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Is India A Success Story With Biosimilar Drugs?

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How Indian generic companies are expanding, if not shifting their business focus on biosimilar and complex generic drugs, may be a current trend of general discourse – but the initiative is not a current one. This journey commenced decades ago with an eye on the future. In those days, Indian players were already dominating the global markets of small molecule generic drugs. Interestingly, it started much before the big global players decided to enter into this segment – especially post patent expiry of large molecule blockbuster drugs.

This strategy not just exhibits a sound business rationale, but also benefits patients with affordable access to biosimilar versions of high cost biologic drugs. In this article, I shall dwell on this subject, basically to understand whether India is a success story with large molecule biosimilar drugs, both in terms of drug development, and also in its commercial performance.

India’s journey began with the dawn of the new millennium:

About two decades back from now, some Indian pharma companies decided to step into an uncharted frontier of large molecule biosimilar drugs. According to the ‘Generics and Biosimilars Initiative (GaBI)’, in 2000 – the first biosimilar drug, duly approved by the Drug Controller General of India (DCGI), was launched in the country.  This was hepatitis B vaccine from Wockhardt – Biovac-B.

I hasten to add, in those years, there were no specific regulatory pathways for approval of large molecule biosimilar drugs in India. Thus, the same marketing approval guidelines as applicable to small molecule generic drugs, used to be followed by the DCGI for this purpose. Specific guidelines for biosimilar drugs were implemented on September 15, 2012, which was subsequently updated in August 2016. To date, around 70 large molecule biosimilar drugs, including biopharmaceuticals, have been introduced in India, as the GaBI list indicates.

It is equally important to note that well before any other countries, domestic pharma companies launched in India, AbbVie’s blockbuster Humira (adalimumab) and Roche’s breast cancer treatment Herceptin (trastuzumab). In this context, it is worth mentioning that US-FDA approved the first biosimilar product, Zarxio (filgrastim-sndz), in March 2015.

Will India be a key driver for global biosimilar market growth?

According to the Grand View Research Report of July 2018, increasing focus on biosimilar product development in countries, such as India, China and South Korea, is a major growth driver of the global biosimilar market. As this report indicates, the global biosimilars market size was valued at USD 4.36 billion in 2016, which is expected to record a CAGR of 34.2 percent during 2018-25 period.

Europe has held the largest revenue market share due to a well-defined regulatory framework for biosimilars was in place there for quite some time, and was followed by Asia Pacific (AP), in 2016. Growing demand for less expensive therapeutic products and high prevalence of chronic diseases in the AP region are expected to contribute to the regional market growth – the report highlighted.

Further, the Report on ‘Country-wise biosimilar pipelines number in development worldwide 2017’ of Statista also indicated that as of October 2017, India has a pipeline of 257 biosimilar drugs, against 269 of China, 187 of the United States, 109 of South Korea, 97 of Russia and 57 of Switzerland. However, post 2009 – after biosimilar regulatory pathway was established in the United States, the country has gained significant momentum in this segment, presenting new opportunities and also some challenges to biosimilar players across the world.

Is Indian biosimilar market growth enough now?

An important point to ponder at this stage: Is Indian biosimilar market growth good enough as of now, as compared to its expected potential? Against the backdrop of India’s global success with generic drugs – right from the initial stages, the current biosimilar market growth is certainly not what it ought to be. Let me illustrate this point by drawing an example from theAssociated Chambers of Commerce of India’s October 2016 White Paper.

According to the Paper, biosimilars were worth USD 2.2 billion out of the USD 32 billion of the Indian pharmaceutical market, in 2016, and is expected to reach USD 40 billion by 2030. This represents a CAGR of 30 percent. A range of biologic patent expiry in the next few years could add further fuel to this growth.

A similar scenario prevails in the global market, as well. According to Energias Market Research report of August 2018, ‘the global biosimilar market is expected to grow significantly from USD 3,748 million in 2017 to USD 34,865 million in 2024, at a CAGR of 32.6 percent from 2018 to 2024.’

Many other reports also forecast that the future of biosimilar drugs would be dramatically different. For example, the ‘World Preview 2017, Outlook to 2022 Report’ of Evaluate Pharma estimated that the entry of biosimilars would erode the total sales of biologics by as much as 54 percent through 2022, in the global markets. It further elaborated that biologic sales may stand to lose up to USD 194 billion as several top blockbuster biologic drugs will go off-patent during this period.

Although, current growth rate of the biosimilar market isn’t at par with expectations, there is a reasonable possibility of its zooming north, both in India and the overseas markets, in the near future. However, I would put a few riders for this to happen, some of which are as follows:

Some uncertainties still exist:

I shall not discuss here the basic barriers that restrict entry of too many players in this segment, unlike small molecule generics. Some of which are – requisite scientific and regulatory expertise, alongside wherewithal to create a world class manufacturing facility a complex nature. Keeping those aside, there are some different types of uncertainties, which need to be successfully navigated to succeed with biosimilars. To get an idea of such unpredictability, let me cite a couple of examples, as hereunder:

1. Unforeseen patent challenges, manufacturing and regulatory issues:

  • Wherewithal to effectively navigate through any unexpected labyrinth of intricate patent challenges, which are very expensive and time-consuming. It may crop up even during the final stages of development, till drug marketing, especially in potentially high profit developed markets, like for biosimilars of Humira (AbbVie) in the United States or for Roche’s Herceptin and Avastin in India.
  • It is expensive, time consuming and risk-intensive to correct even a minor modification or unforeseen variation in the highly controlled manufacturing environment to maintain quality across the system, to ensure high product safety. For example, what happened to Biocon and Mylan with Herceptin Biosimilar. As the production volume goes up, the financial risk becomes greater.
  • There are reports that innovator companies may make access to supplies of reference products difficult, which are so vital for ‘comparability testing and clinical trials.’  This could delay the entire process of development of biosimilar drugs, inviting a cost and time-overrun.
  • Current regulatory requirements in various countries may not be exactly the same, involving significant additional expenditure for overseas market access.

2. User-perception of biosimilar drugs:

Studies on perception of biosimilar vis-à-vis originator’s biologic drugs have brought out that many prescribing physicians still believe that there can be differences between originator’s biologic medicine and their biosimilar equivalents. With drug safety being the major concern of patients, who trust their physician’s decision to start on or switch to a biosimilar, this dilemma gets often translated into doctors’ preferring the originator’s product to its biosimilar version. One such study was published in the September 2017 issue of Bio Drugs. Thus, the evolution of the uptake of biosimilars could also depend mainly on similar perception of physicians.

What happens if this perception continues?

Whereas, the W.H.O and drug regulators in different countries are quite clear about comparable safety and efficacy between the originator’s product and its biosimilar variety, some innovator companies’ position on biosimilar drug definition, could help creating a perception that both are not being quite the same, both in efficacy and safety.

To illustrate this point, let me reproduce below how a top ranked global pharma company - Amgen, defines biosimilar drugs, starting with a perspective of biologic medicines:

“Biologic medicines have led to significant advances in the treatment of patients with serious illnesses.These medicines are large, complex molecules that are difficult to manufacture because they are made in living cells grown in a laboratory. It is impossible for a different manufacturer to make an exact replica of a biologic medicine due to several factors, including the inherent complexity of biologics and the proprietary details of the manufacturing process for the original biologic medicine, often referred to as the reference product.It is because of this that copies of biological products are referred to as “biosimilars”; they are highly SIMILAR but not identical to the biologic upon which they are based.”

Could dissemination of the above concept through a mammoth sales and marketing machine to the target audience, lead to creating a better perception that the originators’ biologic drugs are better than their biosimilar genre?

Other realities:

Despite the availability of a wide array of biosimilar drugs, the prescription pattern of these molecules is still very modest, even in India. One of its reasons, as many believe, these are still not affordable to many, due to high out-of-pocket drug expenses in India.

Thus, where other biosimilars of the same category already exist, competitive domestic pricing would play a critical role for faster market penetration, as happens with small molecule generic drugs.

Another strategic approach to address cost aspect of the issue, is to explore possibilities of sharing the high cost and risks associated with biosimilar drug development, through collaborative arrangements with global drug companies. One good Indian example in this area is Biocon’s collaboration with Mylan.

Conclusion:

The question on whether Indian biosimilar market growth is good enough, assumes greater importance, specifically against the backdrop of domestic players’ engagement in this segment, since around last two decades. Apart from the important perception issue with biosimilars , these medicines are still not affordable to many in India, owing to high ‘out of pocket’ drug expenditure. Just focusing on the price difference between original biologic drugs and their biosimilars, it is unlikely to get this issue resolved. There should be enough competition even within biosimilars to drive down the price, as happened earlier with small molecule generics.

That said, with around 100 private biopharmaceutical companies associated with development, manufacturing and marketing of biosimilar drugs in India, the segment certainly offers a good opportunity for future growth. Over 70 such drugs, most of which are biosimilar versions of blockbuster biologic, are already in the market. Today, Indian companies are stepping out of the shores of India, expecting to make their presence felt in the global biosimilar markets, as they did with generic drugs.

The future projections of biosimilar drugs, both in the domestic and global markets are indeed very bullish. But to reap a rich harvest from expected future opportunities, Indian players would still require some more grounds to cover. Overall, in terms of biosimilar drug development since 2000, India indeed stands out as a success story, but a spectacular commercial success with biosimilars is yet to eventuate.

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.

Government Ups the Ante for More Compulsory Licenses in India

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On January 12, 2013, one of the leading dailies of India first reported that in a move that is intended to benefit thousands of cancer patients, Indian Government has started the process of issuing Compulsory Licenses (CL) for three commonly used anti-cancer drugs:

-       Trastuzumab (or Herceptin, used for breast cancer),

-       Ixabepilone (used for chemotherapy)

-       Dasatinib (used to treat leukemia).

For a month’s treatment drugs like, Trastuzumab, 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.

CL through a different route:

This time the government can reportedly notify its intent to grant  CL under Section 92 of the Indian Patents Act 2005, only if any of the following three conditions are met:

- National emergency

- Cases of extreme urgency

- Public non-commercial use

After such Government notification in the gazette, any company interested in manufacturing any or all of these three products can directly apply for a CL to the Indian Patent Office (IPO).

This route is also expected to save usual litigation costs for the interested pharmaceutical players.

In such case, this will be the first time in India, when instead of pharmaceutical players applying for CL the Government on its own will trigger the CL process.

A situation like this will undoubtedly signal immense unpredictability in the IPR environment of the country.

Incongruent with the New Drug Policy 2012:

Interestingly, section 4(xv) of the National Pharmaceutical Pricing Policy 2012 (NPPP 2012) under ‘Patented Drugs’ states as follows:

“There is a separate Committee constituted by the Government order dated 1st February, 2007 for finalizing the pricing of Patented Drugs, and decisions on pricing of patented drugs would be taken based on the recommendations of the Committee.”

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

Thus, it is rather intriguing for many to fathom, why is the Government contemplating to grant CL on the above three anti-cancer drugs in January 2013, despite the decision of the Union Cabinet on the same in the new Drug Policy as recent as December, 2012.

Medicines come at the third stage of a medical treatment process:

For all patients, including the cancer victims, medicines will come at the earliest in the third stage of any treatment process, the first two or in some cases first three stages being:

  • A doctor’s intervention
  • Correct diagnosis through diagnostic processes
  • Surgical interventions (in some cases)

In India, there is no regulation to address the ‘cost issues’ of the first two or three stages of treatment, though there is a dire need to facilitate the entire process and not just one. Coming straight to cancer medicines considering these as the only ‘magic wands’ to improve access to treatment, may well be considered as ‘jumping the gun’ by the Government, if not an imprudent decision.

Skewed healthcare distribution in India:

Healthcare distribution in India is rather skewed and cancer treatment is no exception mainly because of the following reasons:

  • Medical personnel are concentrated in urban areas.
  • 74 percent of doctors work in urban settlements, which is just around 1/4th of the population.
  • 61 percent of the medical colleges are in the 6 states of Maharashtra, Karnataka, Kerala, Tamil Nadu, Andhra Pradesh and Pudicherry.
  • Whereas, just 11 percent of these are located in Bihar, Jharkhand, Orissa, West Bengal and the north-eastern states
  • 369,351 government beds are in urban areas and a mere 143,069 beds in the rural areas.
  • Rural “doctors to population” ratio is lower by 6 times as compared to urban areas.

(Source: KPMG Report 2011)

Huge healthcare Infrastructural Deficiencies:

In India, not just compared to the developed nations, even as compared BRIC countries, there is a huge infrastructural deficiencies as follows:

Indicators

Year

India

US

UK

Brazil

China
Hospital Bed Density(Per 10000 population)

2011

12

31

39

24

30
Doctor Density(Per 10000 population)

2011

6

27

21

17

14

(Source: WHO, World Health Statistics 2012)

  • 0.6 doctors per 1000 population as against the global average of 1.23 suggests an evident manpower gap in the very first stage of a treatment process.
  • Number of beds available per 1000 people in India is only 1.2, which is less than half of the global average of 2.6.

Coming to Medical Colleges, the scenario is equally dismal, as follows:

Year

Number of Medical Colleges

Total Admissions

2011-2012

314

29,263

No of dental Colleges

Total Admissions

2011-2012

289

2783

(Source: Medical Council of India & Dental Council of India)

Thus, India needs to open around 600 medical colleges (100 seats per college) and 1500 nursing colleges (60 seats per college) in order to meet the global average of doctors and nurses.

(Source: KPMG Report 2011) 

Shortages in other healthcare professionals:

It has been reported that a deficit of 64 lakh (6.4 million) allied healthcare professionals India with highest gaps in Maharashtra, Uttar Pradesh, West Bengal, Bihar and Andhra Pradesh, is a stumbling block in providing basic and quality healthcare to Indian population, as follows:

Healthcare Professionals

Shortage
Anesthetists and technicians              850,000
Dental staff              2.04 Million
Ophthalmologists and optometrists              127, 000
Rehabilitation specialists              1.8 Million
Medical laboratory technicians              61,000
Radiographers              19,000
Audiology and speech language specialists                7,500
Medical staff              230,000

(Source: Times Of India, December 20, 2012)

Is the Government ‘missing the woods for the trees’?

In a scenario like this, it is rather impractical to envisage that routine grant of compulsory licenses by the Indian Patent Office will be able to resolve the critical issue of improving access to patented medicines on a long term basis.

Not many CL granted between 1995-2012:

Despite having the provisions of CL in the Patents Act of many countries, not many CLs have been granted across the world from 1995 to date for the obvious reasons.

The details are as follows:

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

Source: DNA, March 9, 2012

An interesting paper:

However, I hasten to add that despite all these, the provision of CL in the Indian Patents Act 2005 has immense relevance, if invoked in the right kind of circumstances.

In the paper titled ‘TRIPS, Pharmaceutical Patents and Access to Essential Medicines: Seattle, Doha and Beyond’, published in ‘Chicago Journal for International Law, Vol. 3(1), Spring 2002’, the author argues, though the reasons for the lack of access to essential medicines are manifold, there are many instances where high prices of drugs deny access to needed treatments for many patients. Prohibitive drug prices, in those cases, were the outcome of monopoly due to strong intellectual property protection.

The author adds, “The attempts of Governments in developing countries to bring down the prices of patented medicines have come under heavy pressure from industrialized countries and the multinational pharmaceutical industry”.

Right pricing of patented drugs is critical: 

While there is no single or only right way to arrive at the price of an IPR protected medicine, how much the pharmaceutical manufacturers will charge for such drugs still remains an important, yet complex and difficult issue to resolve, both locally and globally. Even in the developed nations, where an appropriate healthcare infrastructure is already in place, this issue comes up too often mainly during price negotiation for reimbursed drugs.

A paper titled, “Pharmaceutical Price Controls in OECD Countries”, published by the US Department of Commerce after examining the drug price regulatory systems of 11 OECD countries concluded that all of them enforce some form of price controls to limit spending on pharmaceuticals. The report also indicated that the reimbursement prices in these countries are often treated as de facto market price.

In India, the Government is already mulling to put in place a similar mechanism for patented medicines, as captured in the NPPP 2012.

Further, some OECD governments regularly cut prices of even those drugs, which are already in the market. The values of health outcomes and pharmacoeconomics analysis are gaining increasing importance for drug price negotiations/control by the healthcare regulators even in various developed markets of the world to ensure responsible pricing of IPR protected medicines.

An evolving global trend:

To address such pricing issues, global pharmaceutical majors, like GSK and Merck (MSD) have already started following the differential pricing model, based primarily on the size of GDP and income status of the people of the respective countries. This strategy includes India, as well.

Reference pricing model is yet another such example, where the pricing framework of a pharmaceutical product will be established against the price of a reference drug in reference countries.

An innovative approach to address patented products’ pricing:

To effectively address the challenge of pricing of patented medicines in India, Swiss drug major Roche, has reportedly entered into a ‘never-before’ technology transfer and manufacturing contract for biologics with a local Indian company – Emcure Pharma, for its two widely acclaimed Monoclonal Antibodies’ anti-cancer drugs – Herceptin and MabThera.

The report says that in the past, Emcure had signed licensing deals with US-based bio-pharmaceutical drug maker Gilead Life Sciences for Tenafovir and with Johnson and Johnson for Darunavir. Both are anti-HIV drugs.

In this regard, media reports further indicated that Roche would offer to Indian patients significantly cheaper, local branded versions of these two anti-cancer drugs by early this year. The same news item also quoted the Roche spokesperson from Basel, Switzerland commenting as follows:

“The scope is to enable access for a large majority of patients who currently pay out of pocket as well as to partner with the government to enable increased access to our products for people in need”.

Such ‘out of box’ strategies and initiatives by the global innovator companies could help keeping prices of patented products affordable to the Indian patients, improving their access significantly and making the likes of the current Government initiative on CL irrelevant. 

Conclusion:

It is generally accepted that the provisions for CL in the Indian Patents Act 2005 has utmost relevance in terms of public health interest for all concerned.

However, keeping in view of recent policy announcement in the NPPP 2012, as approved by the Union Cabinet, on price negotiation for patented products, the reported Government move of invoking these provisions for three anti-cancer drugs is rather intriguing.

Moreover, even for the cancer patients, there seems to be a greater urgency to attend to basic healthcare infrastructural and delivery issues, besides providing Universal Health Coverage  (UHC) as recommended by the High Level Experts Group (HLEG) constituted for this purpose by the Government.

Far encompassing critical decisions like grant of CL, I reckon, should be taken only after exhausting all other access improvement measures.

Thus, recent news reports on the possibility of further grant of three more CLs could make the pharmaceutical business environment for the innovator companies in India more uncertain.

Demonstrable predictability for an innovation friendly environment is critical for the economic growth of India, which the Government should not lose sight of. Just upping the ante for more CL of anti-cancer drugs will not necessarily help improving access to cancer treatments in India.

By: Tapan J. Ray

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

‘Old is Always Not Gold’: The Saga of Uncertainty on the New Drug Policy Continues

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Along with the initiation of globalization process of India in 1991, many significant reform oriented steps are being taken by the Government for the pharmaceutical industry as its growth booster.

In tandem with gradual reduction in the span of price control, the government also ensured dereservation of specified drugs only for the public sector and opened it up to the private sector, as well.  During this period, foreign investments through automatic route was first raised from 49 to 74 percent and then to 100 percent.New product patent regime with the introduction of the Patents Act 2005 ushered in a paradigm shift in the pharmaceutical landscape of India, encouraging the domestic industry to invest in R&D. In line with these reforms, weighted deduction on in-house research and development  facility was increased to 200 percent to cover expenditure towards R&D, patent filing, regulatory approvals and clinical trials, over a period of time.

With creation of an enabling growth environment, the government helped the domestic industry catapult itself as a major global force to reckon with, in the generic pharmaceutical space of the world.

Unfortunately, in recent times, the policy makers of the country instead of flooring the gas pedal keeping public health interest in mind, seems to have decided to shift its foot on the brake, creating great uncertainty within the industry.

Recent developments: A cause of concern

As reported by the media the recommendations of the Group of Ministers (GoM) on the Draft National Pharmaceutical Pricing Policy 2011 (NPPP 2011) was scheduled for discussion in the Union Cabinet meeting on November 8, 2012.

Meanwhile, the Ministry of Finance (MoF) reportedly sent its views on the same to the Department of Pharmaceuticals (DoP) and also the Prime Minister’s Office (PMO) advocating continuation of the current cost plus pricing policy.

As a result, the media  reported that the NPPP 2011 was eventually removed from the Cabinet Meeting agenda of November 8, 2012, as the PMO referred the policy back to the GoM requesting the Cabinet Secretariat to mandate the Ministers to hold a fresh meeting (now scheduled on November 21, 2012), consider the view of MoF and get back to the Union Cabinet with a final proposal so that an appropriate decision may be taken by the Cabinet on the new Drug Policy before November 27, as stipulated by the Supreme court of India.

With this, the saga of uncertainty on the new Drug Policy continues unabated.

Finance Ministry views: Continue with cost plus formula:

The key recommendations of the Ministry of Finance as reported are as follows:

  1. The proposal to limit the NPPP to control prices of only formulations leaving aside bulk drugs is not ‘supported’.
  2. Top priced brands in many therapy areas are also the brand leaders. As a result, high prices of such drugs while calculating the ceiling prices would push up prices of many low priced drugs significantly.
  3. The current system which is a cost plus system is adequate to cover all legitimate costs for a manufacturer, particularly when the costing is being done annually and should be continued.
  4. The same cost plus system should also apply to other formulations where additional therapeutic elements will be added. Related incremental cost in those cases can be considered to determine the ceiling price of combination formulations.
  5. The Maximum Retail Prices (MRP) for all NLEM 2011 drugs may be fixed by the NPPA accordingly and the pharmaceutical companies would be free to price these NLEM products at any level below the MRP.
  6. Annual indexation of price with WPI is not supported. The cost analysis should determine the quantum of increase.
  7. Data related to prices and market shares should be collected from sources other than IMS even for drugs covered by them. The methodology to be followed by NPPA for evaluating IMS data and for collecting the data for medicines from other sources should be included in the NPPP.
  8. A phased movement towards 100 percent generic manufacturing, as recommended by the Ministry of Health (MoH), for all drugs under the NLEM should be considered.

The industry view: Have a Balanced Approach

As I understand, the industry feels that the Finance Ministry recommendations are continuation of the same old policy, which has failed to address the key issue of providing affordable and quality healthcare, including medicines, to all, since over last four decades.

However, the pharmaceutical industry has supported the recommendations of the GoM on NPPP 2011 as they reckon it will be a positive step to ensure affordability for the patients, ensure adequate availability and at the same time will not cripple the growth of the industry.

As recommended by the GoM, the draft NPPP 2011 would take the Weighted Average Price (WAP) of all brands with greater than 1% market share by volume as the ceiling price. This formula should improve patient affordability as Weighted Average Price (WAP) of all brands will be most representative of the Indian pharmaceutical market.

The GoM-recommended pricing policy, the industry feels, will certainly have an adverse impact on the pharmaceutical industry as price controls will be expanded and prices will now be based on roughly 91 percent of the pharmaceutical market by value. This will result in over 20 percent price reduction in 60 percent of the NLEM medicines. More importantly, the policy will also achieve the objectives of the Government in ensuring essential medicines are available to those who need these most, by managing prices in the retail market and balancing industry growth.

The existing cost-plus policy, industry leaders argue, has significant limitations and has adversely impacted industry and patients, for example, by shifting bulk drug production out of India (to countries like China), reducing innovation in cost control medicines, limiting new introductions and failing to help medicines reach patients located in rural India.

Many stakeholders have written about the negative implications of a cost-plus pricing methodology. Too stringent price control norms would stifle the pharmaceutical industry and may result in serious shortages of essential drugs in the country. An apt example in this case is that the existing price control regime under DPCO 1995 has caused manufacturing to shift away from the country about 27 notified bulk drugs under price control.  In fact, only 47 out 74 bulk drugs under DPCO 1995 are now produced in the country. Such a situation needs, the industry articulates, to be prevented from happening in the future.  It is quite likely the focus of the national pharma industry may shift then to export, defeating the primary purpose of the new policy.

Moreover, the WHO in its feedback on the draft NPPP 2011 welcomed the intent to move away from cost-plus pricing as it has been abandoned elsewhere. Even developing countries typically have no price control on private market (non-government, non-social insurance reimbursement) sales of pharmaceuticals.

Based on a survey of developing countries similar to India, it is seen that the countries that do have price control for private market drugs, employ market based methods e.g. in Brazil cost-based price regulations do not exist outside of government reimbursement, social insurance reimbursement schemes.  In short, essential medicines predominantly seem to be reimbursed either via government or social insurance or provided free by the government.

Since the Government has recognized that a pricing policy alone cannot ensure access to quality medicines, over the last few months, it has undertaken several steps in the right direction to improve access and affordability of medicines.

The Government has already announced that it will spend over US $5.4 billion to provide essential medicines free to patients in government-run hospitals and clinics. The Government is also in the process of putting in place a central procurement authority to purchase medicines for its use, which, if operated on a level playing field, can realize economies of scale and create the conditions necessary to drive down costs through competition. All such policies can enhance access to medicines and also promote healthy competition in the industry. Both the outcomes cannot be achieved with any price control regime alone.

Expanding access to quality medicines at affordable prices is in everyone’s best interest, and the industry seems to have expressed its willingness and keenness to engage in the development and implementation of policies that will make medicines in India more affordable and accessible to all. 

Pharmaceutical industry expressed its support to the key principles of the new pricing policy, essentiality of drugs and market based pricing so as to ensure greater patient sensitized pricing of medicines. As cited by the Economic Advisory Council (EAC) of the Prime Minister, the negligible increase in drug prices over the last 7 years illustrates the intense competition in the Indian Pharmaceutical Market. In comparison, prices of other essential items including food items have increased steeply. Between 2004 and 2012, price rise of drugs has only been 3/8th of all commodities and half of that of manufactured products.

However, in order to make the pricing formula more robust and to prevent prices of lower priced drugs from moving towards the ceiling price, a section of the industry recommended that this formula be combined with price increases limited to Weighted Price Index (WPI) or 10 percent p.a. (the present price increase cap for non-DPCO) whichever is higher, for individual brands. This measure is expected to make it a fool proof pricing mechanism.

New Drug Policy to focus on all-round inclusive growth:

The role and objectives of the NPPP should help accelerating all-round inclusive growth of the Indian pharmaceutical industry and try to make it a force to reckon with, in the global pharmaceutical industry.

The drug policy is surely not formulated just to implement rigorous price control of drugs. The policy includes other key objectives to contribute significantly towards achieving the healthcare objectives of the nation and also to boost the growth of the industry, working closely with other related ministries of the government.

As stated above by the industry, to correct the imbalance between availability and affordability of essential medicines, in 2005, the government constituted a special taskforce, which is widely known as ‘Dr. Pronab Sen Committee’. This committee was mandated to recommend options other than existing methodology of price control (DPCO 95) for achieving the objective of making available life-saving and essential drugs at reasonable prices.

In its report, the committee did suggest an alternative measure at that time, concluding that the present price control system (DPCO 95) is inappropriate, inadequate and complex, besides being time consuming in its implementation.

Conclusion:

Unfortunately, the views of the MoF point towards continuation of the same old regime, which has failed to deliver for so many decades.

I therefore reckon, it is about time to recognize that the ‘Old is not always Gold’, at least in this particular issue. The government should in no way allow the saga of uncertainty in the formulation of a vibrant and inclusive Drug Policy to continue. The policy makers should consciously shun away any possibility of taking retrograde steps on this critical matter for the sake of both patients and the pharmaceutical industry of India, alike.

By: Tapan 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.