What President Obama And Prime Minister Modi Discussed On IPR And Healthcare In India

Posted on February 2, 2015 by Tapan Ray

During the recent visit of the US President Barack Obama to India from January 25-27, 2015, both the domestic and international media was abuzz with the speculation, whether or not India would concede some ground to America on the prevailing, generally considered, well balanced patent regime in India.

Many expected that the American delegation would succeed in getting some specific assurances from Prime Minister Narendra Modi to follow the line of the US style Intellectual Property Rights (IPR) in India, which would help the American pharma companies to maximize their financial returns in the country.

The assurances from India were expected mainly in areas involving grant of patents even to those pharma products, that do not quality for the same under section 3(d) of the Indian Patents Act 2005, dilution of provisions for Compulsory License (CL) and creation of a new provision for Data Exclusivity in the country, besides a few others.

As everyone noticed, just before the US President’s visit, interested groups both in India and also from abroad intensified lobbying and released op-eds to create pressure on the Indian negotiators, in general, and the Prime Minister Modi in particular.

Terming the Indian Patents Act weak, the lobby groups turned the Indian IPR regime on its head. Playing the role of India’s benefactor, they re-packaged their shrill collective voice into pontificating words while giving interviews to the Indian media by saying: “A strong IPR regime could allow the country (India) to make a major contribution to tackling health challenges, both domestically and around the world.”

Additional US interest in Indian IP regime from TPP perspective:

Exemplary demonstration of India’s resistance to intense external pressure, time and again, for dilution of the IP regime in the country, seems to have become a model to follow for the emerging economies of the world, in general. This trend now gets reflected even among some of the members of the 12-nation Trans-Pacific Partnership (TPP), which is a proposed regional regulatory and investment treaty.

According to reports, TPP members, such as, Brunei, Malaysia, Singapore and Vietnam are negotiating hard to get incorporated somewhat similar to Indian IP rules in the TPP agreement. Besides America, other members of the TPP are Australia, Japan and New Zealand, Canada, Chile, Mexico and Peru.

TPP negotiations are generally expected to follow the overall framework of American laws. However, according to media reports, based on the leaked draft of the TPP, the data exclusivity period for biologic medicines has already been negotiated down to 7 years, from 12 years under the US Affordable Care Act.

However, on January 27, 2015, US Senator Orrin Hatch, Chairman of the Senate Finance Committee reportedly said that he would oppose Senate approval of the TPP, if it does not provide 12 years of patent protection for biologics.

The same day, at a hearing before the House Ways and Means Committee, US Trade Representative Mike Froman reportedly reiterated, “The US is insisting on 12 years of IP protections, even though the Obama administration’s budget calls for 7-year exclusivity on biologic meds.”

It is also worth noting that Nobel laureate Joseph E. Stiglitz in an op-ed titled, “Don’t Trade Away Our Health”, published in The New York Times of January 30, 2015 commented as follows:

“TPP could block cheaper generic drugs from the market. Big Pharma’s profits would rise, at the expense of the health of patients and the budgets of consumers and governments.”

Clicking on this short video clip you will be able watch another similar viewpoint on TPP, its general perspective and what it encompasses.

Thus, the closely guarded ‘turf war’ on TPP is now heating up, making negotiations increasingly tougher to arrive at a consensus on the IP rules that would be applicable to pharmaceutical products in this trade initiative. Consequently, the evolving scenario has prompted the interested groups to keenly follow, with hopes, the outcome of Presidents Obama’s recent visit to India, especially in the pharma IP areas. This is because, many emerging economies of the world are now appreciative of the prevailing well-balanced patent regime in India.

After the 12-nation TPP agreement comes into force, probably following the lines of the US IP laws, it is quite possible that India may sometime in future would prefer to be a part of this agreement for greater trade facilitation, as the country comes closer to America…Who knows?

However, in that case the bottomline is, India would have to amend relevant provisions of its Patents Act in conformance with the requirements of mainly the US pharmaceutical companies and the IP laws prevailing in America, as this will be necessary to become a new member of this treaty.

Discussion in the summit meeting:

According to the Joint Statement on the summit meeting released by the White House, President Obama and Prime Minister Modi discussed the following subjects related to IPR and Healthcare in India, as detailed below:

Reaffirmed the importance of providing transparent and predictable policy environments for fostering innovation. Both countries reiterated their interest in sharing information and best practices on IPR issues, and reaffirmed their commitment to stakeholders’ consultations on policy matters concerning intellectual property protection.

Reaffirmed their commitment to the Global Health Security Agenda (GHSA) and announced specific actions at home and abroad to prevent the spread of infectious diseases, including a CDC-Ministry of Health Ebola and GHSA preparedness training, expansion of the India Epidemic Intelligence Service, and development of a roadmap to achieve the objectives of the GHSA within three years.

Committed to multi-sectoral actions countering the emergence and spread of antimicrobial resistance (AMR), and cooperation in training of health workers in preparedness for infectious disease threats. The Leaders agreed to focus science and technology partnerships on countering antibiotic resistant bacteria and promoting the availability, efficacy and quality of therapeutics.

Welcomed further progress in promoting bilateral cooperation on cancer research, prevention, control, and management and agreed to continue to strengthen the engagement between the CDC and India’s National Centre for Disease Control.

Welcomed the upcoming completion of an Environmental Health, Occupational Health and Injury Prevention and Control MoU between the U.S. Centers for Disease Control and Prevention and the Indian Council for Medical Research to further collaborative efforts to improve the health and welfare of both countries’ citizens.

Agreed to expand the India-U.S. Health Initiative into a Healthcare Dialogue with relevant stakeholders to further strengthen bilateral collaboration in health sectors including through capacity building initiatives and by exploring new areas, including affordable healthcare, cost saving mechanisms, distribution barriers, patent quality, health services information technology, and complementary and traditional medicine.

Pledged to encourage dialogue between the U.S. Department of Health and Human Services and its Indian counterparts on traditional medicine.

Pledged to strengthen collaboration, dialogue, and cooperation between the regulatory authorities of the two countries to ensure safety, efficacy, and quality of pharmaceuticals, including generic medicines.

Agreed to accelerate joint leadership of the global Call to Action to end preventable deaths among mothers and children through a third meeting of the 24 participating countries in India in June 2015. As host, India will showcase the power of new partnerships, innovations and systems to more effectively deliver life-saving interventions.

Also lauded the highly successful collaboration on a locally produced vaccine against rotavirus, which will save the lives of an estimated 80,000 children each year in India alone, and pledged to strengthen the cooperation in health research and capacity building through a new phase of the India-U.S. Vaccine Action Program.

As stated earlier, during this summit meeting, US lobbyists were reportedly nurturing a hope that Prime Minister Modi would eventually agree, at least in principle, to jettison section 3(d) on the patentability criteria enshrined in the Indian Patents Act 2005 and significantly water down the country’s Compulsory License (CL) provisions. This expectation increased, when the US President made the investment promise of U$4 billion in India.

That said, from the above points of discussion in the joint statement, it appears that no breakthrough on the part of the US was achieved especially in the IPR space, during the summit.

However, in other areas of bilateral healthcare co-operation, such as, science and technology partnerships in countering antibiotic resistant bacteria; cancer research and traditional medicines; the reaffirmations made by the two leaders are encouraging.

US pressure on IP to continue:

Going by India’s reaffirmation during the summit meeting of its commitment to consultations with America on policy matters related to IPR protection and US Trade Representative Mike Froman’s reported affirmation of the following to the US lawmakers during a Congressional hearing held on January 27, 2015, it is construed by the IP activists that the kettle has possibly started boiling:

- “We have been concerned about the deterioration of the innovation environment in India, and we have engaged with the new government since they came into office in May of last year about our concerns,”

- “We held the first Trade Policy Forum in four years in November. I just returned from India yesterday as a matter of fact … and in all of these areas, we have laid out a work program with the government of India to address these and other outstanding issues.”

- “We are in the process of providing comments on that draft policy proposal on IPR, and we are committed to continuing to engage with them to underscore areas of work that needs to be done in copyright, in trade secrets as well as in the area of patents,”

- “We’ve got a good dialogue going now with the new government on this issue, and we’re committed to working to achieve concrete progress in this area,”

Media reports also indicate that US pressure on IPR would continue, as they highlight:

“Threatened by free trade of high-quality and affordable medicines, US-based pharmaceutical companies and politicians friendly with the industry are using prominently placed op-eds, large advertisements on Washington, D.C. buses, and letters to President Obama to spread false information -claiming India’s rules are not legal or discourage innovation. The companies have been threatening to withhold investment if India does not adopt weaker patent laws that would extend pharmaceutical monopolies and stymie the country’s generic industry.”

I discussed some of these issues in my blog post of January 19, 2015, titled “New National IPR Policy of India – A Pharma Perspective”.

Conclusion:

Irrespective of whatever the US-India Joint Statement says on IPR, some experts do apprehend that Indian Government may now wilt under continuous intense pressure from the American Government. This is mainly because, India’s Commerce and Industry’s Minister has reportedly sought America’s inputs in the finalization process of the new National IPR policy of the country.

On this score, let me hasten to add that it may not be prudent to read too much into it, as seeking stakeholders’ comments on such matter is a practice that India has been following since long on various issues and policies.

However, at the same time, other groups of experts nurture a quite different viewpoint. They are confident that the nationalist Modi Government, under no circumstances would concede its long nurtured strategic ground on IPR to the US power play.

Emerging countries across the globe are keenly watching this intense game of ‘Power Chess’, as they plan to emulate India in many of the pharmaceutical IP areas to uphold the public health interest, providing affordable healthcare to all.

These are still early days. Thus, in my view, on January 25, 2015, what President Barack Obama and Prime Minister Narendra Modi discussed on the IPR regime in India may not be as important as what they would eventually decide to agree, disagree or agree to disagree in this area, moving on from here.

Only time would prove…not just who is right, that is pretty obvious to many, but who wilts at the end of the day…and more importantly, why?

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.

With Highest Billionaire Wealth Concentration, India Tops Malnutrition Chart in South Asia: “What Future Do You Want?”

Posted on January 26, 2015 by Tapan Ray

Two recent global research reports, though on different spheres, place India at the top of the respective blocks. However, the take away messages that the studies offer are indeed poles apart in qualitative terms and worth pondering over collectively.

On January 20, 2014, just before the World Economic Forum (WEF) at Davos in Switzerland, Oxfam International released a report warning that by 2016, the world’s wealthiest 1 percent will control almost half of the global assets. Since 2009, the world’s billionaires have seen their share of the asset pie grow from 44 percent to 48 percent.

Before that, a World Bank Report of October 2014 titled, “Addressing Inequality in South Asia”, highlighted that India has the highest billionaire wealth concentration in South Asia.

Billionaire wealth to gross domestic product ratio in India was 12 percent in 2012. This was was higher than other economies with similar development level, namely, Vietnam with its ratio at less than two percent, and China with less than five percent.

This report also clarifies that inequality in South Asia appears to be moderate when looking at standard indicators such as the Gini index, which are based on consumption expenditures per capita. But other pieces of evidence reveal enormous gaps, from extravagant wealth at one end to lack of access to the most basic services at the other.

Stark realities:

Wealth creation by no means is bad and in fact, is essential for economic growth of any nation, if read in isolation. This is mainly because, as the Oxfam report says, some economic inequality is essential to drive growth and progress, rewarding those with talent, hard earned skills, and the ambition to innovate and take entrepreneurial risks.

Unfortunately, at the same time, as the same World Bank report highlights, the stunted growth of children under fiver years of age, due to malnutrition, has been 60 percent of the total number of children born in the poorest households of India, as compared to 50 per cent in Bangladesh and Nepal.

Moreover, According to UNICEF, every year 1 million children again below the age of five years die due to malnutrition related causes in India. This number is worrisome as it is far higher than the emergency threshold, according to W.H.O classification of the severity of malnutrition.

Highlighting stark inequality in India, the report says, “The net worth of a household that is among the top 10 per cent can support its consumption for more than 23 years, while the net worth of a household in the bottom 10 per cent can support its consumption for less than three months.”

Some poor moved above the poverty line, though grossly inadequate:

According to the same report, from 2004-05 to 2009-10 when India’s GDP registered the highest ever average growth, about 40 percent of poor households moved above the poverty line and around 11 percent of poor population even moved into the middle class. Unfortunately, during the same period around 14 percent of the non-poor population also slipped below the poverty line.

Thus, what needs to be addressed soonest is the issue of vast difference in income between the richest and the poorest leading to an equally huge difference in the access to basic human developmental needs such as, education, healthcare and nutrition.

Adverse impact on expected ‘demographic dividend’ of India:

As legendary Bill Gates said in a recent media interview, “India has got far more kids that are malnourished and whose brains are not developed, way more than any other country. That’s really the crisis.”

If this trend of inequality continues, the ‘demographic dividend’ of India that the country has factored in so intimately in its future GDP growth narrative, could well be no more than a myth.

As US Supreme Court Justice Louis Brandeis once famously said, “We may have democracy, or we may have wealth concentrated in the hands of the few, but we cannot have both.”

The Oxfam report also emphasizes, the extreme levels of wealth concentration occurring today threaten to exclude hundreds of millions of people from realizing the benefits of their talents and hard work.

Social inequality and healthcare challenges:

Health of an individual is as much an integral contituent of the socio-economic factors as it is influenced by a person’s life style and genomic configurations. Important research studies indicate that socio-economic disparities, including the educational status, lead to huge disparity in the space of healthcare.

As stated in another report, ‘About 38 million people in India (which is more than Canada’s population) fall below the poverty line every year due to healthcare expenses, of which 70 percent is on purchase of drugs’.

Thus, reduction of social inequalities ultimately helps to effectively resolve many important healthcare issues. Otherwise, mostly the minority population with adequate access to knowledge, social and monetary power will continue to have necessary resources available to address their healthcare needs, appropriately.

Regular flow of newer and path breaking medicines to cure and effectively treat many diseases has not been able to eliminate either trivial or dreaded diseases alike. Otherwise, despite having effective curative therapy for malaria, typhoid, cholera, diarrhea/dysentery and venereal diseases, why will people still suffer from such illnesses? Similarly, despite having adequate preventive therapy, like vaccines for diphtheria, tuberculosis, hepatitis and measles, our children still suffer from such diseases. All these continue to happen mainly because of socio-economic inequalities related considerations, including poor level of awareness.

A paper titled, “Healthcare and equity in India”, published in The Lancet (February, 2011) identifies key challenges to equity in service delivery, healthcare financing and financial risk protection in India.

These include:

- Imbalanced resource allocation

- Limited physical access to quality health services and inadequate human resources for health

- High out-of-pocket health expenditures

- High health spending inflation

- Behavioral factors that affect the demand for appropriate healthcare

Research studies vindicate the point:

Following are some research studies, which I am using just as examples to vindicate the above argument on inequality adversely impacting healthcare:

• HIV/AIDs initially struck people across the socio-economic divide. However, people from higher socio-economic strata responded more positively to the disease awareness campaign and at the same time more effective and expensive drugs started becoming available to treat the disease, which everybody cannot afford. As a result, HIV/AIDS are now more prevalent within the lower socio-economic strata of the society.

• Not very long ago, people across the socio-economic strata used to consume tobacco in many form. However, when tobacco smoking and chewing were medically established as causative factors for lung and oral cancers, those coming predominantly from higher/middle echelon of the society started giving up smoking and chewing of tobacco, as they accepted the medical rationale with their power of knowledge. Unfortunately the same has not happened with the poor people of lower socio-economic status. As a consequence of which, ‘Bidi’ smoking and ‘Gutka’/tobacco chewing have not come down significantly among the population belonging to such class, with more number of them falling victim of lung and oral cancers.

Thus, in future, to meet the unmet needs when more and more sophisticated and high cost disease treatment options will be available, mostly people with higher socio-economic background will be benefitted more due to their education, knowledge, social and monetary power. This widening socio-economic inequality will consequently widen the disparity in the healthcare scenario of the country.

Phelan and Link in their research study on this subject had articulated as under:

“Breakthroughs in medical science can do a lot to improve public health, but history has shown that, more often than not, information about and access to important new interventions are enjoyed primarily by people at the upper end of the socioeconomic ladder. As a result, the wealthy and powerful get healthier, and the gap widens between them and people who are poor and less powerful.”

Recent deliberations at Davos:

In the last two decades, socio-economic inequality in India has been fuelled by rapid, but unequal economic growth of the nation. Though the overall standard of living has been rising, there still remain a large number of populations living in pockets of intense deprivation and abject poverty.

One of the Davos sessions of this year deliberated on “What Future Do You Want?” The session, among others, reportedly felt the important need to ensure people’s well being and put in place effective measures such as a social safety net and universal healthcare.

At the same WEF annual meet at Davos, United Nation’s Secretary General Ban Ki-Moon also reiterated, “All policies must be people centric. We should make a world where nobody is left behind.”

Conclusion:

Assuming the above approach as a sincere realization of the current policy makers and more importantly the powerful influencers of those policies, the key question that comes up is: In which direction would India now chart its course to address this critical issue?

One may possibly hazard a guess on the shape of the future policies to come in India from the BJP party President Amit Shah’s recent address to crème de la crème of Mumbai businessmen in a function organized by a business news channel. In this event Mr. Shah reportedly said to them that the BJP does not agree with their definition of “reforms” and will strive to build a welfare state.

Will this approach of the new political dispensation get reflected in the forthcoming union budget as well, to effectively translate the new National Health Policy of India into reality, at least this time?

I deliberated on the National Health Policy of India in my Blog Post of January 12, 2015, titled “India’s National Health Policy 2015 Needs Wings To Fly”

That said, if it really so happens, a strong signal would go to all stakeholders that India is now well poised to chart on an uncharted frontier to significantly reduce the impact of inequality, particularly in the space of healthcare.

In that process, despite the highest billionaire wealth concentration, India would set a pragmatic course to place itself at the top of the healthcare chart, not just in South Asia, but probably also within the BRIC countries, to expect the least.

By: Tapan J. Ray

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

New “National IPR Policy” of India – A Pharma Perspective

Posted on January 19, 2015 by Tapan Ray

Whether under pressure or not, is hardly of any relevance now. What is relevant today is the fact that the new Indian Government, almost in a record time of just around two months, has been able to release a high quality first draft of an important national policy for public discourse.

In October 2014, the Department of Industrial Policy and Promotion (DIPP) constituted a six-member ‘Think Tank’ chaired by Justice (Retd.) Prabha Sridevan to draft the ‘National IPR Policy’ of India and taking quick strides, on December 19, 2014, released its first draft of 29 pages seeking stakeholders’ comments and suggestions on or before January 30, 2015. A meeting with the stakeholders has now been scheduled on February 5, 2015 to take it forward.

A quick glance at the Draft IPR Policy:

The proposed ‘Mission Statement’ as stated in the draft “National IPR Policy” is:

“To establish a dynamic, vibrant and balanced intellectual property system in India, to foster innovation and creativity in a knowledge economy and to accelerate economic growth, employment and entrepreneurship.”

Specifying its vision, mission and objectives, the draft policy suggests adopting a catchy national slogan to increase IP awareness: ‘Creative India; Innovative India’ and integrating IP with “Smart cities”, “Digital India” and “Make in India” campaigns of the new Government.

The ‘Think Tank’ dwells on the following seven areas:

IP Awareness and Promotion
Creation of IP
Legal and Legislative Framework
IP Administration and Management
Commercialization of IP
Enforcement and Adjudication
Human Capital Development

In the policy document, the ‘Think Tank’ has discussed all the above seven areas in detail. However, putting all these in a nutshell, I shall highlight only three of those important areas.

1. To encourage IP, the ‘Think Tank’ proposes to provide statutory incentives, like tax benefits linked to IP creation, for the entire value chain from IP creation to commercialization.

2. For speedy redressal of patent related disputes, specialized patent benches in the high courts of Bombay, Calcutta, Delhi and Madras have been mooted. The draft also proposes creation of regional benches of the IPAB in all five regions where IPOs are already located and at least one designated IP court at the district level.

3. The draft concludes by highlighting that a high level body would monitor the progress of implementation of the National IP Policy, linked with performance indicators, targeted results and deliverables. Annual evaluation of overall working of the National IP Policy and quantification of the results achieved during the period have also been suggested, along with a major review of the policy after 3 years.

Although the National IPR policy cuts across the entire industrial spectrum and domains, in this article I shall deliberate on it solely from the pharmaceutical industry perspective.

Stakeholders’ keen interest in the National IPR Policy – Key reasons:

Despite full support of the domestic pharmaceutical industry, the angst of the pharma MNCs on the well-balanced product patent regime in India has been simmering since its very inception, way back in 2005.

A chronicle of recent events, besides the seven objectives of the IPR policy as enumerated above, created fresh general inquisitiveness on how would this new policy impact the current pharmaceutical patent regime of India, both in favor and also against.

Here below are examples of some of those events:

At a Congressional hearing of the United States in July 2013, a Congressman reportedly expressed his anger and called for taking actions against India by saying:

“Like all of you, my blood boils, when I hear that India is revoking and denying patents and granting compulsory licenses for cancer treatments or adopting local content requirements.”

This short video clipping captures the tone and mood of one such hearing of the US lawmakers.

On April 30, 2014, the United States in its report on annual review of the global state of IPR protection and enforcement, named ‘Special 301 report’, classified India as a ‘Priority Watch List Country’. Placement of a trading partner on the ‘Priority Watch List’ or ‘Watch List’ indicates that particular problems exist in that country with respect to IPR protection, enforcement, or market access for persons relying on IP.

It further stated that USTR would conduct an Out of Cycle Review (OCR) of India focusing in particular on assessing progress made in establishing and building effective, meaningful, and constructive engagement with the Government of India on IPR issues of concern. An OCR is a tool that USTR uses on adverse IPR issues and for heightened engagement with a trading partner to address and remedy in those areas.

“India misuses its own IP system to boost its domestic industries,” commented the US Senator Orrin Hatch while introducing the 2014 report of the Global Intellectual Property Centre (GIPC) of US Chamber of Commerce on ‘International Intellectual Property (IP) Index’. In this report, India featured at the bottom of a list of 25 countries, scoring only 6.95 out of 30. The main reasons for the low score in the report were cited as follows:

- India’s patentability requirements are (allegedly) in violations of ‘Trade Related Aspects of Intellectual Property Rights (TRIPS)’ Agreement.

- Non-availability of regulatory data protection

- Non-availability of patent term restoration

- The use of Compulsory Licensing (CL) for commercial, non-emergency situations.

Based on this report, US Chamber of Commerce urged USTR to classify India as a “Priority Foreign Country”, a terminology reserved for the worst IP offenders, which could lead to trade sanctions.

In the midst of all these, international media reported:

“Prime Minister Narendra Modi got an earful from both constituents and the US drug industry about India’s approach to drug patents during his first visit to the US last month. Three weeks later, there is evidence the government will take a considered approach to the contested issue.”

Washington based powerful pharmaceutical industry lobby group – PhRMA, which seemingly dominates all MNC pharma trade associations globally, has reportedly urged the US government to continue to keep its pressure on India in this matter. According to industry sources, PhRMA has a strong indirect presence and influence in India too. Interestingly, as reported in the media a senior representative of this lobby group would be India when President Obama visits the country later this month.

In view of all these concerns, during Prime Minister Narendra Modis’s visit to the United States in September 2014, a high-level Indo-US working group on IP was constituted as a part of the Trade Policy Forum (TPF), which is the principal trade dialogue body between the two countries.

Almost immediately after the Prime Minister’s return to India, in October 2014, the Government formed a six-member ‘Think Tank’ to draft ‘National IPR Policy’ and suggest ways and legal means to handle undue pressure exerted by other countries in IPR related areas. The notification mandated the ‘Think Tank’ to examine the current issues raised by the industry associations, including those that have appeared in the media and give suggestions to the ministry of Commerce and Industry as appropriate.

However, the domestic pharma industry of India, many international and national experts together with the local stakeholders continue to strongly argue against any fundamental changes in the prevailing patent regime of India.

A perspective of National IPR Policy in view of Pharma MNCs’ concerns:

I shall now focus on four key areas of concern/allegations against India on IPR and in those specific areas what has the draft National IPR Policy enumerated.

- Concern 1: “India’s patentability requirements are in violations of ‘Trade Related Aspects of Intellectual Property Rights (TRIPS)’ Agreement.”

Draft IPR Policy states: “India recognizes that effective protection of IP rights is essential for making optimal use of the innovative and creative capabilities of its people. India has a long history of IP laws, which have evolved taking into consideration national needs and international commitments. The existing laws were either enacted or revised after the TRIPS Agreement and are fully compliant with it. These laws along with various judicial pronouncements provide a stable and effective legal framework for protection and promotion of IP.”

A recent vindication: Just last week (January 15, 2015), Indian Patent Office’s (IPO’s) rejection of a key patent claim on Hepatitis C drug Sovaldi (sofosbuvir) of Gilead Sciences Inc. further reinforces that India’s patent regime is robust and on course.

Gilead’s patent application was opposed by Hyderabad based Natco Pharma. According to the ruling of the IPO, a new “molecule with minor changes, in addition to the novelty, must show significantly enhanced therapeutic efficacy” when compared with a prior compound. This is essential to be in conformity with the Indian Patents Act 2005. Gilead’s patent application failed to comply with this legal requirement.

Although Sovaldi ((sofosbuvir) carries an international price tag of US$84,000 for just one treatment course, Gilead, probably evaluating the robustness of Sovaldi patent against Indian Patents Act, had already planned to sell this drug in India at a rice of US$ 900 for the same 12 weeks of therapy.

It is envisaged that this new development at the IPO would prompt entry of a good number of generic equivalents of Sovaldi. As a result, the price of sofosbuvir (Sovaldi) formulations would further come down, despite prior licensing agreements of Gilead in India, fetching huge relief to a large number of patients suffering from Hepatitis C Virus, in the country.

However, reacting to this development Gilead has said, “The main patent applications covering sofosbuvir are still pending before the Indian Patent Office…This rejection relates to the patent application covering the metabolites of sofosbuvir. We (Gilead) are pleased that the Patent Office found in favor of the novelty and inventiveness of our claims, but believe their Section 3(d) decision to be improper. Gilead strongly defends its intellectual property. The company will be appealing the decision as well as exploring additional procedural options.”

For more on this subject, please read my blog post of September 22, 2014 titled, “Gilead: Caught Between A Rock And A Hard Place In India”

- Concern 2: “Future negotiations in international forums and with other countries.”

Draft IPR Policy states: “In future negotiations in international forums and with other countries, India shall continue to give precedence to its national development priorities whilst adhering to its international commitments and avoiding TRIPS plus provisions.”

- Concern 3: “Data Exclusivity or Regulatory Data Protection.”

Draft IPR Policy states: “Protection of undisclosed information not extending to data exclusivity.”

- Concern 4: “Non-availability of patent term restoration, patent linkage, use of compulsory licensing (CL) for commercial, non-emergency situations”.

Draft IPR Policy: Does dwell on these issues.

I discussed a similar subject in my blog post of October 20, 2014 titled, “Unilateral American Action on Agreed Bilateral Issues: Would India Remain Unfazed?”

Conclusion:

Overall, the first draft of the outcome-based model of the National IPR Policy appears to me as fair and balanced, especially considering its approach to the evolving IPR regime within the pharmaceutical industry of India.

The draft policy though touches upon the ‘Utility Model’, intriguingly does not deliberate on ‘Open Source Innovation’ or ‘Open Innovation’.

Be that as it may, the suggested pathway for IPR in India seems to be clear, unambiguous, and transparent. The draft policy understandably has not taken any extreme stance on any aspect of the IP. Nor does it succumb to high voltage power play of the United States and its allies in the IPR space, which, if considered, could go against the public health interest.

It is heartening to note, a high level body would monitor the progress of implementation of the National IPR Policy, which will be linked with performance indicators, targeted results and deliverables. Annual evaluation of the overall working of the policy and the results achieved will also be undertaken. A major review of the policy will be done after 3 years.

That said, pharma MNCs in general, don’t seem to quite agree with this draft policy probably based purely on commercial considerations, shorn of public health interest. It is quite evident, when a senior lobbyist of a powerful American pharma lobby group reportedly commented to Indian media on the draft National IPR Policy as follows:

“Real progress will only be achieved when India demonstrates through policy change that it does indeed value the importance of intellectual property, especially for the innovative treatments and cures of today and tomorrow”.

It appears, India continues to hold its stated ground on IPR with clearly enunciated policy statements. On the other hand MNCs don’t stop playing hardball either. Though these are still early days, the question that floats on the top of mind: Who would blink first?…India? Do you reckon so?

By: Tapan J. Ray

A Great News! But…Would This ‘Golden Goose’ Lay Golden Eggs?

Posted on December 15, 2014 by Tapan Ray

On December 9, 2014, international media flashed across the world a great news item from the Indian pharma industry:

“The first biosimilar of the world’s top-selling medicine Humira (adalimumab) of AbbVie has been launched in India by Zydus Cadila.”

This exhilarating news has undoubtedly got frozen in time flagging a well-cherished moment of pride for the Indian pharmaceutical industry. Along side, taking note of many contemporary factors in this area, a lurking apprehension too does creep in. It raises an awkward and uncomfortable question – would this ‘Golden Goose” born out of a laudable ‘reverse engineering’ effort be able to lay ‘Golden Eggs’, signaling its global commercial success for the company?

In this article, I shall try to dwell on on this important issue.

In one my earlier blog posts of August 25, 2014 titled, “Scandalizing Biosimilar Drugs With Safety Concerns”, I discussed another related concern in this area.

Born a ‘Golden Goose’:

Just to recapitulate, the original product Humira (Adalimumab) of Abbvie, a fully human anti-TNF alpha monoclonal antibody was first globally approved for marketing in 2002. Since then Humira has emerged as the most preferred therapy to reduce the signs and symptoms of patients suffering from moderate to severe rheumatoid arthritis, moderate to severe polyarticular juvenile idiopathic arthritis, psoriatic arthritis, ankylosing spondylitis, moderate to severe Crohn’s disease and moderate to severe ulcerative colitis. However, Humira is not available in the Indian market, at present.

Zydus Cadila has announced that its biosimilar version of Humira (Adalimumab), has been approved by the Drug Controller General of India (DCGI) and will be marketed under the brand name ‘Exemptia’ for the treatment of autoimmune disorders as indicated for Humira.

As claimed by the company, ‘Exemptia’ is a ‘fingerprint match’ with the original drug Humira in terms of purity, safety and potency. Zydus Cadila has also stated that the novel non-infringing process for Adalimumab and a novel non-infringing formulation have been researched, developed and produced by scientists in its own Research Centre.

With this the world took note of the ‘Golden Goose’, born out of brilliant ‘Reverse Engineering’ in India. However, the apprehension of many continued to linger: Would this ‘Golden Goose’ be able to lay ‘Golden Eggs’?

The product and the price:

According to an estimate, over 12 million patients in India suffer from the above chronic conditions of autoimmune disorders, which progressively deteriorate and lead to lifelong pain and in some cases, even disability. To treat these indications, Exemptia is recommended as a 40 mg subcutaneous injection once every alternate week. Patients normally would have to take the treatment for six months.

Media reports indicate that ‘Exemptia’ of Zydus Cadila will be priced in India equivalent to US$ 200 a vial against Humira price in the United States of US$ 1,000. Initial overall reaction for this local price does not seem to be quite favorable for India.

The global market:

A recent report from Thomson Reuters indicates, as blockbuster drugs with sales turnover of around US$100 billion lose patent protection, the global biosimilars market is expected to grow around US$ 25 billion by the end of the decade.

According to a 2013 report of the credit rating agency Fitch, eight of the current 20 top-selling global pharmaceuticals are biologics that will face patent expiry by 2020.

EvaluatePharma reported that the current the anti-rheumatics market makes up the second largest treatment area by sales, with worldwide revenues of US$ 41.1 billion, closely behind the oncology therapy area, which registered sales of US$68 billion in 2012 with a high growth rate.

The report also states, despite biosimilar entry Anti-rheumatics segment is expected to record a Compound Annual Growth Rate (CAGR) of 4 percent with a turnover of around S$52.1 billion in 2018.

The local potential:

Over the last several years, China and India have been emerging as the promising destinations for international outsourcing of biopharmaceutical manufacturing. In the recent times, China and India are reportedly showing promises to become the industry’s top potential destinations for offshoring over the next five years, ahead of traditional bio manufacturing hubs in the US and Western Europe.

More than 40 biosimilar products are now available in the Indian market. Over 10 pharma players are competing in this area with around 15 epoetin, 8 G-CSF and 4 insulin “biosimilars”, besides a few others.

Although India has the second largest USFDA approved drug manufacturing plants next to the United States, none of the products manufactured in these facilities can possibly be considered as “true biosimilars”.

Humira expected to remain strong:

EvaluatePharma also forecasts that Humira of AbbVie would continue to remain the best selling drug of the world at least till 2018 with sales of US$12.8 billion, despite its US patent expiry in 2016.

Moreover, to succeed Humira that will go off patent between end 2016 and 2018 (Europe), AbbVie reportedly has seven new drugs in clinical development for Rheumatoid Arthritis. These patented new drugs could also significantly cannibalize the sales of Humira.

Physicians’ attitude towards biosimilars:

According to an October 2014 Report of IMS Institute from Europe’s perspective, within each country’s health system, physicians display a range of attitudes and behaviors that influence their prescribing of biosimilars.

IMS observed three broad segments of prescribers as follows:

Conservative prescribers: These doctors tend to be late adopters of new technologies, are more likely to follow published clinical treatment guidelines, and may not be aware of or educated on the availability of potential use of biosimilars.

Open-minded prescribers: This archetype includes physicians who tend to be the most responsive to new information about treatment options, particularly where experience and knowledge of biologics may be low and educational program can be effective in impacting usage.

Enterprising prescribers: This segment of prescribers is most likely to search out information from all sources, and be open to trying different options for patient care including biosimilars as well as innovative treatments.

In addition to these archetypes, the report states, physicians’ attitudes and prescribing behavior may also be influenced or determined by prescribing guidelines, if any, the use of prescribing incentives, as well as the use of promotional activities by either originator or biosimilar manufacturers.

The US biosimilar challenge:

According to reports, despite two pharma players filing biosimilar applications at the USFDA, there are still many issues to be sorted out in this space by the drug regulator of the country.

Though an interchangeable biosimilar in the United States still appears to be several years away, there are initiatives in some American states to restrict interchangeable biosimilar for substitution against the reference product.

Moreover, USFDA’s draft guidance on clinical pharmacology of May 2014 has invited strong adverse comments from the innovator companies, lobby groups and the industry associations.

However, just in the last week, both the innovator companies and biosimilar manufacturers have reportedly agreed to support state legislation that allows pharmacies to automatically substitute biosimilars for corresponding branded biologics. But pharmacies must give prescribers a heads up afterward “within a reasonable time.”

For biosimilars makers, it’s a big improvement on the alternative, as the biotech developers wanted to require pharmacists to check with doctors before making the switch.

That said, the USFDA is yet to determine exactly how to classify biosimilars and their “reference products” as interchangeable. This guidance for classification would be necessary for the above mentioned pharmacy switches. This guidance is important especially for the statutory language, which dictates that interchangeability is proven for “any given patient”. This could also be construed as requiring studies in all the approved indications for a brand name biologic, i.e. Humira has around five different indications.

Thus, the path ahead still remains challenging for the biosimilar players in the United States, and more so for the Indian Companies, as compared to other global pharma majors with deep pockets.

Several other Humira biosimilars under development too:

As indicated earlier, the US and Europe patents of Humira with worldwide sales of US$ 11.02 billion in 2013 would expire by end 2016 and 2018, respectively. Thus, the product has become among the most sought-after biosimilar target prototypes for many pharma and biotech companies across the world.

The global biotech major Amgen has already indicated that its ABP 501 biosimilar has shown comparable efficacy and safety to Humira (adalimumab) in a late-stage trial in patients with moderate-to-severe plaque psoriasis after treatment duration of 16 weeks. The product, reportedly, has also matched Humira in stimulating immune response in patients.

Experts believe, Amgen could be in a position to compete directly with Humira when it loses patent protection, if similar results are obtained in the second phase III trial.

Moreover, according to available reports, Boehringer Ingelheim, Sandoz (Novartis) and Coherus are also progressing well with the development of Humira biosimilars.

Zydus Cadila expects that in 2019 it would be ready to launch the biosimilar of Humira (Adalimumab) in the United States.

Marketing challenges for biosimilars:

Today, the global biosimilars market is indeed in a nascent stage, even for the Indian players.

For successful commercialization of biosimilars, I envisage, a well-crafted hybrid marketing-model of small molecule generics on the one hand and large molecule biologics of the originators’ on the other would be appropriate, in the years ahead.

In the early marketing phase, biosimilar marketers are expected to follow the same branding, communication and detailing strategies of the originators, which ultimately would transform into a generic matrix as more players chip in with the price competition intensifying.

Unlike small molecule generics, affordable price of a biosimilar would be just one of the many critical considerations for its commercial success in the biologics market.

Sustained efforts and initiatives to allay safety concerns with biosimilars among both the doctors and also the patients would be a dire necessity. Providing in-depth medical, technical and domain knowledge to the sales team should never be compromised, though these would require additional initial investments. Post marketing surveillance or pharmacovigilance for biosimilars must be ongoing, even in India. Here too, Indian players do not seem to be very strong, as yet.

Thus, unlike small molecule generics, marketing a large molecule biosimilar would require clear, razor sharp and focused strategies across the value chain to unlock its true potential. Crafting impactful value propositions, avoiding complexities, for each stakeholder, would decide the commercial fate of the product.

‘Made in India’ issue for pharma needs to be addressed expeditiously:

High credibility clinical trial data and manufacturing quality standards would also play a decisive role, especially for India made biosimilars.

This is mainly due to widespread reports of frequent USFDA allegations related to falsification and doctoring of manufacturing data in several manufacturing plants of India.

Ethical and quality issues for drugs made in India, such as these, assumed even greater dimension, as the regulators in France, Germany, Belgium and Luxembourg reportedly suspended marketing approval for 25 drugs over the genuineness of clinical trial data from India’s GVK Biosciences. This is yet another blow to ‘Made in India’ image for medicines, which has arrested the global attention, for all the wrong reasons, just the last week.

Conclusion:

Considering all the above points, let me now try to make a fair personal guess on whether or not the ‘Golden Goose’ would be successful enough to lay ‘Golden Eggs’, as required by the company.

Firstly, in the Indian perspective, the key point that strikes me is the cost of a treatment course with ‘Exemptia’ per patient in the country. On a rough calculation, it comes around Rs. 1,50,000 per course/per patient. This appears rather high according to the income level of an average Indian.

However, Zydus Cadila expects sales between Rs.1 billion (US$16.16 million) and 2 billion for ‘Exemptia’ only from the Indian market.

I reckon, with relatively high per course treatment cost with Exemptia, it may be quite challenging for the company to achieve this goal in the domestic market.

Thus, the global success of this biosimilar brand would mainly depend on its degree of success in the United States and Europe, post patent expiry of Humira.

Going by the possible availability of other Humira biosimilars from manufacturers with robust global marketing muscle, skill sets, experience and other wherewithal, the path of global success for Exemptia of Zydus Cadila, if the company decides to fly solo, appears to be strewn with many odds.

I would now stick my neck out to zero in with specificity in this area, while envisaging the possible future scenario.

Considering the evolving macro scenario together with the commercial success requirements in this space, I reckon, despite presence of several possible competitors of Humira biosimilars, including one from Zydus Cadila, the biotech domain expertise of Amgen, fuelled by its marketing muscle, would in all probability make its ABP 501 biosimilar the toughest competitor to Humira after its patent expiry in the US and Europe…and then…why doesn’t it try to succeed in India too?

By: Tapan J. Ray

Nutraceuticals: An Emerging Opportunity in The Gray Area Between Pharma And Nutrition

Posted on November 17, 2014 by Tapan Ray

Close association between nutrition and health has assumed a historical relevance. Growing pieces of evidence, even today, suggests that nutritional intervention with natural substances could play an important role, especially in the preventive healthcare. The World Health Organization (WHO) too has highlighted that mortality rate due to nutrition related factors in the developing countries, like India, is nearly 40 percent.

The ‘Gray Area’:

In the space between pharmaceutical and nutrition, there is an emerging ‘gray area with 50 shades’ having significant business relevance.

In a related publication, A.T. Kearney – a leading global management consulting firm has elaborated it as under:

“At one end of this natural nutrition spectrum, are functional foods and beverages as well as dietary supplements, aimed primarily at maintaining health. At the other, more medical end of the spectrum, are products aimed at people with special nutritional needs. In the middle, is an emerging gray area of products that have a physiological effect to reduce known risk factors, such as high cholesterol, or appear to slow or prevent the progression of common diseases such as diabetes, dementia or age related muscle loss.”

Evolution of the terminology ‘Nutraceuticals’:

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

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

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

In India, nutraceuticals are mostly promoted to the doctors just as any other ethical pharma products. These are also prescribed by the medical profession, not just as nutritional supplements but also for the treatment of disease conditions, ranging from obesity to arthritis, osteoporosis, cardiological conditions, diabetes, anti-lipid, gastroenterological conditions, dementia, age-related muscle loss, pain management and even fertility. All these are generally based on off-label therapeutic claims of the respective manufacturers.

Currently, this particular category of nutraceutical products, despite being out of price control and operating within much relaxed regulatory environment, is showing just a moderate growth trend in India.

The market:

According to a report of Frost & Sullivan, the global nutraceutical market has clocked maximum growth in the last decade.

Nutraceuticals as an industry emerged in the early 1990s. However, from 2002 to 2010 has been the key growth phase for the industry. From 1999 to 2002, the nutraceutical industry grew at an Annual Average Growth Rate (AAGR) of 7.3 percent, while from 2002 to 2010, the AAGR doubled to 14.7 percent, in line with the Indian Pharma Market (IPM).

The penetration of nutraceuticals in India was around 15 percent in 2013. In the same year, the turnover of the global nutraceuticals market was around US $168 billion in which India had a demand share of around 2 percent, i.e. around US $2 billion.

Growing at a Compound Annual Growth Rate (CAGR) of 17.1 percent, the Indian market is expected to reach US$ 4 billion by 2018. China, Southeast Asia, and India are the fast-growing markets, with each experiencing growth in double digits.

In the last couple of years functional beverages have emerged as a fastest growing category for the Indian market, with many companies expanding their portfolio in the segment. This category is expected to grow at a CAGR of 21.7 percent by 2018.

However, in terms of ingredients, especially plant extracts and phytochemical, Indian manufacturers have entrenched their place as suppliers, both locally as well as globally.

Some other key findings of this report are as under:

India is currently a nascent market for nutraceuticals, without a robust business model in place. Both MNCs as well as domestic companies in the pharmaceutical and food and beverage space have tested the market with a variety of launches, with some degree of success.

The existence of alternative medicines in India, and the Indian consumer’s belief in them, could provide a platform for the nutraceutical industry to cash on.

The Indian consumers’ awareness about conventional nutraceutical ingredients such as omega-3 fatty acids or lutein is very limited. The nutraceutical manufacturers would require spreading awareness about their products to the Indian masses, much more effectively.

As compared with the developed countries such as the USA, Europe, and Japan, the percentage of population consuming nutraceuticals in India is much low. The middle to high income groups are the dominant consumers of functional foods and beverages along with dietary supplements, while the lower income groups consume mainly prescription-based dietary supplements.

Health awareness and an increase in the penetration of organized retail stores are expected to play a major role in driving the nutraceuticals’ consumption in India.

Current regulations in India:

The Food Safety and Standards Act (FSSA) of India, 2006 predominantly regulate manufacturing, storage, distribution, sale and import of nutraceuticals in India. Unlike pharma products, no other regulations are still in place, though the government reportedly is in the process of inviting suggestions from the stakeholders on the subject.

Experts feel that FSSAI needs to play a more important role in defining standards to streamline the operations for nutraceuticals business in India, which should include, besides others, the following:

Quality of raw materials
Safe manufacture of product with cGMP standards
Health claims
Labeling
Distribution & storage

In the absence of comprehensive regulations many companies are unable to decide on necessary investments that will be required for this business in the longer term.

Currently, nutraceuticals are much less expensive to develop, manufacture, market and distribute, offering a rainbow of business opportunities in the healthcare space.

A brand ‘New Ministry’ in place:

In all likelihood, renewed measures would now be taken to bring nutraceuticals under the mainstream healthcare.

It appears more feasible today than ever before, as the Prime Minister Modi, with an eye on reviving indigenous and traditional medicine has recently created a brand new ministry with a Minister of State (Independent Charge) at the helm to look after Department of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy (AYUSH).

Need to generate robust clinical data:

In this context, a relatively new development is worth noting. It has been reported that all new traditional medicines will need to undergo clinical trials before their regulatory marketing approval in India. However, it has also been amply clarified that “such products will include only the new patented drugs and not the classical formulations that find mention in India’s ancient texts, some of which are 5,000 years old.”

I reckon, for all nutraceutical formulations with specific therapeutic efficacy and safety claims, there is a need to generate supportive robust clinical data for the patients’ long term health interest.

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

Similarly, to rule out any long-term toxicity problem with such products, generation of credible clinical data is again critical. At present, these are not usually followed for nutraceutical products in India, even when therapeutic claims are made.

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

Regulatory requirements for nutraceuticals in the USA:

In America, the Congress had passed the ‘Dietary Supplement Health and Education Act’ in 1994. This act allows ‘functional claims’ to dietary supplements, like “Vitamin A promotes good vision” or “St. Johns Wort maintains emotional well-being”, as long as the product label contains a specific disclaimer that the FDA has not evaluated the said claim and that the product concerned is not intended to diagnose, treat, cure or prevent disease.

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

Indian Health Ministry should take note of these points for ethical promotion of nutraceuticals in India.

Sanofi considered nutraceuticals as a business opportunity in India:

So far in India, Sanofi is the only Pharma MNC that has entered into nutraceuticals business in a big way. Sniffing the market opportunity in this segment, the French major acquired the nutraceuticals business of Universal Medicare Private Ltd of worth Rs.110 Crore, in August 2011. The nutraceuticals product portfolio of Universal Medicare included more than 40 brands from cod liver oil capsules, vitamins/mineral supplements and antioxidants to liver tonics.

Ambivalence of Pharma MNCs:

According to A.T. Kearney report, unlike food industry, the global pharma industry has approached nutraceuticals with a ‘great deal of ambivalence’.

Pfizer and Novartis have sold their nutrition businesses.While the same Pfizer that sold Wyeth Nutrition to Nestle, invested an undisclosed sum to acquire Danish vitamins company Ferrosan and the dietary supplements manufacturer of the United States, Alacer, reinforcing what was already a billion-dollar business enterprise.

On the other hand GlaxoSmithKline (GSK) and Novartis have recently announced a joint venture for consumer products business, which could probably be a stepping-stone to get into nutraceuticals. Who knows?

Food companies leading nutraceuticals business:

The A.T. Kearney report also states that at present the food companies, and not the pharma players, are in the lead, accounting for about 90 percent of nutraceuticals sales with expertise in branding, consumer market expertise and access to mass distribution channels.

A few consumer companies have also inked partnership with pharma companies. For example, Coca-Cola and Sanofi have partnered to sell health drinks in French pharmacies.

Conclusion:

Nutraceuticals business, as many believe, is an emerging opportunity in the ‘Gray Area’ between pharmaceuticals and nutritional product classes. So far, the food companies have been charting this frontier that remained uncharted by a large majority of the pharma players. This is mainly because the success requirements for nutraceutical products, including dietary supplements, are quite different.

That said, a transparent and well-charted regulatory pathway for nutraceuticals, especially for formulations with therapeutic claims, would have a significant impact on its future growth potential in India.

Many nutraceutical products in the country with specific therapeutic claims do not seem to have supporting robust clinical data, leave aside being peer reviewed and published in the reputed international journals on the claims for safety or efficacy.

The entry of one of the global majors, Sanofi, having a clear focus on Evidence Based Medicines (EBM), ushers in a new hope and promise to get the loose knots tightened in this important area, while driving the business growth of the category.

Just as EBM, scientific ‘Evidence Based Nutraceuticals (EBN)’ with therapeutic claims, should be the centerpiece of consumer confidence and interest in this emerging niche of healthcare business 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.

An Aggressive New Drug Pricing Trend: What It Means To India?

Posted on October 27, 2014 by Tapan Ray

A new class and an aggressive drug-pricing trend is now evolving in the global pharmaceutical industry, exerting huge financial pressure on the patients and payers, including governments, especially, in the developed nations of the world.

Another aspect of this issue I deliberated in one of my earlier blog posts of August 18, 2014 titled, “Patented Drug Pricing: Relevance To R&D Investments.”

Let me start my deliberation today by citing an example. According to 2013 Drug Trend Report of the pharmacy benefits manager Express Scripts, the United States will spend 1,800 percent more on Hepatitis C Virus (HCV) medications by 2016 than it did last year. This is largely attributed to new Hepatitis C cure with Sovaldi of Gilead, priced at Rs 61,000 (US$ 1,000) per tablet with a three-month course costing around Rs. Million 5.10 (US$ 84,000), when it reportedly costs around U$130 to manufacture a pill.

In a Press Release, Express Scripts stated, “Never before has a drug been priced this high to treat a patient population this large, and the resulting costs will be unsustainable for our country…The burden will fall upon individual patients, state and federal governments, and payers who will have to balance access and affordability in a way they never have had to before.”

The magnitude of impact – an example:

According to another report from the Centers for Medicare and Medicaid of the US, the cost to treat all Americans, who have hepatitis C, with Sovaldi would cost US$227 billion, whereas it currently costs America US$260 billion a year for all drugs bought in the country. According to Express Scripts, no major therapy class has experienced such a hefty increase in spending over the last 21 years.

This gives us a feel of the net impact of the evolving new aggressive drug pricing strategy on the lives of the patients and payers of one of the richest nations of the world.

Three critical parts of the evolving pricing strategy:

In an era, when new drug pricing has come under great scrutiny of the stakeholders globally, this strategy seems to have three critical components as follows:

1. Strategy for the developed countries: Set the launch price as high as possible and generate maximum profit faster from wealthy minority who can afford to pay for the drug.

It helps establishing the base price of the product globally, despite all hue and cries, maintaining a very healthy top and bottom line business performance, amidst ‘Wall Street cheering’.

Implementing this strategy meticulously and with precision, Gilead has reportedly registered US$ 5.8 billion in sales for Sovaldi in the first half of 2014. That too, in the midst of huge global concerns on alleged ‘profiteering’ with an exorbitantly priced HCV drug.

At that time, the company noted on its earnings call that it believes 9,000 people have been cured of HCV so far with Sovaldi, which means that the 6-month turnover of Sovaldi of US$ 5.8 billion was generated just from the treatment of 9000 patients. If we take the total number of HCV infected patients at 150 million globally, this new drug benefited less than one percent of the total number of HCV patients, despite clocking a mind-boggling turnover and profit.

2. Strategy for the developing countries: Create a favorable optic for the stakeholders by lowering the drug price significantly, in percentage term from its base price, earning still a decent profit. However, in reality the discounted price would continue to remain high for a very large number of patients.

Gilead is now in the process of implementing this strategy for 80 developing countries. For these markets, it has already announced a minimum threshold price of US$ 300 a bottle, enough for a month. With three months typically required for a full course and taking into account the currently approved combination with interferon, the total cost per patient would be about US$ 900 for a complete treatment against its usual price of US$ 84,000.

If we convert the discounted treatment cost, it comes down to around Rs. 55,000 from the base price of around Rs. Million 5.10. This discounted price, which is significantly less than the base price of the drug, creates an extremely favorable optic. No one discusses how many Hepatitis C patients would be able to afford even Rs. 55,000, say for example in a country like India? Thus, setting a high base price in the developed market for a new drug could make many in the developing world perceive that the treatment cost of Rs. 55,000 is very reasonable for majority of not so privileged patients.

Under the second strategy, Gilead has targeted mostly the world’s poorest nations, but also included some middle income ones such as Egypt, which has by far the highest prevalence of HCV in the world.

A ‘Financial Times’ report, also states, “At the US price, Gilead will recoup its Sovaldi development investment . . . in a single year and then stand to make extraordinary profits off the backs of US consumers, who will subsidize the drug for other patients around the globe.”

If other global pharma companies also follow this differential strategy, one for the developed markets and the other for the developing markets, it could be a masterstroke for the Big Pharma. This would help address the criticism that its constituents are facing today for ‘obscene’ pricing of important new life saving drugs, as they target mostly the creamy layer of the society for business performance.

However, many in the United States are also articulating that they understand, the countries getting steep discounts from Gilead have high levels of poverty, but clearly points out that the disease affects lower-income patients in America, as well. To substantiate the point, they reiterate, according to the World Health Organization (WHO) about 150 million people worldwide have HCV, out of which around 2.7 million HCV diagnosed people live in the US. They highlight that currently even less than 25 percent of Americans with chronic HCV have had or are receiving treatment. In Europe, just 3.5 percent of patients of are being treated.

Thus, keeping in view of the increasing number of voices in the developed countries against abnormally high prices of the new drugs, the moot questions that come up are as follows:

Is Strategy 1 sustainable for the developed markets?
If not, would Strategy 2 for the developing market could ever be broader based?

3. Strategy for Voluntary License (VL) in those countries, where grant of product patent is doubtful.

Thanks to the Indian patent regime, global companies would possibly consider following this route for all those products that may not be able to pass the ‘Acid Test’ of Section 3(d) of the Indian Patents Act 2005. Gilead has followed this route for Sovaldi and before that for tenofovir (Viread).

In this context, it is worth noting that the Indian patent office has not recognized Sovaldi’s patent for the domestic market, just yet. Thus, following this strategy Gilead announced, “In line with the company’s past approach to its HIV medicines, the company will also offer to license production of this new drug to a number of rival low-cost Indian generic drug companies. They will be offered manufacturing knowhow and allowed to source and competitively price the product at whatever level they choose.”

Accordingly, on September 15, 2014, international media reported that Cipla, Ranbaxy, Strides Arcolab, Mylan, Cadila Healthcare, Hetero labs and Sequent Scientific are likely to sign in-licensing agreements with Gilead to sell low cost versions of Sovaldi in India.

It was also reported that these Indian generic manufacturers would be free to decide their own prices for sofosbuvir, ‘without any mandated floor price’.

Indian companies would require paying 7 per cent of their revenues as royalty to Gilead, which, in turn would ensure full technology transfer to them to produce both the Active Pharmaceutical Ingredients (API) and finished formulations. The generic version of Sovaldi is likely to be available in India in the second or third quarter of 2015, at the earliest.

However, the final decision of the Indian Patent Office on the patent grant for Sovaldi holds the key to future success of similar high-voltage, seemingly benign, VL based game plan of the global pharma majors.

The new trend:

In April 2014, Merck and Co. announced that its two HCV drug candidates had a 98 percent cure rate in a mid-stage trial. In addition, AbbVie is also expected to launch a high-end hepatitis C drug within the next year. The prices for these drugs are yet to be announced.

However, a new report of October 2014 states that USFDA has approved this month a new drug named Harmony, a ledipasvir/sofosbuvir combo formulation, again from Gilead for curative treatment of chronic HCV genotype 1 infection in adults. Harmony, which is called the son of Sovaldi, would cost a hopping US$ 94,500 for a 12-week regimen, as against US$ 84,000 for Sovaldi.

Hence, I reckon, similar aggressive pricing strategy for new drugs would gain momentum in the coming years and at the same time.

Is this pricing model sustainable?

Though Gilead pricing model for patented drugs works out better than what is prevailing today in India, the question that comes up yet again, whether the new model is sustainable for various reasons as mentioned above or would it be followed by majority of the global drug innovators?

In a situation like this, what then could be a sustainable solution in India?

The desirable pathway:

A transparent government mechanism for patented drugs pricing, as followed by many countries in the world, would be quite meaningful in India. The Department of Pharmaceuticals (DoP) of the Government of India could play a constructive role in this area, as already provided in the Drug Policy 2012 of the country.

This measure assumes greater urgency, as the astronomical prices of patented drugs, especially for life-threatening illnesses, such as cancer, have become a subject of great concern in India too, just as it has become a critical issue across the world.

DoP is in inactive mode:

It is not difficult to fathom that CL for all patented life-saving drugs would not be a sustainable measure for all time to come. Thus, the need for a robust mechanism of price negotiation for patented drugs was highlighted in the Drug Policy 2012.

The DoP first took up the issue for consideration in 2007 by forming a committee. After about six years from that date, the committee produced a contentious report, which had hardly any takers.

Today, despite the new government’s initiative to inject requisite energy within the bureaucracy, administrative lethargy and lack of sense of urgency still lingers with the DoP, impeding progress in this important subject any further.

Intense lobbying on this issue by vested interests from across the world has further pushed the envelope in the back burner. Recent report indicates, the envelope has since been retrieved for a fresh look with fresh eyes, as a new minister is now on the saddle of the department.

According to reports, a new inter-ministerial committee was also formed by the DoP under the chairmanship of one of its Joint Secretaries, to suggest a mechanism to fix prices of patented drugs in the country. The other members of the committee are Joint Secretary, Department of Industrial Policy and Promotion (DIPP); Joint Secretary, Ministry of Health and Family Welfare; and Member Secretary, National Pharmaceutical Pricing Authority (NPPA).

Unfortunately, nothing tangible has been made known to the stakeholders on this matter, just yet. I sincerely hope that the new government expedites the process now.

Three critical factors to consider:

While arriving at the patented products price in India, three critical factors should be made note of, as follows:

The discussion should start with the prices adjusted on the Purchasing Power Parity factor for India.
Any price must have a direct relationship with the per capita income of the population of the country.
Details of other public healthcare measures that the government would undertake, by increasing its healthcare spends as a percentage of GDP, should also be clearly articulated.

Conclusion:

The evolving and aggressive new product-pricing trend has three following clearly identifiable facets:

One, the base price of the drugs would be established at a very high level to help increase both the turnover and profit of the companies significantly and quickly. This measure would consequently make the drug bills of the developed world even more expensive, which could limit healthcare access wherever co-payment exists or the expenditures are Out of Pocket (OoP) in nature.

Two, against intense global criticism for aggressive drug pricing strategy, to create a favorable optic, the concerned companies would launch these products at a deep discount on the base price in the developing world. However, the net price would still remain high in absolute terms, considering per capita income in those countries.

Three, for many of these new products, Section 3(d) of the Indian Patents 2005 would place India at an advantage. Thus, in absence of evergreening type of product patents, to salvage the situation, many of these companies would prefer to offer Voluntary License (VL) to Indian generic manufacturers under specific terms and conditions. However, such VL may not have any potential value, if IPO refuses to grant patents to those products, which would fall under the above section. In that case, generic competition would further bring down the prices.

No doubt, the above pricing model for patented drugs works out better than what is prevailing today in India. However, the question that comes up, whether the new model is sustainable or would be followed by majority of the global drug innovators in the same way? Considering all these, it does not seem to be the most desirable situation. Moreover, the current patent regime is a deterrent mostly to evergreening of patents.

Thus, the Indian government should play a more specific and proactive role in this game by first putting in place and then effectively implementing a country specific mechanism to tame the spiraling patented drug prices in India, for the interest of patients.

The world has taken serious note of this fast evolving aggressive new drug-pricing trend, as different countries are in the process of addressing the issue in various country-specific ways. Unfortunately, the DoP still remains in a deep slumber, having failed once to half-heartedly put a clumsy mechanism in place to address the issue.

As India is now under a new political regime, let us sincerely hope, the new minister in charge succeeds to make it happen, sooner, reducing vulnerability of a vast majority of patients during many life threatening ailments and…of course, in tandem, ensuring justifiable profit margin for the innovator drug companies…the evolving aggressive new drug pricing trend notwithstanding.

By: Tapan J. Ray

“Make in India…Sell Anywhere in The World”: An Indian Pharma Perspective

Posted on September 29, 2014 by Tapan Ray

In his Independent Day speech from the ramparts of the Red Fort on August 15, 2014, Indian Prime Minister Modi gave a clarion call to all investors of the world, “Come, make in India”, “Come, manufacture in India”, “Sell in any country of the world, but manufacture here”.

The Prime Minister did not stop there. In his inimitable style, following it through on September 25, 2014 he gave an official status to ‘Make in India’ slogan and launched a global campaign.

“My definition of FDI for the people of India is First Develop India. This is also a responsibility for the people of India,” he further clarified.

An Indian perspective:

If I juxtapose this vision of the Prime Minister in the Indian pharmaceutical industry perspective, one finds that many small, medium and large size local domestic manufacturers are currently manufacturing drugs not just for the domestic market, but are also exporting in large quantities to various countries of the world, including, North America, South America and Europe.

The United States (US) is one of the most critical markets for majority of the Indian drug exporters. This transaction was taking place without any major regulatory hitches since quite some time. Unfortunately, over the last few years, mostly the Federal Drug Administration of the US (USFDA) and the United Kingdom (UK)’s Medicines and Healthcare Products Regulatory Agency (MHRA) have started raising serious doubts on the quality of medicines manufactured in India, making a significant impact on the drug exports of the country.

Most of these quality issues are related to ‘Data Integrity’ in the dug manufacturing and its documentation processes.

The impact:

According to industry data, in 2013-14, Indian drug exports registered the slowest growth in nearly the last 15 years. In this fiscal year, pharma exports of the country with a turnover of US$ 14.84 billion grew at a meager 1.2 percent. Pharmexcil attributed its reason to USFDA related regulatory issues and increasing global competition.

US accounts for about 25 percent of India’s pharma exports and its Federal Drug Administration (USFDA) has been expressing, since quite a while, serious concerns on ‘Data Integrity’ at the agency’s previously approved production facilities of a large number of Indian pharma players.

The issue is causing not just a serious concern to USFDA and some other overseas drug regulatory agencies, but also posing a huge threat to future growth potential of Indian drug exports.

It is worth noting that Indian government had set an objective, in its strategy document, to register a turnover of US$ 25 billion for pharma exports in 2014-15. In all probability, it would fall far short of this target at the end of this fiscal, predominantly for related reasons.

Why is so much of ‘fuss’ on ‘Data Integrity’?

Broadly speaking, ‘Data Integrity’ in pharmaceutical manufacturing ensures that finished products meet pre-established specifications, such as, for purity, potency, stability and sterility. If data integrity is breached in any manner or in absence of credible data, the product becomes of dubious quality in the eyes of drug regulators.

Manufacturing related ‘Data Integrity’ is usually breached, when data from a database is deliberately or otherwise modified or destroyed or even cooked.

Over the last several years, ‘Data Integrity’ related issues in India are attracting enormous attention of both the USFDA and the MHRA, UK. As a result, concerned pharma manufacturing facilities are receiving Import Alerts/Warning Letters from the respective overseas drug regulators, refusing entry of those medicines mostly in the United States and some in the UK.

Recent warning letters:

Just over a year – from May 2013 to July 2014, around a dozen ‘Warning Letters’ have been sent to the Indian drug manufacturers by the USFDA on ‘Data Integrity’ related issue, as follows:

	Recent ‘Warning Letter’ issued to:	Date of issue
1.	Marck Biosciences Ltd.	08. 07. 2014
2.	Apotex Pharmachem India Pvt Ltd.	17. 06. 2014
3.	Sun Pharmaceutical Industries	07. 05. 2014
4.	Canton Laboratories Private Limited	27. 02. 2014
5.	USV Limited	06. 02. 2014
6.	Wockhardt Limited	25. 11. 2013
7.	Agila Specialties Private Limited	09. 09. 2013
8.	Posh Chemicals Private Limited	02. 08. 2013
9.	Aarti Drugs Limited	30. 07. 2013
10.	Wockhardt Limited	18. 07. 2013
11.	Fresenius Kabi Oncology Ltd	01. 07. 2013
12.	RPG Life Sciences Limited	28. 05. 2013

(Source: RAPS, 19 August 2014)

Another report states that USFDA has, so far, banned at least 36 manufacturing plants in India from selling products in the US.

Importance of US for Indian generic players:

Generic drugs currently contribute over 80 percent of prescriptions written in the US. Around 40 percent of prescriptions and Over The Counter (OTC) drugs that are sold there, come from India. Almost all of these are cheaper generic versions of patent expired drugs. Hence, India’s commercial stake in this area is indeed mind-boggling.

The ‘Data Integrity’ issue is not restricted to just US or UK:

A report quoting researchers led by Roger Bate, an American Enterprise Institute scholar and funded by the The Legatum Institute and the Humanities Research Council of Canada, concluded that many Indian pharma companies follow double manufacturing standards, as they are sending poor quality drugs to Africa compared to the same pills sold in other countries. This study was based on tests of 1,470 samples produced by 17 Indian drug manufacturers.

Besides India, the researchers took drug samples from pharmacies in Africa and middle-income countries, including China, Russia and Brazil.

According to this paper, the researchers found that 17.5 percent of samples of the tuberculosis therapy rifampicin sold in Africa tested substandard, which means the drug has less than 80 percent of the active ingredient than what it should otherwise. Against this number, in India, 7.8 percent of the medicine sampled was found substandard.

Moreover, Almost 9 percent of samples of the widely used antibiotic ciprofloxacin sold in Africa tested substandard, as compared to 3.3 percent in India.

Thorny issues around golden opportunities:

Much reported breach in manufacturing ‘Data Integrity’ detected at the manufacturing sites in India, are throwing fresh doubts on the efficacy and safety profile of generic/branded generic medicines, in general, produced in the country and more importantly, whether they are putting the patients’ health at risk.

A new analysis by the U.S. National Bureau of Economic Research pointed out some thorny issues related to ‘Data Integrity’ of drugs produced by the Indian pharmaceutical companies, which supply around 40 percent of the generic drugs sold in the United States, as stated above.

The researchers examined nearly 1,500 India-made drug samples, collected from 22 cities and found that “up to 10 percent of some medications contained insufficient levels of the key active ingredients or concentrations so low, in fact, that they would not be effective against the diseases they’re designed to treat.”

The report also highlighted that international regulators detected more than 1,600 errors in 15 drug applications submitted by Ranbaxy. The Bureau Officials commented that these pills were “potentially unsafe and illegal to sell.”

Frequent drug recalls by Indian pharma majors:

The above findings came in tandem with a series of drug recalls made recently by the Indian pharma companies in the US.

Some of the reported recent drug recalls in America, arising out of manufacturing related issues at the facilities of two well-known Indian pharma majors, which are going to merge soon, are as follows:

Sun Pharmaceuticals recalled nearly 400,000 bottles of the decongestant cetirizine (Zyrtec) and 251,882 of the antidepressant venlafaxine (Effexor) this May, because the pills failed to dissolve properly. The drugs were distributed by the drug maker’s US subsidiary Caraco Pharmaceutical Laboratories, but were manufactured in India.

In the same month – May, Ranbaxy recalled 30,000 packs of the allergy drugs loratadine and pseudo-ephedrine sulphate extended release tablets because of manufacturing defects in packaging.

In March, Sun Pharma recalled a batch of a generic diabetes drug bound for the US after an epilepsy drug was found in it. A patient discovered the error after noticing the wrong medication in the drug bottle.

Again in March, Ranbaxy recalled nearly 65,000 bottles of the statin drug atorvastatin calcium (Lipitor) after 20-milligram tablets were found in sealed bottles marked 10-milligrams. A pharmacist in the U.S. discovered the mix up.

Indian media reinforces the point:

Indian media (TNN) also reported that there is no quality control even for life-saving generic drugs and the government is apathetic on ensuring that the quality protocol of these drugs is properly observed.

This happens, as the report states, despite government’s efforts to push generic drugs, as they are more affordable. The report gave an example of a life-saving drug, Liposomal Amphotericin B, which is used to treat fungal infections in critically ill patients.

Are all these drugs safe enough for Indian Patients?

Though sounds awkward, it is a fact that India is a country where ‘export quality’ attracts a premium. Unintentionally though, with this attitude, we indirectly accept that Indian product quality for domestic consumption is not as good.

Unfortunately, in the recent years, increasing number of even ‘export quality’ drug manufacturing units in India are being seriously questioned, warned and banned by the overseas drug regulators, such as USFDA and MHRA, UK, just to ensure dug safety for the patients in their respective countries.

Taking all these into consideration, and noting increasing instances of blatant violations of cGMP standards and ‘Data Integrity’ requirements for ‘export quality’ drugs, one perhaps would shudder to think, what could possibly be the level of conformance to cGMP for the drugs manufactured solely for the consumption of local patients in India.

A cause of concern, as generic drugs are more cost effective to patients:

It has been widely recognized globally that the use of generic drugs significantly reduces out-of-pocket expenditure of the patients and also payers’ spending.

The findings of a study conducted by the Researchers from Brigham and Women’s Hospital (BWH), Harvard Medical School and CVS Health has just been published in the Annals of Internal Medicine on September 15, 2014. In this study the researchers investigated whether the use of generic versus brand name statins can play a role in medication adherence and whether or not this leads to improved health outcomes. The study concluded that patients taking generic statins were more likely to adhere to their medication and also had a significantly lower rate of cardiovascular events and death.

In this study, the mean co-payment for the generic statin was US$10, as against US$48 for brand-name statins. It is generally expected that the generic drugs would be of high quality, besides being affordable.

I deliberated on a related subject in one of my earlier blog posts of November 11, 2013 titled, “USFDA” Import Bans’: The Malady Calls For Strong Bitter Pills”.

Conclusion:

According to USFDA data, from 2013 onwards, about 20 drug manufacturing facilities across India attracted ‘Import Alerts’ as against seven from China, two each from Australian, Canadian and Japanese units and one each from South African and German facilities.

Unfortunately, despite intense local and global furore on this subject, Indian drug regulators at the Central Drugs Standard Control Organization (CDSCO), very strangely, do not seem to be much concerned on the ‘Data Integrity’ issue, at least, not just yet.

In my view, ‘Data Integrity’ issues are mostly not related to any technical or other knowledge deficiency. From the “Warning Letters” of the USFDA to respective Indian companies, it appears that these breaches are predominantly caused by falsification or doctoring of critical data. Thus, it basically boils down to a mindset issue, which possibly pans across the Indian pharma industry, irrespective of size of operations of a company.

Indian Prime Minister’s passionate appeal aimed at all investors, including from India, to “Make in India” and “Sell Anywhere in The World”, extends to pharma industry too, both local and global. The drug makers also seem to be aware of it, but the ghost keeps haunting unabated, signaling that the core mindset has remained unchanged despite periodic lip service and public utterances for corrective measures by a number of head honchos.

Any attempt to trivialize this situation, I reckon, could meet with grave consequences, jeopardizing the thriving pharma exports business of India, and in that process would betray the Prime Ministers grand vision for the country that he epitomized with, “Make in India” and “Sell Anywhere in The World”.

By: Tapan J. Ray

Does Patent Expiry Matter Less For Difficult To Copy Drugs?

Posted on September 8, 2014 by Tapan Ray

“Patent expiry matters much less for difficult to copy drugs”.

Not so long ago, this is what many used to believe in the pharma industry. However, looking at the current trend involving the tech savvy generic players, it appears, gone are those days even for the home grown companies in India. As we witness today, a number of global generic players, including some from India, are overcoming the tough challenge of technological barrier of the original drugs with technology, boldly and squarely, and that too with reasonably good speed.

A global CEO felt quite the same:

Possibly encouraged by this commercial dogma, the Chief Executive of GlaxoSmithKline (GSK) Sir Andrew Witty reportedly felt in not too distant past that his company’s blockbuster drug Advair/Seretide, used for the treatment of asthma, would continue to remain a major product, despite losing US patent in end 2010. Witty thought so considering the intricate technology involved in making its high tech inhalation drug delivery system with exacting precision.

Technology based entry barrier:

Although, Advair/Seretide is a respiratory inhalation drug, it is not quite like a typical aerosol inhaler consisting of a pressurized canister filled with liquid medicine formulation. In such system, as the canister is compressed, the liquid inside comes out as a spray that is breathable in an amount as required for desirable clinical efficacy for the patients.

With the application of complex technology, Advair/Seretide was formulated not as a liquid, but as pre-determined fixed dose combination of powders that patients inhale into their respiratory tracts with a device called ‘Diskus’, which involves a complex and difficult to copy inhaler technology with a long patent life.

This precision technology was expected to create the requisite entry barrier for generic equivalents of this important medicine.

“Diskus” patent to continue:

It is important to note, though Advair/Seretide had gone off patent in end 2010, the patent protection for the “Diskus” device that dispenses the powder version of the fixed dose drugs combination, continues till 2016. For the inhaler device that dispenses the aerosol version of the same drugs, the patent remains valid until 2025.

New USFDA guidance:

Keeping these factors in mind, the USFDA in its latest guidance has clearly enunciated the characteristics that an inhaler should have, including a similar size and shape to Diskus. This new USFDA guidance for inhaled drugs, like Advair/Seretide, now requires only “relatively basic” preclinical tests and a short clinical trial.

Many believe that this new guidance is mainly to ensure that other generic devices also qualify for the GSK’s asthma drug combo, after its patent expiry.

Nevertheless a challenging task:

Despite this new USFDA guidance for inhaled drugs, some large generic manufacturers apprehended, even way back in 2010, that they doubt whether it will be possible for them to adequately replicate Advair/Seretide to meet the stringent “substitution” requirements of the USFDA on generics. This is exactly what Witty had envisaged earlier.

Almost two years after its patent expiry, in October 2012, the world’s largest generic drug maker Teva also announced that the company does not expect to see true substitutes for Advair/Seretide before 2018.

No immediate sales impact post-patent expiry:

As a result, in 2012, even a couple of years after its patent expiry, Advair/Seretide could successfully weather the impending storm, though GSK reported a lackluster overall business performance. The brand at that time was virtually immune to substitution threats from generic equivalents. The key reason being, as stated above, much unlike a patented chemical drug substance, the ‘Diskus’ system of the GSK inhaler is a hell of a task to copy by meeting the regulatory requirements of substitution.

In 2013, close to three years after its patent expiry, Advair/Seretide ranked fourth within the top 10 global best-selling drugs of that year, clocking annual revenue of US $8.25 billion.

The first competition:

In the midst of all these, the first generic equivalent of Advair/Serevent with a new inhalation device, carrying a name AirFluSal Forspiro from the Sandoz unit of Novartis, started warming up to obtain regulatory approval from several countries within the European Union (EU).

The product was first approved in Denmark on December, 2013 with subsequent marketing authorizations received in Germany, Sweden, Hungary, Romania, Bulgaria, and Norway.

The heat started being felt now:

The overall position of the brand started changing thereafter. According to published reports, sales trend of Advair/Seretide in Europe and other markets are on the decline in 2014. In Europe, the drop was around 3 percent and in the US around 19 percent in the last quarter, due to a combined impact of many factors.

According to Bloomberg, the sales of Advair/Seretide are expected to drop from US$8.25 billion in 2013 to US$5.9 billion in 2016 with the entry of generics.

A large and growing market to invest into:

According to the World Health Organization (WHO), in every 10 seconds, Chronic Obstructive Pulmonary Disease (COPD) that includes conditions such as chronic bronchitis and emphysema kills one person globally. It is expected to be the third leading cause of death worldwide by 2030. However, though more number of people suffers from asthma globally, its mortality rate is still much less, WHO says.

Bloomberg estimates that COPD market, including asthma, is expected to reach over US$30 billion by 2018.

Cipla came next crossing the ‘technology hurdle’:

Though the leader in the global generic market – Teva, expressed its inability to introduce the generic version of Advair/Seretide before 2018, this month, the Indian pharma major Cipla introduced its version of the product in two European countries, just next to Novartis. Consequently, Cipla demonstrated its ability to overcome the technological hurdle of the product faster than most others and mastering the intricate NDDS technology in record time, with precision.

The Cipla product is named as ‘Serroflo’ in Germany and ‘Salmeterol/Fluticasone Cipla’ in Sweden. As reported in the media quoting Cipla Chairman Dr. Yusuf Hamied, the product has also been launched in Croatia. By now, Cipla has obtained regulatory approvals of this product in 10 countries in total, with an approval pending in the GSK’s own domestic turf, the United Kingdom (UK). Other country-wise launches in Europe would probably take place much before the end of 2014, according to Dr. Hamied.

The product is expected to be launched in the US in the next three to four year’s time, though one media report mentioned about its 2015 launch in that market. Dr. Hamied also said that his company is now planning its first-ever manufacturing plant in America, which might focus on producing HIV medicines.

On a conservative estimate, the market analysts expect Cipla to generate around US$50 million in sales from the EU markets by 2016 and around US$110 million by 2018, as the company gains increasing market access with not more than 4-5 generic competitors competing in this segment.

Be that as it may, getting regulatory approval for launch of a generic version of Advair/Seretide in the regulated markets, by itself, is a huge achievement of technological prowess that Cipla has demonstrated, yet again.

Not too many generic competition expected:

Because of high quality technological requirements to develop a replaceable generic version of the GSK product, not too much competition is expected in this segment.

Thus far, another global generic drug major Mylan is expected to file for a generic version of Advair/Seretide in the US by the third quarter of 2015 for a 2016 launch. Besides Cipla and Novartis, Mylan, Teva and Actavis are expected come out with the generic version of this drug.

Opportunities in ‘difficult to copy’ drugs:

According to a recent ‘RnR Market Research Report’, over 1,400 drugs with New Drug Delivery System (NDDS) have since been approved globally. This includes inhalation devices too.

The oral drugs contribute the largest share of the overall NDDS market with over 52 percent of the total pie. This segment is expected to attain a turnover of over US$90 billion by 2016 at a CAGR of 11 percent. The injectable new drug delivery market is expected to reach a turnover of over US $29billion by 2015, according to this report.

I have deliberated this subject in one of my earlier blog posts titled. “Moving Up The Generic Pharma Value Chain”.

Another high tech area – biosimilar drugs:

As the high priced biologic drugs of the innovator companies go off patent, large molecule biosimilar drugs, involving high technology, would emerge as another lucrative growth opportunity for the generic players having requisite wherewithal.

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. Some of the Indian companies that have already entered into the biosimilar segment are Dr. Reddy’s Laboratories (DRL), Lupin, Biocon, Panacea Biotech, Wockhardt, Glenmark, Emcure, Bharat Biotech, Serum Institute, Hetero, Intas and Reliance Life Sciences, besides others.

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.

Overall improvement in the quality of ANDA filings:

In the last few years, overall quality of ANDA filings of the domestic Indian pharma players has also improved significantly. Their regulatory filing schedules now include many complex molecules, injectibles, oral contraceptives, ophthalmic preparations, inhalers/other drug delivery systems and biosimilars, beside Para IV/FTFs. All these are now contributing a growing share in their new product initiatives for the regulated markets.

Conclusion:

In the largest pharma market of the world – the United States, global generic companies are increasingly facing cutthroat price competition with steep price erosion, registering mixed figures of business performance and growth.

However, a new trend is fast emerging. Even when global innovator companies are including increasing number of difficult to copy medicines in their product portfolio, some pharma players are reaping a rich harvest by moving up the value chain with the generic versions of those products, post patent expiry. These copycats offer much higher margin than non-differentiated generics.

Some Indian generic companies too have started focusing on building value added, difficult to manufacture, and technology intensive generic product portfolios in various therapy areas. DRL is reportedly all set to take its complex generic drug Fondaparinux sodium injection to Canada and two other emerging markets.

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 now be much better placed in positioning themselves significantly ahead of the rest, both in terms of top and the bottom line performance.

The myth, as epitomized in the good old saying, “Patent expiry matters less for difficult to copy drugs”, seems to be partly true in delaying entry of generics immediately after the end of the monopoly period, at least, for now. However, I reckon, this gap of delay would eventually get much reduced, if not eliminated altogether, as we move on. Armed with cutting edge technology Cipla has almost busted the myth, as it came close second to Novartis with the launch of a complex generic equivalent of Advair/Seretide in the EU and other markets.

Pharma majors of the country, such as, DRL, Cipla, Lupin and Biocon, to name a few, are taking great strides, setting examples for many others to emulate and excel in this area. The groundswell has already begun for a long haul global journey of the Indian pharma into the El Dorado of high tech generics fetching higher rewards.

By: Tapan J. Ray

PILMAN

A Tapan Ray Website

Tag Archives: US

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Does Patent Expiry Matter Less For Difficult To Copy Drugs?