Author Archives: Tapan Ray

Is Drug Price Control The Key Growth Barrier For Indian Pharma Industry?

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The corollary of the above headline could well be: “Are drug price hikes the key growth driver for the Indian Pharmaceutical Market (IPM)?”

Whenever the first question, as appears in the headline of this article: “Is drug price control a key barrier to growth of the IPM?”, is asked to the pharma players, irrespective of whether they are domestic companies or multinationals (MNCs), the answer in unison would quite expectedly be a full-throated ‘yes’. Various articles published in the media, including some editorials too, also seem to be on the same page, with this specific view. 

Likewise, if the corollary of the above question: “Are drug price hikes the key growth driver for the IPM?”, is put before this same target audience, most of them, if not all, would expectedly reply that ‘in the drug price control regime, this question does not arise at all, as IPM has been primarily a volume driven growth story.’ This answer gives a feel that the the entire or a major part of the IPM is under Government ‘price control’, which in fact is far from reality

Recently, a pharma industry association sponsored ‘Research Study’, conducted by an international market research organization also became quite vocal with similar conclusion on drug price control in India. This study, released on July 2015, categorically highlights ‘price control is neither an effective nor sustainable strategy for improving access to medicines for Indian patients’. The report also underscores: “The consumption of price-controlled drugs in rural areas has decreased by 7 percent over the past two years, while that of non-price controlled products has risen by 5 percent.”

I argued on the fragility of the above report in this Blog on September 7, 2015, in an article titled, “Drug Price Control in India: A Fresh Advocacy With Blunt Edges”.

Nonetheless, in this article, going beyond the above study, I shall try to put across my own perspective on both the questions raised above, primarily based on the last 12 months retail data of well-respected AIOCD Pharmasofttech AWACS Pvt. Ltd. 

Pharma product categories from ‘Price Control’ perspective:

To put this discussion in right perspective, following AIOCD-AWACS’ monthly pharma retail audit reports, I shall divide the pharma products in India into three broad categories, as follows:

  • Products included under Drug Price Control Order  2013 (DPCO 2013), which are featuring in the National List of Essential Medicines 2011 (NLEM 2011) 
  • Products not featuring in NLEM 2011, but included in Price Control under Para 19 of DPCO 2013
  • Products outside the ambit of any drug price control and can be priced by the respective drug manufacturers, whatever they deem appropriate

The span of price controlled medicines would currently be around 18 percent of the IPM. Consequently, the drugs falling under free-pricing category would be the balance 82 percent of the total market. Hence, the maximum chunk of the IPM constitutes of those drugs for which there is virtually no price control existing in India.

According to the following table, since, at least the last one-year period, the common key growth driver for all category of drugs, irrespective of whether these are under ‘price control’ or ‘outside price control, is price increase in varying percentages: 

Value vs Volume Growth (October 2014 to September 2015):

Month DPCO Product      Gr% Non-DPCO Products Gr% Non-NLEM Para 19 Gr% IPM
2015 Value Volume Value Volume Value Volume Value Volume
September 2.8 1.2 10.9 1.1 11.5 9.0 9.9 1.4
August 3.3 (2.7) 14.5 2.4 15.2 13.7 13.0 1.6
July 5.1 (0.6) 14.2 4.1 11.8 9.9 12.9 3.3
June 5.6 (0.1) 16.2 6.2 14.6 11.7 14.8 5.0
May 5.3 (0.3) 12.1 3.4 7.2 4.3 11.0 2.6
April 11.1 5.3 18.4 9.6 11.9 9.6 17.2 8.7
March 17.6 9.5 21.7 13.0 15.6 13.2 20.9 12.2
Feb 13.9 7.6 20.0 10.1 14.4 9.9 18.9 9.6
Jan 6.9 1.8 14.0 3.7 NA NA 12.7 3.3
2014    
December 8.0 0.7 14.8 3.2 NA NA 13.6 2.7
November 3.1 (3.4) 12.6 0.3 NA NA 10.9 (0.4)
October (2.4) (5.7) 6.8 (1.7) NA NA 5.2 (2.6) 

Source: Monthly Retail Audit of AIOCD Pharmasofttech AWACS Pvt. Ltd 

Does ‘free drug-pricing’ help improving consumption?

I would not reckon so, though the pharma industry association sponsored above study virtually suggests that ‘free pricing’ of drugs would help improve medicine consumption in India, leading to high volume growth.

As stated earlier, the above report of IMS Health highlights, “The consumption of price-controlled drugs in rural areas has decreased by 7 percent over the past two years, while that of non-price controlled products has risen by 5 percent.”

On this finding, very humbly, I would raise a counter question. If only free pricing of drugs could help increasing volume growth through higher consumption, why would then the ‘price-controlled non-NLEM drugs under para 19’, as shown in the above table, have generally recorded higher volume growth than even those drugs, which are outside any ‘price control’? Or in other words, why is the consumption of these types of ‘price controlled’ drugs increasing so significantly, outstripping the same even for drugs with free pricing?

The right answers to these questions lie somewhere else, which I would touch upon now.

Are many NLEM 2011 drugs no longer in supply?

DPCO 2013 came into effect from from May 15, 2013. Much before that, NLEM 2011 was put in place with a promise that all the drugs featuring in that list would come under ‘price control’, as directed earlier by the Supreme Court of India.  Even at that time, it was widely reported by the media that most of the drugs featuring in the NLEM 2011 are either old or may not be in supply when DPCO 2013 would be made effective. The reports also explained its reasons. 

To give an example, a November 6, 2013 media report stated: “While the government is still in the process of fully implementing the new prices fixed for 348 essential medicines, it has realized that most of these are no longer in supply. This is because companies have already started manufacturing many of these drugs with either special delivery mechanism (an improved and fast acting version of the basic formulation) or in combination with other ingredients, circumventing price control.”

Just to give a feel of these changes, the current NLEM 2011 does not cover many Fixed-Dose Combinations (FDC) of drugs. This is important, as close to 60 percent of the total IPM constitutes of FDCs. Currently, FDCs of lots of drugs for tuberculosis, diabetes and hypertension and many other chronic and acute disease conditions, which are not featuring in the NLEM 201, are very frequently being prescribed in the country. Thus, the decision of keeping most of the popular FDCs outside the ambit of NLEM 2011 is rather strange.

Moreover, a 500 mg paracetamol tablet is under price control being in the NLEM 2011, but its 650 mg strength is not. There are many such examples.

These glaring loopholes in the NLEM 2011 pave the way for switching over to non-NLEM formulations of the same molecules, evading DPCO 2013. Many experts articulated, this process began just after the announcement of NLEM 2011 and a lot of ground was covered in this direction before DPCO 2013 was made effective.

Intense sales promotion and marketing of the same molecule/molecules in different Avatars, in a planned manner, have already started making NLEM 2011 much less effective than what was contemplated earlier. 

Some examples:

As I said before, there would be umpteen number of instances of pharmaceutical companies planning to dodge the DPCO 2013 well in advance, commencing immediately after NLEM 2011 was announced. Nevertheless, I would give the following two examples as was reported by media, quoting FDA, Maharashtra:

1. GlaxoSmithKline (GSK) Consumer Healthcare having launched its new ‘Crocin Advance’ 500 mg with a higher price of Rs 30 for a strip of 15 tablets, planned to gradually withdraw its conventional price controlled Crocin 500 mg brand costing around Rs 14 for a strip of 15 tablets to patients. GSK Consumer Healthcare claimed that Crocin Advance is a new drug and therefore should be outside price control.

According to IMS Health data, ‘Crocin Advance’ achieved the fifth largest brand status among top Paracetamol branded generics, clocking a sales turnover of Rs 10.3 Crore during the last 12 months from its launch ending in February 2014. The issue was reportedly resolved at a later date with assertive intervention of National Pharmaceutical Pricing Authority (NPPA).

2. Some pharmaceutical companies reportedly started selling the anti-lipid drug Atorvastatin in dosage forms of 20 mg and 40 mg, which are outside price control, instead of its price controlled 10 mg dosage form.

Why DPCO 2013 drugs showing low volume growth?

From the above examples, if I put two and two together, the reason for DPCO 2013 drugs showing low volume growth becomes much clearer.

Such alleged manipulations are grossly illegal, as specified in the DPCO 2013 itself. Thus, resorting to illegal acts of making similar drugs available to patients at a much higher price by tweaking formulations, should just not attract specified punitive measures, but may also be construed as acting against health interest of Indian patients…findings of the above ‘research report’, notwithstanding, even if it is accepted on its face value.

In my view, because of such alleged manipulations, and many NLEM 2011 drugs being either old or not in supply, we find in the above table that the volume growth of ‘Price Controlled NLEM drugs’ is much less than ‘Price Controlled non-NLEM Para 19’ drugs. Interestingly, even ‘Out of Price Control’ drugs show lesser volume growth than ‘Price Controlled non-NLEM Para 19 drugs’.

Government decides to revise NLEM 2011:

The wave of general concerns expressed on the relevance of NLEM 2011 reached the law makers of the country too. Questions were also asked in the Parliament on this subject.

Driven by the stark reality and the hard facts, the Union Government decided to revise NLEM 2011. 

For this purpose, a ‘Core Committee of Experts’ under the Chairmanship of Dr. V.M Katoch, Secretary, Department of Health Research & Director General, Indian Council of Medical Research (ICMR), was formed in May 2014.

The minutes of the first and second meetings of the ‘Core Committee of Experts’, held on June 24, 2014 and July 2, 2014, respectively, were also made public. 

On May 5, 2015, the Union Minister for Chemicals and Fertilizers Ananth Kumar said in a written reply to the ‘Lok Sabha’ that “The revised NLEM would form the basis of number of medicines which would come under price control.” This revision is taking place in the context of contemporary knowledge of use of therapeutic products, the Minister added.

Would pharma sector grow faster sans ‘price control’?

If ‘drug price control’ is abolished in India, would pharma companies grow at a much faster rate in volume with commensurate increase in consumption, than what they have recorded during ‘limited price control’ regime in the country? This, in my view, is a matter of conjecture and could be a subject of wide speculation. I am saying this primarily due to the fact that India has emerged as one of the fastest growing global pharmaceutical market during uninterrupted ‘drug price control regime’ spanning over the last 45 years.

Nevertheless, going by the retail audit data from the above table, it may not be necessarily so. The data shows that volume growth of ‘out of price control’ drugs is not the highest, by any measure. On the contrary, it is much less than ‘price controlled drugs under para 19 of DPCO 2013′, which are mainly prescribed for non-infectious chronic diseases on a large scale.

I am referring to AIOCD-AWACS data for just the last 12 months, because of space constraint, but have gone through the same for the entire DPCO 2015 period, till September’15. The reason for my zeroing in on DPCO 2015 is for the three simple reasons:

- The span of price control in this regime is the least, even lesser than DPCO 1995, which was 20 percent. 

- It is much more liberal in its methodology of ‘Ceiling Price (CP)’ calculation, over any other previous DPCOs

- It has also a provision, for the first time ever, of automatic price increases every year for price controlled drugs, based on WPI.

A safeguard for patients?

Medicines enjoy the legal status of ‘essential commodities’ in India. Thus, many believe that ‘drug price control’ is a ‘pricing safeguard’ for Indian patients, especially for essential medicines and ‘out of expenses’ for drugs being as high as over 60 percent.

In the prevailing health care environment of India, the situation otherwise could even be possibly nightmarish. The key reason for the same has been attributed to ‘market failure’ by the Government, for most of the pharmaceutical products, where competition does not work. I discussed this issue in my article titled, “Does ‘Free-Market Economy’ Work For Branded Generic Drugs In India?” of April 27, 2015, in this Blog.

In India, ‘drug price control’ has successfully passed the intense scrutiny of the Supreme Court, along with its endorsement and approval. Any attempt of its retraction by any Government, without facing a tough challenge before the Apex Court, seems near impossible.

Conclusion: 

The fundamental reasons for overall low volume growth, or in other words, price-increase driven value growth of the IPM, I reckon, lie somewhere else, which could be a subject matter of a different debate altogether.

As I said in the past, IPM grew at an impressive speed consistently for decades, despite ‘drug price control’, and grumbling of the industry for the same. This high growth came from volume increase, price increase and new product introductions, the volume growth being the highest.

Most of the top 10 Indian pharma players, came into existence and grew so fast during the ‘drug price control’ regime. The  home-grown promoter of the numero-uno of the IPM league table, is now the second richest person of India. These are all generic pharma companies.

Generally speaking, Indian pharma shares even today attract more investors consistently than any other sector for such a long time. Granted that these companies are drug exporters too, but they all gained their critical mass in partly ‘price controlled’ Indian market. The criticality of the need for consistent growth in the domestic market, by the way, still remains absolutely relevant to all the pharma players in India, even today, despite…whatever.

Growth oriented overall Indian pharma scenario remaining quite the same, ‘drug price control’ with a current span of just around 18 percent of the IPM, can’t possibly be a growth barrier. Otherwise, how does one explain the highest volume growth of ‘price controlled non-NLEM drugs’, which is even more than ‘out of price-control drugs’?

Be that as it may, in my view, implementation of public funded ‘Universal Health Care (UHC)’ by the Indian Government, in any form or calling it by any other name, can possibly replace DPCO. Similar measures have been adopted by all the member countries of the ‘Organization for Economic Co-operation and Development (OECD)’ in this area, though following different paths, but nevertheless to attain the same goal.

Lamentably enough, the incumbent Government too has not ‘walked the talk’ on its number of assurances related to this core issue of health care in India.

Still, the hope lingers!

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.

 

Does India Produce ‘World Class’ Medicines, For All?

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India has already achieved a staggering number In terms of quantity or volume of generic medicines that it produces not just for India, but for many developed, developing and poorer countries, across the world. For this reason, India is popularly known as ‘The Pharmacy of The World’. No one questions this number at all, rather looks at India with a sense of admiration in this regard.

Nevertheless, for driving this volume growth trend further north, in a consistent and sustainable way, Indian pharma sector must ensure that its huge volume growth engine remains firmly placed on a solid bedrock of ‘world class’ drug quality, always. Any compromise in this crucial area, could strike a critical blow to this ‘tower of national pride’.

Ongoing several embarrassing incidents related to the drug manufacturing quality standards in India, are increasingly fueling the apprehension, whether or not India produces ‘World Class’ medicines for all patients across the world, independent of any other criteria, financial or otherwise. The debate has now taken an interesting turn, especially after near confirmation of this apprehension by the top drug regulator of India.

In this article, I shall discuss this important issue that hugely impacts all of us, giving my own perspective to it. Let me begin with one of the most recent incidents on the subject, involving the numero-uno of Indian pharmaceutical industry.

An overseas new product launch got prematurely aborted?

On September 25, 2015, by a Press Release, Sun Pharma Advanced Research Company Ltd. (SPARC) announced a major set back for the company. The set back may not be so much in terms of the company’s estimated revenue loss, but more on public perception across the world, about the manufacturing quality standards followed even by the top most pharma company of India.

SPARC made a public announcement through media that on March 2015 it had received a final approval from the Food and Drug Administration of the United States (USFDA) for the anti-epileptic drug – Elepsia XR (Levetiracetam extended-release tablets 1000 mg and 1500 mg). However, in the Complete Response letter (CRL) to the company’s New Drug Application (NDA) for the product, the USFDA has revoked its earlier approval, citing that the compliance status of the manufacturing facility was not acceptable on the date of approval. Elepsia XR is to be manufactured at Sun Pharmaceutical Industries Ltd (SPIL)’s Halol facility in Gujarat, the announcement said.

Sun Pharma had reportedly indicated in June 2015 that the Company had been working “very aggressively” to find partners for the product. It had “some advanced discussions” and aimed to launch the drug by the second half of fiscal 2016.

The international media lapped it up and reported this development with eye-catching headlines, one such was:

“India’s Sun Pharma research arm sees FDA nod for Elepsia XR yanked by FDA on manufacturing.”

Not a one-off isolated incident:

This matter can no way be treated as a one-off and an isolated incident, as it fits in well with a series of similar events, spanning over the last few years.

Looking at these disturbing adverse reports from the foreign drug regulators on the drug manufacturing quality standards in India, together with recent comments of the Indian drug regulator on the subject, serious health safety concerns on overall drug quality in the country, are being expressed now. The concern includes the local patients in India, as well.

Can the core issue be wished away?

Up until today, USFDA has altogether warned 39 manufacturing sites of 27 Indian pharma companies for breach of data integrity and not following specified manufacturing quality standards. The agency has also expressed that it treats these as potentially dangerous medicines for the consumption of patients in the US.

In 2015 alone, USFDA has reportedly detected such serious ‘short comings’ with 6 Indian drug makers, till September. A report from Financial Times (FT) states that the above numbers do not include the testing facilities facing sanctions from the European Medicines Agency (EMA) in the GVK Biosciences related cases or from the World Health Organizations (WHO).

What is most worrying, none can possibly still fathom, if these alleged ‘reprehensible’ manufacturing practices are restricted to just a few players or are all pervasive across the Indian drug industry.

When the foreign regulators, such as USFDA and Medicines and Healthcare Products Regulatory Agency (MHRA) of the United Kingdom (UK) continue raising the red flags on the manufacturing standards of the top pharma players of India, including the numero uno, a chilling sensation flows through the spine, as it were. The moot question that comes up: Are all the drugs manufactured in India safe for the local patients, offering desirable efficacy?

Keeping these in perspective, would it be prudent to wish away the drug quality related critical issues, raising a conspiracy theory against the US or EU or suspend discussions on any Foreign Trade Agreement (FTA)? I don’t reckon so, and would touch upon this point in course of my discussion below.

The murmur among the US doctors:

According to an article from Reuters of March 18, 2014, titled “Unease grows among US doctors over Indian drug quality”, some US doctors are also expressing concerns about the quality of generic drugs supplied by Indian manufacturers, following a flurry of recalls and ‘import bans’ by the USFDA.

This concern has been prompted by the fact that India supplies about 40 percent of generic and over-the-counter drugs used in the United States, making it the second-biggest supplier after Canada.

Not much complaint from the Indian doctors:

This is intriguing. Despite so much of furore of the regulatory agencies in the US and EU on the Indian drug quality standards, not much concern on the same has been expressed by the medical practitioners in India, just yet.

It appears, by and large, Indian doctors believe that branded generics are generally of good quality, and the quality of generics without a brand name is not as reliable, always.

This logic is beyond my comprehension. How come just fixing a brand name on a generic formulation makes it more acceptable in terms of quality, when both branded generics and generics without a brand name, have obtained the same regulatory approval from the same drug regulators in India and following the same regulatory process?

As you will see below, the situation has changed further now, especially after the admission of the DCGI about non-compliance of global manufacturing quality standards by majority of the formulation manufacturers in India, as reported by the media. The only silver lining to it is that whatever is being currently manufactured in India, presumably meets the regulators approval in conformance to the Drugs and Cosmetics Act of the country, without any credible data to the contrary.

Does India produce drugs of ‘World Class’ quality for all?

The key question that is being raised today: Does India produce ‘world class’ drugs and for all? This is mainly because, manufacturers of ‘world class’ drug quality always aim at competing for quality on the best global standards to remain competitive in the international markets, in all parameters. This should hold good even for the domestic Indian market, for all drugs, consumed by all the local patients, irrespective of their financial status.

A lurking fear keeps lingering, primarily apprehending that Indian drug manufacturing quality related issues are not confined only to the importers in the developed world, such as, the United States, European Union or Canada. There is no reason to vouch for either, that such gross violations are not taking place with the medicines consumed by the patients in India or in the poorer nations of Africa and other similar markets.

A recent international study on Indian drug quality:

The following study further aggravates the angst.

The September 2014 ‘Working Paper 20469’ of ‘The National Bureau of Economic Research (NBER)’ Cambridge, USA, titled “Poor Quality Drugs and Global Trade: A Pilot Study’, epitomizes the following:

  • Experts claim that some Indian drug manufacturers cut corners and make substandard drugs for markets with non-existent, under-developed or emerging regulatory oversight, notably Africa.

The study assessed the quality of 1470 antibiotic and tuberculosis drug samples that claim to be made in India and were sold in Africa, India, and five mid-income non-African countries and found:

      – 10.9 percent of these products fail a basic assessment of active pharmaceutical                  ingredients (API) 

       - The majority of the failures are substandard (7 percent) as they contain some correct          API but the amount of API is under-dosed.

        – The distribution of these substandard products is not random, they are more likely             to be found as unregistered products in Africa than in India or non-African                           countries.

Claiming that the findings are robust, the NBER study points towards one likely explanation that Indian pharmaceutical firms and/or their export intermediaries do indeed differentiate drug quality according to the destination of consumption.

Incomprehensible?

The above facts are alarming, especially when these flow from a survey report of a credible international institution. This is incomprehensible too, as all these are medicines, and are meant to be for relief or cure of ailments that the patients are suffering from, irrespective of whether they are from the developed, developing or poorer countries.

If it is still happening today, why are those manufacturers allowed by the Indian drug regulators to discriminate between the patients of the developed countries and the developing world, including India, to meet the same health care needs? This is absolutely cruel by any standard, undoubtedly.

‘As you sow, so shall you reap’:

Just as the above well-known proverb says that the actions or deeds repay in kind, reasonably frequent ‘import bans’ by the foreign drug regulators on drug quality norms, has probably prompted booming generic drug exports of Indian pharma now slowing down to US$15.3 billion in 2014-15, from US $14.84 billion in 2013-14.

Along side, these avoidable incidents have significantly dented India’s image as the ‘pharmacy of the world’, manufacturing affordable and high quality generic formulations for the patients across the world.

Indian drug regulator too now thinking afresh? 

Yet another relevant question comes up. What happens, if during treatment of serious ailments such drugs fail to act for inferior quality? How would one possibly know in India, whether a death has occurred due to unresponsive poor quality of drugs or on account of severity of the ailments? How helpless are the patients in such a situation?

This sad feeling gets even stronger, when well after a prolonged defense of the high quality of drugs manufactured in India, no less than the Drug Controller General of India (DCGI), airs his second thought on the same issue. This is vindicated by recent media reports on this subject.

On September 30, 2015, a media report stated that being virtually flustered by the USFDA and the drug regulators in the European Union, the Drug Controller General of India (DCGI) would place a proposal before the Ministry of Health, within the next six months, for an amendment to the existing pharmaceutical manufacturing laws under Drugs and Cosmetics Act, 1940, and Drugs and Cosmetics Rules, 1945, in order to ‘bring them on par with international standards’.

The DCGI now believes that this remedial measure would raise drug manufacturing standards in India in line with the global cGMP standards, recommended by the World Health Organization (WHO).

Currently, out of around 8,000 drug manufacturers in India, only 10 to15 percent are following the WHO guidelines, the report stated quoting the DCGI.

The new revelation further strengthens the apprehension about quality of drugs that Indian patients are consuming in the country with a strong hope for relief from the diseases that they suffer from.

The DCGI apparently admitted it, when he was quoted saying in the above report, “India has become a pharmacy of the world. So, we cannot live in isolation and will have to meet their expectations. Our system is in the process of improving.”

DCGI statement follows an important Government decision:

It is worth noting that the above comment of the DCGI comes close on the heels of an important Government decision in this regard.

On August 12, 2015, The Press Trust of India (PTI) reported that to facilitate domestic manufacture of quality medical products, the Cabinet Committee on Economic Affairs (CCEA) on that day approved a proposal of strengthening and upgrading the drug regulatory system both at the Central and state level. The committee approved a budget of of INR17.5 billion (US$270 million) on this account.

The up gradation and strengthening of the system will also include setting up of new laboratories and training academy for regulatory and drug testing officials, the report added.

Yet Another significant development:

On October 5, 2015, in yet another significant development in this direction, the Medicines and Healthcare products Regulatory Agency (MHRA) of the United Kingdom (UK), by a ‘Press Release’, announced signing of a Memorandum of Understanding (MOU) with the Central Drugs Standard Control Organization (CDSCO) of India.

This agreement will increase collaboration between India and UK in the area of medicines and medical devices with the aim of further improving public safety in both the countries. It is worth noting, around 25 percent of generic drugs consumed in the UK are made in India. Hence, the concern of MHRA over the safety of those medicines is understandable.

I wrote in this Blog on USFDA ‘Import Bans’ in my article of November 11, 2013, titled ‘USFDA ‘Import Bans’: The Malady Calls For Strong Bitter Pills.’

Conclusion:

A valid question that is being asked by many in India today, why the issues like, alleged cGMP non-compliance, data fudging and falsification of other documents, especially with USFDA, have multiplied suddenly over the last few years. Why not as many of such issues were raised by the USFDA before around 3 to 4 years?

This is primarily because, of late the inspectors from the USFDA have significantly increased their efforts to ensure the drug manufacturing facilities from where both generic Active Pharmaceutical Ingredients (API) and formulations are exported to the US, strictly follow the drug manufacturing standards, as stipulated by the USFDA. The fact that India supplies about 40 percent of generic and over-the-counter drugs currently used in the United States, has prompted this requirement to safeguard health safety of the American patients.

Such stringent USFDA audits commenced in 2012, when US Congress passed the FDA Safety and Innovation Act. This legislation, among others, requires the USFDA auditing all foreign facilities that make drugs for export to the US, as frequently as it does for the domestic drug manufacturing plants. Thereafter, we have seen a spurt in the USFDA inspections of the pharma manufacturing facilities in India, where from drugs are exported to the US. Hence, there does not seem to be any other credible ‘conspiracy theory’ on this issue.

As reported in ‘The New York Times’ of February 14, 2014, the same DCGI almost brushing aside the gravity of the situation arising out of repeated ‘import bans’, commented at that time, “If I have to follow US standards in inspecting facilities supplying to the Indian market, we will have to shut almost all of those.”

The top drug regulator seems to have changed his mind since then, and presumably is thinking differently now, as the Indian media very recently quoted the DCGI saying “India has become a pharmacy of the world. So, we cannot live in isolation and will have to meet their expectations. Our system is in the process of improving.”

This is a good omen, especially for the patients in India. If and when it gets translated into reality, with Kudos to the DCGI, we all would feel very proud saying, “The Pharmacy of the World now produces the World-Class drugs, for all” …God willing!

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.

Just 16% Of Indian Population Has Access To Free Or Partially-Free Health Care?

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Is health care currently a low priority area for the Government of India? Probably yes, and thus it is worth trying to fathom it out.

Besides planned frugal spending on overall public health in 2015-16, even as compared to the past trend, two other health related budgetary decisions of the Government are indeed baffling, at the very least.

As many of you, I too know that the incumbent Government in its first full-year budget of 2015-16 has sharply reduced the budgetary allocation on many important health related other projects, such as:

- Union budget allocation for the National Rural Drinking Water Program (NRDWP) that aims at providing safe drinking water to 20,000 villages and hamlets across India, has been drastically reduced this year. Curiously, this decision has been taken at a time, when India loses 200 million person days and Rs 36,600 crore every year due to water-related diseases.

- The Integrated Child Development Services (ICDS) scheme, which provides food, preschool education, and primary health care to children under 6 years of age and their mothers, has also been hit by a 54.19 percent budget cut this year. This decision too of cutting public expenditure on food, nutrition and health care for children to more than half, defies any logic, especially when 40 percent of growth stunted children in the world are reportedly from India, exceeding the number of even sub-Saharan Africa.

I hasten to add that the Union budget 2015-16 has indicated, as the states’ share in the net proceeds of the union tax revenues has increased, as per recommendations of the 14th Finance Commission, these central Government programs will now be run with a changed funding pattern between the Union and states. However, according to financial experts in these areas, regardless of devolution, the total money available to run these critical projects is sharply decreasing.

That said, on the other pages of the same Union Budget, public funding in the current fiscal year for bridges and roads has more than doubled. The budgetary allocation for these two areas now stands more than even education.

I deliberated on similar subject of access to health care in my blog of March 16, 2015, titled, “With Frugal Public Resource Allocation Quo Vadis Healthcare in India?”

Health care sector is important for job creation too:

According to the World Health Organization (WHO), health care sector is one of the largest job creators, not just in India, but globally. Thus, Indian health care industry being one of the fastest growing industrial turf in the country with a reasonable base, deserves a sharper focus of the Government.

Additionally, the socio-economic benefits that this sector provides in creating a sustainable, healthy and highly productive work force, has been well documented and can’t just be wished away, in any case.

The neglect is intriguing:

Currently, total healthcare spend of India is no more than 4.2 percent of the GDP with public spending being just 1.2 percent of it. Other BRICS nations are way ahead of India, in this area too. To set a direction on country’s public healthcare spend, breaking the jinx of a long period of time, the draft National Health Policy 2015 of the Government aimed at initial increase in health expenditure to 2 percent of the GDP.

As a result of the legacy of neglect over a long period of time, which continues albeit more blatantly even today, only 16 percent of the Indian population declares today that they have access to free or partially-free health care. I shall dwell on this area subsequently in this article.

Keeping these in perspective, it was intriguing, when the union budgetary allocation for health care in 2015-16 was kept at Rs. 297 billion or U$4.81 billion for its main health department, almost the same outlay as in the previous budget.

When compared against public fund allocations, such as, US$ 93 billion for highway projects or US$ 7.53 billion for 100 smart cities in the country, one will get a realistic perspective of this meager health budget allocation, in terms of effectively addressing the health care needs of around 1.25 billion people of India. Over 70 percent of this population live in the hinterland.

Agreed that the Government focus on these ‘infrastructure projects’ are not unimportant by any means. Nevertheless, the above comparison only highlights how much priority the Government assigns to the health care sector of India and for the health of its citizens. This issue assumes even greater significance in combating several challenging health situations, such as, ongoing fight against increasing incidence of life-long chronic ailments and deadly life-threatening diseases like, cancer, fueling already high rate of morbidity and mortality in the high country.

A quick glimpse on a few outcomes of neglect:

The Working Paper No. 1184 dated January 8, 2015, titled “Improving Health Outcomes And Health Care In India” of the Organization for Economic Co-operation and Development (OECD), highlights some interesting points, as follows:

  • Chronic diseases are the biggest causes of death and disability accounting for 50 percent of deaths, with cardiovascular diseases and diabetes, respiratory conditions and cancers figuring most prominently.
  • Preventive interventions such as improving access to a clean water supply, reducing the spread of HIV/AIDS through better sexual education, and vaccination campaigns for other diseases will each deliver more significant returns in life years.
  • Vaccination rates for diphtheria, tetanus and pertussis, for measles and for hepatitis B are all much lower than in OECD and peer countries.
  • Minimal access to free or partially-free health care.

It is an irony that ‘life expectancy’ in India still remains well below the countries at a similar level of development.

Abysmal overall hygienic conditions:

The OECD survey brings to the fore  abysmal hygienic conditions still prevailing in India. It can only be improved through active intervention of the Government with necessary budgetary allocations, sans photo ops for some celebrities and most politicians. Sincere support and participation of the civil society and intelligentsia, in general, are also equally important.

The paper underscores, among others, the following extremely unhygienic conditions still prevailing both in urban and rural India:

  • Most households in rural India do not defecate in a toilet or latrine, which leads to infant and child diseases (such as diarrhea) and can account for much of the variation in average child height. Even today the sight of poor children defecating openly in the streets, that too in a city like Mumbai, is also not very uncommon.
  • The burning of solid fuels in particular (undertaken by more than 80 percent of the population in cooking) is a major risk factor behind ischemic heart disease, lower-respiratory tract infections and chronic obstructive pulmonary diseases and could also increase cataracts and stroke.
  • Exposure to air pollution is a significant problem.
  • Many of the poor continue to smoke heavily.
  • 11 of the lowest income quintile did not undertake sufficient physical activity, compared with 16 percent in the highest income quintile.

India provides minimal access to free or partially-free health care:

As I mentioned above, India provides minimal access to free or partially-free healthcare to its citizens, as compared to all the BRICS nations, many other countries in South East Asia and even in Africa.

The above OECD paper states that with poor health intertwined with poverty, the greatest gains lie with policies that address the social conditions which enable combating communicable and non-communicable diseases.

Among BRICS countries, India provides least access to ‘Free or Partially-Free Health Care’ Services to its general population. This is despite being the largest democracy in the world, which is now striving hard to emerge as an economic and military superpowers.

The following study shows that only 16 percent of the Indian population declares having access to free or partially-free health care from the government:

BRICS Countries % surveyed said ‘Yes’ to the question: “Does your household have access to free or partially free health care from the State”
India 16
Brazil 24
China 73
Russia 96
South Africa 62

Source: Credit Suisse Research Institute, Emerging Consumer Survey Databook 2014.

As the OECD paper states, in this study approximately 1500 respondents were surveyed in each country, with India and China both having larger sample size of 2500. The male-to-female split between respondents was roughly 50:50 in all cases with rural-to-urban split varying by country.

Poor satisfaction level with existing health care services:

This is very important; as public facilities are the predominant source of qualified health professionals in rural areas where much of the Indian poor reside. In addition, significant population growth is occurring in urban slums, where urban public health care facilities are struggling to provide basic services. In a situation like this, slum dwellers face challenging economic barriers to accessing expensive private health care services (MoHFW, 2012).

The OECD survey indicates that 41 percent of those in rural areas and 45 percent in urban areas were not satisfied with treatment by their doctors or facility.

The reason attributed to this dissatisfaction are as follows:

  • Distance was cited by 21 percent of people in rural areas and 14 percent in urban areas.
  • Public health care centers remain closed more than half the time and lack basic medical supplies, such as stethoscopes and blood pressure scales.
  • Non-availability of required services was cited by 30 percent of people in rural areas and 26 percent in urban areas.

This is quite credible, as according to the Government’s own estimates:

- 10 percent of primary health care centers are without a doctor

- 37 percent are without a laboratory technician

- 25 percent without a pharmacist (MoHFW, 2012)

The above picture is quite consistent with large scale surveys in poor communities of India, by OECD.

Health care business for up market is booming:

Growing inequitable distribution of healthcare products and services is now wide open and blatant, more than ever before. There is no signal yet that the Government would soon consider health care sector as its one of the key focus areas, along with education, just as infrastructure, such as, building roads, highways, e-highways, flyovers, bridges and smart cities.

For up-market patients, the private sector is creating world class facilities in India. We can see today a good number of ‘five-star’ hospitals, with more number of newer ones coming up offering jaw-dropping facilities, quite akin to, may be even surpassing what are being offered for patients’ luxurious comfort in the developed world. Although these facilities cost a fortune, one would usually need to be in a queue to get admitted there for any medical or surgical treatment.

Most of these hospitals are now in high demand for ‘medical tourism’. According to available reports India currently caters to health care needs of over 200,000 foreign patients. ‘Medical tourism’ business reportedly fetched around US$ 2 billion to India in 2012.

On the flip side of it, as we all read in the recent media reports, some of these hospitals in Delhi refused admission even to seriously ill dengue patients, as they can’t afford such facilities. A few of these patients ultimately succumbed to the disease and the parents of one such poor child, who died without any hospital treatment in that process, committed suicide unable to withstand the irreparable and tragic loss.

Giving ‘Infrastructure Status’ to health care sector:

When creating basic infrastructure is the priority area of the present Government for financial resource allocation, why not give ‘infrastructure status’ to the health care sector now? This is not just for the heck of it, but purely based on merit and earlier detail evaluation by a Government Committee of experts.

To address the critical health care needs for the vast Indian population with appropriate infrastructure, quality products, services and manpower, providing ‘infrastructure status’ to the health care sector could facilitate the whole process. Additionally, it can transform the Indian healthcare sector as one of the biggest job-generating industry too.

This has been a key demand of the industry until recently, though not so much being talked about it today. A few years back, the previous Government was reportedly mulling to assign full fledged infrastructure status to the healthcare sector, as it merits inclusion in the category of ‘infrastructure’, satisfying all the nine criteria set by the erstwhile Rangarajan Committee.

I find in my archive, the Confederation of Indian Industry (CII) also demanded ‘infrastructure status’ for the health care sector in its pre-union budget memorandum for 2010-11. In that proposal CII had estimated that health care industry in India requires an investment of around US$80 billion, whereas in the current fiscal year the public expenditure on health still languishes at U$4.81 billion.

This specific issue seems to have taken a back seat today, for reasons not known to me. However, it is interesting to note that not just the Government apathy, no such demand is being made today by the large multi-industry trade associations of India, as vociferously as we witness, for example, in the case of ‘The Goods and Service Tax (GST) Bill’.

Health care debate is not to the fore today:

Critical health care issues of the country don’t seem to be in the fore front today for comprehensive debates even for the Indian main stream media, to influence the government.

We have been experiencing for quite while that Indian media, including social media, in general, usually goes ballistic 24×7 mostly with selective sensational topics. These may include, among others…glitzy events on Government’s high profile advocacy initiatives to attract more Foreign Direct Investment (FDI) from large overseas companies…Or back home some unfortunate and tragic Dengue fever related deaths due to negligence just in Delhi, though the same and equally grave incidences taking place in the other states of India, are hardly getting any coverage…Or on some high profile alleged murder pot-boilers announcing media verdict conclusively, even before completion of police investigation and charge-sheet being filed in a court of law.

These are probably neither bad, nor unimportant, nor avoidable, nor can come within the ambit of any media criticism. I am also not trying to do that, either.

As the saying goes, variety is the spice of life. We, therefore, generally want to get a feel of it everyday early in the morning, mostly glancing through the newspaper headlines, or in the late evening watching impatient anchor with strong personal opinion trying hard to dominate over all other participants in high-decibel ‘TV debates’, as these are called by the respective channels.

In an era of sensationalized and eye-ball grabbing ‘Breaking News’ of all kinds, flashing everywhere almost every now and then, critical health care issues seem to have become a mundane subject to the newsmakers for any meaningful debate to influence the Government. Serious debates on critical health care issues presumably would not generate all important Television Rating Points (TRPs) to the TV channel owners. Though I have no idea, the TRP of such debates  probably has been estimated to be even lesser as compared to the cacophony aired by the TV channels on the cost to exchequer for the MPs subsidized meals in the Indian Parliament…with intermittent high pitch ‘war cry’ of the dominating anchor… ‘the nation wants to know this’.

Conclusion:

Be that as it may, health care environment impacts all of us, quite appreciably. There is not even an iota of doubt on it. However, we can feel it mostly when the reality hits us or our families hard…very hard, as serious and cruel ailments strike suddenly, or as we face avoidable disease related deaths of our near and dear ones, or when illness makes a loving one virtually incapacitated, even after facing financial bankruptcy.

Health care is a serious matter for all of us, just as it is a serious and critical business for every nation and every Government. This criticality factor is independent of whatever level of economic development the country is aspiring for. Thus, the indifference of the Indian Government, if I may say so, despite promising so much on health care earlier this year, is intriguing, and more so, when just 16 percent of the total population has access to free or partially-free health care in our India of the 21st century.

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.

Evolving Scenario of Non-Personal Promotion in Pharma Marketing

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In the Indian pharmaceutical industry, ‘Non-Personal Promotion (NPP)’ is gradually expected to assume much greater strategic importance than what it is today, if at all, in the overall strategic marketing ball game.

This process would get hastened as and when the Department of Pharmaceuticals (DoP) decides to ‘walk the talk’ with mandatory implementation requirement of its ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’, with necessary teeth built into it for proper enforcement. Thereafter, pharma sales and marketing process would possibly not remain quite the same.

In that scenario, dolling out ‘Freebies’ of various kinds and values to the customers, that has been happening over a long period of time, would attract penal consequences as would be defined by the Government.

This, in turn, is expected to create virtually a level playing field for all the pharma players in the brand marketing warfare, irrespective of how deep their pockets are. Consequently, without any lucrative incentives to offer to the important doctors, Medical Representatives (MRs) in general, in my view, would find access to busy important doctors becoming increasingly tougher, and much less productive.

Not just an imagination:

This is not totally an imaginary situation, as it has already started happening elsewhere.

Stringent legal and regulatory measures are now being put in place, both for the pharmaceutical companies and also for the doctors, in various developed markets of the world to minimize alleged marketing malpractices.

In tandem, following noteworthy developments are taking place more frequently than ever before:

  • A large number of high value penalties are being regularly levied by the judiciary and/or regulatory authorities of various countries to many big name global pharma players for alleged marketing malpractices.
  • Some measurable changes are taking place in the area of ‘access to busy medical practitioners’ by the MRs, more in those countries.

A recent study:

According to a recent study of 2015 by ZS Associates, published in ‘AccessMonitor™ 2015’, MRs’ access to important prescribers are declining steadily over the last 6 to 7 years. This study was based on analysis of ‘Call Reports’ of 70 percent of all US pharma companies’ MRs. The report reviewed in great detail how often over 400,000 physicians and other prescribers meet with MRs who visit their offices.

The decrease in MR access to prescribers from 2008 to 2015 was captured as follows:

Year MR Access to Prescribers (%)
2015 47
2014 51
2013 55
2008 80

Source: ‘AccessMonitor™ 2015

This trend is indeed striking. It won’t be much difficult either to ascribe a plausible reason to it, when viewed in perspectives of increasingly tough pharma sales and marketing environment in the US.

Over a period of time, stringent laws and regulations, both for the prescribers and also for the pharma players, are being strictly enforced.  The ‘cause and effect’ of the overall development can possibly be drawn, when one finds in the above report that throughout the US, more than half of all doctors are voluntarily “access restricted” in varying degree, as on date.

Most impacted specialty area:

Coming to restricted access to doctors in medical specialty areas, oncology was highlighted in the ZS Associates report among the most restrictive specialties. This is evident from its analysis that today around 73 percent of the cancer specialists restrict MR access, where around 75 percent of them were “MR-friendly” as recently as 2010.

With this increasing south bound trend of “access restricted” doctors over the past decade, at least in the US, and with a strong likelihood of its continuity in the future too, the pressure on getting cost-effective per MR productivity keeps mounting commensurately. Hence, the search for newer and effective NPP platforms of modern times is also becoming more relevant to generate desirable prescription output from the important busy medical practitioners.

Any viable alternative? 

Although virtually unthinkable today, it would be interesting to watch, whether viable alternatives to pharma MRs emerge in the near future to overcome this critical barrier. As necessity is the mother of all inventions, pharma companies are expected to find out soon, how best to respond in this challenging situation for business excellence.

More interestingly, India being a low-cost thriving ground for technological solutions of critical problems of many types, I would be curious to watch how do the pharma players synergize with ‘Information Technology (IT)’ sector to pre-empt similar fall-out in India, as and when it happens.

Non-Personal Promotion: 

In these circumstances, the question arises, when productive personal access to busy doctors through MRs becomes a real issue, what are other effective strategic measures pharma marketers can choose from, for fruitful engagement with those doctors?

Relevant Non-Personal Promotion (NPP), yet personalized, has the potential to create a favorable brand experience and image in the overall brand-building process, leading to increased prescription generation. Application of various high to low tech-based NPP tools is more feasible today than ever before, especially when the use of smart phones, tablet PCs and iPads are becoming so common within the busy medical practitioners.

Major benefits:

There are, at least, the following four key benefits that NPP in pharma marketing could offer:

  • Companies can proactively get engaged with even those doctors who would not prefer visits by MRs or those visits are failing to yield the desired results, as before.
  • Personalized, flexible, persuasive, interactive and cost efficient brand or disease related communication can be made available to even extremely busy doctors, at any time of their choice. This is quite unlike personal ‘one on one’ meetings with MRs, that are now taking place usually during or around the busy working hours.
  • Helps create a positive impression in the doctors’ minds that their busy schedules with patients are valued and not disturbed, respecting their wish and desire for the same.
  • Built-in provisions to encourage the doctors requesting for more specific information online, would enhance the possibility of ongoing customer interactions for productive long term engagement.

Based on all these, it appears to me, creative use of modern technology based NPP tools show a great potential to create a ‘leap-frog’ effect in augmenting the pharma brand-equity in all situation, especially during restricted access to all those heavy prescribers, who matter the most.

From message ‘Push’ to information ‘Pull’:

One of the fundamental differences between Personal-Promotion (PP) of pharma brands through MRs and Non-Personal Promotion (NNP) of the same, is a major shift from ‘Push’ messaging to the modern day trend of information ‘Pull’.

In the era of Internet and different types of ‘Web Search’, people want to ‘Pull’ only the information that they want, and at a time of their personal choice, if not in a jiffy. In this context, broader utilization of especially digital medium based NPP with navigational tools, would be of great relevance.

Any specific request coming from the target doctors in response to personalized e-mails or other direct communications may be delivered through the MRs. This would help creating an important and additional opportunity to strengthen the relationship between the prescribers and the pharma companies.

A good NPP strategy, therefore, needs to be crafted by creating a platform for ongoing engagement with the prescribers, primarily through information ‘Pull’, rather than making it just another part of any specific promotional campaign through message ‘Push’.

The segments to initially concentrate upon:

Till mandatory UCPMP comes into force with stringent compliance requirements, and in tandem MCI guidelines for the doctors acquire necessary teeth, Indian pharma industry, at least, can start warming up with NPP.

A sharper focus on NPP, as I see it, is required in the following pharma marketing situation, at least as a key supporting strategy:

  • Extremely busy doctors, who do not want to meet the MRs
  • Important doctors, who are not too attentive during brand communication
  • Potential heavy prescribers, who do not prefer interaction with MRs during meetings, with poor engagement level
  • For promotion of important ‘mature brands’ or ‘cash cows’ to free MRs’ time to focus on newer products

NPP and “Cash Cows”

NPP could be very relevant for ‘Mature Brands’ or the ‘Cash Cows’, especially for those pharma players having a large number of such brands and at the same time are also introducing new products. This situation is not very uncommon in the Indian pharma industry, either.

With such ‘mature brands’, the MRs have already done a superb job, who are now required to concentrate on making ‘Stars’ with other new products.

It would, therefore, be more meaningful to opt for a lower cost engagement with NPP for these brands, at least for the busy doctors, across multiple channels. Consequently, this strategy would further boost the margins of mature brands, sans deployment of a large number of more expensive MRs.

Platforms to explore:

The emerging situation offers a never before opportunity to use many interesting channels and interactive platforms for flexible and effective tech-based customer engagements. These can be used both for the doctors and also for the patients’ engagement initiatives. Exploration of platforms, such as, custom made health apps, social media, WhatsApp, e-mails and messengers using smartphones and mobile handsets, has already been initiated by some pharma players, though in bits and pieces.

Trapped in an ‘Archaic Strategy Cocoon’?

I wrote an article on the above subject in this blog dated June 17, 2013 titled, “Pharma Marketing in India: 10 Chain Events to Catalyze a Paradigm Shift”

In that article, I mentioned that over a long period of time, Indian pharmaceutical industry seems to have trapped itself in a difficult to explain ‘Archaic Strategy Cocoon’. No holds bar sales promotion activities, with very little of cerebral strategic marketing, continue to dominate the ball game of hitting the month-end numbers, even today.

It is about time to come out of this cocoon and prepare for the future, proactively, boldly, creatively and squarely. This will require a strategic long term vision to be implemented in an orderly, time-bound and phased manner to effectively convert all these challenges into high growth business opportunities.

Conclusion:

Like many others, I too believe that ‘face to face’ meetings still remain the most effective method for MRs’ brand detailing to doctors. It may remain so, at least, for some more time.

Nonetheless, in the gradually changing sales and marketing environment, pharma players, I reckon, should no longer rely on the personal visits alone. Instead, they should start exploring multi-channel, mostly tech-based, interactive and personalized NPP as effective augmentation, if not alternatives, for customer engagement to achieve the business goals.

In an environment thus created, it appears, the same or even a lesser number of MRs would be able to effectively orchestrate a large number of communication channels, facilitated by simple yet high technology online platforms.

All NPP channels and platforms would need to be designed and used as preferred by the busy medical practitioners and at any time of their choice, which could even be outside the usual working hours for a MR. In a transparent and mostly online sales and marketing monitoring process, physical supervision and guidance of, at least, the front line managers may also become irrelevant, as we move on.

In India, most pharmaceutical players are attuned to similar genre of promotional strategy-mix, predominantly through MRs, for all types of doctors and specialties, though the message may vary from one specialty to the other. A large number of companies also don’t seem to have organized research-based credible data. These are mainly on, what types of engagement platforms – personal or non-personal – and at what time, each busy prescriber would prefer for product information access and sharing.

Pharma sales marketing environment is slowly but steadily undergoing a metamorphosis, all over the world. This change is very unlikely to spare India, ultimately. The evolving paradigm of mostly high-tech driven and extremely user-friendly NPP in pharma marketing, has the potential to reap rich harvest. The early adopters, making adequate provisions for scaling up, are likely to gain a cutting edge competitive advantage to excel in business performance.

Scalable and creative use of NPP has a ‘Zing Factor’ too. Nonetheless, pharma marketing strategies have been too much tradition bound, by choice. By and large, most of what are being followed today reflect high attachment to past practices, with some tweaking here or there…tech-based or otherwise.

Well before it becomes a compelling strategic option, as the looming pharma marketing environment unfolds with the UCPMP becoming mandatory for all, would the Indian pharma companies come out of the ‘Archaic Cocoon’ to proactively embrace NPP with required zest and zeal?

By: Tapan J. Ray

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

India’s China Dependence On API: A Time To Think ‘Outside The Box’

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The Department of Pharmaceuticals (DoP) has declared the Year 2015 as the Year of ‘Active Pharmaceutical Ingredient (API)’. Following it up on February 25, 2015, the Union Minister of Chemicals & Fertilizers Ananth Kumar assured the Pharmaceutical Industry that appropriate decisions will be taken soon to make India self-sufficient in Bulk Drugs (APIs).

The Minister also confirmed having received the recommendations of high level ‘Katoch Committee’ that was set up by the Government on October 8, 2013 to look into various issues concerning the API. This would be implemented expeditiously after taking the Union Cabinet’s approval, as the Bulk Drugs constitute the backbone of the Pharma Industry and the sector needs to be incentivized to take on the challenges from cheaper imports.

According to a recent report, in June 2015, the Ministry of Chemicals and Fertilizer has floated a draft cabinet note with the recommendations of the ‘Katoch Committee’. Quoting a senior official of the DoP the report mentioned that the cabinet note also proposes formation of a separate bulk drug authority, which will look into the implementation of such schemes.

The DoP Secretary Dr. V.K. Subburaj has lately reiterated that there is an urgent need to bring about self-sufficiency in the field of API.

In this article, I shall restrict my discussion only to those APIs, which are required for manufacturing the essential medicines in India.

Significant dependence on China:

For a large number of essential medicines, India heavily depends on API imports from China.

On December 12, 2014, the Minister of Commerce and Industry informed the Indian Parliament that in case of 12 essential drugs namely: Paracetamol, Metformin, Ranitidine, Amoxicillin, Ciprofloxacin, Cefixime, Acetyl salicylic acid, Ascorbic acid, Ofloxacin, Ibuprofen, Metronidazole and Ampicillin, there is significant dependence on imports. Approximately 80-90 percent of these imports are from China. He mentioned that the decision to import, and the country of origin for such imports, are based on economic considerations.

The Minister also informed the Parliament that a Committee of Secretaries, under the Chairmanship of the Secretary, Department of Health Research was set up on October 8, 2013 to study and identify the APIs of critical importance and to work out a package of interventions/concessions required to build domestic production capabilities, and examine the cost implication.

Interestingly, rapid and consistent increase in API import from China has been reported as follows:

Year API import from China (Rs. Crore)
April-September in 2014-15 6,521
2013-14 11,865
2012-13 11,000
2011-12 8,798

Ironically, though India manufactures over 30 percent of global generic drug consumption, more than 80 percent of APIs required to produce these medicines come from China.

In ‘RIS Policy Brief’ February 2015, Dr. Y. K. Hamied, Chairman of CIPLA was also quoted sounding an alarm bell, as follows:

“If China decided one bright day to stop export to India, we would be finished. The pharma industry is zero, both domestic and export, and we are looking at that danger objectively”.

Even, the National Security Adviser of India has reportedly expressed similar concern and urged to create adequate infrastructural facilities to make India self-reliant, at least, on the essential medicines, without further delay.

Another recent industry report:

A July 2014 report of ASSOCHAM, titled “Pharmaceuticals Sector in India: Challenges Faced & Suggested Way Forward” also underscores, since a very significant volume of India’s drug imports are concentrated in China, this lack of self–sufficiency in APIs poses significant risk to the drug security of the country. Any deterioration in relationships with China can potentially cause severe domestic shortages in the supply of essential drugs. 

Additionally, China could easily increase prices of some of these drugs where it enjoys virtual monopoly, noted the ASSOCHAM study.

The report further points out that this risk extends beyond the domestic market to export markets, as Chinese pharmaceutical companies, that have traditionally focused on large-volume intermediates and unregulated markets are beginning to “forward integrate”, with increasing focus on exports to regulated markets.

This emerging trend is supported by the recent improvements in local Chinese cGMP and product quality standards, increase in the number of manufacturing sites approved by the USFDA, and current filings of Abbreviated New Drug Applications (ANDAs) by the local companies of China. Given their overall dominance in intermediates and API manufacturing, Chinese players can pose a serious competitive threat to their Indian counterparts, much beyond the APIs for essential drugs, the above study noted.

‘Katoch Committee’ recommendations:

The recommendations of the ‘Katoch Committee’, as revealed by the the Minister to the law makers of India, appears to me a long list of ‘Things to Do’ without addressing the intricacies involved with the complicated core issue.

On May 8, 2015, the Minister of State of the Ministry of Chemicals and Fertilizers informed the Rajya Sabha of the Indian Parliament that in its report on API manufacturing in India, the Katoch Committee has inter-alia recommended:

  • Establishment of Mega Parks for APIs with common facilities such as common Effluent Treatment Plants (ETPs), Testing facilities, Captive Power Plants/assured power supply by state systems, Common Utilities/Services such as storage, testing laboratories, IPR management, designing, etc., maintained by a separate Special Purpose Vehicles (SPV)
  • A scheme for extending financial assistance to states to acquire land and also for setting up common facilities
  • Revival of public sector units for starting the manufacturing of selected and very essential critical drugs (e.g., penicillins, paracetamol etc.)
  • Financial investment from the Government for development of clusters which may be in the form of a professionally managed dedicated equity fund for the promotion of manufacture of APIs
  • Extending fiscal benefits to creation of the entire community cluster infrastructure and individual unit infrastructure
  • Extension of fiscal and financial benefits to promote the bulk drugs sector
  • Promoting stronger industry-academia interaction
  • Synergizing R&D promotion efforts by various government agencies
  • Incentivizing scientists
  • Duty exemptions for capital goods imports

On the face of it, the recommendations appear to be good. However, are these not too simplistic, based on just what is visible on the surface, without going into the complexity of the issue?

I shall now briefly dwell upon some of these areas, from my own perspective of the core issue and the key challenges involved.

Major challenges:

Profitability is undoubtedly a major reason why the indigenous production of important APIs, required to formulate widely used essential medicines, has paved the way for low priced Chinese equivalents. This has been acknowledged by all concerned and has happened more with APIs involving fermentation technology.

Besides other factors, API profitability and commensurate return on capital employed (RoCE) are primarily driven by the product design, process technology in use together with its associated requirements, cost of capital goods and utilities, working capital requirement, quality of sustainable demand generated and achievement of ‘economies of scale’. The last one is so important, as it signifies that proportionate saving in costs is gained by an increased level of production. Simply speaking, the greater the yield and the quantity of a API produced, the lower will be the per-unit fixed cost, as these costs are shared over a larger number of goods.

Additionally, ‘any time cGMP-audit preparedness’ for the big customers, make the running of the operation really unenviable.

Highly competitive generic API market, with larger number of manufacturers, is driven by its customers’ requirement of the lowest possibly cost for any quality product. With this ascending trend, global API manufacturing business has started slowly shifting from the long time much preferred big-name players of the western world, to the upcoming ones in India and China. Unfortunately, now even India has started importing APIs in significant volume from China. APIs of Chinese origin for Indian essential drugs are not just cheaper, but are also available almost on the shelf.

This fiercely competitive scenario has compelled a sizeable number of bulk drug manufacturers to shut shops in India. Many other ‘API only’ Indian manufacturers are now venturing into production and marketing of higher margin formulations, moving up the pharma value chain.

Some API producers have also entered into contract manufacturing of formulations in large quantities. A few others have already entered or are trying to enter into their API based formulation manufacturing agreements with large pharma MNCs for the regulated markets, and by filing DMFs and ANDAs.

To sum up, the challenges before the API sector, in my view, are predominantly as follows:

  • Intense price competition
  • Requirement of attaining ‘economies of scale’ for business sustainability, at times leading to overcapacity
  • Low profitability and RoCE
  • ‘Any time technical audit’ preparedness for high-end customers
  • Capital intensive business
  • High inventory carrying cost both for intermediates and finished goods
  • Long credit demand
  • High working capital requirement
  • Undifferentiated capabilities
  • Product obsolescence with changing disease profile or newer off-patent molecules coming in the same therapy area

Need to think ‘outside the box’:

I do not have access to the complete report of the Katoch Committee, just yet. However, going by what the Government has reported to the Indian Parliament on this subject, it appears that overall recommendations made by the Committee of Secretaries on the subject, are steps in the right direction.

If all the suggestions are implemented, the cost of manufacturing infrastructure and utilities are expected to come down. However, I am not quite sure, whether just these steps would be good enough making India self-reliant on APIs required to manufacture the essential medicines.

Nevertheless, to achieve the desired goal, some critical questions would still need to be answered with high clarity, such as:

  • Despite lowering cost of manufacturing, would it still be enough to neutralize Chinese competition?
  • Stakes being very high for China, if it feels threatened of loosing the booming API generic business from India, won’t the Chinese Government not find out ways and means to retain its ground? If so, are there proactive measures ready to negate the possible counter-move by China?
  • Would this cost reduction help most of the Indian API manufacturers achieving ‘economies of scale’ for reasonable sustainability, with cost competitiveness in the business?
  • Most of the essential drugs are low cost products. Thus, what happens, if Indian API manufacturers in clusters, thus created, decide to produce and sell only higher margin APIs and intermediates, including for the global innovator companies, without getting engaged in APIs for essential medicines?

Since this crucial problem is multi-faceted one, the recommendations should address all possible ‘what if’ scenarios, thinking ‘outside the box’. Mere creation of infrastructural and financial support base, may not help addressing all the key challenges, effectively. After all, it’s an open market competition, and Chinese players are tough nuts to crack, as they have been demonstrating time and again in various fields of activities.

Conclusion:

Having achieved dominance in the Indian generic API market, Chinese bulk drug manufacturers are now concentrating on continuous improvement in process technology to drive down the cost further. According to available reports, they are achieving it too, with great success, focusing on multiple critical areas starting from product and reactor design to much wider use of catalysis.

To effectively compete with Chinese APIs, especially for essential drugs, Indian API manufacturers in the clusters would require to start, at least, from where China is today in this area, and take off from there. This is possible, though quite challenging too.

Moreover, manufacturing overcapacity for generic APIs is already existing in China. If it gets further aggravated with overcapacity created in India for the same molecule, the overall scenario may lead to a desperate sales and marketing situation of survival for the fittest.

No doubt, over-dependence on Chinese APIs for the essential medicines may pose a threat to the drug security of India, as many have already opined, including the National Security Advisor of the country. Nonetheless, the situation could possibly turn even worse, without imposition of artificial tariff barrier, if India decides to rely on a simplistic solution for a multi-factorial complex problem.

‘Katoch Committee’ report is a good initiative for the domestic API business, in general. Nonetheless, to significantly reduce over-dependence on imported Chinese bulk drugs and be self reliant on  high quality and competitively priced APIs for essential medicines, India would need to think ‘outside the box’, undoubtedly.

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.

Biosimilar Drugs: Why Prescriptions Aren’t Still Enough?

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On September 3, 2015, in a Press Release, Novartis announced, “Zarxio(TM) (filgrastim-sndz) is now available in the United States. Zarxio is the first biosimilar approved by the US Food and Drug Administration (FDA) and the first to launch in the US.” Zarxio is being marketed by the generic drug unit of Novartis – Sandoz.

The company highlighted: “With the launch of Zarxio, we look forward to increasing patient, prescriber and payor access to filgrastim in the US by offering a high-quality, more affordable version of this important oncology medicine.” This statement may be interpreted as an acknowledged of a research based global pharma major that high-priced biologics create a notable access barrier to a large number of patients, even in a rich country such as the United States. It also underscores the increasing prescription opportunities for cheaper biosimilar drugs.

Zarxio will initially be available with a 15 percent discount. This needs to be viewed against usual price drop of around 20-30 percent for biosimilar drugs in Europe, as compared to the original molecules. It is expected that price differences between biosimilar drugs and the original ones, would vary widely from as low as 10 percent to a hefty 60 percent, in the global markets.

Prior to Novartis’s Press Release, USFDA announced Zarxio’s approval in a separate ‘FDA News Release on March 6, 2015, indicating that it can be prescribed by a health care professional for:

  • patients with cancer receiving myelosuppressive chemotherapy
  • patients with acute myeloid leukemia receiving induction or consolidation chemotherapy
  • patients with cancer undergoing bone marrow transplantation
  • patients undergoing autologous peripheral blood progenitor cell collection and therapy a
  • patients with severe chronic neutropenia.

Though such types of drugs are available in the important markets such as, Europe, Australia and India, the launch of Zarxio heralds the dawn of a new era of biosimilar drugs in the United States – the numero uno of the global pharma market.

Incidentally, USFDA’s approval of biosimilar drugs is an outcome of a relatively recent healthcare reform in the United States, when President Obama signed into law the ‘Affordable Care Act’ on March 23, 2010.

The key benefit:

In its above ‘Press Release’, Novartis captured well the key benefits of biosimilar drugs , as follows:

“While biologics have had a significant impact on how diseases are treated, their cost and co-pays are difficult for many patients and the healthcare budget in general.  Biosimilars can help to fill an unmet need by providing expanded options, greater affordability and increased patient access to life-saving therapies.”

Major growth drivers:

According to July 2015 report of ‘MarketsandMarkets (M&M)’ the global biosimilars market is expected to grow to US$6.22 Billion by 2020 from US$2.29 Billion in 2015, growing at a CAGR of 22.1 percent from 2015 to 2020.

The major growth drivers of the global biosimilars market are expected to be:

  • Growing pressure to curtail healthcare expenditure
  • Growing demand for biosimilar drugs due to their cost-effectiveness
  • Rising incidences of various life-threatening diseases
  • Increasing number of off-patented biologics
  • Positive outcome in the ongoing clinical trials
  • Rising demand for biosimilars in different therapeutic applications such as rheumatoid arthritis and blood disorders.

European Union (EU) had a head start of 5 to 7 years to put its regulatory pathway for biosimilar drug development and approval process. Thus, at present practically most the entire value sales of biosimilar drugs take place in the EU.

As, cheaper biosimilars would continue to hit the US market, insurance companies are expected to encourage the use of such drugs instead of highly expensive original ones.

According to Express Scripts report released in December 2014, the US healthcare system could clock savings in drug costs around US$250 billion in the first decade of availability of biosimilars drugs and the approval of Zarxio would help patients saving more than US$5 billion in the the world’s largest market for biologics.

By 2020, several blockbuster biological products with global sales of more than US $67 billion would go or are going off-patent, creating great opportunities for biosimilar drugs the world over. Some of these drugs are Avastin (Roche), Humira (AbbVie), Synagis (AstraZeneca), Aranesp (Amgen) and Enbrel (Amgen, Pfizer).

However, the crux of its success, to a great extent, would lie on physicians’ confidence to prescribe large molecule biosimilar drugs, as these are new and not exact replicas of the original biologic molecules, unlike the small molecule generic drugs.

Possible growth barriers:

The success requirements of large molecule biosimilar drugs would not mimic the same for small molecule generics, anywhere in the world.

In my view, there are two types of critical barriers to success with biosimilars, both tangible and intangible in nature.

The same M&M report lists the following factors as possible tangible barriers to fast growth of biosimilar drugs:

  • High manufacturing complexities and costs
  • Stringent regulatory requirements in countries
  • Innovative strategies by biologic drug manufacturers to restrict the entry of new players

I would very briefly touch upon each one of these, hereunder:

I. High manufacturing complexities and costs:

This is primarily because, the therapeutic characteristics of biosimilar drugs are significantly influenced by their manufacturing methods. For example, it is quite possible that based on the manufacturing system that is adopted, the same starter ingredients may give substantially different results.

II. Stringent regulatory requirements:

Among many other stringent regulatory requirements, I would highlight in this article just the following two:

A. The labeling:

It is noteworthy that USFDA has named Zarxio with the placeholder nonproprietary name “filgrastim-sndz” and not as ‘filgrastim’, the nonproprietary name for Amgen’s, Neupogen, for which Zarxio has been approved as a biosimilar.

To quickly recapitulate its background, in July 2014, the World Health Organization (WHO), which oversees the system of International Nonproprietary Names (INN), recommended that biosimilar drugs would receive the same nonproprietary name, but with a four-letter code at the end.

This is primarily because, innovator biologic drug companies and also some doctors’ groups argue that molecular structures of biosimilar drugs are similar, but not exact replicas of the original ones. Hence, there is a need to differentiate them, while assigning INN.

They reiterate that giving biosimilars the same INN as the original biologic molecule may cause confusion among both the doctors and the patients. It could also make the tracking of adverse reactions, as and when these will be reported, more challenging.

Consequently, it has now been accepted by the regulators that biosimilars would receive the same nonproprietary name but with a four-letter code at the end to differentiate such drugs from the original biologics.

B. Interchangeability:

The above labelling issue, in turn, creates a barrier to possible interchangeability or automatic substitution of expensive original biologics with much cheaper equivalent of biosimilar drugs. I reckon, this could pose a critical obstacle in the initial take-off of the later.

According to a July 4, 2015 article, titled “Fate of cost-saving biosimilar drugs may hinge on naming policy”, published in ‘Modern Healthcare’, the USFDA has the following two pathways for licensing of biosimilar drugs:

  • For being designated as “similar” in efficacy and safety to an original biologic.
  • For being approved as being “interchangeable,” which requires a much higher review standard and could take years and millions of dollars to obtain the needed clinical trial data.

According to this article, none of the biosimilar products currently under USFDA review are in the interchangeable pathway.

III.  Innovative strategies to restrict entry of new players:

All the above innovative strategic moves and arguments, where biologic drug manufacturers are allegedly involved, may seriously restrict not just the entry of newer biosimilars, but also their faster prescription throughput.

Safety concern (immunogenicity):

Additionally, a critical safety concern on biosimilar drugs is being raised by the manufacturers of original biologics. This concern involves immunogenicity, which means the way a biosimilar drug provokes an immune response in the body. Original biologic drug manufacturers contend, since biosimilar molecules are not exactly the same as originals and their long term safety, related to immunogenicity, has not been tested, these drugs cannot be construed as having the same safety profile as the innovators’ biologics.

Besides, ‘Free-Trade-Agreements (FTAs)’ are also likely to be cleverly used by the original biologic drug manufacturers through their respective Governments, to the extent possible, for safeguarding the beachhead from the marketing onslaught of biosimilar drugs.

A perception barrier too:

Here comes an important perception-based intangible barrier to desirable prescription growth for biosimilar drugs.

Probably gauging it, post Zarxio launch, none other than the CEO of Novartis – Joe Jimenez, reportedly said: “He’s not expecting too much of a splash before 2020.”

This is understandable, as the doctors’ favorable disposition towards biosimilar drugs would be a crucial factor for prescription growth of these medicines.

A recent doctor community survey from QuantiaMD primarily captures the doctors’ thoughts and feelings on biosimilar drugs. This study was done with 300 specialists and primary care physicians.

Some of the notable findings of the report are as follows:

  • While 78 percent of the doctors polled said they were familiar with the term “biosimilar,” only 38 percent could name a biosimilar that’s under consideration for USFDA approval and would be relevant to their patient population.
  • Only 33 percent could name a biosimilar at all.

Researchers then narrowed down the original 300 physicians polled into a group of 120 “prescribing specialists.” This group of 120 doctors are currently prescribing biologics and most likely to prescribe biosimilar drugs in the years ahead. The study reported:

  • Only 17 percent of that segment said they are “very likely” to prescribe biosimilars.
  • And 70 percent said they either aren’t sure or are “somewhat likely’” to prescribe a biosimilar.
  • Only 12 percent of prescribing specialists are “very confident” that biosimilars are as safe as the original biologic version of the drug.

That said, 12-year ‘Data Exclusivity’ period for biologics in the United States, is one additional barrier to early introduction of cheaper biosimilar drugs, as considered by many.

On this issue GPhA – the generic drug makers’ group in America reportedly issued a statement, criticizing a paper of Biotechnology Industry Organization (BIO), saying:

“Market exclusivity acts as an absolute shield to their weak patents. Thus, from a practical perspective, extending market exclusivity beyond the Hatch-Waxman period would block the introduction of generic competition for almost 20 years, derailing any potential cost savings by Americans.”

The challenges ahead:

Considering all these together, the challenges ahead for quick acceptance of biosimilar drugs are indeed mind-boggling. The situation necessitates enough innovative and painstaking work by all concerned to gain the doctors’ confidence on biosimilar medicines. It goes without saying that success in generation of enough prescriptions for these drugs is the fundamental requirement to benefit the patients, which, in turn, would lead to significant savings in health care cost, as estimated above.

As more innovator companies start joining the biosimilar bandwagon, the physicians’ perception on these medicines, hopefully, would change sooner.

The status in India:

Although it appears strange, but a fact nonetheless. Biosimilar drugs approved in India till August 2012, followed the requirements of the regulators as provided mostly in the Drugs and Cosmetics Act for small molecule drugs, which are incidentally quite a different kettle of fish.

According to GaBI-online, the first locally produced biosimilar drug was approved and marketed in the year 2000. India announced implementation of its ‘Guidelines’ for ‘Similar Biologics’ much later, on September 15, 2012.

Indian ‘Guidelines’ for ‘Similar Biologics’ were jointly developed by the Department of Biotechnology (DoB) and the Central Drugs Standard Control Organization (CDSCO). The ‘Guidelines’ outline requirements for pre-clinical evaluation of biological products, claiming ‘similar to already approved biologics’. Thus, Indian regulators will partly rely on data from the already approved products to ensure safety, purity, potency and effectiveness of these drugs.

A wide variety:

A wide variety of biosimilar drugs have been approved and marketed in India, since then.

According to International Journal of Applied Basic Medical Research (2014 Jul-Dec; 4.2: 63–66), biosimilars in India consist primarily of vaccine, monoclonal antibodies, recombinant proteins and diagnostics, insulin, erythropoietin, hepatitis B vaccine, granulocyte colony stimulating factor, streptokinase, interferon alpha-2B and epidermal growth factor receptor.

The above article states that there are about 100 biopharmaceutical companies actively involved in research and development, manufacturing and marketing of biosimilar therapeutic products in India. Only 14 therapeutic drugs (similar biologics) were available in 50 brands in 2005. This number had grown to 20 therapeutic drugs in 250 brands in 2011.

The status of similar biologics approved and marketed in India is elaborated in this Table 1.

Some of the key Indian players of biosimilar drugs are Dr. Reddy’s Laboratory (DRL), Lupin, Zydus Cadila, Serum Institute of India, Biocon, Reliance Life Sciences, Wockhardt, Zenotech Laboratories and Intas.

I wrote on a related subject in this blog dated December 15, 2014 titled, “A Great News! But…Would This ‘Golden Goose’ Lay Golden Eggs?”

Conclusion:

Opportunities for biosimilar drugs are expected to expand significantly all over the world, basically driven by the need for affordable biologics and healthcare cost containment pressure in many countries.

As I had articulated before, unlike small molecule generics, unlocking the true potential of large molecule biosimilar drugs in a sustainable way would demand innovative, clear, razor sharp and highly focused business strategies across the value chain.

For faster growth in prescriptions, biosimilars would call for a hybrid marketing model of small molecule (branded) generics and large molecule original biologics. Ability to craft impactful value proposition and ensuring its effective delivery for each stakeholder, smart and innovative use of interactive and participative digital tools both for doctors’ and patients’ engagement, of course sans complexities, would decide the ultimate commercial fate for each of these types of products.

To effectively reap rich harvest from the new space thus being created, the challenges are also too many. The concerns expressed on biosimilars may also be genuine, but the regulators should take care of those before granting marketing approval to benefit the patients, in a meaningful way.

Overall key drivers and barriers for success with biosimilar drugs would remain almost the same, both for global and local players. However, carving out and thereafter expanding share in this market, sizably, won’t be a piece of cake for any company, understandably.

Quite naturally, the innovator companies for biologics would go all out to retain their turf as much as possible, despite the entry of cheaper biosimilars. This is expected to continue by reinforcing the belief of the physicians and the patients that biosimilars are not quite the same as the original biologic molecules.

Effective proactive measures need to be initiated, soon, by the regulators and all other stakeholders to spread the right message, protecting the patients’ interest. Otherwise, apprehension of the doctors on biosimilars in general, regarding safety, efficacy, substitution and interchangeability may persist for some time to come, negatively impacting faster and desirable prescription growth of these drugs all over the world, including 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.

 

Drug Price Control in India: A Fresh Advocacy With Blunt Edges

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It is no-brainer that the advocacy initiatives to influence the new Government doing away with the ‘Drug Price Control’ in India has re-started by flooring the gas pedal. A fresh invigorating effort, apparently a pretty expensive one, has been initiated in July 2015 with an interesting study conducted on the subject by an international market research organization, sponsored by a multi-national pharma trade association in India.

Having gone through the report, it appears to me, as if the whole purpose of the study was to rationalize an ‘advance’ conclusion in mind, weaving plethora of data around it for justification.

The report presents an abundance of selective data, apparently to rubbish the very concept of ‘Drug Price Control’ in India. In that process, it reinforced the existence of a deep seated malady in the overall sales and marketing strategic framework of most of the pharma players, rather than failure of ‘Drug Price Control’ in India, meant for the essential drugs.

In this article, I shall dwell on this issue adding my own perspective. Although my views are different, I totally respect the findings and suggestions made in this report.

Drug price control in India:

From 1970, Drug Price Control Orders (DPCO) are being issued in India under the Essential Commodities Act, without any break, so far. The key intent of the DPCO is to provide quality essential medicines at a reasonably affordable price to the consumer. The DPCO has been amended four times since then, the latest one being DPCO 2013.

Unlike the previous ones, the span of price control of DPCO 2013 is restricted to essential medicines, as featured in the National List of Essential Medicines 2011 (NLEM 2011). The methodology of price control has also now changed to ‘marked-based’ pricing from earlier ‘cost-based’ pricing.

However, for the first time in July 2013, the National Pharmaceutical Pricing Authority (NPPA) extended ‘Drug Price Control’ beyond the Schedule Drugs, when by a notification it announced price fixation of ‘anti-diabetic and cardiovascular drugs in respect of 108 non-scheduled formulation packs under Paragraph 19 of DPCO, 2013’,

Paragraph 19 of DPCO, 2013, authorizes the NPPA in extraordinary circumstances, if it considers it necessary to do so in public interest, to fix the ceiling price or retail price of any drug for such period as it deems fit.

Although the pharma industry initially had supported the switch from ‘cost based’ price control to ‘market based’ price control and only for NLEM 2011 drugs, it took a tougher stand after the above notification. Some trade association reverted to the same good old genre, yet again, trying to establish that ‘Drug Price Control’ does not help at all. The brand new market research report under discussion in this article, appears to be a step in that direction.

‘Market failure in pharma’ where competition does not work:

In its price notification dated July 10, 2014, as mentioned above, the NPPA justified its action by underscoring ‘market failure’ for those anti-diabetic and cardiovascular drugs, where competition does not work. NPPA considered ‘market failure’ as one of the ‘extraordinary circumstances’ and explained the situation as follows:

  • There exist huge inter-brand price differences in branded-generics, which is indicative of a severe market failure, as different brands of the same drug formulation, which are identical to each other in terms of active ingredient(s), strength, dosage, route of administration, quality, product characteristics, and intended use, vary disproportionately in terms of price
  • It is observed that, the different brands of the drug formulation may sometimes differ in terms of binders, fillers, dyes, preservatives, coating agents, and dissolution agents, but these differences are not significant in terms of therapeutic value.
  • In India the market failure for pharmaceuticals can be attributed to several factors, but the main reason is that the demand for medicines is largely prescription driven and the patient has very little choice in this regard.
  • Market failure alone may not constitute sufficient grounds for government intervention, but when such failure is considered in the context of the essential role of pharmaceuticals play in the area of public health, which is a social right, such intervention becomes necessary, especially when exploitative pricing makes medicines unaffordable and beyond the reach of most and also puts huge financial burden in terms of out-of-pocket expenditure on healthcare.

I discussed this subject in my bog post of April 27, 2015 titled, “Does ‘Free-Market Economy’ Work For Branded Generic Drugs In India?”

Are medicines cheapest in India, really?

It is quite often quoted that medicines are cheapest in India. In my view, it would be too simplistic, if we compare the prevailing Indian drug prices in Rupee, against prices of similar drugs in other countries, just by simple conversion of the foreign currencies, such as, US$ and Euro converted into Rupee. To make the comparison realistic and credible, Indian drug prices should be compared against the same in other countries only after applying the following two critical parameters:

  • Purchasing Power Parity and Per Capita Income
  • Quantum of per capita ‘Out of Pocket Expenditure’ on drugs

The Department of Pharmaceuticals (DoP) with the help of academia and other experts had earlier deliberated on this issue in one of its reports on patented drugs pricing. The report established that post application of the above two parameters, medicines in India are virtually as expensive as in the developed world, causing great inconvenience to majority of patients in the country.

Hence, common patients expectedly look for some kind of critical intervention by the Government, at least, on the prices of essential drugs in India.

A new study on drug price control:

Recently, I came across a ‘brand new’ research report that tries to justify the fresh stance allegedly taken by the pharma industry on the abolition of ‘Drug Price Control’ in India.

This new study of IMS Health released on July 2015, sponsored by a pharma MNC trade association in India, titled “Assessing the Impact of Price Control Measures on Access to Medicines in India”, categorically highlights ‘price control is neither an effective nor sustainable strategy for improving access to medicines for Indian patients’.

The key findings:

The following are the key findings of the report:

  • High income patient populations, rather than the low-income targets are the primary beneficiaries of the DPCO 2013.
  • The consumption of price-controlled drugs in rural areas has decreased by 7 percent over the past two years, while that of non-price controlled products has risen by 5 percent.
  • The DPCO 2013 has resulted in an increase in market concentration and a decrease in competitive intensity.
  • Price control has increased margin pressures for small and mid-sized companies, limiting both employment and investment opportunities in the sector.
  • Price controls negatively impact internal capability-building and expertise-building initiatives, discourage local talent and undermine the government’s ’Make in India’ initiative.

The suggestions made:

In my view, the report almost repeats the same old suggestions being made by the pharma industry over decades. However, while making recommendations, this new report selectively quotes, without clearly naming them, from the draft National Health Policy 2015 and ‘Jan Aushadhi’ initiative of the DoP. It also attempts to ride on the shoulder of Prime Minister Modi’s ‘Make in India’ campaign. The key recommendations of the study are, as follows:

  • Strengthen healthcare financing and extend universal health coverage across population segments with focus on providing cover for medicines
  • Invest in healthcare infrastructure and capability building
  • Promote joint and bulk procurement mechanisms, e.g. Tamil Nadu Medical Services Corporation
  • Levy a cess on the tobacco and liquor industries to fund the healthcare sector and subsidize essential medicines from taxes
  • Introduce mechanisms to ensure availability of generics at lower prices, to improve affordability for patients i.e. set up dedicated generic medicine stores.

An official of IMS Health was also quoted by the media that sounds to me almost like pontification:

“Price control has limited impact on improving patient access and, furthermore is not aligned with the requirements of a vibrant economy like India” and the “Government’s priority should be on strengthening India’s healthcare infrastructure and extending universal insurance coverage.”

The blunt edges in the report raise more questions than answers:

I wonder, whether another apparently expensive research, such as this, was at all necessary to reinvent the same old advocacy narratives on ‘Drug Price Control’ in India.

As I note, the report highlights, “The consumption of price-controlled drugs in rural areas has decreased by 7 percent over the past two years, while that of non-price controlled products has risen by 5 percent.” If this is true, one should try to fathom:

  • What does it really mean and what are its implications?
  • Can it happen, if it has happened, just because of ‘Drug Price Control’?

I am raising these two questions mainly because, price controlled drugs are prescription medicines. Thus, post DPCO 2013, when it happens to ‘prescription only medicines’, other critical questions that come at the top of mind are as follows:

  • Are the doctors now prescribing less of price controlled drugs? If so, why?
  • Price controlled drugs being essential drugs, are the doctors prescribing less of essential drugs? If so, why?
  • Do the doctors prefer prescribing expensive ‘non-schedule’ drugs to patients against their interest? if so, why?

Further, deliberately causing decline in consumption of these drugs, for margin or whatever may be the reasons, without intimating the NPPA as stipulated in the DPCO 2013, is a serious offense, attracting stringent penal action under the Essential Commodities Act.

Therefore, if the above finding of this study is correct and assuming that NPPA is not aware of such shortages or declining consumption of essential drugs in India, yet another critical question that needs to be answered:

  • By deliberately bringing down the consumption of essential medicines, are the concerned pharma players not taking the law in their own hands?

If yes, the Government would need to act forthwith. If not, the above finding of the report is just not correct.

The DoP, NPPA and other stakeholders would, therefore, need to ferret out, which one of the above two is correct.

Thus, I reckon, to wish away ‘Drug Price Control’ in India, the fresh advocacy initiative of the pharma trade association, keeping in the forefront a new study with blunt edges, raises more questions than answers. I have given just an example here, as above.

More marketing push on ‘free-pricing’ drugs is common:

It is not uncommon that the sales of ‘free-pricing’ drugs are usually more, as their margin is unlimited. Pharma players take increasing interest in those drugs and push them harder, almost totally controlling the ‘push-pull’ effect of drug marketing.

Globally, drug companies take increasing interest in such medicines. India is no exception. Here too ‘out of price control’ non-schedule drugs usually show higher growth, as the doctors are influenced to prescribe more of such drugs, though at the cost of consumer.

This practice may not be acceptable to many, but is a stark reality. This process is expected to continue, at least, till Uniform Code of Pharmaceutical Marketing Practices (UCPMP) is made mandatory with strict enforcement and strong punitive provisions for any violations.

Is the growth of price controlled drugs declining?

If the growth of price controlled medicines drastically comes down post DPCO 2013, that should get reflected on the declining overall sales and growth of those drugs. Similar pattern should also be visible in the growth of those types products marketed by most of the major pharma companies in India.

Let me now present the scenario of that space. The following analysis is based on the monthly retail audit data of AIOCD Pharmasofttech AWACS.

When I look at the growth of DPCO 2013 products based on NLEM 2011 and other price controlled drugs under ‘Para 19’ from January to July 2015 period in the following table, the scenario does not look as worrying just yet, as the above report has made it out to be.  

Product group-wise market growth (in Value):

Month (2015) DPCO products (%) DPCO  Para 19 Products (%) Non-DPCO Products (%) Total Market Growth (%)
July 5.1 11.8 14.2 12.9
June 5.6 14.6 16.2 14.8
May 5.3 7.2 12.1 11.0
April 11.1 11.9 18.4 17.2
March 1.6 15.6 21.7 20.9
February 13.9 14.4 20.0 18.9
January 6.9 NA 14.0 12.7

(Source: AIOCD Pharmasofttech AWACS )

Again, in the following table, when I look at the growth of DPCO 2013 products of some the very major pharma players in India, the conclusion still remains the same as above:

DPCO Products Growth (%) by major companies (Jan-July 2015):

Company July June May April March Feb Jan
Ranbaxy 20.5 31.9 29.5 17.3 27.6 20.7 53.7
Pfizer 13.0 17.4 5.7 16.7 25.6 21.1 18.6
Abbott 7.2 11.7 18.5 13.5 15.5 18.3 21.2
GSK -2.1 - 1.8 -1.2 12.2 12.2 NA NA

(Source: AIOCD Pharmasofttech AWACS )

The blunt edges fail to cut ice:

Quite expectedly, even a month after its release in July 2015, the blunt edges in the report seem to have cut no ice, especially at a very important place that matters most to the industry in this area. This observation gets vindicated by a credible media report.

On August 24, 2015 in an interview to a national business daily, V K Subburaj, the Secretary of the Department of Pharmaceuticals commented, “Price control on drugs a shot in the arm for health care” and “the Government cannot do away with it.”

He argued, “A large section of the population is poor. Suddenly, your system is disturbed if you have to spend more on drugs. Drugs are an important component of health care expenditure.”

Accepting the fact that in India, big and small companies investing in research would need more money, Mr. Subburaj said, “In India, we can’t afford to remove controls as the burden of disease is high.”

Conclusion:

With all due respect to all concerned, the above report appears to me palpably commercial, sans any worthy academic value or intellectual input that could trigger thinking for a change in the Government policy. The report apparently lacks in the required cutting edge to achieve the intended goal. The blunt edges are glaring, suggesting on the contrary, that the real action actually lies with the industry. Let me hasten to add, if any one has a different view on the subject, I would respect that with all humility.

The drug price control in India has been continuing since 1970, without any gap. The retail audit data clearly indicates that the growth of the Indian pharma industry did not get stunted or stifled during the period for this particular reason, as postulated in the above report of IMS Health. On the contrary, despite price control of drugs with all its ‘ill-effects’, as highlighted in the study, the growth of the Indian pharma industry in the last 4 decades has been nothing less than spectacular. This would consequently mean, increasing consumption of drugs, leading to improving access to medicines in India, including its hinterland, though may still not be good enough. I discussed this subject in my blog post of December 13, 2013, titled “Access to Medicine: Losing Track in Cacophony”.

Coincidentally, at the commencement of drug price control regime in India, almost all, if not all, the players in the ‘Top 10’ pharma league table of the country, were multi-national drug companies. Today the situation has just reversed. Out of ‘Top 10’, about 7 are home grown drug companies. Many of these companies were born post 1970. Without M&As by the pharma MNCs, this number could have been even higher today.

When it comes to profitability, it is worth mentioning, the soft-spoken and well-respected owner of the so called ‘low margin’ generic pharma company – Sun Pharma, is the second-richest person of the country. He created his initial wealth from India, despite ostensible ‘growth stunting’ price control – as elaborated in the above report.

By the way, what is the span of drug price control in India really – just around 18 percent of the total domestic pharma market now? More than 80 percent of the local drug market continue to remain in the ‘free-pricing’ and ‘high-profit’ zone. In that case, is the essence of the report not chanting… ‘yeh dil maange more’?

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.

Cancer Cure: Inching Towards The ‘Holy Grail’?

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In a Press Conference on August 20, 2015, the 39th President of the United States, now 90-year-old  Jimmy Carter, revealed (video) that during a liver surgery earlier this month the doctors diagnosed that he has cancer. The type of cancer that he is suffering from is called melanoma, which has already spread to his liver and brain. Medical jargon would term it as deadly metastatic cancer.

Though the surgeons have removed the liver tumor, and well-targeted radiation treatment for four other small tumors in his brain has already been initiated, the original site of the melanoma, the lethal skin cancer, has reportedly not been found, as yet.

Mr. Carter’s medical treatment has started with an infusion of a new class of drug that uses the human immune system to fight cancer cells. The drug has been reported to work not only in advanced metastatic cancer, but also in the old age of patients. The former American President appears optimistic about the treatment outcomes with this new therapy, ‘placing his fate in the hands of God’, though initially he thought that he had just weeks to live.

I shall deliberate in this article, in an easy to understand language, though briefly, the promises offered by two latest options for cancer cure. One of these two, has just become available to patients and the other one, after an initial jaw-dropping success, is undergoing further tests in a renowned research laboratory of the United States.

Two novel pathways for cancer treatment:

Until recently, surgery, radiation and chemotherapy used to be the three common options for cancer treatment. One breakthrough option has just been launched and more in the offing.

In search of a cure for cancer, pathbreaking outcomes of medical research, especially in the following two areas, are significant:

A. Immunotherapy: It is a revolutionary approach to cancer treatment. The first of this novel class of drugs has just come to the market, with which Mr.Jimmy Carter is now reportedly being treated.

B. Re-programming cancer cells back to normal: Success has just been achieved in laboratory studies with this technique. It holds a strong promise to cure cancer, universally.

A. Immunotherapy:

On June 1, 2015, in an article titled, ‘Cure for terminal cancer’ found in game-changing drugs, “The Telegraph” – well-regarded international news daily, reported on anti-cancer immunotherapy drugs, as follows:

“Terminally ill cancer patients have been ‘effectively cured’ by a game-changing new class of drugs. In one trial, more than half of patients who had just months to live saw deadly tumors shrink or completely disappear.”

“In recent days, the results of trials of a number of treatments which harness the body’s immune system have been announced at the American Society of Clinical Oncology’s annual conference in Chicago. They show promise in the fight against skin cancer and lung disease.”

As we know, most of the cancers are deadly. All these grow and spread, as they manage to hide from the immune system, disguising the life-threatening danger. Thus, medical research scientists pondered that the human immune system could play a critical role in the fight against cancer and even cure, by harnessing its ability to fight the deadly disease, effectively and decisively.

To achieve this goal, this class of new cancer drugs work by allowing the body to recognize and attack cancer as any other harmful invader to the body. It effectively blocks a cellular pathway that hinders the ability of the human immune system to attack cancer cells.

At present, to treat different types of cancer, more number of immunotherapy drugs are undergoing clinical investigations.

Brilliant treatment outcomes, but not universal:

It has been reported, about one third of patients taking immunotherapy for the treatment of cancer experienced positive results. Those who responded to this therapy, showed immediate effect with their tumors shrinking or vanishing in a matter of weeks. As a result, the patients who had no more than weeks or months to live, just as former US President Jimmy Carter, have gone into remission for years and continuing with their normal lives.

It has also been reported, otherwise such patients could expect to live just nine months, if given standard treatment of cancer. Researchers said, they were hopeful that half of the patients responded to immunotherapy would end up “living disease-free”.

These drugs are expensive, costing roughly US$150,000 per year, which is a part of a different debate altogether.

Not a ‘magic bullet’:

Besides its high cost and outstanding quality of results, it is worth noting that immunotherapy is not a ‘magic bullet’ for all types of patients and in all cancer. It, therefore, throws a challenge for the oncologists to understand, why immunotherapy benefits only to some cancer patients, and who are those patients?

Moreover, there is a possibility of immunotherapy sending immune system of some patients to overdrive, precipitating auto-immune disorder that may attack also the healthy cells.

Thus, immunotherapy is not the ‘Holy Grail’ for the treatment of cancer, neither it is nowhere near a perfect drug for the treatment of all types of cancers in all patients.

Two key findings:

In this regard, two key findings of the researchers on immunotherapy are as follows:

  • Roughly around 15 to 20 percent of patients could experience shrinkage or remission of cancer
  • Half of the patients who responded found it lasting for at least six months

Thus, immunotherapy can at best be a cure for only some terminally ill cancer patients, mostly for some time, but not for all.

“In the hands of God”:

All these factors on immunotherapy probably would help us to understand, why an erudite person like Mr. Jimmy Carter said, though optimistic about the new treatment, he is placing his fate ‘in the hands of God’.

B. Re-programming cancer cells back to normal: 

The question, therefore, comes up now, if immunotherapy is not the ‘Holy Grail’ for cancer treatment that the research scientists have been intensively searching for, is there anything else coming up for cancer cure?

It appears so. A totally different approach to re-program the cancer cells back to normal has very recently been reported by Mayo Clinic’s Florida Campus in the United States. With this, cancer researchers’ dream of making the tumor cells morphing back to normal cells, they once were, would probably come true.

The research findings, published in Nature Cell Biology on August 24, 2015, represents ‘an unexpected new biology that provides the code, the software for turning off cancer,’ said the senior investigator of this study.

In the normal process, cells in the human body divide constantly to replace themselves and stop dividing when they have replicated sufficiently. However, unlike the normal cells, cancer cells do not stop dividing, they go out of control, leading to huge cell reproduction and tumor growth.

For the ultimate cure of cancer, scientists at Mayo Clinic have now reportedly succeeded in reversing the process responsible for the normal cells from replicating too quickly.

Possible cure now within sight?

This could ultimately lead to a newer class of breakthrough treatment that would be able to reverse cancerous growth in the human body, possibly curing cancer, without the need of surgery, chemotherapy, radiation or even immunotherapy.

Scientists at the Mayo Clinic have said that their initial experiments in some aggressive types of cancer are quite encouraging. They have successfully done this in very aggressive human cell lines from breast and bladder cancer.

Towards the ‘Holy Grail’:

In pursuit of finding a cancer cure, research scientists have been making commendable progress, over a period of time.

In the last few years, spectacular breakthroughs in treatment of cancer have been possible from the increasing genetic and biological understanding of the researchers, especially in ascertaining exact defects in the DNA code of human genes that cause cancer.

Ability to sequencing human genome has offered a key tool to the researchers to compare the DNA codes of cancerous and normal cells and identify the differences.

From within the 20,000 human genes, around 500 cancer genes have been reportedly discovered and are being catalogued. Clear understanding of what happens precisely when the cells divide uncontrollably and cancer spreads in different parts of the patients’ body, is taking place with commendable progress of various research initiatives in this area.

Based on the current knowledge on human genome, a number of new drugs have been and are being developed to target the cancer-causing genes with great accuracy. Such types of drugs are called ‘personalized medicines’, as these act on specific gene abnormality of patients related to certain types of cancer. Sophisticated laboratory tests facilitate treatment with ‘personalized medicines’. These are more effective with lesser side-effects, as compared to generally used anti-cancer drugs, prescribed to all cancer patients.

However, the question keeps lingering, ‘Is the Holy Grail for cancer cure has now come within sight?’

Conclusion:

Medical scientists continue to take rapid strides towards better and more effective treatment for cancer, if not cure, with fewer side-effects.

Claims for long remissions with immunotherapy, are being reported for some patients with even metastatic cancer and also in old age, just like former President of America – Mr. Jimmy Carter.

The success achieved by the scientists of ‘Mayo Clinic’ in re-programming rogue cancer cells back to normal, is stunning.

Being successful in this effort, the researchers have compared cancer with a complex software program of life. When it goes out of control, ‘instead of the code for normal cells, a code for making abnormal cells is executed’. This new study signals a strong possibility of bringing the cancer cells back to normal.

Medical experts keep their fingers crossed. Although, some of them do apprehend that there may never be a single ‘Magic Bullet’ to cure all types of cancer in all patients. This is mainly because cancer involves a large number of different disease areas, such as, breast, lung, bowel, prostate, blood and so on.

But hope refuses to fade out, as science continues to keep unravelling spectacular breakthroughs in this direction, at a fairly brisk pace. All these researches may be cancer types or patient types specifics, but the progress is taking place in the right direction.

Even in the ‘Mayo Clinic study’, scientists have been, so far, successful in re-programming the breast and bladder cancer cells back to normal, though they believe that this success sends a strong signal of an “early and somewhat universal event in cancer.”

Immunotherapy is undoubtedly a path breaking step that ensures cure in some types of cancer and in some categories of patients. However, if re-programming the cancer cells back to normal, eventually becomes an ‘universal event’ in the treatment of this generally frightening disease, no doubt, the medical science is now slowly but surely inching towards the ‘Holy Grail’ for cancer cure…at long last.

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.