Author Archives: Tapan Ray

Big Pharma Receives Another Body Blow: Would Indian Slumber End Now?

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On May 13, 2014, The New York Times reported, while major pharmaceutical companies have been facing increased scrutiny of their marketing practices from governments around the world, last Wednesday the Chinese authorities sent a strong warning to the pharmaceutical industry implicating Mark Reilly, the former head of Glaxo’s China operations, of ordering his subordinates to form a “massive bribery network” that resulted in higher drug prices and illegal revenue of more than US$150 million.  Mr. Reilly, a Briton, and two Chinese-born Glaxo executives, Zhang Guowei and Zhao Hongyan, had allegedly arranged to bribe government officials in Beijing and Shanghai.

The Chinese police has reportedly said that its 10-month investigation has found that under Mr. Reilly, Glaxo had pushed its staff to meet aggressive sales targets and that the company had conducted “false transactions” through its financial department to transfer “illegal gains” made in China to overseas companies. The authorities also said Mr. Reilly and other senior executives at Glaxo had bribed officials to stop investigations of wrongdoing at the company.

The report also states, although bribery is common in China, it is rare for foreign-born executives from MNCs to be prosecuted. In 2009, a Chinese-born Australian executive at the British-Australian mining giant Rio Tinto was arrested in a bribery and money-laundering case.

“Ethics Matter” – A Chinese warning to MNCs:

On May 16, 2014, Xinhua – the official news agency of China wrote in an editorial that Chinese probe into GSK’s local sales practices should send a warning to other foreign companies doing business in the country that “Ethics Matter”.

This stern action by China is indeed another body blow on the so called ‘ethical image’ of Big Pharma, despite its sophisticated global ‘Public Relations’ machinery working overtime under the respective pharma associations across the world.

Drug price manipulation:

While citing the example of a hepatitis B drug – Heptodin, Xinhua editorial said that GSK “manipulated prices to disguise real costs”, as Heptodin is declared as 73 Yuan to customs in China even though the actual cost is 15.7 Yuan and is sold at 26 Yuan in Canada or 30 Yuan in the U.K.

Quoting a Ministry of Public Security official at a briefing on May 14, it stated that Glaxo charged prices in China that in some cases were seven times as high as in other countries, and used the extra money to pay bribes.

According to this media report, in June last year, “Chinese authorities began investigating allegations that Glaxo had funneled money through local travel agencies to pay bribes to doctors in return for prescribing its drugs. They last year detained some executives on suspicion of economic crimes involving 3 billion Yuan of spurious expenses and trading in sexual favors.”

Not a first time allegation:

This is not the first of such cases and most probably won’t be the last also. Since quite some time many pharmaceutical giants are being reportedly investigated and fined, including out of court settlements, for bribery charges related to the physicians.

In this context July 4, 2012, edition of The Guardian reported a similar astonishing story on Big Pharma. When you click on this short video clipping, which was published on September 29, 2012 you would see that Big Pharma’s Medicaid fraud penalties had reached a record high with GlaxoSmithKline fined $3 Billion in the United States at that time.

It is widespread:

Following are a few more recent examples to help fathom the enormity of the problem:

  • In March 2014, the antitrust regulator of Italy reportedly fined two Swiss drug majors, Novartis and Roche 182.5 million euros (U$ 251 million) for allegedly blocking distribution of Roche’s Avastin cancer drug in favor of a more expensive drug Lucentis that the two companies market jointly for an eye disorder.
  • Just before this, in the same month of March 2014, it was reported that a German court had fined 28 million euro (US$ 39 million) to the French pharma major Sanofi and convicted two of its former employees on bribery charges.
  • In November 2013, Teva Pharmaceutical reportedly said that an internal investigation turned up suspect practices in countries ranging from Latin America to Russia.
  • In May 2013, Sanofi was reportedly fined US$ 52.8 Million by the French competition regulator for trying to limit sales of generic versions of the company’s Plavix.
  • In August 2012, Pfizer Inc. was reportedly fined US$ 60.2 million by the US Securities and Exchange Commission to settle a federal investigation on alleged bribing of overseas doctors and other health officials to prescribe medicines.
  • In April 2012, a judge in Arkansas, US, reportedly fined Johnson & Johnson and a subsidiary more than US$1.2 billion after a jury found that the companies had minimized or concealed the dangers associated with an antipsychotic drug.

There are many more of such examples.

The situation is alarming in India too:

Back home in India, deep anguish of the stakeholders over this issue is now being increasingly reverberated on every passing day, as it were. It has also drawn the attention of the patients’ groups, NGOs, media, Government, Planning Commission and even the Parliament.

An article titled, “Healthcare industry is a rip-off” published in a leading daily, the author highlighted that the absence of regulatory oversight in the healthcare industry needs urgent attention.

The quality of the pharmaceutical marketing in India has touched a new low, causing suffering to patients. Unethical drug promotion is increasingly becoming an emerging threat to society. The Government provides few checks and balances on drug promotion.

To counter the problem of ‘Unethical Drug Promotion’ to a great extent, the author broadly recommended the following:

  • Preparing treatment guidelines,
  • Conducting periodic prescription audits,
  • Generating consumer awareness and empowering consumer with relevant information in an user friendly way
  • Regulating entertainment of doctors in the garb of Continuing Medical Education (CME)

Moreover, the Department Related Parliamentary Standing Committee on Health and Family Welfare in its 58th Report strongly indicted the Department of Pharmaceuticals (DoP) on this score. It observed that the DoP should take prompt action in making the ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’ mandatory so that effective checks and balances could be brought-in on ‘huge promotional costs and the resultant add-on impact on medicine prices’.

Even the Planning Commission of India has reportedly recommended strong measures against pharmaceutical marketing malpractices as follows:

“Pharmaceutical marketing and aggressive promotion also contributes to irrational use. There is a need for a mandatory code for identifying and penalizing unethical promotion on the part of pharma companies. Disclosure by pharmaceutical companies of the expenditure incurred on drug promotion to be made mandatory, ghost writing in promotion of pharma products to attract disqualification of the author as well as penalty on the company, and vetting of drug related material in Continuing Medical Education (CME) should be considered.”

Unfortunately, nothing substantive has been done in India to effectively address such malpractices in a comprehensive manner, as yet, to protect patients’ interest.

A pending PIL:

Despite deplorable inaction by the government on the subject, frequent reporting by Indian media has triggered a national debate on this issue. A related Public Interest Litigation (PIL) is also now pending before the Supreme Court for hearing in the near future. Its judicial verdict is expected to usher in a breath of fresh air around a rather stifling environment for the patients.

Ethical marketing conduct in India – A Survey:

A survey report of Ernst and Young titled, “Pharmaceutical marketing: ethical and responsible conduct”, carried out in September 2011 on the UCMP and MCI guidelines, highlighted the following:

  • Two-third of the respondents felt that the implementation of the UCPMP would change the manner in which pharma products are currently marketed in India.
  • More than 50 percent of the respondents are of the opinion that the UCPMP may lead to manipulation in recording of actual sampling activity.
  • Over 50 percent of the respondents indicated that the effectiveness of the code would be very low in the absence of legislative support provided to the UCPMP committee.
  • 90 percent of the respondents felt that pharma companies in India should focus on building a robust internal controls system to ensure compliance with the UCPMP.
  • 72 percent of the respondents felt that the MCI is not stringently enforcing its medical ethics guidelines for the doctors.
  • 36 percent of the respondents felt that the MCI’s guidelines could have an impact on the overall sales of pharma companies.

 Conclusion:

Increasingly many companies across the world are reportedly being forced to pay heavily for ‘unethical behavior and business practices’ by the respective governments.

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

Be that as it may, I reckon, the need to announce and implement the UCPMP by the Department of Pharmaceutical under the new Modi Government, assumes critical importance in today’s chaotic pharmaceutical marketing scenario. At the same time, demonstrable qualitative changes in corporate ethics and value standards in this regard should always be important goals for any pharmaceutical business corporation in India.

Though late, China has at least started cracking down on the perpetrators of this alleged crime. As corruption conscious Modi-Government assumes office in the country, would India wake-up now to stop this growing menace by enacting and then strictly enforcing the rule of law?

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.

Is Drug Innovation As Critical As Access To Medicines For All? [Augmented By A Video]

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To make important medicines available to all in a sustainable way, the renowned philosopher Thomas Pogge in this very interesting video clipping titled “Medicines For The 99 Percent” suggested the following three simple, yet critical, steps to effectively run the healthcare system of any nation with a cost-effective and patient-centric approach:

  • Access to important medicines for all
  • A robust drug innovation model to meet the unmet needs of patients
  • Transparent and efficient systems to make medicines affordable to all, eliminating wastage of all kinds

To translate this process into reality Pogge proposed an out-of-box model, not just to incentivize companies for drug innovation, but also to produce those drugs in a cost-effective way . In his submission, Pogge recommended a US$ 6 billion ‘Health Impact Fund’ to revolutionize the way medicines are developed and sold. He strongly argued that the value of an innovative drug should always be ascertained by its differential “Health Impact” on patients over the equivalent available generics in the respective disease areas.

As you will see in the video, the model is interesting and deserves wholehearted support from all stakeholders, despite possible resistance from some powerful quarters prompted by vested interests.

Drug innovation and access to medicines:

As the good old saying goes, “Health is Wealth”. When a person falls sick, regaining health is all-important. Medicines play a very critical role there, for all. In the ongoing battle against various types of diseases, addressing unmet needs of the patients is also equally important. For this reason, drug innovation plays just as critical a role.

However, it is now a well-known fact that medicines, as such, are not very expensive to manufacture on a relative yardstick. Abundant availability of cheaper generic medicines, post-patent expiry, with as much as  90 percent price erosion over the concerned patented drug price, would vindicate this point.

Current R&D model:

Astronomical mark-ups on the cost of goods for the innovative-patented drugs coming out of the current R&D model, restrict access to these medicines mostly to rich people of both poor and rich countries of the world, depriving majority of the have-nots. Although in an ideal situation, all these medications should be accessible to those who need them the most.

Is the model sustainable?

Innovator companies attribute ‘astronomical’ high prices of patented drugs to hefty R&D expenditure, which probably includes high cost of failures too. Unfortunately, despite ongoing raging debates, R&D expense details are still held very close to the chest by the innovator companies, with almost total lack of transparency. Many experts, therefore, believe that this opaque, skewed and unsustainable drug R&D model of the global pharma majors needs a radical makeover now, as you would yourself see by clicking on the ‘video clipping’, as mentioned above

To ensure full access to important drugs for all, there are other R&D or innovation models too. Unfortunately, none of those appears to be financially as lucrative to the innovator companies as the one that they are currently following, thus creating a challenging logjam in the inclusive process of drug innovation.

Are Pharmaceutical R&D expenses overstated?

Some experts in this area argue that pharmaceutical R&D expenses are overstated, as the real costs are much less.

An article titled “Demythologizing the high costs of pharmaceutical research”, published by the London School of Economics and Political Science in 2011 indicated that the total cost from the discovery and development stages of a new drug to its market launch was around US$ 802 million in the year 2000. This was worked out in 2003 by the ‘Tuft Center for the Study of Drug Development’ in Boston, USA.

However, in 2006 this figure increased by 64 per cent to US$ 1.32 billion, as reported by a large pharmaceutical industry association of the United States, though with dubious credibility as considered by many.

The authors of the above article had also mentioned that the following factors were not considered while working out the 2006 figure of US$ 1.32 billion:

▪   Tax exemptions that the companies avail for investing in R&D

▪   Tax write-offs that amount to taxpayers’ contributing almost 40 percent of the R&D cost

▪   Cost of basic research should not have been included as those are mostly undertaken       by public funded universities or laboratories

The article observed that ‘half the R&D costs are inflated estimates of profits that companies could have made, if they had invested in the stock market instead of R&D and include exaggerated expenses on clinical trials’.

“High R&D costs have been the industry’s excuses for charging high prices”:

In line with this deliberation, in the same article the authors reinforce the above point, as follows:

“Pharmaceutical companies have a strong vested interest in maximizing figures for R&D as high research and development costs have been the industry’s excuse for charging high prices. It has also helped generating political capital worth billions in tax concessions and price protection in the form of increasing patent terms and extending data exclusivity.”

The study concludes by highlighting that “the real R&D cost for a drug borne by a pharmaceutical company is probably about US$ 60 million.”

Should Pharmaceutical R&D move away from the traditional model?

Echoing philosopher Thomas Pogge’s submission, another critical point to ponder today is:

Should the pharmaceutical R&D now move away from its traditional comfort zone of expensive one company initiative to a much less charted frontier of sharing drug discovery involving many players?

If this overall collaborative approach gains broad acceptance and then momentum sooner, with active participation of all concerned, it could lead to substantial increase in R&D productivity at a much lesser expenditure, eliminating wastage by reducing the cost of failures significantly, thus benefiting the patients community at large.

Choosing the right pathway in this direction is more important today than ever before, as the R&D productivity of the global pharmaceutical industry, in general, keeps going south and that too at a faster pace.

Making drug innovation sustainable: 

Besides Thomas Pogge’s model with ‘Health Impact Fund’ as stated above, there are other interesting drug R&D models too. In this article, I shall focus on two examples:

Example I:

A July 2010 study of Frost & Sullivan reports: “Open source innovation increasingly being used to promote innovation in the drug discovery process and boost bottom-line”.

The concept underscores the urgent need for the global pharmaceutical companies to respond to the challenges of high cost and low productivity in their respective R&D initiatives, in general.

The ‘Open Innovation’ model assumes even greater importance today, as we have noted above, to avoid huge costs of R&D failures, which are eventually passed on to the patients again through the drug pricing mechanism.

‘Open Innovation’ model, as they proposed, will be most appropriate to even promote highly innovative approaches in the drug discovery process bringing many brilliant scientific minds together from across the world.

The key objective of ‘Open Innovation’ in pharmaceuticals is, therefore, to encourage drug discovery initiatives at a much lesser cost, especially for non-infectious chronic diseases or the dreaded ailments like Cancer, Parkinson’s, Alzheimer, Multiple Sclerosis, including many neglected diseases of the developing countries, making innovative drugs affordable even to the marginalized section of the society.

Android smart phones with huge commercial success are excellent examples of ‘Open Source Innovation’. So, why not replicate the same successful model of inclusive innovation in the pharmaceutical industry too?

Example II - “Accelerating Medicines Partnership (AMP)” initiative:

This laudable initiative has come to the fore recently in he arena of collaborative R&D, where 10 big global pharma majors reportedly decided in February 2014 to team up with the National Institutes of Health (NIH) of the United States in a ‘game changing’ initiative to identify disease-related molecules and biological processes that could lead to future medicines.

This Public Private Partnership (PPP) for a five-year period has been named as “Accelerating Medicines Partnership (AMP)”. According to the report, this US federal government-backed initiative would hasten the discovery of new drugs in cost effective manner focusing first on Alzheimer’s disease, Type 2 diabetes, and two autoimmune disorders: rheumatoid arthritis and lupus. The group considered these four disease areas among the largest public-health threats, although the span of the project would gradually expand to other diseases depending on the initial outcome of this project.

“A Social Brain Is a Smarter Brain”: 

As if to reinforce the concept, a recent HBR Article titled “A Social Brain Is a Smarter Brain” also highlighted, “Open innovation projects (where organizations facing tricky problems invite outsiders to take a crack at solving them) always present cognitive challenges, of course. But they also force new, boundary-spanning human interactions and fresh perspective taking. They require people to reach out to other people, and thus foster social interaction.” This articulation further reinforces the relevance of a new, contemporary and inclusive drug innovation model for greater patient access.

Conclusion:

Taking these points into perspective, I reckon, there is a dire need to make the process of offering innovative drugs at affordable prices to all patients absolutely robust and sustainable as we move on.

Philosopher Thomas Pogge, in his above video clipping, has also enunciated very clearly that all concerned must ensure that medications get to those who need them the most. He has also shown a win-win pathway in form of creation of a “Health Impact Fund’ to effectively address this issue. There are other inclusive, sustainable and cost effective R&D models too, such as Open Innovation and Accelerating Medicines Partnership (AMP), to choose from.

That said, a paradigm shift in the drug innovation model can materialize only when there will be a desire to step into the uncharted frontier, coming out of the comfort zone of much familiar independent money spinning silos of drug innovation. Dove tailing business excellence with the health interest of all patients, dispassionately, would then be the name of the game.

Bringing this transformation sooner is extremely important, as drug innovation would continue to remain as critical as access to important medicines for all, in perpetuity.

However, to maintain proper checks and balances between drug innovation and access to medicines for all, the value of an innovative drug should always be ascertained by its differential ‘Health Impact’ on patients over equivalent available generics in that disease area and NOT by how much money, including the cost of R&D failures, goes behind bringing such drugs to the market, solely driven by commercial considerations.

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.

 

 

RHDS: A Simmering Promise in Despondency

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Eric Topol, a leading cardiologist who has embraced the study of genomics and the latest advances in technology to treat chronic disease says, “We’ll soon use our smartphones to monitor our vital signs and chronic conditions in future.”

By clicking on this video clipping, you can watch how Dr. Topol in his talk titled “The Wireless Future of Medicine”, highlights several of the most important wireless devices in medicine’s future – all helping to keep more patients out of hospital beds.

In achieving similar objectives, India’s potential is indeed immense. The good news is, though in India Internet penetration has just crossed 16 percent of its total population, in absolute numbers this percentage reportedly works out to nearly 10 times the population of Australia. According to a report released by the Internet and Mobile Association of India (IMAI) and IMRB, there will be around 243 million internet users in India by June 2014, overtaking the US as the world’s second largest internet base after China. This situation must be leveraged to improve access to healthcare in the country significantly.

‘Remote Healthcare Delivery Solutions (RHDS)’

However, for several other reasons the situation is quite challenging in India. Out of its total population of over 1.2 billion, nearly 72.2 percent live in the hinterland and remote rural areas spreading across over 700,000 villages. In all these places, despite huge prevalence of diseases, inadequate healthcare infrastructure and delivery mechanisms offer an ideal backdrop to explore innovative healthcare solutions such as, ‘Remote Healthcare Delivery Solutions (RHDS)’ or ‘Telemedicine’. In that endeavor, smartphones could play a key role in improving access to healthcare for a very large number of population.

The World Health Organization (WHO) has defined ‘Telemedicine’ as:

“The use of information and communications technology (ICT) to deliver healthcare, particularly in settings where access to medical services is insufficient.”

Thus, to effectively improve access to healthcare, especially in rural India, RHDS holds a great promise.

A complex mix:

Healthcare space in India is generally a complex mix of issues related to access, availability, affordability and quality of healthcare, compounded by inadequate public healthcare infrastructure and delivery system on the one hand and expensive private healthcare facilities on the other. The degree of this complexity is rather stark in rural areas.

In a situation like this, RHDS holds a great promise to satisfy healthcare needs of the hinterland and rural India, as this would entail effective medical care, despite understaffed Primary Healthcare Centers (PHCs) and undertrained healthcare staff, with low start-up costs.

Equipped with modern Internet enabled technologies, RHDS would facilitate transmission of patient related information through SMS, email, audio, video, or other image transmissions, like MRI and CT Scans to relevant specialists of different disciplines of medical sciences located in other places. With RHDS, these specialists can monitor even blood pressure or blood glucose levels of patients on computer screens without examining them in person.

Key advantages:

The key advantages of a structured and well committed implementation of RHDS or ‘Telemedicine’ in india are as follows:

  • Elimination of many costs, including travel expenses for specialists and patient transfers – especially in a critical health situation, improving access to quality healthcare.
  • Reduction of feeling of isolation of the rural medical practitioners by upgrading their knowledge through Tele-education or Tele-Continuing Medical Education (CME) programs.

RHDS in India:

In India, RHDS initiative in form of telemedicine commenced more than a decade ago in 1999, when the Indian Space Research Organization (ISRO) deployed a SATCOM-based telemedicine network across the country. ISRO’s telemedicine program has now been reportedly enhanced to multi-point systems with a network of 400 centers across India.

The good news is, besides Department of Information Technology, the Ministry of Health & Family Welfare and many state governments, some well-reputed medical and technical institutes, corporates and academia have also started taking active interest in this area, especially oriented for the rural population of India.

In this context it is worth mentioning that in March 2014, Biocon Foundation reportedly partnered with Canara Bank and the Odisha Government for an e-healthcare program that aims at setting up of diagnostic facilities in PHCs to improve healthcare access to  51,000 villages.

Simultaneously, the Department of Information Technology has put in place the ‘Standards for Telemedicine Systems’ and the Ministry of Health & Family Welfare has constituted the National Telemedicine Task Force to provide further thrust to RHDS in India,.

To cite an example, US based World Health Partners (WHP) have reportedly set up an extensive Tele-Medicine network in the state of Uttar Pradesh (UP), which has received almost 35,000 calls in two years requesting for services. After receiving the calls, the patients requiring intervention were directed to WHP’s franchisee clinics in the respective areas. This model included three areas namely, Meerut, Bijnor and Muzzafarnagar.

Apollo group, Narayana Hruduyalaya, Aravind Eye Hospital and Asia Heart Foundation are also running similar system in India. Unfortunately, none of these or even all put together can extend such facilities to patients across the whole of India, just yet.

The Market:

According to a report of Infinity research the global market for telemedicine is around US$ 9 billion with a CAGR of 20 percent. However, another report quoting KSA Technopak indicates that the Indian market is currently relatively very small with a market size of around US$ 7.5 Million. Considering future growth opportunities, as deliberated here, RHDS market holds a great promise.

Telemedicine or RHDS market is classified based on the type of technology and services used and usually analyzed on the basis of telemedicine applications, such as Tele-consultation, Tele-cardiology or Tele-dermatology etc. However, Tele-consultation reportedly dominates the telemedicine services market.

To give an idea of its market potential, the BRIC (Brazil, Russia, India and China) telemedicine market was reportedly at US$ 200.5 million in 2009 and was expected to expand at a CAGR of 15.8 percent from 2009 to 2014.

The telemedicine technology market segment forms the largest segment of the overall BRIC telemedicine market and is expected to be US$ 307.4 million by end 2014 with a CAGR of 16.6 percent from 2009 to 2014. The services segment in the overall BRIC telemedicine market is expected to reach US$ 111 million in 2014 with a CAGR of 13.8 percent.

The Challenges in India:

Again there are following two critical challenges in this areas:

  • The biggest challenge is undoubtedly the broadband Internet connectivity.
  • Transmitting patients’ medical records through Internet could infringe upon patient privacy giving rise to ethics related issues, besides avoidable litigations.

I reckon, these concerns can be well addressed, if both the private healthcare providers and the Government together resolve and chart a time-bound pathway to improve access to quality healthcare in a cost effective manner to a large majority of Indian population.

Conclusion:

Various public and private RHDS solution providers are gradually getting actively engaged, though incoherent way, to create awareness about telemedicine in the country. This  brings with it a never before hope of ensuring access to quality healthcare to almost the entire population of the country.

A survey conducted in the United States highlighted that 85 percent of patients expressed satisfaction with their telemedicine consultation. Back home in India, a similar study in Odisha reported a satisfaction rate as high as 99 percent post telemedicine consultation.

Having a large base of medical and IT manpower with requisite expertise in RHDS, India holds a great promise to become a major telemedicine hub even for its neighboring countries, transforming the healthcare delivery scenario in all those places significantly.

Bundling all these, together with the increasing use of Internet enabled smartphones as explained by Dr. Eric Topol in his video clipping above, RHDS does offer a simmering promise in an otherwise despondent healthcare scenario of 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.

Would ‘Empowered Patients’ Hold The Key For Rapid Progress of Healthcare In India?

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Empowered patients would eventually hold the key of rapid progress of healthcare all over world. It has to happen in India too and is just a matter of time.

One such approach has recently been initiated in America. ‘The Patient-Centered Outcomes Research Institute (PCORI)’, established through 2010 Patient Protection and Affordable Care Act of the United States, helps its people in making informed healthcare decisions to significantly improve healthcare delivery and outcomes. Active promotion of high integrity, evidence-based information that comes from intensive research, ably guided by patients, caregivers and the broader healthcare community, forms the bedrock of this Institute.

PCORI ensures that, patients and the public at large have information that they can use to make decisions that reflect their desired health outcomes.

This initiative can be termed as one of the key steps towards ‘Patients Empowerment’ in the United States, setting a good example for many other countries to follow, across the world.

Come May 2014, the new Union Government of India, with its much touted focus on healthcare, would probably find this Act worth emulating.

Changing doctor-patient relationship:

In good old days, well before the accelerated use of Internet became a way of life for many, patients used to have hardly any access to their various health related information. As a result doctors used to be the sole decision makers to address any health related problem of patients, sitting on a pedestal, as it were.

Any patient willing to discuss and participate in the decision making process of his/her ailments with the doctors, would in all probability be frowned upon with a condescending question – “Are you a doctor?” Clearly indicating – ‘Keep off! I am the decision maker for you, when you are sick”. This situation, though changing now even in India, rather slowly though, needs a radical transformation with clearly established individual ‘patient empowerment’ mechanism in the country.

Individual ‘Patient Empowerment’:

Just as PCORI in the US, Government of India too needs to encourage individual ‘Patient Empowerment’ by making him/her understand:

  • How is the healthcare system currently working on the ground?
  • What are the key drivers and barriers in getting reasonably decent healthcare support and solution in the country?
  • What should be done individually or collectively by the patient groups to overcome the obstacles that come on the way, even in rural India?
  • How should patients participate in his/her healthcare problem solving process with the doctors and payor?

The essence of ‘Patient Empowerment’:

‘Natural Health Perspective’ highlighted ‘Patient Empowerment’ as follows:

  • Health, as an attitude, can be defined as being successful in coping with pain, sickness, and death. Successful coping always requires being in control of one’s own life.
  • Health belongs to the individual and the individuals have the prime responsibility for his/her own health.
  • The individual’s capacity for growth and self-determination is paramount.
  • Healthcare professionals cannot empower people; only people can empower themselves.

It started in America: 

Much before PCORI, the movement for ‘Patient Empowerment’ started in America in the 70’s, which asserts that for truly healthy living, one should get engaged in transforming the social situation and environment affecting his/her life, demanding a greater say in the treatment process and observing the following tenets:

  • Others cannot dictate patients’ choice and lifestyle
  • ‘Patient Empowerment’ is necessary even for preventive medicines to be effective
  • Patients, just like any other consumers, have the right to make their own choices

Thus, an ‘Empowered Patient’ should always play the role of a participating partner in the healthcare decision making or problem solving process.

‘Patient empowerment’ is a precursor to ‘Patient-Centric’ approach:

In today’s world, the distrust of patients on the healthcare system, pharmaceutical companies and even on the drug regulators, is growing all over the world. Thus, to help building mutual trust in this all important area, the situation demands encouraging ‘Empowered Patients’ to actively participate in his/her medical treatment process.

In India, as ‘out-of-pocket’ healthcare expenses are skyrocketing in the absence of a comprehensive, high quality and affordable Universal Health Coverage (UHC) system, the ‘Empowered Patients’ would increasingly demand to know more of not only the available treatment choices, but also about the medicine prescription options.

‘Patient Empowerment’ is the future of healthcare:

Even today, to generate increasing prescription demand and influence prescription decision of the doctors, the pharmaceutical companies provide them with not just product information through their respective sales forces, but also drug samples and a variety of different kinds of gifts, besides many other prescription influencing favors. This approach is working very well, albeit more intensely, in India too.

Being caught in this quagmire, ‘Empowered Patients’ have already started demanding more from the pharma players for themselves. As a result, many global majors are now cutting down on their sales force size to try to move away from just hard selling and to gain more time from the doctors.  Some of them have started taking new innovative initiatives to open up a chain of direct web-based communication with patients to know more about the their needs in order to satisfy them better.

In future, with growing ‘Patient Empowerment’ the basic sales and marketing models of the pharmaceutical companies are expected to undergo a paradigm shift. At that time, so called ‘Patient-Centric’ companies of today would have no choice but to walk the talk.

Consequently, most pharma players will have to willy-nilly switch from ‘hard-selling mode’ to a new process of achieving business excellence through continuing endeavor to satisfy both the expressed and the un-expressed or under-expressed needs of the patients, not just with innovative products, but more with innovative and caring services.

In the years ahead, increasing number of ‘Empowered Patients’ are expected to play an important role in their respective healthcare decision making process, initially in the urban India. Before this wave of change effectively hits India, the pharmaceutical players in the country should pull up their socks to be a part of this change, instead of attempting to thwart the process.

‘Empowered Patients’ can influence even the R&D process:

Reinhard Angelmar, the Salmon and Rameau Fellow in Healthcare Management and Professor of Marketing at INSEAD, was quoted saying that ‘Empowered Patients’ can make an impact even before the new drug is available to them.

He cited instances of how the empowered breast cancer patients in the US played a crucial role not only in diverting funds from the Department of Defense to breast cancer research, but also in expediting the market authorization and improving market access of various other drugs.

Angelmar stated that ‘Empowered Patients’ of the UK were instrumental in getting NICE, their watchdog for cost-effectiveness of medicines, to change its position on the Age-related Macular Degeneration (AMD) drug Lucentis of Novartis and approve it for wider use than originally contemplated by them.

Patient groups such as the Cystic Fibrosis Foundation (CFF) reportedly fund directly to develop novel therapies that benefit patients in partnership with industry.

Meeting with the challenge of change:

To effectively respond to the challenge posed by the ‘Empowered Patients’, some pharmaceutical companies, especially in the US, have started developing more direct relationship with them. Creation of ‘Patient Empowered’ social networks may help addressing this issue properly.

Towards this direction, some companies, such as, Novo Nordisk had developed a vibrant patient community named ‘Juvenation’, which is a peer-to-peer social group of individuals suffering from Type 1 diabetes. The company launched this program in November 2008 and now the community has much over 16,000 members, as available in its ‘Facebook’ page.

Another example, Becton, Dickinson and Co. had created a web-based patient-engagement initiative called “Diabetes Learning Center” for the patients, not just to describe the causes of diabetes, but also to explain its symptoms and complications. From the website a patient can also learn how to inject insulin, along with detailed information about blood-glucose monitoring. They can even participate in interactive quizzes, download educational literature and learn through animated demonstrations about diabetes-care skills.

Many more Pharmaceutical Companies, such as Pfizer, Johnson & Johnson, Novartis, Boehringer Ingelheim, AstraZeneca, Bayer, GlaxoSmithKline, Sanofi, Roche and Merck are now directly engaging with the customers through social media like Twitter, Facebook etc.

Technology is helping ‘Patient Empowerment’:

Today, Internet and various computer/ iPad and smart phone based applications have become great enablers for the patients to learn and obtain more information about their health, illnesses, symptoms, various diagnostic test results, including progress in various clinical trials, besides product pricing.

In some countries, patients also participate in the performance reviews of doctors and hospitals.

Conclusion:

Increasing general awareness and rapid access to information on diseases, products and the cost-effective treatment processes through Internet, in addition to fast communication within the patients/groups through social media like, ‘Twitter’ and ‘Facebook’ by more and more patients, I reckon, are expected to show the results of ‘Patient Empowerment’ initiatives, sooner than later, even in India.

Accelerated ‘Patient Empowerment’ initiatives with modern technological support, would help the patient groups to have a firm grip on the control lever of setting truly patient centric direction for the healthcare industry.

Working in unison by all stakeholders towards this direction, would herald the dawn of a new kind of laissez-faire in the healthcare space of India, the sole beneficiary of which would be the mankind at large.

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.

 

Would e-Marketing Replace Medical Representatives?

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Many people within the pharmaceutical industry cannot simply visualize a drug marketing environment without Medical Representatives (MRs) detailing their products to doctors for ever increasing prescription support. This much traditional sales force, for face to face interaction and transaction with the customers, is considered virtually indispensable and has formed the backbone for organic growth of the global pharma industry since decades.

It has emerged this way because, pharmaceutical industry sells drugs predominantly through doctors’ prescriptions, where MRs play a pivotal role to influence them directly or indirectly in various ways.

Therefore, for greater success through effective increase in customer focus, as compared to competition, pharma companies are engaged in expanding the size of their respective field-forces on an ongoing basis, though in varying numbers. However, over a period of time, this process has become very expensive, costing on an average around 17 to 20 percent, if not more, of the total expenditure of a company.

As a result, many companies have now started experiencing that their business return on ever increasing number of MRs is not commensurate to investments made on them, mainly in terms of productivity growth per headcount.

This overall scenario has now prompted many pharma players, across the world, to take a hard look at the evolving drug marketing scenario and expeditiously address the consequent issues, as I shall deliberate in this article.

MRs historical role:

Most of the pharma players use their MRs to implement predominantly the following time-tested strategic game plans to generate more and more prescriptions for their respective brands:

  • Detailing product features and benefits
  • Distributing free samples and gifts
  • Developing Key Opinion Leaders (KOL) for identified products
  • Arranging product oriented seminars, conferences and Continuing Medical Education (CME) programs
  • Monitoring doctors prescriptions and incentivizing them in various company specific ways
  • Giving necessary feedbacks to their respective companies

Productive ‘doctor calls’ becoming increasingly difficult:

According to an article titled “Are Sales Reps Necessary?” published in ‘The Pharma Marketing News’, the following details, besides others, were captured in the United States:

  • MRs’ average only 2 quality details per day (quality details include discussion of features, benefits, and data).
  • Only 43 percent of MRs ever gets past the receptionist
  • Only 7 percent of pharma rep visits last more than 2 minutes
  • Only 6 percent of physicians think representatives are very fair balanced
  • The physician remembers only 8 percent of MR calls

Optimal MR productivity – the key issues:

The issue of desired MR productivity is thus becoming a cause of great concern globally for the pharma players. This is mainly because, while the number of patients is fast increasing, the doctors are trying to see all these patients within their limited available time. As a result, each patient is getting lesser doctors’ time, even though the doctors are trying to provide optimal patient care in each patient visit.

In tandem, other obligations of various kinds, personal or otherwise, also overcrowd physicians’ time. In a situation like this, increasing number of MRs, which has almost doubled in the past decade, is now fiercely competing with each other to get a share of lesser and lesser available time of the doctors. Added to this, inflow of new doctors not being in line with the increasing inflow of patients, is making the situation even worse.

According to another study of CMI Communication Media Research, about half of physicians restrict visits from MRs in one-way or another. It reported, about half of cancer specialists (oncologists) are now saying that they would interact only on new products with MRs, while 47 percent of them indicated email as a preference to MR calls.

Surveys found that the oncologists are the most restrictive specialists, with only 19 percent allowing MRs without restrictions. Moreover, 20 percent of them would not see MRs at all and another 40 percent either require prior appointments or limit visits to particular hours of the day/week.

Downsizing sales force with e-marketing:

A paper published in the WSJ titled, “Drug Makers Replace Reps With Digital Tools” states that pharmaceutical companies in the United States are downsizing their sales force with increasing usage of iPad apps and other digital tools for interacting with doctors.

Such widespread layoffs do signal to many that digital tools and technology have started replacing the MRs, at least in the United States, may be in a limited way to begin with.

Building relationship:

However, other group of industry watchers believe that eliminating MRs from the pharma marketing process could lead to a serious set back in the doctor-pharma company face to face relationship that is very important for success While rebutting this point, the pro e-marketing proponents  raise a counter question: Does such relationship now exist with most MRs so far as the high value target doctors are concerned?

e-marketing gradually taking roots:

Many fascinating experiments with e-marketing have now started in several places of the world with considerable success, in tandem with germination of even bolder and brighter ideas in this area. However, the above report mentioned the following:

  • AstraZeneca tracks what doctors view on the website and uses that information to tailor marketing content for the doctor during subsequent interactions. The company had reportedly said in 2010, that it plans to eliminate 10,400 jobs by 2014, including thousands of sales positions in Western markets amounting to around 16 percent of its work force. This step was to help the company saving around US$1.9 billion a year by 2014.
  • When German drug maker Boehringer Ingelheim GmbH launched the cardiovascular drug Pradaxa in the US, it reportedly put together a digital-marketing package to target doctors, including organizing webcasts for leading physicians to speak to other physicians about the drug, with considerable success.
  • Novo Nordisk in 2010 launched a website and iPad/iPhone application called ‘Coags Uncomplicated’, which offers tools to help doctors diagnose bleeding disorders. The site and app include a plug for Novo Nordisk’s drug NovoSeven, which helps stop bleeding related to acquired hemophilia. It has several other applications available on iTunes, including one that helps doctors calculating blood-sugar levels.
  • Some other companies offering iPhone and iPad based apps for doctors include among others, Sanofi, Merck, Pfizer, GlaxoSmithKline, Novartis and Eli Lilly.

Advantages of e-marketing:

As I had indicated earlier in my blog post, ‘e-marketing’ would help creating customized, more impressive, self-guided by doctors and more focused presentations with significant reduction in the detailing cost/ product with improved productivity.

Moreover, ‘e-marketing’ would:

  • Make expensive printed promotional aids redundant
  • Eliminate time required and cost involved to deliver such material
  • Have the flexibility of change at any time
  • Ordering of just required samples online would help eliminating wastage

Fast increasingly number of doctors using Internet enabled computers/tablets and smart phones for professional purposes, especially in the urban areas, would facilitate this process.

Conclusion:

Keeping in mind this changing scenario, mindset and behavior of the doctors, as lesser and lesser time is available with the high value target customers for interaction with the MRs, the pharma players would require to take afresh a hard look at their own strategic marketing vision and principles to zero-in on the most effective mix. This approach, I reckon, is applicable more to the domestic players in India.

For high value target customers a combo-strategy would probably be more effective now. In this strategic game plan, MRs would continue to remain as the basic fabric of a drug marketing process, though in reduced numbers and augmented by increasing focus on new technologies/applications through iPad, smart phones, various Internet enabled tools, social networking sites and real time analytics. Formidable differential marketing thrust that would be created through skillful execution of this combo-strategy, is expected to be more effective in making both top and bottom line performance of a pharma player sustainably impressive to the stakeholders.

The name of the game is, therefore, impactfully delivering the core tangible and intangible product values to the doctors for desired outcome in their prescriptions decision making process, keeping in pace with the changing demand of time with a long-term ability to innovate.

That said, would e-marketing then replace MRs to a considerable extent in the years ahead?

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.

The Takeover Magician To Tango Again On A Bold New ‘Sunny’ Tune

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The consolidation process of the Indian pharmaceutical industry continues in its own pace. Most recently, the homegrown pharma takeover magician is all set to tango yet again with a bold ‘Sunny’ tune. The low profile creator of high value ‘Sun Pharmaceuticals’, that he painstakingly built from the scratch facing many turbulent weather over nearly three decades, is ready to go for the gold, yet again.

The cool, composed and the decisive business predator is now in the process of gobbling up, quite unexpectedly, the much ailing prey – Ranbaxy. This acquisition of a distressed asset, would make Sun Pharmaceuticals a pharma behemoth not just in India with a jaw-dropping 9.33 percent share of the Indian Pharma Market (IPM), but also would help catapulting the company to become the 5th largest generic pharmaceutical company globally.

Ranbaxy – A sad example of value destruction:

It is worth recapitulating that in 2008, Daiichi Sankyo paid reportedly US$ 4.6 billion to acquire 63.8 percent stake in Ranbaxy.

After Sun Pharma’s acquisition of Ranbaxy with US$ 3.2 billion in 2014, Daiichi Sankyo will hold just 9 per cent of Sun Pharma, which is currently worth US$ 2 billion. Such an example of value erosion of a pharma giant in a little over 5 year period is not just unique, but very sad indeed.

Keeping the “Sunny” side up”:

It is expected that post acquisition, Sun Pharma would continue to keep its ‘Sunny Side’ up, maintaining the corporate name of the merged entity as ‘Sun Pharma’.

Ranbaxy name, in any case, is not so popular, either inside or outside India after the US-FDA fiasco, casting aspersions on the quality of products that it manufactures.

Moreover, the history indicates that this is exactly what happened when Abbott acquired Piramal Healthcare, Zydus bought over Biochem or even Torrent took control of Elder.

Ranbaxy name could probably exist as a division of Sun pharma in future, if at all.

Post acquisition IPM league table:

According to AIOCD AWACS, extrapolating the post acquisition scenario on the league table (MAT February 2014) of the Top 10 Pharma majors in India, it looks as follows:

Rank Company Value Rs. Crore Market Share % Growth %
1 Sun Pharma Group 6,741 9.33 8.8
2 Abbott Group 4,758 6.59 4.6
3 Cipla 3,493 4.84 8.5
4 Zydus Group 3,116 4.31 9.7
5 GSK 2,727 3.78 -14.7
6 Lupin 2,457 3.40 12.4
7 Alkem Group 2,433 3.37 10.1
8 Mankind 2,257 3.12 7.6
9 Pfizer + Wyeth 2,150 2.98 3.0
10 Emcure Group 2,048 2.83 15.5
Total IPM 72,236 100.00 6.0

(Source: AIOCD AWACS)

Distancing from No. 2 by a mile:

With the above unprecedented chunk of the IPM, Sun Pharma would distance itself from the (would be) second ranking Abbott with a whopping 2.74 percent difference in market share, which would be equivalent to the turnover of the 10th ranking pharma player in the domestic pharma market.

In its pursuit of corporate excellence, Sun Pharma has made 13 acquisitions between 1990s and 2012.  Post merger, the revenue of the combined entity is estimated to be around US$ 4.2 billion with EBITDA of US$ 1.2 billion for the 12-month period that ended on December 31, 2013.

Merger consolidates ‘Domestic Pharma’ market share:

This acquisition would also tilt the balance of ‘Domestic Pharma’ Vs. ‘Pharma MNC’ market share ratio in the IPM very significantly, as follows:

Current Market Share Ratio

Post Acquisition Market Share Ratio

Domestic Pharma Vs. Pharma MNC

73.4 : 26.6

77.2 : 22.8

(Source: AIOCD AWACS)

Further, this trend is also expected to allay the lurking fear of many about the robustness and future growth appetite of the domestic pharma industry, thus becoming an easy prey of pharma MNC predators.  It is believed that such an apprehension was prompted by a series of large ‘Brownfield FDIs’ coming into the Indian pharma industry to acquire a number of important local assets.

The key challenges:
1. Sun Pharma too is under US-FDA radar:
As we know that along with Ranbaxy, Wockhardt and some others, Sun Pharma has also come under the USFDA radar for non-compliance of the Current Good Manufacturing Practices (cGMPs).

Under the prevailing circumstances, it would indeed be a major challenge for Sun Pharma to place its own house in order first and simultaneously address the similar issues to get US-FDA ‘import bans’ lifted from four manufacturing plants of Ranbaxy in India that export formulations and API to the United States. This is quite a task indeed.

2. Pending Supreme Court case on Ranbaxy:

Prompted by a series of ‘Import Bans’ from US-FDA on product quality grounds, the Supreme Court of India on March 15, 2014 reportedly issued notices to both the Central Government and Ranbaxy against a Public Interest Litigation (PIL) seeking not just cancellation of the manufacturing licenses of the company, but also a probe by the Central Bureau of Investigation (CBI) on the allegation of supplying adulterated drugs in the country.

Ranbaxy/ Sun pharma would now require convincing the top court of the country that it manufactures and sells quality medicines for the consumption of patients in India. No doubt, all these issues were factored-in for relatively cheap valuation of Ranbaxy.

3. CCI scrutiny of the deal:

Out of the Top 10 Therapy Areas, the merged company would hold the top ranking in 4 segments namely, Cardiac, Neuro/CNS, Pain management and Gynec and no. 2 ranking in two other segments namely, Vitamins and Gastrointestinal.

Noting the above scenario and possibly many others, the Competition Commission of India (CCI), after intense scrutiny, would require to take a call whether this acquisition would adversely affect market competition in any of those areas. If so, CCI would suggest appropriate measures to be completed by these two concerned companies before the deal could take effect. This would also be a task cut out for the CCI in this area.

4. SEBI queries:

Securities and Exchange Board of India (SEBI), has sought information from Sun Pharmaceutical on stock price movement and the deal structure.

According to reports, this is due to “Ranbaxy shares showing good movement on three occasions: first in December, then in January and subsequently in March 2014, just before the deal was announced.” This has already attracted SEBI’s attention and has prompted it to go into the details.

The opportunities:

That said, there are many opportunities for Sun Pharma to reap a rich harvest out of this acquisition. The most lucrative areas are related to Ranbaxy’s missed opportunities for ‘first to launch’ generic versions of two blockbuster drugs – Diovan (Novartis) and Nexium (AstraZeneca).

Diovan (Novartis):

Despite Ranbaxy holding the exclusive rights to market the first generic valsartan (Diovan of Novartis and Actos of Takeda) for 180 days, much to its dismay, even after valsartan patent expired on September 2012, a generic version of the blockbuster antihypertensive is still to see the light of the day. However, Mylan Inc. has, now launched a generic combination formulation of valsartan with hydrochlorothiazide.

Nexium (AstraZeneca):

Ranbaxy had created for itself yet another opportunity to become the first to launch a generic version of the blockbuster anti-peptic ulcerant drug of AstraZeneca – Nexium in the United States, as the drug goes off patent on May 27, 2014. However, due to recent US-FDA import ban from the concerned plant of Ranbaxy, it now seems to be a distant reality. Unless…

Sun Pharma has reportedly 10 manufacturing plants in India and 8 in the US, besides having other production facilities in Israel, Mexico, Hungary, Canada, Bangladesh and Brazil. Post acquisition, the combined entity will have operations in 65 countries with 47 manufacturing facilities spanning across 5 continents, providing a solid platform to market specialty and generic products globally. With all these, the above key issues would perhaps be addressed expeditiously.

Leaving aside those two big opportunities, post merger, Sun Pharma is expected to have around 629 ANDAs waiting for approval, including first-to-file opportunities in the United States, besides the current ongoing businesses of the merged company.

What about cost synergy?

Though Sun pharma promoters have given an indication about the revenue synergy, nothing is known, as yet, about the targeted details of cost synergy after this acquisition.

Conclusion:

I reckon, the consolidation process in the Indian pharmaceutical industry would continue, though with a different pace at different times, involving both the domestic pharma and MNCs as the predators.

Even before ‘The Breaking News’ of this brand new well hyped acquisition came from Reuters, in the ‘Corporate World’ of India, Dilip Shanghvi used to be known as an unassuming and astute self-made business tycoon blessed with a ‘magic wand’ deeply concealed in between his two ears, as it were. Folks say, at an opportune time, wielding this ‘wand’, he confidently turns distressed pharma assets into money-spinners and has proved it time and again with grit, grace and élan in equal measures.

Can he do it again? Well…Why not?

Thus, while acquiring the ailing Ranbaxy with a value for money, the takeover magician, prepares for his best shot ever, wielding the same magic wand yet again, to steer the new company from an arduous, dark and complex path, hopefully, to a bright frontier of sustainable excellence.

Let’s hope for the best, as the ‘Tango’ begins…on a bold new ‘Sunny’ tune.

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.

 

Is The New ‘Market Based Pricing’ Model Fundamentally Flawed?

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After a long wait of close to two decades, when the Drug Price Control Order 2013 (DPCO 2013) followed the National Pharmaceutical Pricing Policy 2012 (NPPP 2012) last year, it appeared that the new pharma price control regime is more acceptable to the industry than the previous, resulting in better over all implementation and compliance.

However, just within a year, the reality seems to be quite different. Not only the Ceiling Price (CP) calculation process of the National Pharmaceutical Pricing Authority (NPPA) based on DPCO 2013 appears to be fundamentally flawed, its misuse and abuse by some pharma players have also been the subject of great concern and consumer aghast.

The eternal ‘Cat and Mouse’ game continues:

Probably there would be many instances of pharmaceutical companies dodging the DPCO 2013. However, FDA, Maharashtra, has unearthed the following two instances, so far:

1. Favorable consumer expectations with well-hyped DPCO 2013 received a body blow for the first time, when the general public came to know through media reports, that too after almost a year, that 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, has planned to gradually withdraw its conventional price controlled Crocin 500 mg brand costing around Rs 14 for a strip of 15 tablets to the patients . GSK Consumer Healthcare claims that Crocin Advance is a new drug and therefore should be outside price control.

According to IMS Health data, ‘Crocin Advance’ is currently the fifth largest brand among top Paracetamol branded generics, clocking a sales turnover of Rs 10.3 Crore during the last 12 months ending in February 2014.

2. The second instance of evading DPCO 2013 has also been reported by the media. In this case some other pharmaceutical companies have 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. Quoting the Maharashtra FDA, the report states: “Atorvastatin may face a similar kind of action from the state FDA as other overpriced brands of drugs as this drug has been overpriced five to 10 times more than the DPCO price. This kind of overcharging is a subject for investigation. Atorvastatin of 40 mg dosage is generally recommended for senior citizens.”

Tip of an Iceberg?

All these seem to be just the tip of an iceberg related to evasion of DPCO 2013 by some pharma black ships, raising costs of essential medicines for the patients. Ironically, what is happening now is an exact replica of the same old strategy that many pharma players got involved into to avoid price control under earlier DPCO 1995. Continuation of the same act of deceit with DPCO 2013 confirms that the ‘cat and mouse game’ to avoid price control is eternal in India, in the absence of any strong and exemplary deterrent.

Better late than never:

When Maharashtra FDA brought it to the notice of National Pharmaceutical Pricing Authority (NPPA), the later asked GSK to immediately reduce the market price of ‘Crocin Advance’, as there is no proven additional therapeutic efficacy for the product. The price regulator also sought confirmation of the action taken by the company in this regard. Additionally, GSK Consumer Healthcare now faces consequential punitive measures from the NPPA for price overcharging. This action on the part of NPPA, in all probability, would get lost in the quagmire of litigation, as usually happens in India.

Be that as it may, I expect NPPA taking similar action for Atorvastatin too and increasing its vigil for such scant respect on patient-centric laws and policies of the country.

A brief recapitulation:

Just to recapitulate, DPCO 2013 has been fundamentally different from its ‘predecessor’ DPCO 1995, mainly on the following two counts:

1. Methodology of Price Control:

This has changed from earlier ‘Cost Based Pricing (CBP)’ to ‘Market Based Pricing (MBP)’ based on simple average of all products having 1 percent or more market share.

2. Span of Price Control:

In DPCO 1995, all formulations of 74 bulk drugs, selected based on specified criteria, were under cost based price control, covering over 1700 formulations. Whereas, in DPCO 2013 all essential drugs as mentioned in the National List of Essential Medicines 2011 (NLEM 2011) come under price control applying the above new methodology of MBP. DPCO 2013 brings around 652 formulations of 348 drugs under 27 therapeutic segments of the NLEM 2011, under price control.

Significant benefits of DPCO 2013 to the industry:

DPCO 2013 offers following three key advantages to the industry, both in the short and longer term:

  • MBP methodology in DPCO 2013 is considered by the industry as more transparent and less ‘intrusive’ than CBP methodology.
  • Span of price control with DPCO 2013 came down to 18 percent of the total pharmaceutical market covering around 610 formulations, as against 20 percent in DPCO 1995 covering over 1700 formulations.
  • Opportunity for automatic annual price increase for controlled formulations based on WPI, which was not there in DPCO 1995, is now available to the industry. Thus, in keeping with the relevant provision of DPCO 2013, NPPA has recently allowed the drug companies to increase the Maximum Retail Price (MRP) of the price controlled medicines, contributing 18 percent of the total market, by 6.32 percent effective April 1, 2014, while prices of balance 82 percent of drugs, that are outside price control, can go up by 10 percent every year.

Check on essential drugs going out of market:

Interestingly, DPCO 2013 has tried to prevent any possibility of an essential drug going out of the market without the knowledge of NPPA by incorporating the following provision in the order:

“Any manufacturer of scheduled formulation, intending to discontinue any scheduled formulation from the market shall issue a public notice and also intimate the Government in Form-IV of schedule-II of this order in this regard at least six month prior to the intended date of discontinuation and the Government may, in public interest, direct the manufacturer of the scheduled formulation to continue with required level of production or import for a period not exceeding one year, from the intended date of such discontinuation within a period of sixty days of receipt of such intimation.”

However, it is still not clear, whether or not GSK Consumer Healthcare had followed this stipulated provision for price controlled conventional Crocin formulations. At least, I do not remember having come across any such public notice, as yet.

Key concerns expressed with DPCO 2013:

The MBP methodology seems to be unique to India as CBP is more common in countries that follow drug price control. Hence the following concerns were expressed with DPCO 2013.

  • Reduction in drug prices with market-based pricing methodology is significantly less than the cost based ones. Hence, consumers will be much less benefitted with the new system.
  • Earlier cost based pricing system was not more transparent only because a large section from the industry reportedly did not co-operate with the NPPA in providing cost details, as required by them.
  • Serious apprehensions have been expressed about the quality of outsourced market data lacking adequate confidence level across the board, which now forms the basis of CP calculations.
  • Additionally, outsourced data would provide details only of around 480 out of 652 NLEM formulations. How will the data for remaining products be obtained and with what level of accuracy?

It is, therefore, believed now by many that DPCO 2013 is more of an outcome of a successful lobbying efforts of the pharmaceutical industry in India, rather than a robust pricing policy supported by a flawless methodology for CP calculations.

DPCO 2013 faces challenge in the Supreme Court:

As a result of the above apprehensions, a Public Interest Litigation (PIL) is now pending before the Supreme Court for hearing challenging DPCO 2013.

Ground Zero of the quality of outsourced market data:

While assessing from the ‘Ground Zero’, keeping aside instances of hoodwinking DPCO 2013 with tweaked formulations, the core issue of the quality of outsourced market data forming the bedrock of CP calculation by the NPPA, undoubtedly becomes more fundamental, creating huge discomfort for many pharma players .

Unlike DPCO 1995, where NPPA used to calculate the CP based on its own audits, data provided by the concerned companies and from many other reliable market sources, the calculations to arrive at the CP for DPCO 2013 products are based predominantly on data outsourced from IMS Health, if not solely.

IMS data does not always capture correct brand prices:

As stated above, many leading pharmaceutical companies are now reportedly pointing out repeatedly that the CP fixation by the NPPA is not accurate, as the IMS Health data does not represent the real prices in many cases.

This is not a new issue either. I have been hearing similar complaints since ages in different forum, wearing different hats and also from various other reliable industry sources. Moreover, NPPA and the Department of Pharmaceuticals (DoP) have indicated several times in the past that IMS data do not capture the requisite details as needed for over 100 products featured in NLEM 2011.

According to Pharmabiz of April 2, 2014, some of the companies expressing the above apprehensions are Sun Pharma, Unichem Labs, Panacea Biotec, Win-Medicare, Albert David, Baxter (India), Indi Pharma and Gland Pharma.

Responding to such widespread complaints, the DoP has directed NPPA to revalidate the IMS data, now being used for CP calculations, for all notified medicines. Accordingly, NPPA has sought the relevant details from respective companies. However, till such data validation takes place, pharma players must comply with all CPs, as notified by the NPPA from time to time.

Difficulty in data validation:

In my view, it would not be easy for the NPPA to revalidate the IMS data due to the following reasons:

  • Those companies, whose prices are showing higher than the current ones in the IMS Health data, may not report to NPPA, as that could ultimately affect them adversely.
  • Pharma companies’ response, in general, to requests from NPPA for furnishing cost and price related information has traditionally been much less than encouraging.

The logjam to continue:

With this evolving scenario, I reckon, till the Supreme Court intervenes responding to the PIL on DPCO 2013 related issues, the dissatisfaction of the industry and the constraints of the NPPA would continue, patients being the primary sufferers.

Conclusion:

Despite the reported concern expressed in the 2014 National Trade Estimate (NTE) Report on Foreign Trade Barriers over the Indian drug price control mechanisms as a deterrent to foreign investments, government price control for essential medicines in India is here to stay for a long haul, to uphold the patients’ health interest.

That said, the final verdict of the Supreme Court related to the PIL on the NPPP 2012, based on which DPCO 2013 has been worked out, is yet to come. Any unfavorable decision of the Honorable Court on the subject may push both the NPPP 2012 and DPCO 2013 back to square one, yet again.

In this backdrop, considering the key fundamental flaw in the CP calculation process of DPCO 2013 with associated loud hiccups as evidenced by the GSK Consumer Healthcare episode and others, would a well-considered verdict of the Supreme Court on the subject be more desirable for greater access to more affordable essential drugs by the patients in India?

By: Tapan J. Ray

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

 

 

Playing Hardball, Riding the Horse of ‘Innovation’

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Media reports are now abuzz with various stories related to intense pressure being created by Big Pharma on the United States Government to declare India as a ‘Priority Foreign Country’ for initiating ‘Trade Sanctions’.

As we know, ‘Priority Foreign Country’ is the worst classification given by the United States to “foreign countries” that deny “adequate and effective” protection of Intellectual Property Rights (IPR) or “fair and equitable market access” to the US.

One of the key factors that infuriated Big Pharma is the ‘patentability’ criterion of the Indian Patents Act 2005 captured in its section 3(d).  This denies grant of patent to those inventions, which are mere “discovery” of a “new form” of a “known substance” and do not result in increased efficacy, offering no significant treatment advantages over already existing drugs.

A brief perspective:

The sole requirement for any company to enjoy market monopoly with a medicine, for a specific period, with its associated commercial advantages, is obtaining a valid patent for that new drug substance from a competent authority of the concerned country. Marketing approval process and other requirements for the same of the drug regulators do not come in the way of the market monopoly status granted to patented products.

This is mainly because the drug regulators do not require to be convinced that a new drug is an improvement or more effective than the existing ones. As a consequence of which, there has been no compulsion for the Big Pharma to bring to the market only those New Molecular Entities (NMEs) that would significantly improve efficacy of a disease treatment benefitting the patients.

Choosing the easier path:

Developing any NME that is a breakthrough in the treatment of a disease is not just difficult and time consuming, it is very risky too. For this reason, once a new innovative drug gets well established in the market, many companies decide to produce their own versions of the same and obtain patent rights for the new ‘tweaked’ molecules, as is generally believed by many.

This approach of bringing ‘me-too’ types of so called ‘innovative’ drugs into the market is considered much less risky, takes lot lesser time in the R&D process, not as expensive and most importantly, enjoys all the commercial benefits that a break through NME would otherwise derive out of its invention, especially the market monopoly with free pricing.

In his well-known book titled ‘Bad Pharma’, Ben Goldacre stated that, as very often these ‘me-too’ drugs do not offer any significant therapeutic benefits, many people regard them as wasteful, an unnecessary use of product development money, potentially exposing trial participants to unnecessary harm for individual companies commercial gain, rather than any medical advancement.

‘Innovation’ of ‘me-too’ molecules:

Examples of some of the ‘me-too’ molecules are as follows:

  • Cemetidine – Ranitidine – Famotidine – Nizatidine – Roxatidine (to treat Acid-peptic disease)
  • Simvastatin – Pravastatin – Lovastatin – Pitavastatin – Atorvastatin – Fluvastatin – Rosuvastatin (to treat blood lipid disorder)
  • Captopril – Enalepril – Lisinopril – Fosinopril – Benzapril – Perindopril – Ramipiril – Quinalapril – Zofenopril (Anti-hypertensives)

Goldacre further highlighted in his book that despite this fact, pharma market does not behave accordingly. Unlike usual expectations that multiple competing drugs in the same disease area would bring the prices down, a Swedish data showed that the drugs considered by the US-FDA as showing no advantages over the existing ones, enter the market at the same or even at higher prices than the original ones. Consequently, the outcome of such innovations adversely impacts the patients and the payor including the government, as Big Pharma takes full advantage of market monopoly and free pricing for such drugs in the garb of innovation.

‘Innovation’ of ‘me-gain’ molecules:

Unlike the above ‘me-too’ drugs, which are new molecules, though work in a similar way to the original ones, another kind of patented drugs have now come-up in a dime a dozen.

Goldacre defined those drugs as ‘me-again’ drugs. These are the same molecule re-launched in the same market at the same price with a different patented ‘enantiomer’. Each of a pair of such molecules is a mirror image of each other e.g. esomeprazole (Nexium) is the left-handed version of the omeprazole molecule (Prilosec), which is a mixture of both left and right handed forms.

There is no dramatic difference between omeprazole and esomeprazole in any respect. Moreover, it is worth noting that concerned constituents of Big Pharma come out with ‘me-again’ drugs only at the end of the patent lives of the original ones. What then could be the reason?

Some examples of ‘me-again’ drugs are as follows:

Enantiomer/Brand Medical Condition Original Drug/Brand
Levocetirizine (Vozet) Allergies Cetirizine (Zyrtec)
Escitalopram (Lexapro) Depression Citalopram (Celexa)
Esomeprazole (Nexium) Acid reflux Omeprazole (Prilosec)
Desloratadine (Clarinex) Allergies Loratadine (Claritan)
Pregabalin (Lyrica) Seizures Gabapentin (Neurotonin)

Why do the doctors prescribe such drugs?

That is indeed a good question, why do the doctors prescribe such costly, avoidable and so called ‘innovative’ drugs? Well, don’t we know that already?

Section (3d) plugs the loophole:

To discourage market entry of high priced and avoidable ‘me-too’ and ‘me-again’ types of drugs that are also an outcome of so called pharma ‘innovations’, the Indian law makers very wisely introduced the section (3d), while amending the Indian Patents Act in 2005. This section, as indicated above, categorically states that inventions that are mere “discovery” of a “new form” of a “known substance” and do not result in increased efficacy of that substance are not patentable. This law has also passed the scrutiny of the Supreme Court of India in the Glivec case of Novartis.

With this Act, India has unambiguously reiterated that it does not support the grant of patents for inventions that are minor modifications of the original ones, effectively blocking the usual path of patents grant as followed by Big Pharma across the world to enjoy monopolistic commercial advantages of ‘frivolous’ innovations, as called by many experts in this area.

Consequent ire of Big Pharma:

This above action of Indian law makers has raised the ire of Big Pharma, as it has a huge commercial interest to protect ‘me-too’ and ‘me-again’ types of innovations in India, even if that comes at the cost of patients’ health interest.

Section (3d) of the Indian Patents Act, therefore, became a major hindrance in meeting the commercial goals of its constituents in India, as such molecules constitute a large majority of the total number of NMEs innovated globally.

As intense power-packed advocacy campaigns of the global pharma companies with the Government of India did not yield any meaningful result to get the section 3(d) amended, it unleashed the might of its well funded lobby groups having free access to the corridors of political power to play hardball with India, riding the horse of innovation and pooh-poohing patients’ interests.

Playing hardball:

The question therefore arises, would India tactfully reciprocate playing hardball or give in to the pressure of trade sanctions under ‘Priority Foreign Country’ categorization of the United States?

I reckon India would not give in. To state more emphatically, India just cannot give in now, under any circumstances.

Come May 16, 2014, the new Union Government of India would almost be ready take its position on the saddle. Thereafter, even if it prefers to give in to intense US political pressure just to avoid trade sanctions, in all practicality that would virtually be a non-starter. This is because, the new Government would unlikely to be in a position to garner enough votes in the Parliament to amend the section (3d), ignoring the general sentiment on this important public health related issue and political compulsions of many of its constituents on the subject.

Would America go to WTO?

Would the United States of America ultimately complain against India in the multilateral forum of the World Trade Organization (WTO) for alleged violation of the TRIPS Agreement? That is exactly the question that many people are asking today.

In this context it is worth noting, India has reiterated time and again that Indian Patents Act 2005 is in full compliance of the TRIPS Agreement and the Doha Declaration of 2001.

Since, no country has complained to WTO against India on this issue, as yet, despite so much of posturing and the noise generated the world over, it appears improbable that the US would now do so, though Big Pharma would continue playing hardball raising the same old bogey of protection of ‘innovation’ in a much higher pitch, cleverly camouflaging its hardcore vested commercial interests.

What happens, if WTO decides in favor of India?

In the multilateral forum, if the WTO decides in favor of India, there is much to loose for Big Pharma.

In that scenario, the Indian example would encourage a large number of countries to enact similar model of Patents Act fully complying with the TRIPS agreement, as vetted by the WTO.

Some has termed it as a refreshingly fresh “Alternative Model of Patent Law’, going away from the dominant IP model as is being propagated by the US.

As I had indicated in the past, countries like the Philippines, Brazil and South Africa have either emulated or strongly favoring this alternative model that favors protection of Intellectual Property (IP) and at the same time promotes access to new inventions to a large majority of the global population.

Conclusion:

I reckon, Big Pharma’s playing hardball with India, riding the horse of ‘innovation’, could ultimately boomerang.

The Government of India, irrespective of any political color, lineage or creed, is unlikely to be bullied by Big Pharma constituents any time soon.

More importantly, even in a worse case scenario, the Government would be incapable of getting the section (3d) amended by the Indian Parliament garnering majority of the lawmakers’ support and going against strong political and public voices on this issue.

Nevertheless, Big pharma would continue to wish it to happen… and that drags me to the good old saying:

“If wishes were horses, beggars would ride.”

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.