 

Currently the DIPP appears to be planning to extend the provision of Compulsory License  (CL) beyond cancer drugs to other Non-Communicable Diseases (NCD) in the country, like diabetes. 

Domestic Pharma Association supports the move: 

A major domestic pharmaceutical industry association, as per media reports, supports this move by clearly articulating, “Over the years, more deaths are taking place on account of Non-Communicable Diseases (NCDs) than communicable ones. It is, therefore, natural that this provision (CL) will be used for NCDs as well.”

UN declaration on NCD provides flexibilities in TRIPS Agreement: 

Experts believe that this new move on CL for drugs related to NCDs is a consequence of India’s signing the United Nation (UN) declaration on the prevention of NCDs in the country by, among others, using flexibilities in the TRIPS Agreement to increase availability of affordable drugs for such diseases.

The Government has already launched a “National Program for Prevention & Control of Cancer, Diabetes, Cardio Vascular Diseases and Stroke (NPCDCS)” as a pilot project covering 150 million people in 100 inaccessible and most backward districts during the financial year 2011-2012 at a cost of US$ 275 million.

Socio-economic impact of NCDs in India: 

Indian Journal of Community Medicine (IJCM) in an article titled, “Social and Economic Implications of Non-Communicable Diseases (NCDs) in India” has highlighted, among others as follows:

  • NCDs account for 62 percent of the total disease burden in India with a significant ascending trend both in terms of overall mortality and morbidity.
  • This burden is likely to increase in the years to come.
  • Due to chronic nature of the disease and technological advancements in care, costs of treatment are high leading to access barriers, or ‘catastrophic expenditures’ for those who undergo treatment.
  • There are evidences of greater financial implications for the poorer households suffering from NCDs.
  • Most estimates suggest that the NCDs in India account for a significant economic burden ranging from 5 to 10 percent of GDP.
  • An urgent multi-sectoral Government action is strongly warranted both on grounds of economic arguments and social justice.
  • Action needs focus on addressing the social determinants of NCDs for prevention and strengthening of health systems to meet the challenge.
  • A framework for monitoring, reporting, and accountability is essential to ensure that the returns on investments in NCDs meet the targets and expectations set in the national plans.

Innovator companies contemplating legal recourse: 

Reacting to all these developments, the global pharmaceutical companies have, once again, expressed strong commitment to protect and continue to defend their Intellectual Property Rights (IPR) within the legal framework of India.

They have also reiterated their belief that a robust IPR regime will encourage innovation in the country making available more and more innovative drugs for the patients in India.

An interesting WHO report on a ‘robust IPR regime’: 

In this regard a World Health Organization (WHO) research report titled “Patents, Price Controls and Access to New Drugs: How Policy Affects Global Market Entry” makes some interesting observations on a ‘robust IPR regime’.

The report highlights the following four important points:

1. Increasing the strength of a patent system to include long-term protection on pharmaceutical products appears to spur market entry mostly in the high-income countries.

For the low- and middle-income countries that are currently being encouraged to move to stronger protection through trade policies, the evidence that extending protection enhances access to new pharmaceuticals is mixed.

2. There is some evidence that high level of protection might encourage more frequent entry of innovative products in the short term. However, in the longer term the same domestic capacity could well be an alternative source of entry of such drugs.

3. Intellectual Property (IP) holders frequently assert that the poor quality of enforcement in developing countries undermines the value of their patent rights. However, it is quite evident now that patent laws in these countries are at least broadly meaningful commensurate to their respective domestic requirements.

4. The standard argument on price regulation that it will dissuade market entry for innovative drugs appears to have more relevance among the high-income countries and not so for the poorer countries.

The authors further indicate:

“There we find that while price regulation makes it less likely that new drugs will be available quickly, it does not appear to prevent new products from being launched eventually.”

Conclusion: 

Following all these recent developments and weighing pros and cons, one could well imagine that pressure on the Government from various stakeholders for CL on drugs for Cancer and NCDs will keep mounting, unless an alternative measure like, ‘Price Negotiation for Patented Drugs’ is put in place by the Department of Pharmaceuticals, sooner than later, in 2013.

The recent judgment of the ‘Intellectual Property Appellate Board (IPAB)’ on CL to Natco may further add fuel to this raging debate.

It is now quite clear from the Finance Minister’s speech on the ‘Union Budget Proposal’ for 2013-14 that eagerly awaited ‘Universal Health Coverage’ or ‘Free Distribution of Essential Medicines to all’ schemes will not be implemented, at least for now.

Thus in all probability, the ghost of CL will keep haunting the innovators in India unabated, unless an effective, scalable and sustainable model for improving access to patented drugs for majority of population in the country is put in place. This will call for demonstrative, innovative and constructive Public-Private-Partnership (PPP) initiatives, sooner. In this effort  all concerned should at first be aligned with the cause, in principle, and try to be a constructive partner to get it translated into reality together, rather than just playing the role of vociferous critics in perpetuity .

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.

Obama Wins: ‘Obamacare’ stays on course… and what it means to India?

Posted on by
Reply

Re-election of President Barrack Obama for another four year term, no doubt, sends a clear signal to all concerned that full implementation of the ‘Patient Protection and Affordable Care Act’ of America, which is also known to many as ‘Obamacare’, will keep staying on course powered by passionate and unflagging enthusiasm of the head of state of the most powerful nation of the world. More so, when it has passed this year even the strict scrutiny of the Supreme Court of the country.

Re-elected President will now have no apprehension that this Act will be repealed, as many predicted a Mitt Romney win could mean a reversal or at least a slower adoption of the new healthcare reform process in the U.S.

That said, it is also clear, although President Obama will get another four years in the White House, Republicans will control the ‘House of Representatives’ and the Democrats will control the ‘Senate’, making the job of the re-elected President indeed tougher. Moreover, much anticipated ‘fiscal cliff’ of the country could pose even a greater challenge to fully fund the ‘Affordable Care Act’, the way it has been crafted by the U.S government.

‘Obamacare’: 

Let us now have a brief and a quick review of the ‘Obamacare’.

After getting elected for the first four year term as the President of the U.S, Barrack Obama championed enactment of the historic healthcare reform legislation – ‘Patient Protection and Affordable Care Act’ fulfilling his election campaign pledge deftly to ensure healthcare for all  American. The center piece of this legislation was aimed at providing health insurance benefits to another around 34 million poor and uninsured Americans.

The key highlight of this Act is that it will compel the insurers to extend insurance to even those with any pre-existing illness and impose stringent criteria on expenditure towards medical treatment to cut healthcare costs.

‘Patient Protection and Affordable Care Act’ is expected to cost around US $940 billion over 10 years to the U.S Government. To partly recover this cost, Obama administration had already proposed new fees to the healthcare and pharmaceutical companies along with a new tax for the high income groups.

Thus, so far as the new path-breaking healthcare reform process in the US is concerned, President Obama has ‘walked the talk’ and even ‘talked the walk’.

‘Obamacare’: the key features: 

Cost US$ 940 billion over 10 years. Expected to reduce projected federal budget deficits by US$ 143 billion by 2019
Coverage 95% people would gain coverage, leaving 22 million uninsured
Timeline Most provisions would take effect in 2014
Sources ofFunding:New Taxes • Tax on high-income earners• Tax on “Cadillac” health plans• 10 year industry fees imposed on:1. Insurance Companies

2. Medical Device Manufacturers

3. Drug Makers
IndividualResponsibility Penalty: People without coverage would pay a fine of $ 95 in 2014, which would rise to US$ 695 or 2.5% of income, whichever is higher by 2016.
EmployerResponsibility Penalty: Raises the fee that employers must pay if they do not provide insurance to US$2,000 per employee. Also, exempts companies from paying the fee for the first 30 employees.
Employer Subsidies Small businesses can immediately apply for tax credits of upto 35% of their contributions toward employee health insurance premia. Beginning 2014, these tax credits will cover 50% of contributions toward employee premia.
Fraud and   Abuse Deterrence / Civil and Criminal Penalties: Penalties increased to US$ 50,000 for each false statement or misrepresentation.

‘Medicare’ plan of America:

According to the explanation of the program given by Medicare, it is a prescription drug benefit program. Under this program, senior citizens purchase medicines from the pharmacies. The first U.S$ 295 will have to be paid by them. Thereafter, the plan covers 75 percent of the purchases of medicines till the total reaches U.S$ 2,700. Then after paying all costs towards medicines ‘out of pocket’ till it reaches U.S $ 4,350, patients make a small co-payment for each drug until the end of the year.

Some arguments in favor of the Act: 

The following are some arguments in favor of the Act:

  • More security to the lives of so many Americans
  • Will protect against worst practices of insurance companies
  • Will give chance to uninsured and small businesses choose an affordable plan from a more competitive market
  • Every insurance plan will cover preventive care
  • Reduce cost of premium because of intense competition and regulations
  • Would bring down the deficit by US$ 1 trillion.

Some arguments against the Act: 

At the time of the enactment of the new law, following were some arguments against ‘Obamacare’: 

  • Goes against popular wisdom
  • Complex – difficult to implement
  • Expensive
  • Appeasement to Insurance Companies
  • A ‘Political Suicide’

Immediate impact of the Act on US Pharmaceutical Companies:

Following were the reported immediate impact of the Act and reaction of the U.S Pharmaceutical Industry in 2009-10: 

  • Overall adverse impact on sales & profit due to higher rebates on drugs sold through “Medicaid” Program
  • 50% discount for patients in “Medicare” part D Program
  • J&J, Eli Lilly, Abbott, Amgen and Gilead gave guidance on adverse impact on 2010 performance
  • Companies with high US sales dependency like, Forest, King, Cephalon, Amgen and Shire were expected to be the biggest losers
  • Bayer, Sanofi, Novartis and Roche were expected to have lesser impact 

US Pharmaceutical Industry pledged US $ 80 billion towards healthcare reform of the nation: 

Despite adverse financial impact as indicated above, it was reported that the U.S Pharmaceutical and Biotech Companies had at that time offered to spend US $ 80 billion to help the senior citizens of America to be able to afford medicines through a proposed overhaul of the healthcare system of the country.

This was a voluntary pledge by the U.S pharmaceutical industry to reduce what it will charge the federal government over the next 10 years.

Though many experts had said, without this gesture the adverse financial impact on the U.S pharmaceutical companies would have been much more.

US citizens’ support: 

Despite some skepticism around, a leading U.S daily reported that American citizens overwhelmingly support substantial changes in the country’s healthcare system and are strongly behind a government run insurance plan to compete with private insurers.

According to a New York Times/CBS News poll, majority of Americans would be willing to pay higher taxes so that every individual could have health insurance. The survey also highlighted that Americans, by and large, feel that the government could do a better job of holding down healthcare costs as compared to the private sector.

Current American healthcare: High quality – high cost 

85 percent of respondents in the above survey at that time indicated that the country’s healthcare system should be completely overhauled and rebuilt. The poll also showed that American citizens are far more unsatisfied with the cost of healthcare rather than its quality.

President Obama has been repeatedly emphasizing the need to reduce costs of healthcare and always believed that the healthcare legislation is absolutely vital to American economic recovery. 86 percent of those polled in the survey opined that the rising costs of healthcare pose a serious economic threat to the country.

Another interesting study: 

Another study conducted by the ‘George Washington University School of Public Health and Health Services’ reported that as a part of the new healthcare reform initiative in the U.S, if the health centers are expanded to cover from the current 19 million to 20 million patients, the country can save US$ 212 billion from 2010 to 2019 against a cost of US$ 38.8 billion that the government would have incurred to build the centers. This is happening because of lower overall medical expenses for these patients.

Impact on Indian generic business: 

‘Obamacare’ was always considered to make a positive impact on India in general and the domestic Indian pharmaceutical players in particular, because of the following reasons:  

  • U.S is the largest generics pharmaceutical market of the world
  • The Act promotes use of generic drugs boosting the growth opportunity of the market further
  • India produces around 20 percent of the global requirement for generic drugs by volume
  • Indian companies account for over 35 percent of the ANDAs as more and more branded drugs are going off-patent 

However there is also a flipside to it, as follows:  

  • Increase in demand will attract more number of generic players to compete
  • Will attract more MNCs in generic business having stronger marketing muscle power
  • Intense cost competition
  • Severe pressure on margin

 Impact on Indian Bio-similar Drug Business: 

Though a pathway for entry of biosimilar drugs is now in place in the U.S, 12 year ‘Data Exclusivity (DE)’ could pose to be a serious market access barrier for such products. However, some experts believe, since biosimilar opportunity in U.S comes in 2015, many such drugs developed in India will cross 12 year exclusivity period by then.

Keeping an eye on this emerging opportunity many U.S biotech companies are now looking for low cost bio-manufacturing destinations, like India. 

Impact on Indian BPO opportunities: 

The following are the expected positive impact on the ‘Business Process Outsourcing (BPO)’ opportunities in India:

  • Around 35 million more Americans coming under insurance cover would mean as many new enrollment and transactions
  • Will require more customer support services, as the healthcare reform makes digitized records mandatory in the country
  • Currently less than 30 percent physicians in the U.S have Electronic Health Records (EHRs)
  • Conversion of archival data into compatible formats (data entry, validation, maintenance) is a must now
  • Online submission of applications through payors’ portal has commenced
  • High volume claim adjudication is expected to follow 

However, here also there is a flipside to this opportunity due to the following reasons: 

  • ‘Regulatory’ and ‘Privacy’ concerns related to patients’ records
  • Detail knowledge of medical procedures and codes
  • Variation between the states within USA

 Expected Volume of BPO Business: 

The U.S Government is likely to spend around US$ 15-20 billion on healthcare technology services alone and bulk of the business is quite likely to come to India, unless President Obama finally decides to discourage outsourcing opportunities through domestic tax measures.

Current situation: 

Currently the size of India’s outsourcing industry is estimated to around US$ 70 billion, telecom, banking, financial and other customer services being the main BPO demand from the U.S. Healthcare BPO now represents reportedly only around 5 percent of the total business, though with an ascending growth trend.

Sensing the emerging opportunity, various call centers, medical record transcribers and software developers among others, have already started building commensurate capacities. India’s big outsourcing firms are also expanding their operations in the US.

Interestingly, it has been reported that ‘Obamacare’ could probably be India’s biggest BPO bonanza yet – bigger than even Y2K.

Closer home:

Closer home, during the new U.S healthcare reform initiative, Indian Prime Minister Dr. Manmohan Singh reiterated in his speech delivered at the 30th Convocation of PGIMER, Chandigarh on November 3, 2009, the dire need of the country to strike a right balance between preventive and curative healthcare for the common man. The Prime Minister articulated his thoughts as follows:

“ We must also recognize that a hospital centered curative approach to health care has proved to be excessively costly even in the advanced rich developed countries. The debate on health sector reforms going on in the U.S is indicative of what I have mentioned just now. A more balanced approach would be to lay due emphasis on preventive health care”.

However, the Prime Minister of India has not walked the talk, not just yet.

Conclusion: 

When the world believes that comprehensive healthcare reform measures to provide access to affordable, high quality healthcare services covering the entire population of the country is fundamental to economic progress of any nation, the government of India seems to be keeping its ‘Universal Health Coverage’ initiative still on the drawing board, engulfed by controversies, debates and posturing by different key elements.

If and when the ‘Universal Health Coverage’ initiative will see the light of the day in India, all stakeholders including the pharmaceutical industry will hopefully come forward with their own slice of contribution, just as what happened in the U.S, to ensure access to affordable high quality healthcare to all the citizens of the country.

Be that as it may, a photo-finish win, as it were, of Barrack Obama for the second four year term as the President of the United States, assures all that ‘Obamacare’ stays on course for the Americans, extending its significant spin-off benefits to India and well deserving a ‘thumbs-up’ from the stakeholders of the country .

By: Tapan J Ray   

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

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

Posted on by
Reply

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

Posted on by
Reply

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.

Pharma industry requires striking a right balance between ethical obligations to shareholders and ethical obligations to patients

Posted on by
Reply

On September 15, 2012, while delivering his keynote address in a pharmaceutical industry function, Dr. Sam Pitroda, the Chicago based Indian, creator of the telecom revolution in India and the Advisor to the Prime Minister on Public Information, Infrastructure & Innovations, made a profound comment, for all concerned to ponder, as follows:

“Everyone wants to copy the American model of development.  I feel that this model is not scalable, sustainable, desirable and workable.  We have to find an Indian Model of development which focuses on affordability, scalability and sustainability.”

The above comment assumes greater significance, as the U.S. has been the number one pharmaceutical market of the world over a long period of time, although currently growing at a snail’s pace, as compared to the emerging markets of the world or even in absolute numbers.

Being impressed by past success record of America in the pharmaceutical sector, many countries of the world are being influenced to imbibe the U.S. models in various areas of the industry like, R&D, product commercialization process, focus on the “Wall Street” and even the way America walks the talk in fulfilling its various ethical obligations.

As the popular saying goes ‘proof of the pudding is in the eating’, gradual drying-up of the R&D pipeline, significant decline in the pharmaceutical business growth rate with commensurate adverse impact on the “Wall Street” and regularly published media reports on ‘unethical marketing practices’, lead to pertinent questions on the longer-term sustainability of the U.S. model in all these areas.

It appears, prompted by the prevailing reality in the U.S since quite some time, Dr. Pitroda made the above comment in a wider context of the pharmaceutical industry, including very important scalability, sustainability, desirability and workability of the ethical values in the Indian pharmaceutical business operations.

A burning issue:

As stated above, even in areas related to ethical issues in the pharmaceutical industry, global media reports indicate, as Dr. Pitroda commented above, the American model has not been successful to set an example for others, as yet. Thus, here also India will possibly need to find an Indian model that works and is sustainable.

We have been witnessing, for quite some time from now, among many other burning issues, ethical concerns related to the pharmaceutical industry across the world, have been hugely bothering a large section of its stakeholders, solely for the interest of patients and India is no exception to this stark reality.

Such concerns emanate from widely circulated media reports on legal fines levied to large pharmaceutical companies or out of court settlements on such fines due to alleged ‘unethical’ business practices of some large companies in various parts of the world including India.

Civil Society and other stakeholders including governments do allege that the prescription decisions made by the doctors, having received expensive free products and services from the pharmaceutical companies may not entirely or always be in the best interest of the patients.

In a situation like this, overall robust and healthy bottom line of the pharmaceutical industry in general, may be a tad lesser now, calls for a proper balancing act between its ethical obligations to shareholders and the ethical obligations to patients of all class, creed and color together with the civil society, at large.

Unique situation for the patients:

Healthcare sector in general and the pharmaceuticals in particular is unique in many respects. The Department Related Parliamentary Committee on Health and Family Welfare in its 59th Report clearly articulated that:

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 buying and consuming 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 to their patients
  • Patients are totally dependent on and at the mercy of external entities to protect their interests.

Such a scenario gives rise to a situation where patients, by and large, are compelled to buy medicines at any price, which leads many to conclude that the pharmaceutical industry is ‘recession proof’.

The perspective of the Global Pharmaceutical industry:

The global pharmaceutical industry is primarily research driven, as the low cost generic drugs flow from the patent expiry of innovative drugs. Moreover, the R&D process is arduous, expensive (reportedly costs over US$ 1.8 billion), risky and quite lengthy involving, besides others:

  • Discovery and development process of the New Chemical Entity (NCE) or New Molecular Entity (NME)
  • Pre-clinical trials
  • Clinical trials, Phase I, II and III and IV
  • Stringent marketing approval process

Thus they believe that to foster innovation to meet the unmet needs of patients, the Intellectual Property Rights (IPR) of such products must be strongly protected by the governments of all countries putting in place a robust product patent regime.

Further, the industry strongly argues that to recover high costs of R&D and manufacturing of such products together with making a modest profit, the innovator companies set a product price, which at times may be perceived as too high for the marginalized section of the society, where government intervention is required more than the innovator companies.

Aggressive marketing activities, during the patent life of a product, are essential to gain market access to such drugs for the patients.

In support of the pharmaceutical industry the following argument was put forth in a recent article:

“The underlying goal of every single business is to make money. People single out pharmaceutical companies for making profits, but it’s important to remember that they also create products that save millions of lives.”

Marketing expenditure becoming more productive than R&D investments:

It is indeed interesting to note that expenditure towards marketing by the pharmaceutical companies is becoming more productive than the same towards R&D. This is vindicated by the article titled “R&D and Advertising Efficiencies in the Pharmaceutical Industry”,  published in the International Journal of Applied Economics, 8(1), March 2011.

In this research study the authors stated that although advertising as a percentage of sales has not increased during the past twenty years, its effectiveness in generating sales has improved dramatically by way of the Direct-To-Consumers-Ads (DTCA) strategy, which encouraged patients asking their healthcare providers for brand name drugs rather than cheaper generics. The paper also supports the notion that advertising replaces R&D investments when those investments fail to live up to their promise.

Many experts opine that the above scenario is prevailing today, especially when the global innovator companies are passing through a ‘patent cliff’.

Marketing expenditure far exceeds investments in R&D:

Another article concludes through its research paper titled, “The Cost of Pushing Pills: A New Estimate of Pharmaceutical Promotion Expenditures in the United States” that pharmaceutical companies spend almost twice as much on promotion as they do on R&D, quite contrary to the claim by the industry.

The study endorses the public image of the pharmaceutical industry as a marketing-driven sector when it should invest more for research and development and much less for promotion, that too many a times is not ‘ethical’ in nature, as cited above.

Patients are the ultimate victims:

A relatively recent report on India dated January 11, 2011, published in ‘The Lancet’, which vindicates the fact, in a similar (though not the same) context, that the alleged ‘unholy relationships’ between many pharmaceutical companies and the doctors, as a result of such aggressive and alleged ‘unethical’ marketing practices, has resulted in over-prescribing and irrational use of injection and drugs causing hardships to the patients.

Conclusion:

As stated above, many experts have been arguing since long, based on available data, that the current business models of many pharmaceutical companies are heavily tilted towards their obligation to the shareholders. These thought leaders are increasingly raising their voices to put forth the view that the industry continues to live in a self-made and a fire-walled cocoon, always trying to change others and refusing to change itself, unfortunately, even for the patients’ sake.

Despite the experts making above comments, my personal view is that in this direction, we have been witnessing no better attitude from our own government either to usher in a much desirable and long pending change in the prevailing scenario, solely for the patients, which is indeed even more disappointing.

In a situation like this, to be ‘patient centric’ in a real sense, there is an urgent need for the industry to first walk the talk along with their respective voluntarily codes of ethical marketing practices both in the letter and spirit.

If voluntary mechanism fails to work, a legal or statutory mechanism should be implemented, like what the Department of Pharmaceuticals had articulated in its draft ‘Uniform Code of Pharmaceutical Marketing Practices’, last year.

Thus, I reckon, to enhance its image, the pharmaceutical industry in India, as advised by Dr. Sam Pitroda, should imbibe a transparent, workable, scalable, demonstrable and a sustainable business model to strike a right balance between its ethical obligations to shareholders and ethical obligations to patients of all class, creed and color together with the civil society, at large

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.