Tag Archives: Up

A Tipping Point For Robust Healthcare System In India

Posted on by
Reply

“Given the popular uptake of universal health coverage reforms elsewhere in Asia, the Feb 4 elections may be a tipping point for health in India. For example, in 2012, Joko Widodo was elected Governor of Jakarta. He launched popular UHC reforms in the capital and 2 years later was elected president. In 2016, voters in the USA and UK supported politicians prepared to act on the concerns of the electorate. If health becomes a populist cause in India, rather than a political inconvenience, then the country might finally be liberated to achieve health outcomes commensurate with its economic and technical achievements”, is exactly what appeared in the editorial of The Lancet, titled “Health in India, 2017,” published on January 14, 2017.

The Lancet Editor further reiterated: “Because states have responsibility for health, the elections will raise the importance of access to quality, affordable health care in India, regardless of the electoral outcome. It is a debate that needs to be fostered.”

This is, of course, a ‘top-down’ approach for healthcare, as seen in several countries across the world. However, I have recently deliberated another approach in the same area on – why a ‘bottom-up’ demand is not forthcoming in India, in an article titled ‘Healthcare in India And Hierarchy of Needs’, published in this blog on November 06, 2017.

No one, including any Government, would possibly ever argue – why shouldn’t a robust public healthcare system in a country, including the availability of reasonably affordable drugs, assume as much priority as economic growth and education?

On the contrary, Governments in several other countries, including those with a well-functioning Universal Healthcare (UHC) in place, are trying to ensure even better and greater access to healthcare for all, by various different means. In this article, I shall focus on it, in a holistic way.

Exploring a bottom-up approach:

It is increasingly becoming more evident that a bottom-up approach would help yield greater success in this area, with a win-win outcome. It will involve taking the stakeholders on board in the process of framing and implementing healthcare projects within a given time-frame. The question then arises, why is it still not happening on the ground in India the way it should? Just floating a discussion paper on draft projects and policies, for stakeholders’ inputs, isn’t enough any longer. There is a need to move much beyond that in making these decisions more inclusive.

Various successive Governments may have some justifiable funding related or other pressing issues to offer a robust public healthcare system in India. But, none of these will be an insurmountable barrier, if more number of heads of astute stakeholders are involved in ferreting out an effective and implementable India-specific solution in this area, within a pre-determined timeline.

There are examples of remarkable progress in this direction, by involving stakeholders in charting out a workable pathway, agreed by all, and jointly implemented in a well-calibrated and time bound manner. Equally important is to make this plan known to the public, so that the Government can be held accountable, if it falls short of this promise, or even misses any prescribed timeline.

‘The Accelerated Access Pathway’ initiative:

Let me now draw an interesting example of involving stakeholders by the Government to improve patient access to expensive and innovative drugs. This example comes from a country that is running one of the oldest and most efficient UHC in the world – the United Kingdom.

Despite a robust UHC being in place, the National Health Service (NHS) in England had a perennial problem to make ‘breakthrough’ medicines available early to NHS patients. The British pharma industry reportedly had a long-held complaint that patients in England get a raw deal when it comes to accessing the latest medicines.

According to a reported study by the Association of the British Pharmaceutical Industry (ABPI) and endorsed by the charity Cancer Research UK, average British patients get lower access to leading cancer medicines than their European counterparts.

To resolve this issue effectively, the British Government launched ‘The Accelerated Access Pathway initiative’. Former GSK global CEO Sir Andrew Witty was named as the chairman of this collaborative body. The scheme, launching from April 2018, will see approvals of cutting-edge treatments for conditions like cancer, dementia and diabetes dramatically speeding up. The pathway is expected to get ‘breakthrough’ medicines to NHS patients up to four years earlier, as the report, published in ‘The Telegraph’ on November 3, 2017 indicates.

It is believed that ‘Accelerated Access Collaborative’ initiative would benefit the NHS patients, as well as deliver significant long-term savings for the health service.

Similar initiatives may be effective in India:

Taking collaborative initiatives, such as above, may not be absolutely new in India. However, in a real sense, Indian initiatives are no more than top-down approaches, and not in any way be termed as bottom-up. Moreover, these usually originate in the form of Government discussion papers inviting comments from the stakeholders.

Moreover, in the healthcare policy related arena, there is no subsequent firm resolve by the Government to chart out a clear pathway for its effective implementation, with specific timelines indicated for each step, besides assigning individual accountability for delivering the intended deliverables.

Any such decisive move by the government, keeping all stakeholders engaged is quite rare to come across in our country, as yet. Thus, carefully selected outside expert group suggestions based – the National Health Policies also have met with the same fate, without possibly any exception, thus far.

Two illustrations:

I shall illustrate the above point with two top-of-mind examples. The first one is a report – the ‘High Level Expert Group (HLEG)’ report on ‘Universal Health Coverage (UHC)’ for India, submitted to the erstwhile Planning Commission in November 2011. The other example is of a policy – the National Health Policy (NHP) 2017, which is in place now, based on a report by an expert committee constituted by the Government.

Let me now briefly recapitulate both – one by one, as follows:

The report on ‘Universal Health Coverage (UHC)’ for India

The ‘High Level Expert Group (HLEG)’ on ‘Universal Health Coverage (UHC)’ was constituted by the Planning Commission of India in October 2010, with the mandate of developing a framework for providing easily accessible and affordable health care to all Indians.

While financial protection for healthcare was the principal objective of this initiative, it was recognized that the delivery of UHC also requires the availability of adequate health infrastructure, skilled health workforce, access to affordable drugs and technologies to ensure the entitled level and quality of healthcare is delivered to every citizen.

The report further highlighted, the design and delivery of health programs and services call for efficient management systems as well as active engagement of empowered communities.

The original terms of reference directed the HLEG to address all of these needs of UHC. Since the social determinants of health have a profound influence not only on the health of populations, but also on the ability of individuals to access healthcare, the HLEG decided to include a clear reference to them.

Nevertheless, this report was never acted upon for its effective implementation. Now, with the change in Government, HLEG recommendations for UHC in India seems to have lost its relevance, altogether.

The National Health Policy (NHP) 2017

The new Government that subsequently came to power, decided to start afresh with a brand new and modern National Health Policy in India, replacing the previous one framed 15 years ago in 2002. NHP 2017 promises healthcare in an ‘assured manner’ to all, by addressing the challenges in the changing socioeconomic, epidemiological and technological scenarios. Accordingly, the National Health Policy 2017 was put in place, early this year.

To achieve the objectives, NHP 2017 intends to raise public healthcare expenditure to 2.5 percent of GDP from the current 1.4 percent. Interestingly, no visible signal about the seriousness on implementation of this laudable initiative has reached the public, just yet.

Let’s now wait for the next year’s budget to ascertain whether the policy objective of ‘healthcare in an assured manner to all’ would continue to remain a pipe dream, as happened in earlier budget proposals. It is noteworthy that union budget allocation on health did not go up, at least, in the last 3 years, despite categorical assurances by the ministers on increasing focus on healthcare.

Significant increase in both the union and the state governments budgetary allocation for healthcare is necessary. This is because, besides many other intents, NHP 2017 intends to provide free diagnostics, free drugs and free emergency and essential healthcare services in all public hospitals for healthcare access and financial protection to all.

Universal Healthcare is the core point in both:

The core focus of both – the HLEG report and also the NHP 2017, is UHC in India, but with different approaches. When HLEG report was not translated into reality, the 2014 general election in India was widely expected to be the tipping point for a new public healthcare landscape in the country fulfilling this promise. More so, as the public healthcare system is generally in a shamble throughout the country, except in a handful of states.

Just as in the United States, Europe or Japan, “if health becomes a populist cause in India, rather than a political inconvenience, then the country might finally be liberated to achieve health outcomes commensurate with its economic and technical achievements,” as the above Lancet editorial commented.  Giving yet another perspective, I also wrote in my blog post, titled ‘Healthcare in India And Hierarchy of Needs’ on November 06, 2017, why has it not happened in India, as on date.

Conclusion:

What happens, if the Indian Government too adopts a major collaborative approach, such as ‘The Accelerated Access Pathway’ initiatives, involving all stakeholders – including the pharma and device industry leaders to implement UHC in the country – part by part?

The relevant counter question to this should not be – Will that work? Of course, it will, if the Government wants to. On the contrary, it could be a potential ‘Tipping Point’ to create a robust public healthcare landscape in India. Thus, the real question that we should ask ourselves: Why won’t it work, when all stakeholders are on board to pave the pathway for an efficient Universal Healthcare system in India, in a win-win way?

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.

Moving Up The Generic Pharma Value Chain

Posted on by
Reply

June 2014 underscores a significant development for the generic drug exporters of India. Much-delayed and highly expected launch of generic Diovan (Valsartan) is now on its way, as Ranbaxy has reportedly received US-FDA approval to launch the first generic version of this blood pressure drug in the United States.

As deliberated in my earlier blog titled “Big Pharma’s Windfall Gain From Indian Pharma’s Loss, Costs American Patients Dear”, delay in launch of the generic equivalent of Diovan caused a windfall gain for Novartis from US$ 1.7 billion US sales of this drug last year, instead of usual declining turnover of an innovative molecule post patent expiry.

The generic version of Diovan (Valsartan) is estimated to contribute around US$ 200 million to Ranbaxy’s sales and US$ 100 million to its profit after tax, during the exclusive sale period. Against these numbers, delay in the launch of generic Diovan has reportedly cost payers and consumers in America around US$ 900 million in the first 18 months.

Since four Ranbaxy manufacturing facilities in India are now facing US-FDA ‘import bans’ due to violations of ‘Good Manufacturing Practices’ of the American regulator, its Ohm Laboratories unit located in New Jersey has been allowed to make generic Valsartan for the US.

Go for gold: 

Hopefully, Ranbaxy would soon get similar approvals from the US drug regulator for its ‘first to launch’ generic versions of Nexium (AstraZeneca) and Valcyte (Roche), as well.

It is worth mentioning that around 90 percent price erosion would take place with intense competition, as soon the period of exclusivity for such ‘first to launch’ generics gets over.

Nonetheless, this is indeed a very interesting development, when the global generic pharmaceutical segment is reportedly showing signals of a tough chase for overtaking the branded pharmaceuticals sector in terms of sales turnover too.

India has a huge a stake in this ball game, as it supplies around 30 to 40 percent of the world’s generic medicines and is well poised to improve its pharma exports from around US$ 15 billion per year to US$ 25 billion by 2016. Since 2012, this objective has remained an integral part of the country’s global initiative to position India as the “pharmacy to the world.”

However, considering the recent hiccups of some Indian pharma majors in meeting with the quality requirements of the US-FDA, though this target appears to be a challenging one for now, the domestic pharma players should continue to make all out efforts to go for the gold by moving up the generic pharmaceutical value chain. In this context, it is worth noting that penetration of the generic drugs in the US is expected to increase from the current 83 percent to 86-87 percent very shortly, as the ‘Obamacare’ takes off with full steam.

Moving up the value chain:

In the largest pharma market of the world – the United States, global generic companies are increasingly facing cutthroat price competition with commensurate price erosion, registering mixed figures of growth. Even in a situation like this, some companies are being immensely benefited from moving up the value chain with differentiated generic product launches that offer relatively high margin, such as, specialty dermatologicals, complex injectibles, other products with differentiated drug delivery systems and above all biosimilars.

As a consequence of which, some Indian generic companies have already started focusing on the development of value added, difficult to manufacture and technology intensive generic product portfolios, in various therapy areas. Just to cite an example, Dr. Reddy’s Laboratories (DRL) is now reportedly set to take its complex generic drug Fondaparinux sodium injection to Canada and two other emerging markets.

Thus, those Indian pharma companies, which would be able to develop a robust product portfolio of complex generics and other differentiated formulations for the global market, would be much better placed in positioning themselves significantly ahead of the rest, both in terms of top and the bottom lines.

One such key opportunity area is the development of a portfolio of biosimilar drugs – the large molecule proteins.

Global interest in biosimilars:

According to the June 2014 report of GlobalData, a leading global research and consulting firm, the biosimilars industry is already highly lucrative. More than 100 deals involving companies focused on the development of biosimilars have been completed over the past 7 years, with a total value in excess of US$10.7 billion.

GlobalData further states, there are a number of factors driving the initiative toward global adoption of biosimilars, from austerity measures and slow economic growth in the US, to an aging population and increasing demand for healthcare in countries, such as Japan.

The costs of biosimilars are expected to be, at least, 20 to 30 percent lower than the branded biologic therapies. This still remains a significant reduction, as many biologics command hundreds of thousands of dollars for 1 year’s treatment.

According to another media report, biosimilars are set to replace around 70 percent of global chemical drugs over the next couple of decades on account of ‘safety parameters and a huge portion of biologic products going off patent’.

Biosimilar would improve patient access:

Although at present over 150 different biologic medicines are available globally, just around 11 countries have access to low cost biosimilar drugs, India being one of them. Supporters of biosimilar medicines are indeed swelling as the time passes by.

It has been widely reported that the cost of treatment with innovative and patented biologic drugs can vary from US$ 100,000 to US$ 300,000 a year. A 2010 review on biosimilar drugs published by the Duke University highlights that biosimilar equivalents of novel biologics would improve access to such drugs significantly, for the patients across the globe.

Regulatory hurdles easing off:

In the developed world, European Union (EU) had taken a lead towards this direction by putting a robust system in place, way back in 2003. In the US, along with the recent healthcare reform process of the Obama administration, the US-FDA has already charted the regulatory pathway for biosimilar drugs, though more clarifications are still required.

Not so long ago, the EU had approved Sandoz’s (Novartis) Filgrastim (Neupogen brand of Amgen), which is prescribed for the treatment of Neutropenia. With Filgrastim, Sandoz will now have at least 3 biosimilar products in its portfolio.

Key global players:

At present, the key global players are Sandoz (Novartis), Teva, BioPartners, BioGenerix (Ratiopharm) and Bioceuticals (Stada). With the entry of pharmaceutical majors like, Pfizer, Sanofi, Merck, Boehringer Ingelheim and Eli Lilly, the global biosimilar market is expected to be heated up and grow at a much faster pace than ever before. Removal of regulatory hurdles for the marketing approval of such drugs in the US would be the key growth driver.

Globally, the scenario for biosimilar drugs started warming up when Merck announced that the company expects to have at least 5 biosimilars in the late stage development by 2012.

Most recent global development:

A key global development in the biosimilar space has taken place, just this month, in June 2014, when Eli Lilly has reportedly won the recommendation of European Medicines Agency’s Committee for Medicinal Products for launch of a biosimilar version (Abasria insulin) of Sanofi’s Lantus insulin. This launch would pave the way for the first biosimilar version of Sanofi’s top-selling drug clocking a turnover of US$7.8 billion in 2013. Eli Lilly developed Abasria with Boehringer Ingelheim of Germany.

In May 2014, Lantus would lose patent protection in Europe. However, biosimilar competition of Lantus in the US could get delayed despite its patent expiry in February, as Sanofi reportedly announced its intention of suing Eli Lilly on this score.

Global Market Potential:

According to a 2011 study, conducted by Global Industry Analysts Inc., worldwide market for biosimilar drugs is estimated to reach US$ 4.8 billion by the year 2015, the key growth drivers being as follows:

  • Patent expiries of blockbuster biologic drugs
  • Cost containment measures of various governments
  • Aging population
  • Supporting legislation in increasing number of countries
  • Recent establishment of regulatory pathways for biosimilars in the US

IMS Health indicates that the US will be the cornerstone of the global biosimilars market, powering a sector worth between US$ 11 billion and US$ 25 billion in 2020, representing a 4 percent and 10 percent share, respectively, of the total biologics market.

The overall penetration of biosimilars within the off-patent biological market is estimated to reach up to 50 percent by 2020.

Challenges for India:

Unlike commonly used ‘small molecule’ chemical drugs, ‘large molecule’ biologics are developed from living cells using very complex processes. It is virtually impossible to replicate these protein substances, unlike the ‘small molecule’ drugs. One can at best develop a biologically similar molecule with the application of high degree of biotechnological expertise.

According to IMS Health, the following would be the key areas of challenge:

High development costs:

Developing a biosimilar is not a simple process but one that requires significant investment, technical capability and clinical trial expertise. Average cost estimates range from US$ 20-100 million against much lesser cost of developing traditional generics, which are typically around US$ 1-4 million.

Fledgling regulatory framework:

In most markets apart from Europe, but including the United States, the regulatory framework for biosimilars is generally still very new compared to the well-established approval process for NCEs and small-molecule generics.

Intricate manufacturing issues:

The development of biosimilars involves sophisticated technologies and processes, raising the risk of the investment.

Overcoming ‘Branded Mentality’:

Winning the trust of stakeholders would call for honed skills, adequate resources and overcoming the branded mentality, which is especially high for biologics. Thus, initiatives to allay safety concerns among physicians and patients will be particularly important, supported by sales teams with deeper medical and technical knowledge. This will mean significant investment in sales and marketing too.

Indian business potential:

The biosimilar drugs market in India is expected to reach US$ 2 billion in 2014 (Source: Evalueserve, April 2010).

Recombinant vaccines, erythropoietin, recombinant insulin, monoclonal antibody, interferon alpha, granulocyte cell stimulating factor like products are now being manufactured by a number of domestic biotech companies, such as, Dr. Reddy’s Laboratories, Lupin, Biocon, Panacea Biotech, Wockhardt, Glenmark, Emcure, Bharat Biotech, Serum Institute, Hetero, Intas and Reliance Life Sciences.

The ultimate objective of all these Indian companies is to get regulatory approval of their respective biosimilar products in the US and the EU either on their own or through collaborative initiatives.

Domestic players on the go:

Dr.Reddy’s Laboratories (DRL) in India has already developed Biosimilar version of Rituxan (Rituximab) of Roche used in the treatment of Non-Hodgkin’s lymphoma.  DRL has also developed Filgastrim of Amgen, which enhances production of white blood cell by the body and markets the product as Grafeel in India. DRL has launched the first generic Darbepoetin Alfa in the world for treating nephrology and oncology indications and Peg-grafeel, an affordable form of Pegfilgrastim, which is used to stimulate the bone marrow to fight infection in patients undergoing chemotherapy. The company reportedly sold 1.4 million units of its four biosimilars, which have treated almost 97,000 patients across 12 countries. Besides, in June 2012, DRL and Merck Serono, of Germany, announced a partnership deal to co-develop a portfolio of biosimilar compounds in oncology, primarily focused on monoclonal antibodies (MAbs). The partnership covers co-development, manufacturing and commercialization of the compounds around the globe, with some specific country exceptions.

Another Indian pharmaceutical major Cipla, has reportedly invested Rs 300 Crore in 2010 to acquire stakes of MabPharm in India and BioMab in China and announced in June 19, 2014 collaboration with Hetero Drugs to launch a biosimilar drug with Actroise brand name for the treatment of anemia caused due to chronic kidney disease. Actorise is a biosimilar of ‘Darbepoetin alfa’, which is marketed by US-based Amgen under the brand Aranesp.

In 2011, Lupin reportedly signed a deal with a private specialty life science company NeuClone Pty Ltd of Sydney, Australia for their cell-line technology. Lupin reportedly would use this technology for developing biosimilar drugs in the field of oncology. Again, in April 2014, Lupin entered into a joint venture pact with Japanese company Yoshindo Inc. to form a new entity that will be responsible both for development of biosimilars and obtaining marketing access for products in the Japanese market.

In November 2013, The Drug Controller General of India (DCGI) approved a biosimilar version of Roche’s Herceptin developed jointly by Biocon and Mylan.

In June 2014, Ipca Laboratories and Oncobiologics, Inc. of USA reportedly announced the creation of an alliance for the development, manufacture and commercialization of biosimilar monoclonal antibody products.

Many more such initiatives reportedly are in the offing.

Oncology becoming biosimilar development hot spot:

Many domestic Indian pharmaceutical companies are targeting Oncology disease area for developing biosimilar drugs, which is estimated to be the largest segment globally with a value turnover of around US$ 60 billion growing over 17 percent.

As per recent reports, about 8 million deaths take place all over the world per year due to cancer.

Indian Government support:

In India, the government seems to have recognized that research on biotechnology has a vast commercial potential for products in human health, including biosimilars, diagnostics and immune-biological, among many others.

To give a fillip to the Biotech Industry in India the National Biotechnology Board was set up by the Government under the Ministry of Science and Technology way back in 1982. The Department of Biotechnology (DBT) came into existence in 1986. The DBT currently spends around US$ 300 million annually to develop biotech resources in the country and has been reportedly making reasonably good progress.

The DBT together with the Drug Controller General of India (DCGI) has now prepared and put in place ‘Regulatory Guidelines for Biosimilar Drugs’ in conformance with the international quality and patient safety standards. This is a big step forward for India in the arena of biosimilar drugs.

In June 2014, under the advanced technology scheme of Biotechnology Industry Partnership Program (BIPP), the DBT has reportedly invited fresh proposals from biotech companies for providing support on a cost sharing basis targeted at development of novel and high risk futuristic technologies mainly for viability gap funding and enhancing existing R&D capacities of start-ups and SMEs in key areas of national importance and public good.

However, the stakeholders expect much more from the government in this area, which the new Indian government would hopefully address with a sense of urgency.

Conclusion: 

According to IMS Health, biosimilar market could well be the fastest-growing biologics segment in the next few years, opening up oncology and autoimmune disease areas to this category of drugs for the first time ever. Moreover, a number of top-selling biologic brands would go off patent over the next five years, offering possibilities of reaping rich harvest for the biosimilars players of the country. Critical therapy areas such as cancer, diabetes and rheumatoid arthritis are expected to spearhead the new wave of biosimilars.

While moving up the generic pharma value chain, Indian pharma players desiring to encash on the emerging global biosimilars opportunities would require to do a thorough analysis, well in advance, to understand properly the key success factors, core value propositions, financial upsides and risks attached to investments in this area.

Indian companies would also need to decide whether moving ahead in this space would be through collaborations and alliances or flying solo would be the right answer for them. Thereafter would come the critical market access strategy – one of the toughest mind games in the long-haul pharma marketing warfare.

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.

 

Supreme Court Suspends New Drug Trials in India…Time to Shape Up?

Posted on by
Reply

On September 30, 2013, with a damning stricture to the Drug Regulator, the Supreme Court, in response to a Public Interest Litigation (PIL) filed by the NGO Swasthya Adhikar Manch, stayed approvals for 162 applications for local Clinical Trials (CTs) of new drugs approved by the Drugs Controller General of India (DCGI) earlier.

The apex court of the country granted the DCGI two weeks time to furnish evidence to the court that adequate patients’ safety and other related mechanisms have been put in place for CTs of all New Chemical Entities (NCEs) and New Molecular Entities (NMEs) in the country.

According to reports, during July and August 2013, the DCGI received 1,122 CT applications, out of which, 331 related to approval of global CTs. The New Drug Advisory Committee (NDAC) approved 285 drugs in AIDS, oncology, cardiology, neurology, psychiatry, metabolism and endocrinology therapy areas. Finally, 162 drugs received the green signal from the DCGI. Now all these trials have come to a halt.

At the same time, the court also directed the Ministry of Health to come out with a plan within 10 weeks to strengthen the regulatory framework for CTs in India based on various suggestions received from the state governments, other stakeholders and experts groups.

A casual approach?

Just to recapitulate, prior to this, on January 3, 2013, against the PIL, the bench of Honorable Justices R.M Lodha and A.R Dave of the Supreme Court reportedly observed that uncontrolled Clinical Trials (CT) are creating ‘havoc’ to human lives causing even deaths to many subjects in India.

In an interim order, the bench directed the Government that CTs could be conducted only under the supervision of the Health Secretary of India. Holding the Government responsible, the bench further observed, “You (Government) have to protect health of citizens of the country. It is your obligation. Deaths must be arrested and illegal trials must be stayed.”

Thereafter, though the Health Secretary of India approved the above 162 CTs, presumably following the above Supreme Court directive, it is an irony that when asked by the Apex Court, the government could not immediately explain precisely what systems and mechanisms have been put in place for proper conduct of these 162 CTs. It sought 2 weeks’ time to justify the action taken by the drug regulator in this regards.

Compromise on patients’ safety continues unabated: 

During another hearing early in October 2013 on a petition filed by the NGO ‘Swasthya Adhikar Manch regarding violations of norms during CTs, the Supreme Court reportedly sought details from the Union Government on the irregularities during the drug trial using Human Papilloma Virus (HPV) vaccines by the Seattle (USA) based organization PATH in Andhra Pradesh and Gujarat states of India.

This intervening application by the NGO was based on the 72nd Parliamentary Standing Committee (PSC) on Health and Family Welfare report dated August 30, 2013, where it was recommended that action should be taken against PATH, state governments of Andhra Pradesh, Gujarat, Indian Council of Medical Research (ICMR) and other government officials including Drug Controller General of India (DCGI) for alleged violations on the subject.

The report highlights, HPV vaccines were given to 14,091 girls in Khammam district of Andhra Pradesh and 10,686 girls in Vadodra, Gujarat. These girls were between age group of 10 and 14, of which seven girls died due to such illegal vaccine trials.

Eventually, these trials were stopped, but only after the matter received media attention.

As per reports, the vaccines were provided by two pharma MNCs – Merck and GlaxoSmithKline through PATH. It also stated as follows:

“Vaccines were given to children irrespective of age in the case of Merck’s Gardasil vaccine. While permission was given to use GSK’s Cervarix vaccine in children of 10 to 14 years, CTs had been conducted on subjects in the age group of 18 to 35 years. Thus the safety and well being of subjects were completely jeopardized.”

No options but to shape-up:

It is worth mentioning, the above PIL had alleged that large scale drug trials being conducted across the country, mainly by the pharma MNC, are using Indian patients as ‘guinea pigs’, as it were. The NGO also told the Supreme Court that several pharmaceutical companies continue to conduct CTs quite indiscriminately, in various states of India, endangering lives of poorly/un-informed trial subjects.

In an affidavit to the Court, the Government admitted that between 2005 and 2012, 2,644 people died during CTs of 475 NCEs/NMEs with serious adverse events related deaths taking 80 lives.

Thus, coming under immense pressure from the civil society and now the scrutiny of the Supreme Court for so many CT related deaths and consequential patients’ compensation issues, the Government does not seem to have any other options left now but to bring US$ 500 million CT segment of the country, which is expected to cross a turnover of US$ 1 Billion by 2016, under stringent regulations.

Experts believe that the growth of the CT segment in India is driven mainly by the MNCs for easy availability of a large treatment naive patient population with varying disease pattern and demographic profile at a very low cost, as compared to many other countries across the world.

CT related deaths in India:

As per the Ministry of Health following are the details of deaths related to CTs registered in India from 2008 to August 2012:

Year Total no of deaths CT related deaths Compensation                  paid to patients:
2012 (up to August) 272 12 NA
2011 438 16 16
2010 668 22 22
2009 737 NA NA
2008 288 NA NA

It is estimated that over the last four years, on an average, 10 persons have died every week in India related to CT.

DCGI hauled-up 9 MNCs on patients’ compensation:

It is worth noting, absolutely unacceptable level of compensation, by any standard, are being paid by the concerned companies, including large MNCs, for the lives lost during CTs.

According to another report quoting the Drug Controller General of India (DCGI), 25 people died in clinical trials conducted by 9 pharma MNCs, in 2010. Unfortunately, families of just five of these victims received” compensation for trial related deaths, which ranged from an abysmal Rs 1.5 lakh (US$ 2,500) to Rs 3 lakh (US$ 5,000) to the families of the diseased.

This report also highlighted that arising out of this critical negligence, for the first time ever, the then DCGI was compelled to summon the concerned nine pharma MNCs on June 6, 2011 to question them on this issue and give a clear directive to pay up the mandatory compensation for deaths related to CTs by June 20, 2011, or else all CTs of these nine MNCs, which were ongoing at that time or yet to start, will not be allowed.

The 9 pharma MNCs summoned by the DCGI to pay up the mandatory compensation for deaths related to CTs were reported as Wyeth, Quintiles, Eli Lilly, Amgen, Bayer, Bristol-Myers Squibb (BMS), Sanofi, PPD and Pfizer.

The report also indicated that after this ultimatum, all the 9 MNCs had paid compensation to the concerned families of the patients, who died related to the CTs.

Prior indictment by Indian Parliamentary Committee:

On May 8, 2012, 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.

The report made the following scathing remarks on CDSCO under its point 2.2:

“The Committee is of the firm opinion that most of the ills besetting the system of drugs regulation in India are mainly due to the skewed priorities and perceptions of CDSCO. For decades together it has been according primacy to the propagation and facilitation of the drugs industry, due to which, unfortunately, the interest of the biggest stakeholder i.e. the consumer has never been ensured.”

Action just not enough yet:

Acting on the damning stricture by the Supreme Court, the Ministry of Health by a gazette notification of January 30, 2013 made the norms of compensation to patients participating in CTs more stringent. ‘Patient Compensation’ was proposed to include injury or death, even if those are not related to the drugs being tested in the CTs.

Understandably, reacting to this notification, some pharma companies, industry lobby groups and also Clinical Research Organizations (CROs) expressed concerns in areas like:

  • Lack of distinction between study-related injuries and non-study related injuries.
  • Use of placebos in placebo-controlled trials.
  • Lack of any arbitration mechanism in case of disagreement on causality/quantum of compensation and also lack of clarity on who constitutes the Expert Committee and its composition.

In addition, the DCGI requested the stakeholders’ to share their inputs to the independent experts advisory committee chaired by Prof. Ranjit Roy Chaudhury along with six other distinguished members namely, Dr V. P. Kamboj, Dr BT Kaul, Dr Vasantha Muthuswamy, Dr Mira Shiva 
and Dr Uma Tekur, to help formulating policy, guidelines and SOPs for approval of NCEs/NMEs and procedures for CTs, including the conduct of ethics committees, the accreditation of trials sites, inspections of trials sites, the ongoing monitoring of trials and banning of drugs. The Government on February 6, 2013 constituted this Committee.

This decision of the regulator, though under pressure, was praiseworthy. Unfortunately nothing substantially changed on the ground for CTs in India even thereafter, as no substantive action has yet been taken on the above expert committee recommendations.

The report of the experts committee:

Prof. Ranjit Roy Chaudhury experts committee in its 99-page report has reportedly recommended some radical changes in the CT space of India. Among others, the report includes the following:

  • Setting up of a Central Accreditation Council (CAC) to oversee the accreditation of institutes, clinical investigators and ethics committees for CTs in the country.
  • Only those trials, which will be conducted at centers meeting these requirements, be considered for approval by the DCGI. 
  • For speedy clearance of applications, a broad expertise based Technical Review Committee (TRC) will replace 12 New Drug Advisory Committees (NDACs), which are currently functioning for NCE/NME approvals.
  • The TRC would be assisted, as required, by appropriate subject experts selected from the ‘Roster of Experts’.
  • For any Adverse Effects (AEs) or Serious Adverse Effects (SAEs) during a CT, the sponsor investigator will be responsible for providing medical treatment and care to the patient at its/their cost till the resolution of the AEs/SAEs.
  • This is to be provided irrespective of whether the patient is in the control group, placebo group, standard drug treatment group or the test drug administered group.
  • A Special Expert Committee should be set up independent of the Drug Technical Advisory Board (DTAB) to review all drug formulations in the market and identify drugs, which are potentially hazardous and/or of doubtful therapeutic efficacy.
  • A mechanism should be put in place to remove these drugs from the market by the CDSCO at the earliest.

Though some of the above provisions were vigorously objected by the industry during stakeholders’ consultations, the committee in its final report has upheld those recommendations.

The main worry – costs of CTs will go up:

CTs, as we know, are of critical importance for obtaining marketing approval of any new drug and at the same time forms a major cost component in the new drug development process, across the world.

Any savings in this area, both in terms of time and money, will add significantly to the profit margin of the product. In that context, the above suggestions, if implemented to create a safety net for the patients participating in CTs, will make these trials more expensive for the concerned companies with increased liability.

Hence, we hear a hue and cry, especially from the pharma MNCs. This is mainly because, India was, thus far, a low cost CT destination for them with virtually no liability for the drug trial patients. This is because, the poor and ill-informed subjects are left in the lurch by many companies exploiting the gaping holes existing in the fragile CT system of the country. After the intervention of the Supreme Court in this regard, some foreign players have reportedly suspended their CTs in India for reasons best known to them.

Exploitation of CT regulations:

The system of CT in India has created a huge ruckus, as it has long been tainted with widespread malpractices, abuses and misuses by many players, both global and local. The issue is not just of GCP or other CT related standards but more of an ethical mind-set and well-reported rampant exploitation of uninformed patients, especially in case of trial-related injuries or even death.

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

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

Industry reactions:

Very interestingly, there have been a divergent sets of reactions from the industry on this issue.

An influential section in the CT space of the country has reacted, with gross indiscretion, to the most recent SC order banning CTs for NCEs/NMEs till a robust mechanism in India is put in place.

Commenting on the verdict, an industry leader has reportedly said:

“A black day for Indian science and a sad reflection on our judiciary”.

Such comments probably vindicate much talked about crony capitalistic mindset of this class. They do not hesitate a bit to display their scant respect even to the highest judiciary of the country, leave alone their glaring indifference to the important public health interest related issue. All such actions possibly emanate from the intense greed to protect and further the vested interests, not withstanding the gross injustice being meted out to the drug trial subjects as a consequence.

On the other hand, supporting the Supreme Court’s view, The Indian Society for Clinical Research (ISCR) reportedly has said:

“As a professional organization representing clinical research professionals across the stakeholder spectrum, ISCR is fully supportive of the need for a more robust and regulated environment for the conduct of clinical trials in India which ensures the practice of the highest standards of ethics and quality and where patient rights and safety are protected”.



ISCR further said, “As in every profession and industry, there will always be players who operate at both ends of the spectrum. While we do not condone any irregularities, we must acknowledge, there are several hundreds of clinical trials taking place in the country in compliance with international and local guidelines. There have been over 40 US FDA clinical trial audits done in India with no critical findings reported. There have also been several European regulatory audits of Indian clinical trial sites, again with no critical findings.”

That said, Indian Parliamentary Standing Committee, had commented on a ‘nexus between the industry and the drug regulator’ for continuation of such sorry state of affairs, since long.

‘Industry-pharma nexus’ in the USA too?

Recently, similar tricky relationship between the regulator and the pharma companies was unearthed again with the later paying hefty fees to attend meetings of a panel that advises the US FDA.

The article highlighted, an investigative report in the ‘Washington Post’ found that pharma companies paid as much as US$ 25,000 to attend sessions convened by a scientific panel on painkillers, and has led to claims that the industry was being given an opportunity to influence federal policy in this area.

Expected Government action:

The Supreme Court is expected to hear the matter on October 24, 2013.

Meanwhile, the Ministry of Health reportedly held meetings with concerned officials to chalk out the strategy before the Court, when this case would come up for hearing after two weeks.

The report says, the Government is planning to place before the court a comprehensive plan with details of the existing mechanism and ongoing efforts like, bringing the the new Drugs and Cosmetic (Amendment) Bill 2013 and incorporation of Prof. Ranjit Roy Chaudhury expert committee recommendations, to plug the loopholes in the new drug trial mechanism of the country. 

Conclusion:

While the importance of CTs to ensure better and more effective treatment for millions of patients in India is immense, it should not be allowed at the cost of patients’ safety, under any garb.  If the regulator overlooks this critical factor and some pharmaceutical players keep exploiting the system, judiciary has no option but to effectively intervene in response to PILs, as happened in this particular case too. 

Thus, I reckon, appropriate safety of human subjects participating in CTs and a fairplay in compensation, whenever justified, should be non-negotiable for the indian drug regulator. Despite reactions with indiscretion from a section of the industry, the Supreme Court is absolutely right to direct the DCGI to stop CTs for all NCEs/NMEs until the apex judiciary is satisfied that a robust system is in place for such trials in India. This will ensure, the scientific objectives of the CTs are properly achieved without any compromise on patients’ safety.

Breaking the nexus decisively between a section of the powerful pharmaceutical lobby group and the drug regulator, as highlighted even in the above Parliamentary Committee report, the Ministry of Health should, without any further delay, put in place a robust and transparent CT mechanism in India, come what may.

This well thought-out new system, besides ensuring patients’ safety and fairplay for all, will have the potential to help reaping a rich economic harvest through creation of a meaningful and vibrant CT industry in India, simultaneously benefitting millions of patients, as we move on.

That said, the moot question still remains: Will the drug regulator be able to satisfy the Supreme Court, as the two weeks expire, that appropriate mechanisms are in place to resume smooth conduct of CTs for the new drugs 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.

 

Humongous Pharma Corruption: China Ups The Ante…and India?

Posted on by
Reply

In the ‘pharma bribery’ related scandal in China, many postulated that the Chinese Government has cracked down selectively on Multinational Corporations (MNCs) to extend unfair business advantages for its local players.

Media reports of September 2013 indicate that in all probability the intent of the Chinese Government is not to spare homegrown corruption in this area. The country appears to be taking tough measures against both global and local perpetrators of such criminal acts, which have spread their vicious tentacles deep into the booming Chinese pharmaceutical industry.

The report names the following domestic companies:

  • Sino Biopharmaceutical Ltd has set up a team to investigate allegations broadcast on the state television that its majority-owned subsidiary had paid for illegal overseas trips for doctors to Thailand and Taiwan.
  • Privately held Gan & Lee Pharmaceuticals investigating allegations of spending around US$ 130.75 million to bribe doctors to promote their pharmaceutical products over five years.

More MNCs under investigation:

At the same time, international media are reporting names of more and more big global pharma players allegedly involved in this humongous scam, as follows:

  • In July 2013, the British drug maker GlaxoSmithKline (GSK) was allegedly involved in around US$ 490 million deceptive travel and meeting expenses as well as trade in sexual favors. Chinese authorities detained four senior executives of GSK in China to further investigate into this matter.
  • In the same month Chinese police reportedly visited the Shanghai office of another British pharmaceutical major AstraZeneca for investigation related to this scam.
  • In August 2013, Sanofi of France reportedly said that it would cooperate with a review of its business in China after a whistle-blower’s allegations that the company paid about US$ 276,000 in bribes to 503 doctors in the country.
  • Again in August 2013, a former employee of the Swiss pharmaceutical major Novartis has reportedly claimed that her manager urged her to offer ‘kickback’ to doctors to increase use of the cancer drug Sandostatin LAR. She had about US$ 105,000 budget for payments to doctors who prescribed at least 5 doses, aiming for 50 doses in all. She filed the compensation claim of US $817,000 after resigning from the company.
  • In the same month, another whistleblower has reportedly made bribery allegations involving Eli Lilly of the United States and US$ 4.9 million in purported kickbacks to Chinese doctors.
  • In September 2013, media reports indicated that the Chinese authorities are investigating the German pharma major – Bayer over a “potential case of unfair competition”.
  • Another very recent report of September 17, 2013 states, Alcon Eye Care division of Novartis is investigating allegation of fabricated clinical trials to bribe doctors. The report says Alcon outsourced the trials to a third-party research company, which in turn compensated doctors with “research payments”. It is claimed by the whistleblower that Alcon used funds earmarked for “patient experience surveys” on lens implants to bribe doctors at more than 200 hospitals. One doctor received about US$ 7,300, for studying 150 patients. Alcon allegedly spent more than US$ 230,000, on such studies last year.

This list of pharmaceutical companies involved in alleged serious malpractices to boost their sales and profits in China is probably not exhaustive.

However, only time will unravel whether this juggernaut of scams will keep moving unabated despite all high voltage actions, bulldozing patients’ interest.

Crack down on food companies too:

Crack down of the Chinese Government on alleged malpractices has reportedly extended to milk products’ companies too.

Again in August 2013, Mead Johnson Nutrition and Danone were among six dairy companies ordered to pay a combined 669 million Yuan by the Chinese Government for price fixing of their products.

Global industry lobby has a different view point:

In an interview with the BBC, an expert from APCO Worldwide, considered as the giant of the lobbying industry said:

“China’s behavior was very worrisome for foreign companies. They don’t know what’s hitting them right now. The government is resorting to its traditional “toolbox” of coercive methods, including shaming and ordering people to confess that they’ve done wrong so that your penalties can be minimized. They’re just treating foreign companies the way they’ve treated their own for many years, and this is the way the Party does things.”

He continued, “What may be going on is they’re telling foreign companies and they’re telling private companies here: Behave yourself; remember we’re the Party, we’re in charge.”

This is seemingly an interesting way of pooh-poohing serious allegations of bribery and other malpractices by the pharmaceutical companies in China without even waiting for the results of the pending enquiry.

However, such comments coming from an industry lobbying organization or any Public Relations (PR) Agency is not uncommon. That’s their business.

Possible reasons for crack down:

Experts opine that China has a high drug price problem. This is vindicated by the fact that while most developed nations of the world spend not more than 10-12 percent of their healthcare budget on medicines, in China it exceeds 40 percent. This huge disparity is believed to have prompted Beijing’s crackdown on the industry, especially the MNCs that dominate the Chinese pharmaceutical industry with newer drugs. The powerful National Development and Reform Commission (NDRC) of China has already said that it is examining pricing by 60 local and international pharmaceutical companies.

Some other reports point out, low basic salary of the doctors at the 13,500 public hospitals in China, who are the key purchasers of drugs, is the root cause of corruption in the Chinese healthcare industry.

According to McKinsey with estimated healthcare spending of China nearly tripling to US$1 trillion by 2020 from $357 billion in 2011, the country is increasingly attracting pharma and medical equipment companies from all over the world in a very large number.

The fall out:

A recent media report indicates that Chines crackdown on the widespread pharma bribery scandal in the country is quite adversely affecting the sales of both global and local players, as many doctors in the Chinese hospitals are now refusing to see medical representatives for fear of being caught up in this large scam.

Drug expenditure is even more for healthcare in India:

Several studies indicate that Out Of Pocket Expenditure towards Healthcare in India is one of the highest in the world and ranges from 71 to 80%.

According to a 2012 study of IMS Consulting Group, drugs are the biggest expenditure in the total Out Of Pocket (OOP) spend on healthcare as follows:

Items Outpatient/ outside Hospital (%) Inpatient/ Hospitalization (%)
Medicines 63 43
Consultation/Surgery - 23
Diagnostics 17 16
Minor surgeries 01 -
Private Consultation 14 -
Room Charge - 14
Others 05 04

Despite these facts, India has remained virtually inactive in this critical area so far, unlike China, except some sporadic price control measures like, Drug Price Control Order (DPCO 2013) for essential drugs (NLEM 2011), which covers around 18% of the total pharmaceutical market in India.

Universal Healthcare (UHC): A possible answer?

Another interesting study titled, ‘The Cost of Universal Health Care in India: A Model Based Estimate’ concludes as follows:

The estimated cost of UHC delivery through the existing mix of public and private health institutions would be INR 1713 (USD 38) per person per annum in India. This cost would be 24% higher, if branded drugs are used. Extrapolation of these costs to entire country indicates that Indian government needs to spend 3.8% of the GDP for universalizing health care services, although in total (public+private) India spent around 4.2% of its GDP on healthcare (2010) at 11% CAGR from 2001 to 2010 period.

Moreover, important issues such as delivery strategy for ensuring quality, reducing inequities in access, and managing the growth of health care demand need be explored.

Thus, it appears, even UHC will be 24% more expensive after a public spend of staggering 3.8% of the GDP towards healthcare, if branded drugs are used, which attract huge avoidable marketing expenditures, as we have seen in the Chinese pharma industry scandal.

High marketing costs making drugs dearer?

A recent article, captioned “But Don’t Drug Companies Spend More on Marketing?” vindicates the point, though the drug companies spend substantial money on R&D, they spend even more on their marketing related activities, legally or otherwise.

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.

In the pharmaceutical sector all over the world, the marketing practices have still remained a very contentious issue despite many attempts of self-regulation by the industry. Incessant media reports on alleged unethical business practices have not slowed down significantly, across the world, even after so many years of self-regulation. This is indeed a critical point to ponder.

Scope and relevance of ‘Corporate Ethical Business Conducts and Values’:

The scope of ‘ethical business conducts and value standards’ of a company should not just be limited to marketing. These should usually encompass the following areas, among many others:

  • The employees, suppliers, customers and other stakeholders
  • Caring for the society and environment
  • Fiduciary responsibilities
  • Business and marketing practices
  • R&D activities, including clinical trials
  • Corporate Governance
  • Corporate espionage

That said, codes of ethical conduct, corporate values and their compliance should not only get limited to the top management, but must get percolated downwards, looking beyond the legal and regulatory boundaries.

Statistics of compliance to codes of business ethics and corporate values are important to know, but perceptible qualitative changes in ethics and value standards of an organization should always be the most important goal to drive any business corporation and the pharmaceutical sector is no exception.

Foreign Corrupt Practices Act (FCPA): A deterrent?

To prevent bribery and corrupt practices, especially in a foreign land, in 1997, along with 33 other countries belonging to the ‘Organization for Economic Co-operation and Development (OECD)’, the United States Congress enacted a law against the bribery of foreign officials, which is known as ‘Foreign Corrupt Practices Act (FCPA)’.

This Act marked the early beginnings of ethical compliance program in the United States and disallows the US companies from paying, offering to pay or authorizing to pay money or anything of value either directly or through third parties or middlemen.

FCPA currently has some impact on the way American companies are required to run their business, especially in the foreign land.

However, looking at the ongoing Chinese story of pharma scams and many other reports of huge sums paid by the global pharmaceutical companies after being found guilty under such Acts in the Europe and USA, it appears, levy of mere fines is not good enough deterrent to stop such (mal)practices in today’s perspective.

China acts against pharma bribery, why not India? 

Like what happened in China, many reports, including from Parliamentary Standing Committee, on alleged pharma malpractices of very significant proportions, which in turn are making drugs dearer to patients, have been coming up in India regularly, since quite sometime.

Keeping these into consideration, abject inertia of the government in taking tough measures in this area is indeed baffling and an important area of concern.

Conclusion:

The need to formulate ‘Codes of Business Ethics & Values’ and more importantly their effective compliance, in letter and spirit, are of increasing relevance in the globalized business environment.

Unfortunately, as an irony, increasingly many companies across the world are reportedly being forced to pay heavy costs and consequences of ‘unethical behavior and business practices’ by the respective governments.

Intense quarterly pressure for expected business performance by stock markets and shareholders, could apparently be the trigger-points for short changing such codes and values.

There is, of course, no global consensus, as yet, on what is ethically and morally acceptable ‘Business Ethics and Values’ uniformly across the world. However, even if these are implemented in country-specific ways, the most challenging obstacle to overcome by the corporates would still remain ‘walking the talk’ and ‘owning responsibility’.

That said, to uphold patients’ interests, China is already giving the perpetrators of the ongoing humongous pharma scam a ‘run for life’, as it were, despite what the industry lobbyists have been laboriously working on for the world to believe. Today, common patients’ in India being in a much worse situation for similar sets of reasons, should the domestic regulators not now wake up from the ‘deep slumber’, up all antennas, effectively act by setting examples and bring the violators to justice?

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.

 

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.

 

 

Government Ups the Ante for More Compulsory Licenses in India

Posted on by
Reply

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. 

First ever ‘Code of Pharma Marketing Practices’ by the Government: A strong signal to “Shape Up”!

Posted on by
Reply

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

This decision of the government is the culmination of a series of events, covered widely by the various section of the media, at least, since 2004.

Examples of public/media outcry:

Way back, in its January–March, 2004 issue, ‘Indian Journal of Medical Ethics’ (IJME) in context of marketing practices for ethical pharmaceutical products in India commented: “If the one who decides, does not pay and the one who pays, does not decide and if the one who decides is ‘paid’, will truth stand any chance?” Three year later, in 2007 the situation remained unchanged when IJME (April–June 2007 edition) once again reported: “Misleading information, incentives, unethical trade practices were identified as methods to increase the prescription and sales of drugs. Medical Representatives provide incomplete medical information to influence prescribing practices; they also offer incentives including conference sponsorship. Doctors may also demand incentives, as when doctors’ associations threaten to boycott companies that do not comply with their demands for sponsorship.” Even ‘The Times of India’ reported the following in December 15, 2008: “1. More drugs a doctor prescribes of a specific company, greater are the chances of his/ her winning a car, a high-end fridge or a TV set. 2. Also, drug companies dole out free trips with family to exotic destinations like Turkey or Kenya. 3. In the West, unethical marketing practices attract stiff penalties. 4. In India, there are only vague assurances of self-regulation by the drug industry and reliance on doctors’ ethics”.

Urgent need for change:

In today’s India, the degree of commercialization of the noble healthcare services has reached its nadir, sacrificing the ethics and etiquette both in medical and pharmaceutical marketing practices at the altar of unlimited greed and want.

As a result of fast degradation of ethical standards and most of the noble values  in the healthcare space, the patients in general have started losing faith and trust both on the medical profession and the pharmaceutical industry, by and large. Health related multifaceted compulsions do not allow them, either to avoid such a situation or even raise a strong voice of protest against the vested interests.

Growing discontentment of the patients in both the private and public healthcare space in the country, is being regularly and very rightly highlighted by the media, including reputed medical journals like, ‘The Lancet’ to help arrest this moral and ethical decay with some tangible proactive measures.

MCI took the first step:

In a situation like this, steps taken by the ‘Medical Council of India (MCI)’ in 2009 for the Medical Profession/ Healthcare Practitioners (HCP) deserves kudos from all corners. It is now up to the HCP to properly abide by the new regulations on their professional conduct, etiquette and ethics. The pharmaceutical industry of India should naturally be a party towards conformance of such regulations, in every possible way.

Quite likely, based on the media outcry, the Department of Pharmaceuticals (DoP), also mooted the idea of a self-regulatory UCMP for the entire pharmaceutical industry of India almost around the same time of 2009. However, as was reported, due to lack of consensus within the pharmaceutical industry, the DoP supposedly could not make the said UCMP operational at that time.

A brand new code from the DoP:

Meanwhile in May 2011, the Department of Pharmaceuticals (DoP) released a draft ‘Uniform Code of Marketing Practices’ for the Pharmaceutical Industry of India for comments by the stakeholders. The preamble of the document states as follows:

“This is a voluntary code of Marketing Practices for Indian Pharmaceutical Industry, for the present and its implementation will be reviewed after a period of six months from the date of its coming into force and if it is found that it has not been implemented effectively by the Pharma Associations/Companies, the Government would consider making it a statutory code.”

Some Key features of the DoP Code:

  1. All promotional material must be consistent with the requirements of this Code.
  2. Brand names of products of other companies must not be used for comparison without prior consent of the concerned companies.
  3. Paid or arranged publication of promotional material in journals must not resemble editorial matter.
  4. The names or photographs of healthcare professionals must not be used in promotional material.
  5. Audio-visual material must be accompanied by all appropriate printed material to ensure compliance of the Code.
  6. Samples should be provided directly to prescribing authority and be limited to prescribed dosages for three patients and in response to a signed and dated request from the recipient. Each sample pack shall not be larger than the smallest pack presented in the market.
  7. Medical and Educational events for doctors should be organized in the appropriate venue in India and all expenses must be incurred only for the events held in India.
  8. Outline of a detailed Complaint Lodging and Redressal mechanism (Committee for Code of Pharma Marketing) to ensure compliance of the marketing code.

Overall quality of the DoP marketing code:

  • The overall document is well written, balanced and fair. The DoP should indeed be commended on the great work that they have done in putting all details of pharmaceutical marketing practices together in this document in a very comprehensive manner.
  • This unified Code does not seem to pose any major extra restrictions to the pharmaceutical companies as compared to the MCI guidelines. All concerned should welcome the DoP decision that the same standards will now be applied to all small, mid-sized and large companies, equally. The main focus of the DoP should be in ensuring that all companies across the pharmaceutical industry follow the same standards in their marketing practices and interactions with the HCP.
  • The draft code of the DoP also states that companies must maintain a detailed record of expenditures incurred on these events. It is not quite clear though, as to what extent and detail the pharmaceutical companies are expected to keep these records and how long?  It is also not clear whether these records have to be maintained on file and supplied to the DoP only on specific request for the same or those details are expected to be disclosed on a regular basis to the regulator.
  • The draft indicates that associations must upload full details of received complaints onto their websites. Although this provision could help making the system more transparent, the DoP should clearly articulate the details about the specific information that will require to be disclosed in cases of any proven breach of the code.
  • It is interesting to note in the draft code states that media reports and published letters indicating that a company may have breached the Code will be treated as a complaint.

The global scenario:

Just like in India, a public debate has started since quite some time in the US, as well, on allegedly huge sum of money being paid by the pharmaceutical companies to the physicians on various items including free drug samples, professional advice, speaking in seminars, reimbursement of their traveling and entertainment expenses etc. All these, many believe, are done to adversely influence their rational prescription decisions for the patients.

‘The New England Journal of Medicine’, April 26, 2007 reported that virtually, all doctors in the US take freebies from drug companies, and a third take money for lecturing, and signing patients up for trials. The study conducted on 3167 physicians in six specialties (anesthesiology, cardiology, family practice, general surgery, internal medicine and pediatrics) reported that 94% of the physicians had ‘some type of relationship with the pharmaceutical industry’, and 83% of these relationships involved receiving food at the workplace and 78% receiving free drug samples. 35% of the physicians received re-reimbursement for cost associated with professional meetings or Continuing Medical Education (CME). And the more influential a doctor was, the greater the likelihood that he or she would be benefiting from a drug company’s largess. As a result of strict regulatory measures, the situation in the US has presumably started changing now.

However, such issues are not related only to physicians. ‘Scrip’ dated February 6, 2009 published an article titled: “marketing malpractices: an unnecessary burden to bear”. The article commented: “Marketing practices that seem to be a throwback to a different age continue to haunt the industry. Over the past few months, some truly large sums have been used to resolve allegations in the US of marketing and promotional malpractices by various companies. These were usually involving the promotion of off-label uses for medicines. One can only hope that lessons have been learnt and the industry moves on.” “As the sums involved in settling these cases of marketing malpractices have become progressively larger, and if companies do not become careful even now, such incidents will not only affect their reputation but financial performance too.”

Fierce ongoing debate:

As the financial relationship between the pharmaceutical companies and the physicians are getting increasingly dragged into the public debate, it appears that there is a good possibility of making disclosure of all such payments made to the physicians by the pharmaceutical companies’ mandatory by the Obama administration, as a part of the new US healthcare reform process.

Examples of global voluntary measures:

Eli Lilly, the first pharmaceutical company to announce such disclosure voluntarily around September 2008, has already uploaded its physician payment details on its website. US pharmaceutical major Merck has also followed suit and so are Pfizer and GSK. However, the effective date of their first disclosure details is not yet known.

Meanwhile, Cleveland Clinic and the medical school of the University of Pennsylvania, US are also in the process of disclosing details of payments made by the Pharmaceutical companies to their research personnel and the physicians.

Similarly in the U.K the Royal College of Physicians has reportedly to have called for a ban on gifts to the physicians and support to medical training, by the pharmaceutical companies. Very recently the states like Minnesota, New York and New Jersey in the US disclosed their intent to bring in somewhat MCI like regulations for the practicing physicians of those states.

Transparency: Australia sets an example: The Australian Competition and Consumer Commission (ACCC) has decided to grant authorization for five years to Medicines Australia’s 16th edition of its Code of Conduct. The Code sets standards for the marketing and promotion of prescription pharmaceutical products in Australia. The Code provides, among other measures, a standard to address potential conflicts of interest from unrestricted relationships between pharmaceutical companies and the HCPs, which may harm the consumers through inappropriate prescriptions. The Code also prohibits the pharmaceutical companies from providing entertainment and extravagant hospitality to HCPs with the requirement that all benefits provided by companies should be able to successfully withstand public and professional scrutiny. “The requirement for public disclosure was imposed by the ACCC as a condition of authorization of the previous version of Medicines Australia’s Code and was confirmed on appeal by the Australian Competition Tribunal.” Edition 16 of the Code fully incorporates the public reporting requirements.

Conclusion:

Currently in the US, both in Senate and the House of Congress two draft bills on  ‘The Physician Payment Sunshine Act’ are pending. It appears quite likely that Obama Administration, with the help of this new law, will make the disclosure of payments to physicians by the pharmaceutical companies mandatory.

It appears, India has taken an extra step forward towards this direction as compared to the Obama administration in the USA. The amended MCI regulations for the HCPs coupled with the draft code of the DoP for the entire pharmaceutical industry should make the financial transactional relationship between the physicians and the pharmaceutical industry in India absolutely clean and transparent.

It should be kept in mind by all concerned that the draft code very categorically warns, in case the voluntary code of Marketing Practices is not implemented effectively, the Government would seriously consider making it statutory for the entire pharmaceutical industry of India…quite a strong signal indeed for ‘Shaping Up’!

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.

Abbott – Piramal deal: the way future is expected to shape up

Posted on by
Reply

In my view, these are still very early days for such acquisitions of large domestic Indian pharmaceutical companies by the Global Pharma majors to gain momentum in the country. However, there is no doubt that in the near future, we shall rather witness more strategic collaborations between Indian and Global pharmaceutical companies, especially in the generic space.

Squeezing margin due to cut-throat domestic and international competition may affect future valuation of the domestic companies:

I reckon, the number of such high profile mergers and acquisitions will significantly increase, as and when the valuation of domestic Indian companies appears quite attractive to the global pharma majors. This could happen, as the domestic players face more cut-throat competition both in Indian and international markets, squeezing their profit margin.
Abbott possibly has a well-structured game plan for seemingly high valuation of the deal:
Having said that let me point out, during Ranbaxy-Daiichi Sankyo deal, analysts felt that the valuation of the deal was quite high. US $ 3.7 billion Abbott – Piramal deal has far exceeded even that valuation. Does this deal not make any business sense? I do not think so. Abbott is a financially savvy seasoned player in the M&A space. It is very unlikely that they will enter into any deal, which will not have any strategic and financial business sense.

Big ticket Indian Pharma deals:

So far India has seen four such major deals starting from Ranbaxy – Daiichi Sankyo, Dabur Pharma – Fresenius, Matrix – Myalan and Orchid – Hospira, besides some global collaborative arrangements, such as, Pfizer with Aurobindo/Claris/Strides GSK with DRL, AsraZeneca with Torrent and again Abbott with Zydus Cadila.

Key drivers for these deals:

Such acquisitions and collaborations will be driven by following eight key factors:

1. R&D pipelines of the global innovative companies are drying up
2. Many blockbuster drugs will go off-patent in the near future
3. Cost containment pressure in the western world exerting pressure on the bottom lines
of the global pharma majors
4. Increasing demand of generics in high growth emerging and developing markets
5. The new Healthcare Reform in the US will promote increased usage of generic drugs.
6. The fact that India already produces 20% of the global requirement for generic drugs
increases the attractiveness.
7. The fact of domestic Indian companies account for 35% of ANDAs highlights the future
potential of the respective companies.
8. Highest number of US-FDA approved plants, next to the US, is located in India.

A strategic move by Abbott:

As announced by Abbott from its headquarter in Chicago that Abbott in India will increase its sales four times to around Rs. 11,000 Crores by 2020 with the acquisition of 350 brands of ‘Piramal Healthcare’ business.

Facing the stark reality of a ‘patent Cliff’, cost containment pressures especially in the US and EU, low single digit growth rate of the developed markets and high growth of branded generic dominated emerging markets, Abbott has taken a new global initiative aimed at the emerging markets with the creation of its global ‘Established Products’ Business’. This initiative started with worth US $ 6.2 billion acquisition of branded generic business of Solvay Pharma, which has a sizeable presence in the EU markets.
Recently announced licensing agreement of Abbott with Zydus Cadila to market 24 products initially in 15 emerging markets of the world is another step towards this direction.

Advantage Abbott India:

The asset based acquisition of ‘Piramal Healthcare’ by Abbott will help its Indian arm to increase its domestic market penetration, significantly, both for branded generic and patented products in urban, semi-urban and rural markets spearheaded by around 7000 strong sales force. This strategy perhaps will also help Abbott in India distancing itself from the number 2, in the Indian Pharma league table, probably with a handsome margin.

Global players want a risk-cover with the generic business and minimize tough competition:

Like Abbott, it is quite likely that other major global players are also planning to reduce their business risks by expanding the business from mainly high risk and expensive R&D intensive patented products to a more predictable and rapidly expanding branded generic business.

Will such move have any significant effect on competition?

Such M&A initiatives may seemingly minimize the cut throat competition from large generic players from India. However, I do not envisage any significant impact on over all competition between the generic players for such moves, as their will be mounting competition from more number of new entrants and emerging players, entry barrier in Indian generic pharmaceutical market being quite low.

Conclusion:

In the globalized economy where the ‘world is flat’ such types of business consolidation initiatives are inevitable. The domestic Indian companies across the industry are also in the prowl for suitable global targets, which are at times of world class ‘Crown Jewels’ like Arcelor, Chorus or Jaguar/Land Rover. Pharmaceutical industry is, therefore, no exception.

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.