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The ‘TINA Factor’: A Hotspot for Patented Drugs

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An article published in a global business magazine on December 5, 2013 mentioned that Marijn Dekkers, the CEO of Bayer AG reportedly has said at the Financial Times Global Pharmaceutical & Biotech Conference held this month that:

“Bayer didn’t develop its cancer drug, Nexavar (sorafenib) for India but for Western Patients that can afford it.”

The head honcho deserves kudos for revealing his mind upfront, while inviting two quick questions, as follows:

  • If that is so, why did Bayer launch Nexavar in India?
  • Did Bayer have any other alternative or choice for not doing so, other than negotiating for a ‘Voluntary License’?

As Bayer already had decided against any ‘Voluntary License’ for Nexavar in India, the simple answer to both the questions is : There Is No Alternative (TINA). And…that’s my ‘TINA Factor’, now a hotspot for patented drugs in India.

I shall dwell on it below, just in a short while.

Bellicose stance for high drug prices and more stringent patent regime:

Everybody acknowledges, beyond even an iota of doubt, that the contribution of the global pharmaceutical industry in the ongoing fight of mankind against diseases of all kinds, is commendable and exemplary.

However, over a period of time, as the low hanging fruits of pharma R&D are in the process of getting all plucked, raw commerce mainly driven by likes of “The Wall Street” quarterly expectations, have started overriding public health considerations involving a large section of the society, across the world, including India.

In this evolving scenario, healthcare has to be extended to almost everybody in the society by the respective Governments in power with strong support from the pharma industry. Instead, to utter dismay of many, the later seems to have opted for a bellicose stance.  Their lobby groups appear to be power playing with all might in the corridors of power, to make the product patent regime of faster growing emerging markets more and more stringent, restricting smooth entry of affordable generic or biosimilar drugs increasingly difficult.

Underlying reasons for Big Pharma’s near obsession to have in place an ever stringent patent regime, defying all public health interest particularly of the developing countries, I reckon, are mainly three-fold:

  • Grant of product patent for any innovation irrespective of triviality
  • To have absolute pricing freedom for patented drugs for unlimited profits
  • To enjoy and extend product monopoly status as long as possible

Probably, to camouflage these intents, the reasons for high prices of patented drugs are attributed to the over-used buzz-words – fostering and re-investing in innovation, which is more often underscored as frightfully expensive.

Fair enough, in that case, let the high cost of R&D be appropriately quantified involving independent  experts and made known to public. It will then not be like a jig saw puzzle for people to understand the real intent or the truth behind high drug prices. Thereafter, practical solutions need be fleshed-out putting the bright brains and minds together to make new medicines affordable to patients, across the world.

Most probably, that is not to happen, unless a legally binding system of disclosure of expenses is made mandatory for R&D, just as the ‘Physician Payment Sunshine Act’ of the United States demands public disclosure of gifts and payments made to doctors by the pharma players and allied businesses.

On the contrary, incessant efforts by vested interests still continue to keep the patented drug prices beyond the reach of common man. The following are just some very recent examples:

Another ‘defiant move’ in drug pricing:

In another recent development, US-FDA on December 6, 2013 approved Sovaldi (sofosbuvir) of Gilead Sciences Inc. This new drug is reported to be a cure for chronic infection with hepatitis C virus, without co-administration of interferon.

According to the report of July 2013 of the World Health Organization (WHO), about 150 million people are chronically infected with hepatitis C virus, and more than 350, 000 people die every year from hepatitis C- related liver diseases, across the world.

Most interestingly, Gilead Sciences have reportedly decided to keep the price of Sovaldi at a staggering US$ 1,000 (Rs. 62,000) -a-day for one tablet to be continued for 12 weeks. Thus the cost of a three month course of treatment with Sovaldi would be a mind boggling sum of US$ 84,000 (Rs.L 5.21), just for one patient.

It is worth noting that the above price/table of Sovaldi, as decided by Gilead Sciences, has started culminating into a storm of protest, almost immediately, even in the United States (US). The biggest drug benefits manager in that country – Express Scripts Holding Co. in a decisive move to drive down spending on the medicines, reportedly plans to start a price war when Sovaldi comes to market next year or early in 2015 wearing a price tag of US$ 1,000 a pill.

Further, on this seemingly defiant pricing strategy, that too for a life saving drug affecting patients belonging to all strata of the society, ‘Doctors Without Borders’ have reportedly commented: “Using patents to block affordable versions of sofosbuvir and pricing this drug out of reach of the most vulnerable groups who need it most is simply putting profits before people’s lives.”

Brewing a fresh initiative for more stringent high drug price regime:

To foist stricter pharmaceutical patent regime, making access to affordable drugs for the world’s poor increasingly challenging, an initiative is reportedly brewing afresh led by the United States (US).

Ministers of Trade from 12 countries initiated a discussion on December 6, 2013 at Singapore to meet the US deadline of forging a deal on the proposed ‘Trans-Pacific-Partnership (TPP)’ before the end of 2013.

These twelve countries – Australia Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, USA and Vietnam, contributing 40 percent of the world economy, are expected to hammer out the TPP deal first, though other countries may hitch on thereafter.

However, after 4 days of intense negotiation, the US-led TPP talks ended on December 10, 2013, without beating into shape any deal. These countries would reportedly meet again on January 2014, in contrast to earlier plan.

The global human right groups like ‘Medicins Sans Frontieres (MSF)’ and ‘Doctors Without Borders’ have reportedly commented, “The ‘Data Protection’ period will prevent drug regulatory agencies in TPP signatory countries from referencing data needed to approve lower-cost generic versions of a protected drug, delaying competition that would lead to cheaper prices”.

In a poll commissioned by ‘Avaaz’ – a global advocacy group, reportedly 62 percent of Americans, 63 percent of Australians, 70 percent of New Zealanders, and of 75 percent Chileans opposed limiting access to generic medicines through the patent proposal in TPP.

Quite expectedly, the powerful US pharma lobby group ‘Pharmaceutical Research and Manufacturers of America (PhRMA)’ said, “It was necessary for companies to recover investments and conduct further research into new cures”.

Breath of fresh air:

The good news is that some prudent developments are also seen around in the midst of a monopolistic drug pricing scenario, offering a breath of fresh air. Some countries around the world, including an important payor in the Unites States, National Institute for Health and Care Excellence (NICE) of UK which assesses the value of drugs for NHS use, and even ‘National Development and Reform Commission (NDRC)’ of China, have now started taking note and proactive measures in different ways on monopolistic high drug prices.

A recent report highlighted that ‘National Development and Reform Commission (NDRC)’ of China would examine and regulate the price-related monopolistic practices of six industries operating in the country, including pharmaceuticals and would crack down wherever they find excessively high prices. 

Can India insulate itself from pricing onslaught?

Despite growing global pressure against ‘putting profits before people’s lives’, one may arguably expect more such initiatives spearheaded by Big Pharma to make the patent regime, of especially the emerging markets, more stringent in the years ahead.

That said, ‘The TINA Factor’, which I shall now dwell upon, would probably help reinforcing the protective shield of Indian patent regime against foreseeable assaults with strategies quite similar to as cited above, denying access to new life saving drugs to most of the general population of the country.

‘The TINA Factor’ and three ‘Alternatives’ available to MNCs:

Since enactment of patient-friendly patent laws by the Parliament of India effective January 1, 2005, many global pharma companies and their lobby groups have been continuously expressing immense displeasure and strong anger in many ways for obvious reasons, just as the CEO of Bayer AG did recently.

There are, of course, a few exceptions, such as Sir Andrew Witty, the global CEO of GlaxoSmithKline (GSK), who has been publicly expressing balanced views on this subject in several occasions, so far.

Being driven by anger and possibly desperation any MNC may wish to choose one of the following three ‘Alternatives’ available to them:

Alternative 1: Do not apply for the product patent in India at all.

‘The TINA Factor’: In that case the product will be made available in a platter for the generic players to copy.

Alternative 2: Obtaining the relevant patent from the Indian Patent Office (IPO), do not launch the patented product in India.

‘The TINA Factor’: After three years from the date of grant of patent, as per the statute, the said product could become a candidate for CL on the ground that the patented invention has not been worked in India.

Alternative 3: Launch the product only at the international price.

‘The TINA Factor’: If any patented new product is not available to patients at a ‘reasonably affordable price’ or ‘reasonable requirements’ of patients with respect to the patented invention are not satisfied, again according to statutes, interested parties are free to apply for CL to the IPO, following the steps as specified in the Act. Moreover, the Government itself may issue CL in national emergencies or ‘extreme urgency’ for non-commercial use.

Considering the ‘TINA Factor’, it appears, if the new products do not conform to the ‘Indian Patents Act’ and are NOT launched with ‘reasonably affordable prices’ or ‘reasonable requirements’ of patients are NOT met with these new drugs, the possibility of their legal generic entry at much lower prices is rather high in India. CL granted by the IPO for Bayer’s Nexavar to NATCO vindicates this point.

Summing-up effects of the ‘TINA Factor’:

Many would now reckon that the ‘TINA Factor’, being a hotspot for patented drugs in India, has the potential for getting adopted by many other countries in not too distant future. Two of its palpable effects, as felt in the country so far, may be summed-up as follows:

  • It leaves no option to any MNC, other than launching their new products in India, especially after obtaining  relevant patents from the IPO.
  • It also squashes apprehensions of many that discontented Big Pharma would be able stop launching patented new products in India, depriving a large number of patients of the country.

Conclusion:

‘The TINA Factor’, thus created by the lawmakers, is expected to remain undiluted, unless commensurate changes are made in the Indian Patents Act.

Not withstanding the reported anger expressed by the CEO of Bayer AG or recently reported ‘absurd pricing’ of Sovaldi, or even for that matter, fresh attempts that are now being made to cobble together a TPP deal, patented new products would continue to be launched in India, as they will receive marketing approval from the Drug Controller General of India (DCGI).

Any possibility of dilution of the ‘TINA Factor’ seems remote now, though powerful overseas pharma lobby groups are investing heavily for a change to take place in various ways.

It also does not seem likely, at least in the near to mid-term, that India would be a party to its ‘Patents Act’ diluting any ‘Free Trade Agreement’ or remain unmoved with high drug prices like, US$ 1000/tablet for life saving drugs like sofosbuvir, more so, if those are considered essential medicines in the country.

Come 2014, it appears improbable that any new Union Government would be able to garner enough numbers in the Parliament to amend Indian Patents Act, buckling under pressure of powerful lobby groups, directly or indirectly, and daring to ignore public sentiment on this sensitive issue. 

Considering all these, the point to ponder now:

While abhorring pro-patients ‘Patents Act’ of India, can the Big Pharma come out with any viable alternative today for NOT launching their life saving patented new drugs in the country with the ‘TINA Factor’ prevailing?

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.

 

‘Big Pharma’ Prowls Falter: Triggers Off Yet Another Critical Debate

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The ‘Big Pharma’ prowls faltered yet again exposing the ‘fault line’ to all, when the GSK global head honcho, a pharma icon in his own right, Sir Andrew Witty supported the pharmaceutical policy of India, while in the country earlier this month. This support is quite in contrary to arrogant displeasure being expressed by his MNC counterparts against the pharma regime in India up until now.

Sir Andrew reportedly spoke against the usual pharma MNC practices of charging very high prices for patented medicines during an interview and said that multinationals need to look at things from India’s perspective. 

The above comment, when analyzed especially in context of one of the recent actions of Big Pharma MNCs complaining in writing to President Obama against India’s prevailing pharmaceutical regime, the fault line gets clearly visible.

In this context, a recent report captured the anger and desperation of Big Pharma. This hostility vindicates the general apprehensions in India that MNCs are once again pushing for a stringent patent regime in the country, against the general health interest of Indian patients for access to affordable newer medicines.

Quoting US Chamber of Commerce’s Global Intellectual Property Center another report reconfirmed the impatient prowl of the mighty lobby group in the corridors of power. This piece states, “Recent policy and judicial decisions (Glivec judgment and Nexavar) that invalidate intellectual property rights, which have been increasing in India, cast a daunting shadow over its otherwise promising business climate.” 

The ‘fault line’, thus surfaced, triggers off yet another critical debate, especially related to the slugfest on a stringent pharmaceutical product patent regime in India, as follows:

“Does Stricter IPR Regime Spur Pharma Innovation?”

Global innovator companies strongly argue that stringent Intellectual Property Rights (IPR) and stricter enforcement of IP laws have strong link with fostering innovation leading to a robust economic growth for any nation.

However, another group of thought leaders opine just the opposite. They argue that strong IPR and IP laws have little, if any, to do with fostering innovation and economic growth, as there are no robust research findings to drive home the above point.

It has been noticed that the MNC lobby groups quite often very cleverly use their magic word ‘innovation’ on a slightest pretext with an underlying desire of having a ‘very strict patent regime’ in India. Thus they seem to be trying to mislead the common man, as if India is against innovation.

Comment of the Chairman of National Innovation Council of India:

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

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

Recent Indian stand:

On March 5, 2013, the Government of India made a profound statement on the subject of ‘Innovation and Small and Medium Enterprises (SMEs)’ at the TRIPS Council meeting covering the following points:

  • There is no direct correlation between IP and Innovation even for the Small and Medium Industries.
  • The technological progress even in the developed world had been achieved not through IP protection but through focused governmental interventions.
  • The proponents of this Agenda Item have reached the present stage of technological development by focusing solely on the development of their own domestic industry without caring for the IPRs of the foreigners or the right holders.
  • After achieving a high level of development, they are now attempting to perpetuate their hold on their technologies by making a push towards a ‘TRIPS plus’ regime.
  • Their agenda is not to create an environment where developing countries progress technologically, but to block their progress through stringent IP regime.
  • It is essential that the flexibilities provided by the TRIPS Agreement need to be secured at any cost, if the people in the developing countries are to enjoy the benefits of innovations.

A Wharton Professor’s view:

As the Wharton professor of Healthcare Management Mark V. Pauly has been quoted saying that the link between patent protection and innovation has never been definitely proven.

However, Pauly reportedly is aware that the innovator global pharma companies do say, ‘If you don’t allow us to reap the benefits of our R&D expenditure, we won’t put as much into it, and we won’t invent as many great things’.

However, the Wharton Professor counters it by saying, “The problem is that nobody really knows how much less innovation there would be if there were less patent protection. We just don’t know what the numbers are.”

The above report says, according to Pauly, the onus to prove that patent protection matters should be on the drug industry itself.

He argues, “Rather than always just insisting you should never limit intellectual property protection, they really ought to develop some evidence to show that without that protection, there would be an impact on the rate of adoption of new products. Everybody has an opinion, but nobody knows the facts.“

A French Professor’s view:

In another WIPO seminar held on June 18, 2013, Margaret Kyle, a Professor at the Toulouse School of Economics and the Université de Toulouse I in France, reportedly presented preliminary findings of a study.

This paper explored in detail the impact of World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in various areas related to the speed of launch, price, and volume of sales of drugs across countries and across different drug products.

In this study, as the above report states, Kyle analyzed the trade-off between the dynamic and static effects of Intellectual Property Rights (IPRs).

The dynamic effect of IPRs was considered as an incentive for innovation based on the general belief that patent protection, through granting market exclusivity, incentivizes companies to invest in the research and development (R&D) to develop new drugs.

On the other hand, the static effect of IPRs in the short term is that granting market exclusivity often leads to innovator companies pricing their products at levels, which will be unaffordable by a large number of patients, especially in lower-income countries.

Kyle explained that the results implied as follows:

  • IPRs are neither necessary nor sufficient to launch new pharmaceutical products.
  • The existence of a product patent does not always inhibit generic imitation, nor does the lack of such a patent necessarily deter an originator from making a product available in a given market.

Other eminent voices:

While highlighting that TRIPS-Plus intellectual property protection is passed by some developing countries in order to implement FTA obligations, another recent paper presents the following examples in support of the argument that there no correlation between strong IP laws and fostering innovation:

  • UK Commission on Intellectual Property Rights. Integrating Intellectual Property Rights and Development Policy. 2002. (Link)

“…Strong IP rights alone provide neither the necessary nor sufficient incentives for firms to invest in particular countries… The evidence that foreign investment is positively associated with IP protection in most developing countries is lacking.”

  • Robert L. Ostergard., Jr. “Policy Beyond Assumptions: Intellectual Property Rights and Economic Growth.” Chapter 2 of The Development Dilemma: The Political Economy of Intellectual Property Rights in the International System.  LFB Scholarly Publishing, New York. 2003

“…No consistent evidence emerged to show that IPR contributed significantly to economic growth cross-nationally.  Furthermore, when the nations are split into developed and developing countries, results to suggest otherwise did not emerge.”

  • Carsten Fink and Keith Maskus. “Why We Study Intellectual Property and What We Have Learned.” Chapter one of Intellectual Property and Development: Lessons from Economic Research. 2005. (Link)

“Existing research suggests that countries that strengthen their IPR are unlikely to experience a sudden boost in inflows of FDI.  At the same time, the empirical evidence does point to a positive role for IPRs in stimulating formal technology transfer.”

“Developing countries should carefully assess whether the economic benefits of such rules outweigh their costs. They also need to take into account the costs of administering and enforcing a reformed IPR system”

“We still know relatively little about the way technology diffuses internationally.”

  • Keith Mascus. “Incorporating a Globalized Intellectual Property Rights Regime Into an Economic Development Strategy.”  Ch. 15 of Intellectual Property, Growth and Trade. (ed. Mascus). Elsevier.  2008.

“Middle income countries must strike a complicated balance between promoting domestic learning and diffusion, through limited IP protection, and gaining greater access to international technologies through a strong regime… it makes little sense for these nations to adopt the strongly protectionist IP standards that exist in the U.S., the EU and other developed economies.  Rather, they should take advantage of the remaining policy space provided by the TRIPS Agreement.”

“It is questionable whether the poorest countries should devote significant development resources to legal reforms and enforcement of IPR.”

  • Kamal Saggi. “Intellectual Property Rights and International Technology Transfer via Trade and Foreign Direct Investment. Ch. 13 of Intellectual Property, Growth and Trade. (ed. Mascus). Elsevier.  2008.

“Overall, it is fair to say that the existing empirical evidence regarding the overall technology-transfer impacts of increased IPR protection in developing countries is inconclusive at this stage.  What is not yet clear is whether sufficient information flows will be induced to procure significant dynamic gains in those countries through more learning and local innovation.”

  • Alexander Koff, Laura Baughman, Joseph Francois and Christine McDaniel. “Study on the Economic Impact of ‘TRIPS-Plus’ Free Trade Agreements.”  International Intellectual Property Institute and the U.S. Patent and Trademark Office. August 2011.

“TRIPS-Plus IPRs viewed as ‘important, but not essential’ for attracting investment. Many other factors matter like, taxes, human capital, clustering, etc.”

Patients versus Patents:

Another recent  article on this subject states as follows:

“Compulsory licensing and stricter patentability standards allow domestic manufacturers to produce lower-cost versions of patented NCD medications and break into lucrative therapeutic areas, such as oncology, in which multinational drug firms are heavily invested.”

The paper clearly highlights, “If patients are pitted against patents, international support for IP protection—upon which drug firms and many other developed country industries now heavily rely—will again diminish.”

Yet another article published in The New England Journal of Medicine, July 17, 2013 states:

“Patents are government-granted monopolies. As monopolies, they can drive the prices of drugs up dramatically. For example, in 2000, when only patented antiretroviral drugs for Human Immunodeficiency Virus (HIV) infection were widely available, they cost approximately $10,000 per person per year, even in very poor countries. Today, these same medicines cost $150 or less if they are purchased from Indian generics companies…. patents cause especially acute problems for access to medicines in developing countries – not only because of low incomes but also because insurance and price-control systems are often absent or inadequate.” 

A WHO Report:

To chart the way forward at the backdrop of ongoing global debate elated to the relationship between intellectual property rights, innovation and public health, the World Health Assembly decided in May 2003 to give an independent Commission the task of analyzing this key issue. Accordingly, the Director-General of WHO established the Commission in February 2004. This report titled, “Public health, innovation and intellectual property rights” was published in 2006 and articulated that neither innovation nor access depend on just intellectual property rights and highlighted, among others, the following:

  • Intellectual property rights have an important role to play in stimulating innovation in health-care products in countries where financial and technological capacities exist, and in relation to products for which profitable markets exist.
  • In developing countries, the fact that a patent can be obtained may contribute nothing or little to innovation if the market is too small or scientific and technological capability inadequate.
  • In the absence of effective differential and discounted prices, patents may contribute to increasing the price of medicines needed by poor people in those countries.
  • Although the balance of costs and benefits of patents will vary between countries, according to their level of development and scientific and technological infrastructure, the flexibility built into the TRIPS agreement allows countries to find a balance more appropriate to the circumstances of each country.

India – now the most attractive global investment destination:

Trashing the anger and displeasure of pharma MNCs, as per the latest international survey, India reportedly has emerged as the most attractive global investment destination followed by Brazil and China. It is worth noting that even recently, during April- June period of 2013, with a capital inflow of around US$ 1 billion, the pharma sector became the brightest star in the FDI landscape of India.

Conclusion:

In the Indian context, a 2013 paper titled, “Intellectual Property Protection and Health Innovation: Concerns for India” published by Center for WTO Studies highlights that the regime change in the patent system has not been very supportive for improving access to medicines in India. It reiterates, it has not been established yet that a stricter patent regime in the developing countries like India, has helped health innovation and access to medicines at economically viable prices.

The paper recommends, although India is trying to incorporate all the flexibilities under TRIPS in its Patents Act, the ‘Indian Policy Makers’ should not give in to the pressure of western powers to make IPR more stringent in the country.

In the backdrop of arrogance exhibited by Big Pharma MNCs, in general, against Indian policies and judicial verdicts on this subject, the comments made by Sir Andrew on the issue, as deliberated above, are indeed profound and far reaching. However, it clearly exposes the fault line in the collective mindset of pharma MNCs, without any ambiguity.

I shall not be surprised either, if clever attempts are made now by the MNC lobby groups to negate or trivialize the profoundness of this visionary statement not just in India, but beyond its shores, as well.

Further, as stated above recent emergence of India as the most attractive global investment destination with pharma leading the deck is a point worth noting, more in the context of policy and statutes that India has decided to follow.

Be that as it may, it is beyond the scope of any doubt that innovation or for that matter encouraging innovation still remains the wheel of progress of any nation.

However, have we garnered enough evidence yet, to establish that stringent IPR regime with absolute pricing freedom would lead to fostering more innovation leading to well-being of people of the developing countries, like 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.

 

 

 

R&D: Is Indian Pharma Moving Up the Value Chain?

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It almost went unnoticed by many, when in the post product patent regime, Ranbaxy launched its first homegrown ‘New Drug’ of India, Synriam, on April 25, 2012, coinciding with the ‘World Malaria Day’. The drug is used in the treatment of plasmodium falciparum malaria affecting adult patients.  However, the company has also announced its plans to extend the benefits of Synriam to children in the malaria endemic zones of Asia and Africa.

The new drug is highly efficacious with a cure rate of over 95 percent offering advantages of “compliance and convenience” too. The full course of treatment is one tablet a day for three days costing less than US$ 2.0 to a patient.

Synriam was developed by Ranbaxy in collaboration with the Department of Science  and Technology of the Government of India. The project received support from the Indian Council of Medical Research (ICMR) and conforms to the recommendations of the World Health Organization (WHO). The R&D cost for this drug was reported to be around US$ 30 million. After its regulatory approval in India, Synriam is now being registered in many other countries of the world.

Close on the heels of the above launch, in June 2013 another pharmaceutical major of India, Zydus Cadilla announced that the company is ready for launch in India its first New Chemical Entity (NCE) for the treatment of diabetic dyslipidemia. The NCE called Lipaglyn has been discovered and developed in India and is getting ready for launch in the global markets too.

The key highlights of Lipaglyn are reportedly as follows:

  • The first Glitazar to be approved in the world.
  • The Drug Controller General of India (DCGI) has already approved the drug for launch in India.
  • Over 80% of all diabetic patients are estimated to be suffering from diabetic dyslipidemia. There are more than 350 million diabetics globally – so the people suffering from diabetic dyslipidemia could be around 300 million.

With 20 discovery research programs under various stages of clinical development, Zydus Cadilla reportedly invests over 7 percent of its turnover in R&D.  At the company’s state-of-the-art research facility, the Zydus Research Centre, over 400 research scientists are currently engaged in NCE research alone.

Prior to this in May 14, 2013, the Government of India’s Department of Biotechnology (DBT) and Indian vaccine company Bharat Biotech jointly announced positive results, having excellent safety and efficacy profile in Phase III clinical trials, of an indigenously developed rotavirus vaccine.

The vaccine name Rotavac is considered to be an important scientific breakthrough against rotavirus infections, the most severe and lethal cause of childhood diarrhea, responsible for approximately 100,000 deaths of small children in India each year.

Bharat Biotech has announced a price of US$ 1.00/dose for Rotavac. When approved by the Drug Controller General of India, Rotavac will be a more affordable alternative to the rotavirus vaccines currently available in the Indian market. 

It is indeed interesting to note, a number of local Indian companies have started investing in pharmaceutical R&D to move up the industry value chain and are making rapid strides in this direction.

Indian Pharma poised to move-up the value-chain:

Over the past decade or so, India has acquired capabilities and honed skills in several important areas of pharma R&D, like for example:

  • Cost effective process development
  • Custom synthesis
  • Physical and chemical characterization of molecules
  • Genomics
  • Bio-pharmaceutics
  • Toxicology studies
  • Execution of phase 2 and phase 3 studies

According to a paper titled, “The R&D Scenario in Indian Pharmaceutical Industry” published by Research and Information System for Developing Countries, over 50 NCEs/NMEs of the Indian Companies are currently at different stages of development, as follows:

Company Compounds Therapy Areas Status
Biocon 7 Oncology, Inflammation, Diabetes Pre-clinical, phase II, III
Wockhardt 2 Anti-infective Phase I, II
Piramal Healthcare 21 Oncology, Inflammation, Diabetes Lead selection, Pre-clinical, Phase I, II
Lupin 6 Migraine, TB, Psoriasis, Diabetes, Rheumatoid Arthritis Pre-clinical, Phase I, II, III
Torrent 1 Diabetic heart failure Phase I
Dr. Reddy’s Lab 6 Metabolic/Cardiovascular disorders, Psoriasis, migraine On going, Phase I, II
Glenmark 8 Metabolic/Cardiovascular /Respiratory/Inflammatory /Skin disorders, Anti-platelet, Adjunct to PCI/Acute Coronary Syndrome, Anti-diarrheal, Neuropathic Pain, Skin Disorders, Multiple Sclerosis, Ongoing, Pre-clinical, Phase I, II, III

R&D collaboration and partnership:

Some of these domestic companies are also entering into licensing agreements with the global players in the R&D space. Some examples are reportedly as follows:

  • Glenmark has inked licensing deals with Sanofi of France and Forest Laboratories of the United States to develop three of its own patented molecules.
  • Domestic drug major Biocon has signed an agreement with Bristol Myers Squibb (BMS) for new drug candidates.
  • Piramal Life Sciences too entered into two risk-reward sharing deals in 2007 with Merck and Eli Lilly, to enrich its research pipeline of drugs.
  • Jubilant Group partnered with Janssen Pharma of Belgium and AstraZeneca of the United Kingdom for pharma R&D in India, last year.

All these are just indicative collaborative R&D initiatives in the Indian pharmaceutical industry towards harnessing immense growth potential of this area for a win-win business outcome.

The critical mass:

An international study estimated that out of 10,000 molecules synthesized, only 20 reach the preclinical stage, 10 the clinical trials stage and ultimately only one gets regulatory approval for marketing. If one takes this estimate into consideration, the research pipeline of the Indian companies would require to have at least 20 molecules at the pre-clinical stage to be able to launch one innovative product in the market.

Though pharmaceutical R&D investments in India are increasing, still these are not good enough. The Annual Report for 2011-12 of the Department of Pharmaceuticals indicates that investments made by the domestic pharmaceutical companies in R&D registered an increase from 1.34 per cent of sales in 1995 to 4.5 percent in 2010. Similarly, the R&D expenditure for the MNCs in India has increased from 0.77 percent of their net sales in 1995 to 4.01 percent in 2010.

Thus, it is quite clear, both the domestic companies and the MNCs are not spending enough on R&D in India. As a result, at the individual company level, India is yet to garner the critical mass in this important area.

No major R&D investments in India by large MNCs:

According to a report, major foreign players with noteworthy commercial operations in India have spent either nothing or very small amount towards pharmaceutical R&D in the country. The report also mentions that Swiss multinational Novartis, which spent $ 9 billion on R&D in 2012 globally, does not do any R&D in India.

Analogue R&D strategy could throw greater challenges:

For adopting the analogue research strategy, by and large, the Indian pharma players appear to run the additional challenge of proving enhanced clinical efficacy over the known substance to pass the acid test of the Section 3(d) of the Patents Act of India.

Public sector R&D:

In addition to the private sector, research laboratories in the public sector under the Council for Scientific and Industrial Research (CSIR) like, Central Drug Research Institute (CDRI), Indian Institute of Chemical Technology (IICT) and National Chemical Laboratory (NCL) have also started contributing to the growth of the Indian pharmaceutical industry.

As McKinsey & company estimated, given adequate thrust, the R&D costs in India could be much lower, only 40 to 60 per cent of the costs incurred in the US. However, in reality R&D investments of the largest global pharma R&D spenders in India are still insignificant, although they have been expressing keenness for Foreign Direct Investments (FDI) mostly in the brownfield pharma sector.

Cost-arbitrage:

Based on available information, global pharma R&D spending is estimated to be over US$ 60 billion. Taking the cost arbitrage of India into account, the global R&D spend at Indian prices comes to around US$ 24 billion. To achieve even 5 percent of this total expenditure, India should have invested by now around US$ 1.2 billion on the pharmaceutical R&D alone. Unfortunately that has not been achieved just yet, as discussed above.

Areas of cost-arbitrage:

A survey done by the Boston Consulting Group (BCG) in 2011 with the senior executives from the American and European pharmaceutical companies, highlights the following areas of perceived R&D cost arbitrage in India:

Areas % Respondents
Low overall cost 73
Access to patient pool 70
Data management/Informatics 55
Infrastructure set up 52
Talent 48
Capabilities in new TA 15

That said, India should realize that the current cost arbitrage of the country is not sustainable on a longer-term basis. Thus, to ‘make hay while the sun shines’ and harness its competitive edge in this part of the world, the country should take proactive steps to attract both domestic as well as Foreign Direct Investments (FDI) in R&D with appropriate policy measures and fiscal incentives.

Simultaneously, aggressive capacity building initiatives in the R&D space, regulatory reforms based on the longer term need of the country and intensive scientific education and training would play critical role to establish India as an attractive global hub in this part of the world to discover and develop newer medicines for all.

Funding:

Accessing the world markets is the greatest opportunity in the entire process of globalization and the funds available abroad could play an important role to boost R&D in India. Inadequacy of funds in the Indian pharmaceutical R&D space is now one of the greatest concerns for the country.

The various ways of funding R&D could be considered as follows:

  • Self-financing Research: This is based on:
  1. “CSIR Model”: Recover research costs through commercialization/ collaboration with industries to fund research projects.
  2. “Dr Reddy’s Lab / Glenmark Model”: Recover research costs by selling lead compounds without taking through to development.
  • Overseas Funding:  By way of joint R&D ventures with overseas collaborators, seeking grants from overseas health foundations, earnings from contract research as also from clinical development and transfer of aborted leads and collaborative projects on ‘Orphan Drugs’.
  • Venture Capital & Equity Market:  This could be both via ‘Private Venture Capital Funds’ and ‘Special Government Institutions’.  If regulations permit, foreign venture funds may also wish to participate in such initiatives. Venture Capital and Equity Financing could emerge as important sources of finance once track record is demonstrated and ‘early wins’ are recorded.
  • Fiscal & Non-Fiscal Support: Should also be valuable in early stages of R&D, for which a variety of schemes are possible as follows:
  1. Customs Duty Concessions: For Imports of specialized equipment, e.g. high throughput screening equipment, equipment for combinatorial chemistry, special analytical tools, specialized pilot plants, etc.
  2. Income tax concessions (weighted tax deductibility): For both in-house and sponsored research programs.
  3. Soft loans: For financing approved R&D projects from the Government financial institutions / banks.
  4. Tax holidays: Deferrals, loans on earnings from R&D.
  5. Government funding: Government grants though available, tend to be small and typically targeted to government institutions or research bodies. There is very little government support for private sector R&D as on date.

All these schemes need to be simple and hassle free and the eligibility criteria must be stringent to prevent any possible misuse.

Patent infrastructure:

Overall Indian patent infrastructure needs to be strengthened, among others, in the following areas:

  • Enhancement of patent literacy both in legal and scientific communities, who must be taught how to read, write and file a probe.
  • Making available appropriate ‘Search Engines’ to Indian scientists to facilitate worldwide patent searches.
  • Creating world class Indian Patent Offices (IPOs) where the examination skills and resources will need considerable enhancement.
  • ‘Advisory Services’ on patents to Indian scientists to help filing patents in other countries could play an important role.

Creating R&D ecosystem:

  • Knowledge and learning need to be upgraded through the universities and specialist centers of learning within India.
  • Science and Technological achievements should be recognized and rewarded through financial grants and future funding should be linked to scientific achievements.
  • Indian scientists working abroad are now inclined to return to India or network with laboratories in India. This trend should be effectively leveraged.

Universities to play a critical role:

Most of Indian raw scientific talents go abroad to pursue higher studies.  International Schools of Science like Stanford or Rutgers should be encouraged to set up schools in India, just like Kellogg’s and Wharton who have set up Business Schools. It has, however, been reported that the Government of India is actively looking into this matter.

‘Open Innovation’ Model:

As the name suggest, ‘Open Innovation’ or the ‘Open Source Drug Discovery (OSDD)’ is an open source code model of discovering a New Chemical Entity (NCE) or a New Molecular Entity (NME). In this model all data generated related to the discovery research will be available in the open for collaborative inputs. In ‘Open Innovation’, the key component is the supportive pathway of its information network, which is driven by three key parameters of open development, open access and open source.

Council of Scientific and Industrial Research (CSIR) of India has adopted OSDD to discover more effective anti-tubercular medicines.

Insignificant R&D investment in Asia-Pacific Region:

Available data indicate that 85 percent of the medicines produced by the global pharmaceutical industry originate from North America, Europe, Japan and some from Latin America and the developed nations hold 97 percent of the total pharmaceutical patents worldwide.

MedTRACK reveals that just 15 percent of all new drug development is taking place in Asia-Pacific region, including China, despite the largest global growth potential of the region.

This situation is not expected to change significantly in the near future for obvious reasons. The head start that the western world and Japan enjoy in this space of the global pharmaceutical industry would continue to benefit those countries for some more time.

Some points to ponder:

  • It is essential to have balanced laws and policies, offering equitable advantage for innovation to all stakeholders, including patients.
  • Trade policy is another important ingredient, any imbalance of which can either reinforce or retard R&D efforts.
  • Empirical evidence across the globe has demonstrated that a well-balanced patent regime would encourage the inflow of technology, stimulate R&D, benefit both the national and the global pharmaceutical sectors and most importantly improve the healthcare system, in the long run.
  • The Government, academia, scientific fraternity and the pharmaceutical Industry need to get engaged in various relevant Public Private Partnership (PPP) arrangements for R&D to ensure wider access to newer and better medicines in the country, providing much needed stimulus to the public health interest of the nation.

Conclusion:

R&D initiatives, though very important for most of the industries, are the lifeblood for the pharmaceutical sector, across the globe, to meet the unmet needs of the patients. Thus, quite rightly, the pharmaceutical Industry is considered to be the ‘lifeline’ for any nation in the battle against diseases of all types.

While the common man expects newer and better medicines at affordable prices, the pharmaceutical industry has to battle with burgeoning R&D costs, high risks and increasingly long period of time to take a drug from the ‘mind to market’, mainly due to stringent regulatory requirements. There is an urgent need to strike a right balance between the two.

In this context, it is indeed a proud moment for India, when with the launch of its home grown new products, Synriam of Ranbaxy and Lipaglyn of Zydus Cadilla or Rotavac Vaccine of Bharat Biotech translate a common man’s dream of affordable new medicines into reality and set examples for others to emulate.

Thus, just within seven years from the beginning of the new product patent regime in India, stories like Synriam, Lipaglyn, Rotavac or the R&D pipeline of over 50 NCEs/NMEs prompt resurfacing the key unavoidable query yet again:

Has Indian pharma started catching-up with the process of new drug discovery, after decades of hibernation, to move up the industry ‘Value Chain’?

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.

Slugfest in Pharma Land: Isn’t ‘The Pot Calling the Kettle Black?’

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Close on the heels of detention of a British Citizen, an American citizen too has  been reportedly detained, for the first time, by the Chinese Government in connection with unfolding mega corruption scandal in the country’s pharma industry involving even ‘third party’.

A slugfest over this corruption scandal too has already begun. Media reports highlight, vested interests, as usual, retaliate by saying that China’s attention to the alleged corruption by MNCs is to benefit the local Chinese companies.

As per reports, big global pharma innovator companies like, GlaxoSmithKline, AstraZeneca and UCB are currently being questioned by the Chinese authorities related to this scam.

Critical role of ‘Third Party’ in pharma bribery and corruption: 

Although in the above Chinese scam, a third party, in form of a travel agency, has been accused to have played a critical role in the GSK case, it will be hard to believe that this is a solitary example.

Internal ‘Compliance Systems’ of global pharma companies, in most cases, are believed to be robust enough and will generally be found squeaky clean by any audit. Unfortunately, as it appears from various international reports, corruption still enters through cracks between seemingly robust ‘compliance firewalls’ for business gain.

Invariably in response, expensive and high decibel Public Relations (PR) machineries are put to overdrive. These extremely capable PR agents, with their  all guns blazing, keep trying to establish that such incidents, though quite frequent and are taking place across the world unabatedly, are nothing but  ‘small aberrations’ in pursuit of pharma ‘innovation’ for newer drugs just to benefit the patients.

As one understands from the GSK case, the ‘third party’ travel agent reportedly attempted to keep all transactions at arm’s length to avoid detection of any unholy nexus by the Chinese regulators. 

However, in the real world, it could possibly be any crafty and well-identified ‘third party’, intimately associated with the pharmaceutical business process. These ‘third parties’ are crafty enough to exploit the loopholes in the seemingly robust compliance systems of the concerned companies to help facilitating their financial performance. 

An interesting commonality in all such often repeated scams is the lack of top management accountability of the companies involved. This would probably surprise even the recent public sector scam tainted concerned ministers and top bureaucrats of India.

Much to everybody’s dismay, such incidents reportedly continue to take place in various parts of the world and in all probability in India too.

Other countries initiated probes:

Unlike the high-octane development in China, in many developed countries probes against such corruption have already been initiated at a different scale and level. For example, in Canada a conservative MP reportedly testified on October 17, 2012 to the ‘Standing Senate Committee on Social Affairs, Science and Technology’ as an expert witness regarding post-approval drug monitoring and the corrupt practices of pharmaceutical companies.

Global Corruption Barometer 2013:

When a person talks about corruption, it usually gets restricted to corrupt practices in the Public Sector. Any such issue involving Business, Healthcare, Education and even Judiciary, Media and NGOs are considered at best as misdemeanor, if not minor aberrations.

In this context it is worth mentioning that ‘Transparency International’ has released Global Corruption Barometer 2013 recently.  This ‘2013 Barometer’ is the world’s largest public opinion survey on corruption. It surveyed 114,000 people in 107 countries.

The reported global findings of this survey, which indicate a general lack of confidence in the institutions tasked to fight corruption, is as follows:

  • More than one in two people thinks corruption in their country has worsened in the last two years.
  • 54 per cent of people surveyed believe their governments’ efforts to fight corruption are ineffective.
  • 27 percent of respondents have paid a bribe when accessing public services and institutions in the last 12 months, revealing no improvement from previous surveys.
  • In 51 countries around the world, political parties are seen as the most corrupt institutions.
  • In 36 countries, people view the police most corrupt, in 20 countries they view the judiciary as most corrupt.
  • 54 percent of respondents think that the government in their country is run by special interests.

Situation alarming in India:

However, in India, the situation is much worse. Besides political parties, police and legislature, institutions like, Health Systems, Business, Judiciary, NGOs and even Media smack of high level of corruption, as follows:

No: Institutions Bribe Quotient %
1. Political Parties 86
2. Police 75
3. Legislature 65
4. Education 61
5. Health Systems 56
6. Business 50
7. Judiciary 45
8. Religious Bodies 44
9. Media 41
10. NGO 30
11. Military 20

Moreover, as per the report, approximately one out of four people paid a bribe globally in 2012, while in India, the bribe-paying rate was twice, with a little over one out of two people paying a bribe. Based on this indicator alone India occupies 94th rank out of 107 countries.

Coming back to healthcare in India, manifestations of high level corruptions in this critical area taken together with the same, as reported for its close connects like, as follows, are indeed alarming:

  • Business houses (include pharma companies)
  • Education (produces doctors, nurses etc.) 
  • Judiciary (also resolves various pharma disputes) 
  • Media (help creating unbiased public opinion) 
  • NGOs (takes care of Patients’ interest) 

The prevailing situation is highly disturbing, as any meaningful reform measures in the healthcare space of India could be effectively blunted, if not negated, by influencing related corrupt institutions.

It is important to note that bribery in the Indian healthcare sector was as rampant as Education and Judiciary in 2012, as follows:

No. Sector Bribe Paid in 2012 %
1. Police 62
2. Registry & Permits 61
3. Land 50
4. Utilities 48
5. Education 48
6. Tax Revenue 41
7. Judiciary 36
8. Health 34

Source: Global Corruption Barometer 2013

Where there’s smoke, there’s fire:

All these numbers vindicate the well-known dictum ‘where there’s smoke, there’s fire’ for the healthcare sector, in general, and the pharmaceutical sector, in particular, of India.

Bribery and corruption appear to have emerged as the key compliance related issues in the pharma sector. A report indicates that this is mainly due to manipulable environment in the pharma industry, just like in many other sectors as mentioned above.

Such manipulations could range from influencing drug procurement prices in return for kickbacks, giving expensive freebies to the medical practitioners in return of specific drug prescriptions, and even making regional regulatory bodies to provide favorable reports overlooking blatant malpractices.

High level of tolerance:

KPMG Fraud Survey Report 2012 also highlights, though bribery and corruption continues to be an issue, pharma industry shows reluctance to discuss it openly. Moreover, close to 70 per cent of respondents surveyed said, they faced no significant threats from such issues.

The report also indicated, around 72 per cent of respondents expressed that their respective companies have in place a robust mechanism to address bribery and corruption. However, only few respondents expressed inclination to explain such in-house mechanisms. This vindicates the point of high levels of institutional tolerance to bribery and corruption in the pharmaceutical sector of India, just like in many other countries.

“Collusive nexus”:

Even a Parliamentary Standing Committee in its findings reportedly indicted India’s top drug regulatory agency for violating laws and collusion with pharmaceutical companies to approve medicines without clinical trials with the following remark:

“There is sufficient evidence on record to conclude that there is collusive nexus between drug manufacturers, some functionaries of CDSCO and some medical experts.”

A Research Scientist fumes:

Following is a reported comment of a research scientist on corruption and bribery in the pharmaceutical industry of India:

“It would not make me happy, to put it mildly, to think of a drug that I’d had a part in discovered being flogged via sleazy vacation offers and sets of cookware dumped on a doctor’s office floor.”

Where pharma and political slugfests unite:

This short video clip captures one of too many pharma slugfests given a very high level and fiery political dimension in the global pharma land.

Conclusion:

As we have seen in the ‘Global Corruption Barometer 2013’, the respondents regarded almost all key institutions and industrial sectors in India as being corrupt or extremely corrupt.

As per the above report, corruption seems to have engulfed the private sector too, and alarmingly has not spared even the ‘healthcare system’ at large , as it quite prominently shows up in the ‘Corruption Barometer 2013’. 

As deliberated above, some ‘third parties’ of any type, working within the pharmaceutical value chain, could well be the fountain heads of many types of corruptions, as reported in China. They should be put under careful vigil of the regulators, placed under magnifying glasses of scrutiny and the rogues must quickly be brought to justice wherever and whenever there are violations. A report stating, Chinese administration has decided to punish 39 hospital employees for taking illegal kickbacks from pharmaceutical companies as a part of country’s widening investigation against pharma corruption, would justify this point.

That said, the task in hand is much tougher. On the one hand an Indian Parliamentary Panel observes that both regulators and the pharma companies are hand in glove to fuel corruption, instead of dousing the fire.

On the other hand, the global pharma industry has been accusing the Indian government of ‘protectionism’, ‘lack of transparency/predictability in its policy measures’ and ‘draconian IP laws’.

In the midst of all these cacophony, haven’t the stakeholders and the public at large, with exposure to contextual information, started pondering:

Gosh! in the slugfest on the pharma land, isn’t ‘The Pot Calling the Kettle Black?’

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.

 

FDC Saga: Defiant Manufacturers, Sloppy Regulators and Humongous Inaction

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“TO SIN BY SILENCE WHEN THEY SHOULD PROTEST MAKES COWARDS OF MEN”       – Abraham Lincoln

The ghost of untested, irrational and even of bizarre kind of Fixed Dose Combination (FDC) drugs, which continue to be launched, promoted, prescribed and sold freely across the length and breadth of India, has started haunting the Ministry of Health of India, yet again, in 2013. 

Though the issue originated decades ago, in 1988 appropriate ‘Rule’ of the Drugs and Cosmetics Act of India was amended suitably to have a firm regulatory grip over this situation. Despite this much awaited amendment, the situation almost went astray with incessant market entry of a large number untested FDC medicines of dubious medical rationale.

A free for all situation, as it were, in the FDC arena, continued to be facilitated by blatant laxity on the part of, especially, the state drug regulators by allowing unfettered market entry of such drugs, ignoring the CDSCO directive.

On the other hand, the Central Drugs Standard Control Organization (CDSCO), despite its statutory powers,  continued to suffer from humongous inaction untill the issue resurfaced again in 2007 and then of course, now in 2013.

The WHO Model:

The 2005 ʹProcedure to update and disseminate the WHO Model List of Essential Medicines, Criteria for Selection’ includes the following statement regarding Fixed Dose Combination products (FDCs):

ʺMost essential medicines should be formulated as single compounds. Fixed‐dose combination products are selected only when the combination has a proven advantage over single compounds administered separately in therapeutic effect, safety, and adherence or in delaying the development of drug resistance in malaria, tuberculosis and HIV/ AIDS.ʺ

Thus, FDCs:

  • Need to demonstrate clinical efficacy and safety beyond the individual drugs when given alone.
  • Need to ‘demonstrate bioequivalence of the single combined dose unit with the components administered in the same doses separately but concomitantly’.

‘Adherence’ aspect of WHO Model for FDCs is also important. Problems with ‘adherence’ could lead to inadequate and inconsistent dosing, which in turn could lead to development of drug resistance.

With robust and unquestionable medical rationale, FDCs are expected to provide superior efficacy and improved compliance without causing any untoward risk to patients.

A major disadvantage:

However, one of the major disadvantages with the FDCs is lack of flexibility in adjusting dose of individual ingredients, even if it is required for some patients. Internationally, most popular example is the FDCs of antiretroviral drugs for HIV infected patients like, Combivir, Trzivir, Kaletra etc.

Interestingly, in India there are FDCs for almost all disease areas from allergic disorders to Wolf-Parkinson-White syndrome (exaggerated), as it were.

Market attractiveness for FDCs in India: 

The domestic market for FDCs is very large and growing much faster, in sharp contrast to the western world. The following table will vindicate this point:

% Share

Drug

2008

2009

2010

2011

Plain

55

55

55

54
Combinations

45

45

45

46

Domestic Market: USD 13 Billion; MAT Apr 2013

Source:IMS

Thus, because of growing market demand, pharmaceutical companies in India tend to market FDCs of all different permutations and combination, at times even crossing the line of any ‘sound medical rationale’. For this reason, we find in the website of ‘Central Drugs Standard Control Organization’ (CDSCO), the banned list of so many FDCs.

A messy regulatory situation:

Introduction of new FDCs does not only warrant a ‘sound medical rationale’ but also ‘strict conformance to all prescribed regulatory requirements’ for patients’ interest. 

To check unfettered market introduction of potentially harmful FDCs, the Ministry of Health issued a Notification in September 1988, including FDCs in Rule 122 E of the Drugs & Cosmetics Rules (D&CR) 1945.

In effect, it removed the powers of the State FDAs to give manufacturing or marketing approval of FDCs. After the notification was issued, all manufacturers/marketers of all new FDCs are required to apply only to the Drug Controller General of India (DCGI) under Rule 122E of the D&CR 1945 as a new drug, along with the stipulated fees by way of a Treasury Challan.

Since this entire process entails appropriate regulatory data generation, besides  time and expenses involved, the above ‘Rule’ was continuously and deliberately broken and manufacturing and marketing approvals for various types of FDCs falling under ‘new drug’ category were regularly sought and granted by the State Drug Controllers.

Many believe that the State FDAs were equally responsible for knowingly flouting the Law, as were the pharmaceutical manufacturers.

Patients’ safety – the foremost concern:

Despite serious concerns expressed by a Parliamentary Standing Committee, this complicity resulted in the market being flooded with ‘irrational combinations’ which posed a real threat to patients’ interest and safety. The State FDAs were reminded of the notification by the earlier DCGI.

294 FDCs were banned by the DCGI in 2007. Thereafter, the important issue of patients’ interest and safety got converted into a legal quagmire, as many FDC manufacturers chose to go to the court of law to protect their business interest and also managed to obtain a ‘Stay’ order from the Madras High Court. The matter is still subjudice.

Be that as it may, those 294 FDCs banned by the Ministry of Health of India on health and safety grounds continue to be promoted, prescribed and sold to patients across India without any hindrance, whatsoever.  

Untangling the messy knot:

As the issue got entangled into prolonged litigations, the CDSCO took initiative of resolving this contentious issue again in 2009 with the help of an expert committee, involving the manufacturers.

This subcommittee cleared 48 FDCs under ‘similar FDCs already approved’, after discussing the merits and demerits, including pharmacodynamics, pharmacokinetics, side effects, dosage, medical rationale etc. of each ingredient and the combinations. The decision of the Sub Committee was then submitted to the Drug Technical Advisory Board (DTAB).

After formal approval of DTAB, these combinations are construed to be new drugs and any company wishing to market/manufacture the formulation would require submitting its Application in Form 44 to the DCGI to get approval in Form 45.

This decision was expected to send a clear signal to all concerned that resorting to any form of shortcuts to bypass strict adherence to prescribed regulatory requirements, could seriously jeopardize patients’ interest and safety. The same process was subsequently followed for the balance 142 FDCs, as well.

Thereafter, a special committee was again appointed by the CDSCO in 2013 to look into this matter in a holistic way. However, such sporadic knee-jerk reactions have failed to deliver any tangible results in this area – not just yet.

The saga continues:

Even after the above critical decision of the DTAB the saga still continues.

In March 2013, by a written reply, the Minister for Health and Family Welfare reportedly informed the Lok Sabha (the lower House of the Parliament) that in twenty three cases of new FDC, licenses have been granted by the State Licensing Authorities (SLAs) without the mandatory approval of the DCGI and action will be taken in all these cases.

However, no one seems to know, as yet, what action the Government has taken against those errant officials.

Current scenario:

Recently, the Directorate General of Health Services (DGHS) by a notification to State Drug Controllers has reportedly ordered all manufacturers of new FDC products, licensed locally before October 2012 without CDSCO permission, to submit safety and efficacy data prior to 30 August 2013.

This decision of DGHS has created a furore within the concerned FDC manufacturers, yet again, the possible outcome of which is yet to be ascertained.

The State Drug Controllers had issued manufacturing licenses for these FDCs prior to October 2012. At that time concerned manufacturers were given 18 months time period to prove efficacy and safety of these medicines to the DCGI. Regrettably, as per the above report, the DCGI has confirmed that he has received hardly any response from the FDC manufacturers till date on this regulatory requirement.

CDSCO has also stated that manufacturers, who will fail to submit the required data by the deadline run the risk of having their products banned from the market.

Before this, the State Drug Controllers were informed about this requirement on January 15, 2013.

At this point it is worth mentioning, the DCGI in October 2012 had reportedly also barred the State Drug Controllers from granting manufacturing licenses to pharmaceutical companies under brand names of the drugs, directing them to strictly issue licenses under generic name of the molecule. Additionally, he also asked the state licensing authorities not to grant licenses to combination drugs, which are technically ‘new drugs’ and fall within the domain of DCGI only.

Conclusion:

This logjam with FDCs certainly cannot continue in perpetuity, neither should such regulatory sloppiness be acceptable to any right thinking stakeholder.

All blatant violations of Drugs and Cosmetics Act of India must be stopped forthwith and the violators be brought to justice without delay. Patients’ health interest, as required by the drug regulators, is non-negotiable.

The order of DGHS asking all manufacturers of new FDCs, licensed locally before October 2012 without CDSCO permission, to submit safety and efficacy data prior to 30 August 2013, should not follow recently reported Pioglitazone type of volte face, once again, under similar outside pressure.

It is high time now for the Government to bring the unending saga of  irrational and harmful FDCs, orchestrated by defiant manufacturers, encouraged by sloppy regulators and catalyzed by humongous systemic inaction, to its logical conclusion, for patients’ sake. 

By: Tapan J. Ray

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

 

 

Pharma Innovation Absolutely Critical: But NOT Shorn from Ethics, Propriety, Compliance and Values

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Significant value added innovation is the bedrock of progress of the pharmaceutical industry and is essential for the patients. This is a hard fact.

However, this current buzzword – ‘innovation’ can in no way be shorn from soft business necessities like, ethics, propriety, compliance and values… not just for longer term sustainability of business, but more in the larger interest of patients and patient groups.

Most importantly, ‘ethics, propriety, compliance and values’ are not meant for mere display  in the corporate websites like, any other business showpieces. These should neither be leveraged to create a false positive impression in the minds of the stakeholders with frequent PR blitzkriegs.

The creators of these soft ‘X factors’ are now being increasingly hauled up for gross violations of the same by the Governments in various parts of the world .These are not just legal issues. The net impact of all such acts goes much beyond.

In this article, I shall deliberate on these continuing and annoying issues both in global and local perspectives, quoting relevant examples at random.

The sole purpose of my argument is to drive home that all such repeated gross violations, as reported in the media, go against patients’ interests, directly or indirectly. None of these incidents, in any way, can be negated with stories of great innovations or with any other make of craftily designed shields.

Under increasing scrutiny in the developed world:

Ethics, propriety and business value standards of big pharma, besides various types of legal compliance, are coming under increasing stakeholders’ scrutiny, especially in the developed markets of the world.

Very frequently media reports from across the world, highlight serous indictments of the Government and even judiciary for bribery, corrupt business practices and other unbecoming conduct, aimed at the the global mascot for healthcare.

It is indeed flabbergasting to note that more and more corporates, with all guns blazing at the same time, publicize with equal zest various initiatives being taken by them to uphold high ethical standards and business practices, if not propriety, as the juggernaut keeps on moving forward, unabated.

The scope of ‘ethics and propriety’:

The scope of ‘ethical business conducts, propriety and value standards’ of a company usually encompasses the following, among many others:

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

That said, such scope should not be restricted to the top management, but must be allowed to percolate downwards in a structured manner, looking beyond the legal and regulatory boundaries.

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

‘Business Ethics and Values’ in the globalized economy:

Globalization of business makes the process of formulating the ‘codes of ethics and values’ indeed very challenging for many organizations in many ways. This is mainly because, the cultural differences at times create a conflict on ethics and values involving different countries.

For this purpose, many business organizations prefer to interact with the cultural and religious leaders in the foreign countries, mainly to ascertain what really drives culturally diverse people to act in certain ways.

With the wealth of knowledge of the local customs and people, the cultural and religious leaders can help an organization to unify the code of ethics and values of the globalized business.

Such leaders can also help identifying the ‘common meeting ground of minds’ from a specific country perspective, after carefully assessing the cultural differences, which are difficult to resolve in the near term.

The ‘common meeting ground of minds’ within a given society, thus worked out, could form the bedrock to initiate further steps to strengthen global business standards of ethics and values of an organization.

OECD with USA started early enacting ‘Foreign Corrupt Practices Act (FCPA)’: 

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

This Act marked the early beginnings of ethical compliance program in the United States and disallows the US companies from paying, offering to pay or authorizing to pay money or anything of value either directly or through third parties or middlemen. FCPA currently has significant impact on the way American companies are required to run their business, especially in the foreign land.

A dichotomy exists with ‘Grease Payment’:

OECD classified ‘Grease payment’ as “facilitating one, if it is paid to government employees to speed up an administrative process where the outcome is already pre-determined.”

In the FCPA of the US, ‘Grease Payment’, has been defined as “a payment to a foreign official, political party or party official for ‘routine governmental action,’ such as processing papers, issuing permits, and other actions of an official, in order to expedite performance of duties of non-discretionary nature, i.e., which they are already bound to perform. The payment is not intended to influence the outcome of the official’s action, only its timing.”

Many observers opine, ‘Grease Payments’ is an absolute dichotomy to the overall US policy for ethical standards and against corruption.

Currently besides US, only Canada, Australia, New Zealand and South Korea are the countries that permit ‘Grease payments’.

Notwithstanding, the governments of the US and four other countries allow companies to keep doing business without undue delay by making ‘Grease Payments’ to the lower government officials, such payments are considered illegal in most other countries, in which they are paid, including India.

In India such a business practice is viewed as bribery, which is not only perceived as unethical and immoral, but also a criminal offense under the law of the land. Even otherwise, right or wrong, ‘Grease Payments’ are viewed by a vast majority of the population as a morally questionable standard of ‘business conduct’.

Many companies are setting-up the ethical business standards globally:

While visiting the website of especially the large global and local companies, one finds that all these companies, barring a very few exceptions, have already put in place a comprehensive ‘code of business ethics and values’. Some of these companies have also put in place dedicated code compliance officers across the globe.

‘Practice as you preach’:

Despite all these commendable initiatives towards establishing corporate codes of business ethics and values, the moot question that keeps haunting many times and again: “Do all these companies ‘practice what they preach’ in real life?”

Instances are too many for breach in ethics, propriety and value standards:

The media is now increasingly reporting such instances of violations both locally and globally.

Some Indian examples: (At random, not in a chronological order)

Criminal drug regulatory manipulation:

One of India’s top pharma players reportedly will pay a record fine of US$ 500 million in the US for lying to officials and selling badly made generic drugs.

The company has pleaded guilty to improper manufacturing, storing and testing of drugs, closing a year long civil and criminal investigation into the matter.

Compensation for deaths related to Clinical Trials not paid:

In 2011 the Drug Controller General of India (DCGI) reportedly summoned nine pharma companies on June 6 to question them on the amount of compensation they have decided to pay the ‘victims of their clinical trials’, which is a mandatory part of any clinical trial, or else all other trials of these nine companies going on at that time or yet to start, will not be allowed.

Clinical Trial is another area of pharmaceutical business, especially in the Indian context, where more often than not, issues related to ethics and values are being raised. In an article titled, ‘Clinical trials in India: ethical concerns’ published by the World Health Organization (WHO) following observations have been made:

“The latest developments in India reflect a concerted effort on the part of the global public health community to push clinical trials issues to the fore in the wake of several high-profile cases in which pharmaceutical companies were shown to be withholding information from regulators.”

Alleged marketing malpractices:

In 2010, the Parliamentary Standing committee on Health reportedly expressed concern that the “evil practice” of inducement of doctors by the pharma players continues.

Congress MP Jyoti Mirdha sent a bunch of photocopies of air tickets to Prime Minister Manmohan Singh to claim that doctors and their families were ‘beating the scorching Indian summer’ with a trip to England and Scotland, courtesy a pharmaceutical company.

30 family members of 11 doctors from all over the country reportedly enjoyed the hospitality of the concerned company.

Department of Pharmaceuticals reportedly roped in the Revenue Department under Finance Ministry to work out methods to link the money trail to offending companies.

Some global examples: (At random, not in a chronological order)

United States Government sues a Swiss pharma major for alleged multi-million dollar kickbacks:

The United States Government very recently reportedly announced its second civil fraud lawsuit against a Swiss drug major accusing the company of paying multimillion-dollar kickbacks to doctors in exchange for prescribing its drugs.

Fraud fines: 

Two largest drug makers of the world reportedly paid US$ 8 billion in fraud fines for repeatedly defrauding Medicare and Medicaid in the USA over the past decade.

Denigrating generics:

Another global pharma major reportedly has been recently fined US$ 52.8 million for denigrating generic copies.

Drug overcharging: 

Another global drug major reportedly stirred an ethics scandal and paid US$ 499 million towards overcharging the US government for medicines.

Bribing doctors:

  • A top global pharma player reportedly paid total US$ 60.2 million to settle a federal investigation on alleged bribing overseas doctors and other health officials to prescribe medicines. 
  • Another European pharma group reportedly was fined US$ 3bn after admitting bribing doctors and encouraging the prescription of unsuitable antidepressants to children.

 Concealment of important facts:

A judge in USA reportedly ordered a large pharma company to pay more than $1.2 billion in fines after a jury found that the company had minimized or concealed the dangers associated with an antipsychotic drug.

Off-label marketing:

  • A Swiss pharma major reportedly agreed to pay US$ 422.5 million to resolve an investigation into alleged off-label promotion of a drug, as well as civil allegations relating to five other products.
  • The U.S. Justice Department reportedly hit an American drug major with a US$ 322 million penalty for illegally promoting a drug before it received approval by the Food and Drug Administration for that condition.

Other illegal marketing practices:

Yet another European pharma group was reportedly fined USD 34 million by a court in the United States for illegal marketing practices for its medicine.

‘Illegal’ Clinical Trials: 

It was revealed on May 17, 2013 that global pharmaceutical companies reportedly paid millions of pounds to former communist East Germany to use more that 50,000 patients in state-run hospitals as unwitting guinea pigs for drug tests in which several people died.

All these are some random examples of alleged malpractices associated with ‘ethics, propriety, compliance and values’ in the pharma world, both local and global.

Middle and lower management becomes the ‘fall guy’: 

It is interesting to note that whenever, such incidents take place, the fingers are usually pointed towards the middle or lower management cadre of the corporations concerned for violations and non-compliance.

Corporate or top management ownership of such seemingly deplorable incidents still remains confined within a ‘black box’ and probably a distant reality.

Public perception is not encouraging:

In the pharmaceutical sector all over the world, many business practices have still remained very contentious, despite many well-publicized attempts of self-regulation by the industry. The flow of complaints for alleged unethical business practices have not slowed down either, across the world, even after so many years of self-regulation, penalty and severe indictments.

Government apathy in India:

Nearer home, the Government apathy, despite being pressured by the respective Parliamentary Committees and sometimes including judiciary in repose to Public Interest Litigations (PIL), has indeed been appalling, thus far.

The Department of Pharmaceuticals of the Government of India has already circulated a draft ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’ for stakeholders to comment on it. The final UCPMP, when it comes into force, if not implemented by the pharmaceutical players in its ‘letter and spirit’, may attract government’s ire in form of strong doses of regulatory measures. However, the moot question remains, will the UCPMP come at all?

Similar issues are there in drug regulatory areas falling under the Ministry of Health, especially in the clinical trial area. In this matter, very fortunately Supreme Court has intervened against a Public Interest Litigation (PIL). Thus, one can expect to witness some tangible steps being taken in this area, sooner than later.

Walking the talk:

The need to formulate and more importantly effectively implement ‘Codes of Business Ethics & Values’ should gain increasing relevance in the globalized business environment, including in India.

It appears from the media reports, many companies across the world are increasingly resorting to ‘unethical behavior, impropriety and business malpractices’ due to intense pressure for business performance, as demanded primarily by the stock markets.

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

Conclusion:

Pharmaceutical innovation will continue to remain the launch pad for the industry growth in the battle against diseases of all types, forms and severity. However, that alone should in no way deserve to receive encouragement from any corner shorn from Ethics, Propriety, Compliance and Values.

Balancing pharmaceutical innovation with Ethics, Propriety, Compliance and Values, I reckon, will in turn help striking a right balance, to a considerable extent, between pharmaceutical innovation and public health interest for everyones’ satisfaction, mostly the patients.

Being equipped with the wherewithal to bring new drugs for the global population and being the fundamental source of growth momentum for the generic drug industry of the world, the innovator companies are expected to lead by setting examples in this area too. After all, as the saying goes:

“Caesar’s wife ought to be above suspicion. ‥Caesar himself ought to be so too”.

By: Tapan J. Ray

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

 

 

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

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

These specialist doctors argued:

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

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

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

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

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

Examples of astonishingly high drug prices:

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

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

World’s Most Expensive Medicines

No. Name Disease

Price US$ /Year
1. ACTH Infantile spasm

13,800,00
2. Elaprase Hunter Syndrome

657,000
3. Soliris Paroxysmal nocturnal hemoglobinuria

409,500
4. Nagalazyme Maroteaux-Lamy Syndrome

375,000
5. Folotyn T-Cell Lymphoma

360,000
6. Cinryze Hereditary Angioedema

350,000
7. Myozyme Pompe

300,000
8. Arcalyst Cold Auto-Inflammatory Syndrome

250,000
9. Ceredase / Cerezyme Gaucher Disease

200,000
10. Fabrazyme Fabry Disease

200,000

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

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

Protests against high drug prices for rare diseases:

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

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

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

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

Yet another protest prompted cancer drug price reduction by half:

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

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

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

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

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

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

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

Protests spreading beyond cancer and rare disease treatment:

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

Pressure on diabetic and cardiac drug prices:

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

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

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

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

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

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

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

No. Company

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

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

How high is really the high R&D cost?

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

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

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

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

An interesting pricing model prescribed:

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

The author suggests:

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

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

Conclusion:

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

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

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

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

By: Tapan J. Ray

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

 

 

 

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

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

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

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

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

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

• Stimulate healthy competition with the branded sector

• Deliver savings to national health bills

• Are high quality products

Generic companies also innovate:

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

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

Continuous growth of generic drug industry is critical:

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

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

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

Quality perception for generic drugs:

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

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

The market:

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

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

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

BRIC Countries strongly defend generic drugs:

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

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

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

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

India is surging ahead:      

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

Top 10 Fastest Growing Generic Companies of the World:

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

(Source: FiercePharma)

India the pharmacy of the developing world:

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

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

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

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

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

India tops the chart for ANDAs:

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

Year

Global

India

India’s Share %

2007

492

133

24.1

2008

483

143

27.9

2009

419

132

31.3

2010

419

142

34.0

2011

431

144

33.4

2012

476

178

37.4

Source: Pharmabiz, January 7, 2013 / US FDA

India tops the Chart in DMFs also:

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

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

Source: Pharma Times, August 2012

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

India not loosing its R&D Focus:

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

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

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

Is the “west pressurizing India to change tack?”

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

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

The triggering factor:

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

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

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

Conclusion:

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

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

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

By: Tapan J. Ray

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