Government Ups the Ante for More Compulsory Licenses in India

Posted on January 21, 2013 by Tapan Ray

On January 12, 2013, one of the leading dailies of India first reported that in a move that is intended to benefit thousands of cancer patients, Indian Government has started the process of issuing Compulsory Licenses (CL) for three commonly used anti-cancer drugs:

- Trastuzumab (or Herceptin, used for breast cancer),

- Ixabepilone (used for chemotherapy)

- Dasatinib (used to treat leukemia).

For a month’s treatment drugs like, Trastuzumab, Ixabepilone and Dasatinib reportedly cost on an average of US$ 3,000 – 4,500 or Rs 1.64 – 2.45 lakh for each patient in India.

CL through a different route:

This time the government can reportedly notify its intent to grant CL under Section 92 of the Indian Patents Act 2005, only if any of the following three conditions are met:

- National emergency

- Cases of extreme urgency

- Public non-commercial use

After such Government notification in the gazette, any company interested in manufacturing any or all of these three products can directly apply for a CL to the Indian Patent Office (IPO).

This route is also expected to save usual litigation costs for the interested pharmaceutical players.

In such case, this will be the first time in India, when instead of pharmaceutical players applying for CL the Government on its own will trigger the CL process.

A situation like this will undoubtedly signal immense unpredictability in the IPR environment of the country.

Incongruent with the New Drug Policy 2012:

Interestingly, section 4(xv) of the National Pharmaceutical Pricing Policy 2012 (NPPP 2012) under ‘Patented Drugs’ states as follows:

“There is a separate Committee constituted by the Government order dated 1st February, 2007 for finalizing the pricing of Patented Drugs, and decisions on pricing of patented drugs would be taken based on the recommendations of the Committee.”

A media report also highlighted that an inter-ministerial group constituted for regulating prices of patented medicines in India has recommended using a per capita income-linked reference pricing mechanism for such products.

Thus, it is rather intriguing for many to fathom, why is the Government contemplating to grant CL on the above three anti-cancer drugs in January 2013, despite the decision of the Union Cabinet on the same in the new Drug Policy as recent as December, 2012.

Medicines come at the third stage of a medical treatment process:

For all patients, including the cancer victims, medicines will come at the earliest in the third stage of any treatment process, the first two or in some cases first three stages being:

A doctor’s intervention
Correct diagnosis through diagnostic processes
Surgical interventions (in some cases)

In India, there is no regulation to address the ‘cost issues’ of the first two or three stages of treatment, though there is a dire need to facilitate the entire process and not just one. Coming straight to cancer medicines considering these as the only ‘magic wands’ to improve access to treatment, may well be considered as ‘jumping the gun’ by the Government, if not an imprudent decision.

Skewed healthcare distribution in India:

Healthcare distribution in India is rather skewed and cancer treatment is no exception mainly because of the following reasons:

Medical personnel are concentrated in urban areas.
74 percent of doctors work in urban settlements, which is just around 1/4^th of the population.
61 percent of the medical colleges are in the 6 states of Maharashtra, Karnataka, Kerala, Tamil Nadu, Andhra Pradesh and Pudicherry.
Whereas, just 11 percent of these are located in Bihar, Jharkhand, Orissa, West Bengal and the north-eastern states
369,351 government beds are in urban areas and a mere 143,069 beds in the rural areas.
Rural “doctors to population” ratio is lower by 6 times as compared to urban areas.

(Source: KPMG Report 2011)

Huge healthcare Infrastructural Deficiencies:

In India, not just compared to the developed nations, even as compared BRIC countries, there is a huge infrastructural deficiencies as follows:

Indicators	Year	India	US	UK	Brazil	China
Hospital Bed Density(Per 10000 population)	2011	12	31	39	24	30
Doctor Density(Per 10000 population)	2011	6	27	21	17	14

(Source: WHO, World Health Statistics 2012)

0.6 doctors per 1000 population as against the global average of 1.23 suggests an evident manpower gap in the very first stage of a treatment process.
Number of beds available per 1000 people in India is only 1.2, which is less than half of the global average of 2.6.

Coming to Medical Colleges, the scenario is equally dismal, as follows:

Year	Number of Medical Colleges	Total Admissions
2011-2012	314	29,263
	No of dental Colleges	Total Admissions
2011-2012	289	2783

(Source: Medical Council of India & Dental Council of India)

Thus, India needs to open around 600 medical colleges (100 seats per college) and 1500 nursing colleges (60 seats per college) in order to meet the global average of doctors and nurses.

(Source: KPMG Report 2011)

Shortages in other healthcare professionals:

It has been reported that a deficit of 64 lakh (6.4 million) allied healthcare professionals India with highest gaps in Maharashtra, Uttar Pradesh, West Bengal, Bihar and Andhra Pradesh, is a stumbling block in providing basic and quality healthcare to Indian population, as follows:

Healthcare Professionals	Shortage
Anesthetists and technicians	850,000
Dental staff	2.04 Million
Ophthalmologists and optometrists	127, 000
Rehabilitation specialists	1.8 Million
Medical laboratory technicians	61,000
Radiographers	19,000
Audiology and speech language specialists	7,500
Medical staff	230,000

(Source: Times Of India, December 20, 2012)

Is the Government ‘missing the woods for the trees’?

In a scenario like this, it is rather impractical to envisage that routine grant of compulsory licenses by the Indian Patent Office will be able to resolve the critical issue of improving access to patented medicines on a long term basis.

Not many CL granted between 1995-2012:

Despite having the provisions of CL in the Patents Act of many countries, not many CLs have been granted across the world from 1995 to date for the obvious reasons.

The details are as follows:

Country	Medicine	CL granted in:
Israel	Hepatitis B Vaccine	October 1995
Italy	Imipenem (antibiotic)	June 2005
Italy	Sumatriptan Succinate (migraine)	February 2006
Canada	Oseltamivir (influenza)	July 2006
Brazil	Efavirenz (HIV/AIDS)	May 2007
Thailand	Erlotinib, Docetaxel (cancer)	January 2008
India	Sorafenib Tosylate (cancer)	March 2012

Source: DNA, March 9, 2012

An interesting paper:

However, I hasten to add that despite all these, the provision of CL in the Indian Patents Act 2005 has immense relevance, if invoked in the right kind of circumstances.

In the paper titled ‘TRIPS, Pharmaceutical Patents and Access to Essential Medicines: Seattle, Doha and Beyond’, published in ‘Chicago Journal for International Law, Vol. 3(1), Spring 2002’, the author argues, though the reasons for the lack of access to essential medicines are manifold, there are many instances where high prices of drugs deny access to needed treatments for many patients. Prohibitive drug prices, in those cases, were the outcome of monopoly due to strong intellectual property protection.

The author adds, “The attempts of Governments in developing countries to bring down the prices of patented medicines have come under heavy pressure from industrialized countries and the multinational pharmaceutical industry”.

Right pricing of patented drugs is critical:

While there is no single or only right way to arrive at the price of an IPR protected medicine, how much the pharmaceutical manufacturers will charge for such drugs still remains an important, yet complex and difficult issue to resolve, both locally and globally. Even in the developed nations, where an appropriate healthcare infrastructure is already in place, this issue comes up too often mainly during price negotiation for reimbursed drugs.

A paper titled, “Pharmaceutical Price Controls in OECD Countries”, published by the US Department of Commerce after examining the drug price regulatory systems of 11 OECD countries concluded that all of them enforce some form of price controls to limit spending on pharmaceuticals. The report also indicated that the reimbursement prices in these countries are often treated as de facto market price.

In India, the Government is already mulling to put in place a similar mechanism for patented medicines, as captured in the NPPP 2012.

Further, some OECD governments regularly cut prices of even those drugs, which are already in the market. The values of health outcomes and pharmacoeconomics analysis are gaining increasing importance for drug price negotiations/control by the healthcare regulators even in various developed markets of the world to ensure responsible pricing of IPR protected medicines.

An evolving global trend:

To address such pricing issues, global pharmaceutical majors, like GSK and Merck (MSD) have already started following the differential pricing model, based primarily on the size of GDP and income status of the people of the respective countries. This strategy includes India, as well.

Reference pricing model is yet another such example, where the pricing framework of a pharmaceutical product will be established against the price of a reference drug in reference countries.

An innovative approach to address patented products’ pricing:

To effectively address the challenge of pricing of patented medicines in India, Swiss drug major Roche, has reportedly entered into a ‘never-before’ technology transfer and manufacturing contract for biologics with a local Indian company – Emcure Pharma, for its two widely acclaimed Monoclonal Antibodies’ anti-cancer drugs – Herceptin and MabThera.

The report says that in the past, Emcure had signed licensing deals with US-based bio-pharmaceutical drug maker Gilead Life Sciences for Tenafovir and with Johnson and Johnson for Darunavir. Both are anti-HIV drugs.

In this regard, media reports further indicated that Roche would offer to Indian patients significantly cheaper, local branded versions of these two anti-cancer drugs by early this year. The same news item also quoted the Roche spokesperson from Basel, Switzerland commenting as follows:

“The scope is to enable access for a large majority of patients who currently pay out of pocket as well as to partner with the government to enable increased access to our products for people in need”.

Such ‘out of box’ strategies and initiatives by the global innovator companies could help keeping prices of patented products affordable to the Indian patients, improving their access significantly and making the likes of the current Government initiative on CL irrelevant.

Conclusion:

It is generally accepted that the provisions for CL in the Indian Patents Act 2005 has utmost relevance in terms of public health interest for all concerned.

However, keeping in view of recent policy announcement in the NPPP 2012, as approved by the Union Cabinet, on price negotiation for patented products, the reported Government move of invoking these provisions for three anti-cancer drugs is rather intriguing.

Moreover, even for the cancer patients, there seems to be a greater urgency to attend to basic healthcare infrastructural and delivery issues, besides providing Universal Health Coverage (UHC) as recommended by the High Level Experts Group (HLEG) constituted for this purpose by the Government.

Far encompassing critical decisions like grant of CL, I reckon, should be taken only after exhausting all other access improvement measures.

Thus, recent news reports on the possibility of further grant of three more CLs could make the pharmaceutical business environment for the innovator companies in India more uncertain.

Demonstrable predictability for an innovation friendly environment is critical for the economic growth of India, which the Government should not lose sight of. Just upping the ante for more CL of anti-cancer drugs will not necessarily help improving access to cancer treatments in India.

By: Tapan J. Ray

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

‘Havoc’ and its ‘Aftermath’: Clinical Trials in India

Posted on January 14, 2013 by Tapan Ray

Just as the New Year dawned, on January 3, 2013, in an embarrassing indictment to the Government, the bench of honorable justices R.M Lodha and A.R Dave of the Supreme Court reportedly observed that uncontrolled Clinical Trials (CT) are creating ‘havoc’ to human life causing even deaths to patients.

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

Responding to this damning stricture by the Supreme Court, the Government has now reportedly decided that appropriate rules laying down guidelines for pharma companies and other organizations engaging in drug trials in India would be notified within January 2013. It is envisaged that thereafter, the government will also amend the Drugs and Cosmetics Act of India making any violation of prescribed rules and guidelines a punishable offense under the law.

It is worth mentioning that these guidelines have been reportedly worked out after due consideration of around 300 comments received from the stakeholders on the draft proposal circulated by the Ministry of Health in July 2011, couple of rounds of discussion with the members of the Civil Society, expert groups and against reported ‘stiff opposition from the drug companies’.

Better late than never:

In conformance to the well known saying – “better late than never”, it appears that after reportedly around 2,242 deaths related to CT and under immense pressure from the civil society and the Supreme Court, the Government has now left with no options but to bring US$ 500 million CT segment of the country, which is expected to cross US$ 1 Billion by 2016, under stringent regulations.

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

Clinical trial related deaths in India:

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

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

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

However, looking at the above reported numbers it appears that financial compensation was paid for all registered death related cases however meager such amounts may be.

A huge ruckus:

The subject of CT in India has created a huge ruckus, mainly for wide spread alleged malpractices, abuse and misuse of fragile CT regulations of the country by some players in this field. The issue is not just of GCP or other CT related standards but more of ethical mind-set and reported rampant exploitation of uninformed patients, especially in case of trial related injuries or even death.

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

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

Inadequate auditing:

It is unfortunate that focus on ‘Clinical Trial Registry’ and even ‘Auditing of Clinical Trials’ has been grossly lacking in India, which are considered so important not only in maintaining credibility of the studies, but also to demonstrate their scientific integrity and ethical values.

Unfortunately, there seems to be many loose knots in the current CT policy, practices, rules and guidelines. All these require to be adequately tightened by the Government to make the system efficient and transparent in the national endeavor of establishing India as a preferred destination for global CT without compromising safety and the health interest of the volunteers.

Indian Parliament intervened:

On May 8, 2012, the department related ‘Parliamentary Standing Committee (PSC)’ on Health and Family Welfare presented its 59th Report on the functioning of the Indian Drug Regulator – the Central Drugs Standard Control Organization (CDSCO) in both the houses of the Parliament.

The PSC in its report made the following critical findings, besides many others:

A total of 31 new drugs were approved in the period January 2008 to October 2010 without conducting clinical trials on Indian patients.

Thirteen drugs scrutinized by the panel are not sold in the United States, Canada, Britain, European Union and Australia, as instructed by their respective regulatory authorities.

Sufficient evidence is available on record to conclude that there is collusive nexus between drug manufacturers, some functionaries of CDSCO and some medical experts.

Due to the sensitive nature of CTs in which foreign companies are involved in a big way and a wide spectrum of ethical issues and legal angles, different aspects of CTs need a thorough and in-depth review.

Jolted drug regulator initiates action:

In response to the high-pitched conundrum and media glare, The Ministry of Health and Family Welfare of the Government of India issued a draft notification on 17th July 2012 seeking stakeholders’ views on:

Permission to conduct CT
Compensation of the CT victims

The draft notification also says that the licensing authority, only after being satisfied with the adequacy of the data submitted by the applicant in support of proposed clinical trial, shall issue permission to conduct CT, subject to compliance of specified stringent conditions.

However, some experts do apprehend that such stringent system may give rise to significant escalation in the costs of CT for the pharmaceutical players.

Similarly, to assess right compensation for clinical trial related injuries or deaths, following parameters were mooted in the document:

Age of the deceased
Income of the deceased
Seriousness and severity of the disease the subject was suffering at the time of his/her participation into the trial.
Percentage of permanent disability

Further, unlike current practices, the government is expected to set up independent registered Ethics Committees under medical institutions for effective and smooth conduct of CTs in India.

Poor patient compensation:

Absolutely unacceptable level of compensation, by any standard, paid by the concerned companies for the lives lost during CTs are mainly attributed to the lackadaisical attitude of the drug regulators to frame rules and laws for patient compensation for such cases in India.

Information reportedly gathered through the ‘Right To Information (RTI) Act’ reveals that one pharmaceutical company paid just Rs. 50,000 each to the families of two patients who died during CT of its cancer drug. Another Ahmedabad-based Clinical Research Organization (CRO) paid a compensation of exactly the same amount to another patient for a CT related death.

The report points out that in 2011 out of 438 CT related deaths in India only 16 families of such patients received any compensation, the quantum of which varied from Rs. 50,000 to Rs. L 3.0 with one exception being of Rs. L 5.

In 2012 till August, 272 more CT related deaths have already been reported.

Higher patient compensation expected:

It has been alleged that currently the pharmaceutical companies are “getting away with arbitrary payments” sometimes as meager as Rs. 50,000, as stated above, in case of loss of life during CT, as there are no set norms for calculating compensation to those patients.

It is expected that the new rules will help putting in place a transparent formula for providing a respectable compensation for CT related serious adverse events like deaths, along with a prescribed provision for minimum compensation amount to such patients.

Increasing public scrutiny:

Over the last few years, CTs in India are increasingly coming under intense public and media scrutiny. As a result, both the concerned pharmaceutical companies as well as the CROs are facing the wrath of various stakeholders including the Supreme Court.

Following are the reported numbers of registered CTs in India from 2009 to 2011:

Year	Total Number
2009	181
2010	313
2011	513

Although the total number of CTs registered in India from 2007 to 2011, as per available records, was around 1875, the number of new trials registered in the country had reportedly sharply declined in 2011 over 2010, mainly due to time-consuming regulatory approvals and increasing public scrutiny on alleged unethical practices.

According to www.clinicaltrials.gov – the website of the U.S Government, out of 118,804 human trials conducted in 178 countries, less than 2,000 or 2%, are carried out in India as compared to 9,352 or 8% in China.

It appears, all concerned players now seem to be either willingly or grudgingly waiting for the CT regulatory system to function the way it should.

Conclusion:

Although the Ministry of Health has already started taking some positive measures, as stated above, there is an urgent need for the players in this field to reassure the Civil Society, in general, and the Government in particular about the high ethical standards that the pharmaceutical companies and CROs would comply with and continuously practice, while conducting clinical research in India.

We all understand, CTs are the core of research-based pharmaceutical industry. No new drug can come into the market without CTs, which involve both potential benefits and risks to the participants. All CTs are conducted with the primary aim of bringing to patients new medicines with a favorable benefit–risk ratio.

Global CTs being relatively new to India, no wonder, there are several misconceptions on the subject. The companies conducting clinical research need to proactively publicize their commitment to protecting the rights, safety and the well being of the trial participants.

That said, the bottom line is, without any selfish interest or pressure to the Government in any form, from within the country or outside, all concerned must ensure that CTs of all types must strictly adhere to the prescribed norms and well laid down procedures of India, as soon as these are put in place.

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 and also do not contribute to any other blog or website with the same article that I post in this website. Any such act of reproducing my articles, which I write in my personal capacity, in other blogs or websites by anyone is unauthorized and prohibited.

‘Disease Oriented Treatment’ to ‘Patient Oriented Treatment’ – An evolving trend

Posted on January 7, 2013 by Tapan Ray

The quest for moving away from conventional and error-prone ‘Disease Oriented Treatment’ paving the way for unconventional individual patient-specific ones, may soon come to fruition. Dramatic progress in the research for developing ‘Personalized Medicines’ could soon offer a choice for individual ‘Patient Oriented Treatment’ with precisely predictable efficacy and safety, especially for the treatment of various intractable and dreaded diseases.

Sir John Bell, Professor of Medicine at Oxford University, adviser on genetics to the government and chair of its human genomics strategy group has reportedly said in early December 2012 that ‘Personalized Medicine’ for all could soon be a clear possibility, as everybody will be able to have their entire DNA make-up mapped for as little as £100 (Rs.8, 700 approx.).

This estimate seems to be quite realistic as Sir John said, the price of genome sequencing has fallen by 100,000-fold in 10 years and genetics being a key component of all common diseases, genome sequencing will help immensely in the use of new drugs, as well.

Raising a flag:

While watching the pursuit of excellence by the genetic scientists in the realm of disease treatment, some experts have reportedly been sounding a note of caution. They strongly feel that DNA code sequencing brings to light a “very real privacy concerns” of individuals.

GeneWatch UK, is an organization that investigate how genetic science and technologies will impact on our food, health, agriculture, environment and society. They have been strongly arguing, if genome sequencing is extended to entire population, individuals and their relatives could then be identified and tracked by matching their DNA with the genome stored in the respective health records. This move, as contemplated by them, could “wipe out privacy” with an impact on the society.

Thus, the ethical and social issues in the development of ‘Personalized medicines’ primarily in the area of genetic testing and consideration of race in the development of such medicines, these thought leaders feel, need to be effectively addressed, sooner.

That said, the Prime Minister of UK Mr David Cameron has reportedly said:

“By unlocking the power of DNA data, the NHS will lead the global race for better tests, better drugs and above all better care. We are turning an important scientific breakthrough into a potentially life-saving reality for NHS patients across the country. If we get this right, we could transform how we diagnose and treat our most complex diseases not only here but across the world, while enabling our best scientists to discover the next wonder drug or breakthrough technology.”

Increasingly more in development pipeline:

Rapid strides in pharmacogenomics bring in a promise of radically different ways of treating diseases, as major pharmaceutical companies of the world make progress in developing much more effective medicines designed to target smaller populations.

Tufts Center for the Study of Drug Development (Tufts University) in its publication named ‘Impact Report’, November/December 2010 articulated, “Bio-pharmaceutical companies are committed to researching and developing personalized medicines and within their development pipelines, 12% – 50% of compounds are personalized medicines.”

Experts envisage that over a period of time ‘Personalized Medicines’ will be targeted to biological/genomic profile of a patient or patient types to significantly improve the quality of treatment.

The definition:

The above report defines Personalized Medicines as “Tailoring of medical treatment and delivery of health care to individual characteristics of each patient, including their genetic, molecular, imaging and other personal determinants. Using this approach has the potential to speed accurate diagnosis, decrease side effects, and increase the likelihood that a medicine will work for an individual patient.”

Mainly due to all these reasons, ‘Personalized Medicines’ are expected to be an effective alternative to quite unwieldy current ‘blockbuster drug’ business model.

Makes a perfect fit:

The aim of ‘personalized medicines’ is, therefore, to make a perfect fit between the drug and the patient. It is worth noting that genotyping is currently not a part of clinically accepted routine. However, it is expected to acquire this status in the western world, very shortly.

Consequent changes and shifts:

This potential paradigm shift in the healthcare space would prompt similar changes in various disease diagnostic technologies, which will not only be able to detect a disease well before appearance of symptoms, but would also indicate which patients will best respond to or be adversely affected by which medications.

‘Personalized Medicines’ will in that process ensure a critical shift from the ‘Disease Oriented Treatment’ to a ‘Patient Oriented Treatment’, which can be initiated even before the clinical manifestations of a disease are detected.

The technological march towards this direction is indeed risky and arduous one. However, the benefits that the humanity will accrue out of this disruptive innovation will far outweigh the risks in all forms.

Towards this direction:

The Economist, March 12-18, 2011 in its article titled “Toward the 15-minute genome” reported that ‘nanopore sequencing’ of human genome is now gaining momentum. This could make sequencing of entire genome of cancerous and healthy cells possible to accurately point out what has exactly changed in individual patients, enabling the oncologists to determine patient specific drugs for best possible results in each case, separately.

New cancer marker has been reported to aid earlier detection of the disease, where repetitive stretches of RNA are found in high concentrations in cancer cells.

A new blood test will accurately detect early cancer of all types with an accuracy of greater than 95%, when repeated the accuracy will even be even greater than 99%.

‘Breast On A Chip’ will test nano-medical detection and treatment options for breast cancer.

A brain scan will detect the telltale “amyloid plaques” ,the protein fragments that accumulate between nerves in Alzheimer’s disease.

A difference that matters:

With ‘Personalized Medicines’ the health of a patient will be managed based on personal characteristics of the individual, including height, weight, diet, age, sex etc. instead of defined “standards of care”, based on averaging response across a patient group. Pharmacogenomics tests like, sequencing of human genome will determine a patient’s likely response to such drugs.

All these are expected to offer more targeted and effective treatment with much safer drugs, and in all probability at a lesser real cost. Such medicines will also help identify individuals prone to serious ailments like, diabetes, cardiovascular diseases and cancer and help physicians to take appropriate preventive measures, simultaneously.

Each patient is unique:

‘Personalized medicines’ in that process will focus on what makes each patient so unique, instead of going by the generalities of a disease.

To give a quick example, genetic differences within individuals determine how their bodies react to drugs such as Warfarin – a blood thinner taken to prevent clotting. It is of utmost importance to get the dosing right, as more of the drug will cause bleeding and less of it will not have any therapeutic effect.

‘Personalized medicines’, therefore, have the potential to usher in a revolutionary change, the way patients are offered treatment by the medical profession. Genomic research will enable physicians to use a patient’s genetic code to arrive at how each patient will respond to different types of available treatments.

In the field of cancer, genetic tests are currently being done by many oncologists to determine which patients will be benefited most, say by Herceptin, in the treatment of breast cancer.

Indian initiatives:

Some companies, both well known and little known, are making quiet collaborative progress in the genome sequencing area in India, which will ultimately make expensive treatments like cancer more affordable to many.

Other advantages:

The expected benefits from the ‘Personalized Medicines’, besides very early diagnosis as stated above, are the following:

1. More Accurate Dosing: Instead of dose being decided based on age and body weight of the patients, the physicians may decide and adjust the dose of the medicines based on the genetic profiling of the patients.

2. More Targeted Drugs: It will be possible for the pharmaceutical companies to develop and market drugs for patients with specific genetic profiles. In that process, a drug needs to be tested only on those who are likely to derive benefits from it. This in turn will be able to effectively tailor clinical trials, expediting the process of market launch of these drugs.

3. Improved Healthcare: ‘Personalized Medicines’ will enable the physicians to prescribe ‘the right dose of the right medicine the first time for everyone’ without any trial or error. This would give rise to much better overall healthcare.

Reduced Clinical Trial cost:

Genome sequencing will help identifying a patient population, which will be far more likely to respond positively to the new treatment. In that process, if it reduces costs of clinical trial by even 5%, expected net savings for the industry towards clinical trial in real term will be significant.

With ‘personalized medicines’ the innovator companies will be able to significantly reduce both time, costs and the risks involved in obtaining regulatory approvals and penetrating new markets with simultaneous development of necessary diagnostic tests. Such tests will be able to identify patients group who will not only most likely to be benefited from such medicines, but also will be least likely to suffer from adverse drug reactions.

Therefore, considerable cost advantages coupled with much lesser risks of failure and significant reduction in the lead time for clinical trials are expected to make ‘personalized medicines’ much more cost effective, compared to conventional ‘blockbuster drugs’.

A sustainable business model:

Realization of deficiencies in the deep-pocket economics of ‘block buster drug R&D business model’ has made ‘personalized medicines’ a reality today. Large number of smaller and exclusive markets for ‘personalized medicines’ is also expected to be quite profitable for the pharmaceutical companies. On the other hand, better efficacy and safety profile of ‘personalized medicines’ will prove to be cost-effective in the overall healthcare systems.

However, smaller segmentation of the market may not leave enough space for the conventional ‘blockbuster model’, which is the prime mover of the global pharmaceutical industry, even today.

Reports indicate that some renowned global pharmaceutical companies like, Roche, AstraZeneca, GlaxoSmithKline are making good progress towards this direction through collaborative initiatives.

A different marketing ball game:

With ‘personalized medicines’ the ball game of marketing pharmaceuticals is expected to undergo a paradigm shift. Roche’s model of combining necessary diagnostic tests with new drugs will play a very important role in the new ball game.

Roche is reportedly ensuring that with accompanying required diagnostic tests, the new oncology products developed at Genentech can be precisely matched to patients.

Use in ‘Primary Care’:

Currently there is no widely successful model for use of ‘personalized medicines’ in a ‘primary care’ situation. However, it has been reported that in states like, Wisconsin in the U.S, initiative to integrate genomic medicines with ‘primary care’ has already been undertaken.

Scaling-up operations of such pilot projects will give a big boost to revolutionize the use of ‘personalized medicines’ for precision and targeted treatment for the ailing population.

Current Applications:

Though these are still the early days, initial benefits of ‘personalized medicines’ are now being reported in many areas like:

Genetic analysis of patients dealing with blood clots: Since 2007, the U.S. Food and Drug Administration has been recommending genotyping for all patients being assessed for therapy involving Warfarin.
Colorectal cancer: For colon cancer patients, the biomarker that predicts how a tumor will respond to certain drugs is a protein encoded by the KRAS gene, which can now be determined through a simple test.
Breast cancer: Women with breast tumors can now be effectively screened to determine which receptors their tumor cells contain.

Above applications of ‘personalized medicines’ will help saving not only significant expenses, but also precious time, which is usually spent for ‘trial-and-error treatments’. In addition, this approach also helps clinicians to determine quickly which therapies are most likely to succeed.

A truly patient centric treatment approach:

Generally speaking, unlike conventional ‘one size fits all’ type treatment approach, where same medicine with varying efficacy is tried on a large number of patients with equally varying rates of failure, ‘personalized medicines’ in true sense starts with the patients.

This may not necessarily mean unique treatment for each patient every time. With ‘personalized medicine’-based treatment approach, depending on biological, genetic and genomic characteristics, patients can be divided into groups and targeted treatment with specific drugs showing most efficacy and least side-effects can be worked out for each of these groups. Hence ‘personalized medicines’ by all means are truly patient centric.

Conclusion:

One of the key issues today in the realm of conventional ‘Disease Oriented Treatment’ is that lot many drugs do not work on significantly large number of patients with same efficacy and safety standards. ‘Personalized medicines’ will be able to address this issue with right diagnosis, ensuring treatment with the right medicine in right doses for the right type of patients.

Though in Europe and to some extent in the US, ‘Patient Oriented Treatment’ approaches with ‘personalized medicines’ have already been initiated, these are still early days for this novel concept to get translated into reality for wider use.

Lot many grounds may still need to be covered especially in the areas of medical research and also to work out the regulatory pathways for ‘personalized medicines’ in healthcare by the pioneers of this great concept.

That said, the evolving transition from the conventional ‘Disease Oriented Treatment’ to unconventional ‘Patient Oriented Treatment’ seems to be irreversible now.

By: Tapan J Ray

The Game Changers in 2012 and A Crystal Gazing into 2013

Posted on December 31, 2012 by Tapan Ray

Wish You and Your Dear Ones Best of Health, Happiness, Success and Prosperity in The Brand New Year.

Welcome 2013

The Global Pharmaceutical Industry (GPI), by and large, used to be considered as ‘recession-proof’ for various valid reasons. However, the waves of ‘global economic meltdown’ since last several years prompted the rating service Moody to downgrade its outlook to ‘Negative’ in 2007.

However, on September 24, 2012 the same rating service upgraded the outlook of the GPI to ‘Stable’ from “Negative,” indicating subsiding impact of the wave of drug patent expiration, come 2013.

Various other sources also vindicate that the GPI has in fact now bottomed-out. Available data from IMS Health estimates that the industry will grow from US$ 956 billion in 2011 to around US$ 1004 billion by end 2012 with a growth of approximately 5 percent driven mainly by:

- Cost optimization

- Higher disease prevalence across the world

- Increasing per capita income

The United States continue to maintain its top slot in the industry followed by the European Union and Japan.

All may not be hunky-dory in the GPI just yet, nevertheless 2013 does point towards some early signs of revival after a very uncertain period, prompting a paradigm shift, especially in the mind-set of the global players. This emerging trend could well form a separate topic of discussion altogether in some other time.

Buoyancy in India:

Back home in India the situation is quite different. The Indian Pharmaceutical Industry (IPI) still remains recession-proof. The market buoyancy continued as ‘PharmaTrac India’ reported a turnover of the domestic pharmaceutical market at around US$ 12.6 billion growing over 15 percent annually.

In this article I shall focus on the domestic pharmaceutical market of India.

The Game Changers of 2012:

Looking back, during the year 2012 the ‘Top Five Game Changers’ for the Indian Pharmaceutical Market (IPM), in my opinion, are as follows:

1. A DIFFERENT ‘Drug Policy’ after 10 years:

The ‘National Pharmaceutical Pricing Policy 2012 (NPPP 2012)’ heralds a paradigm shift in the pharmaceutical price control regime of India for the years ahead with a switch from the ‘Cost Based Pricing CBP)’ methodology to ‘Market Based Pricing (MBP)’ and also in its ‘National List of Essential Medicines 2011 (NLEM 2011)’ based span of price control.

The industry has already articulated, though the new policy will make an immediate and significant adverse financial impact on them, market based pricing is directionally prudent for all in the longer term. They feel that MBP is expected to help improving both affordability and availability of medicines.

Such a policy, some stakeholders believe, along with the Government initiative to make essential medicines available free of cost through public hospitals and health centers will benefit all sections of the society, giving a boost to overall consumption of pharmaceutical products in India. It is also good to note that the new policy promises price control exemptions for patented drugs and products with NDDS developed in India through indigenous R&D.

NPPP 2012, is expected to be a game changer for the industry by many, as it will help bringing more stability in the pharma pricing regulation system of India.

However, there is a flip side to this story.

All stakeholders are not equally happy with the NPPP 2012.

In this context, it is worth noting that in an ongoing Public Interest Litigation before the Supreme Court by ‘All India Drug Action Network (AIDAN)’, the petitioner has already drawn the attention of the Court to their ‘Interim Application’ challenging the NPPP 2012 by stating that the ‘policy finalized by the Government will in effect do away with the very notion of price controls’. In response the apex court reportedly had observed that it will consider the averments of AIDAN in the next hearing of January 15, 2013, once the printed Gazette Notification is put on record before the Court by the Government.

2. First ever grant of Compulsory License in India:

On March 12, 2012, Indian Patent Office (IPO), in its landmark ruling, granted its first ever Compulsory License (CL) for Bayer’s patented kidney and liver cancer drug Nexavar (Sorafenib), to the generic pharma player Natco, broadly citing the following reasons:

Reasonable requirements of public under Section 84 have not been satisfied.
The Patented Drug was not available to the public at a reasonably affordable price as per Section 84 (1) (b).
Patented invention is not worked in the territory of India as per Section 84 (1) (c)

The 62 page order of the Controller General of Patents, Designs and Trade Mark (CGPDTM) granted the CL to Natco for the rest of patent life of sorafenib in India at the high end of the UNDP 2001 royalty guidelines at 6 percent.

Though the research based pharmaceutical industry across the world expressed its deep disappointment and anguish over the judgment, many experts and NGOs from different parts of the globe, on the contrary, have reportedly hailed this order as a game changer to improve access to high-priced patented medicines in the country with a firm conviction that the ‘Intellectual Property Rights (IPR)’ and ‘Patients’ Access Issues’ can not tread different paths. They have reportedly opined that CGPDTM has set a right precedence by granting a CL for an exceptionally high-priced sorafenib, which will ensure, in the times to come, that “patent monopolies are kept limited, especially when the patented products are not ‘reasonably affordable’, as stated in the statute”.

Many people, therefore, envisage that if responsible pricing strategy for patented medicines is not followed in India even after the grant of first ever CL by the IPO, one could well expect other generic players applying for CL mainly for the imported high priced patented medicines purely as a business strategy, but citing the reason of improving patients’ access in the country.

3. First ever Guidelines for Biosimilar Drugs in India:

Across the world, biologic drugs have a successful record in treating many life threatening and other complicated ailments. Expiration of product patents of the first major group of originators’ biologic molecules has led to the development of products that are designed to be ‘similar’ to the originators’ products, as it is virtually impossible to replicate any protein substances, unlike the ‘small molecule’ drugs. These are ‘Biosimilar Drugs’, which rely, in part, on prior information obtained from the innovators’ products and demonstration of similarity with the originator’s molecule based on detailed and comprehensive product characterization, for their marketing approval.

India has the potential to become one of the key players in the development and manufacture of biosimilar drugs, not only to serve the needs of the local population, but also for export to large developed markets. However, for this dream to materialize, a science-driven ‘Biosimilar Guidelines’ are absolutely necessary. These guidelines provide a regulatory framework or pathway to ensure that ‘Biosimilar Drugs’ are of good quality and demonstrably similar in efficacy, safety and immunogenicity to the original reference products.

Considerable developments have occurred across the globe, in the scientific and regulatory understanding of biosimilar drugs. Nearly all developed nations and many developing countries have now defined appropriate regulatory framework for the same. However, due to lack of such guidelines in India, until recently, there have been instances of so called ‘biosimilar drugs’ being approved for marketing, reportedly with sub-optimal testing and dossiers, thereby putting into question product quality, comparability and patient safety.

Under this back-drop, the need for such a regulatory framework and comprehensive guidelines is even greater in India, mainly in the light of sub-optimal pharmacovigilance system in the country, besides other reasons.

Keeping these issues in view, the Ministries of Health & Family Welfare and the Science and Technology released India’s first “Guidelines on Similar Biologics: Regulatory Requirements for Marketing Authorization in India” in 2012. These Guidelines have been made operational effective September 15, 2012.

Long awaited new ‘Biosimilar Guidelines’ of India, demonstrating an overall similarity in the philosophy and approach with the those in the U.S and Europe, though a belated move by the Government, but certainly yet another game changer of 2012.

I reckon, this critical step will help ‘Made in India’ biosimilar drugs availing opportunities in the emerging biosimilar markets of the world including Europe and America.

4. Increase in National Health Expenditure Budget from 1% to 2.5% of GDP:

This decision of the Government in 2012 could help paving the way to provide basic healthcare services to all citizens of India through “Universal Health Coverage (UHC)”, which has the vast potential to be another game changer in the healthcare space of India.

It is envisaged that UHC will ensure guaranteed access to essential health services for every citizen of the country, including cashless in-patient and out-patient treatment for primary, secondary and tertiary care. All these services will be available to the patients absolutely free of any cost.

Under UHC all citizens of India will be free to choose between Public Sector facilities and ‘contracted-in’ Private Providers for healthcare services. It is envisaged that people would be free to supplement the free of cost healthcare services offered under UHC by opting to pay ‘out of pocket’ or going for private health insurance schemes.

Thus, UHC, I reckon, will also be able to address simultaneously the critical issue of high ‘out of pocket’ healthcare expenses of the common citizens and at the same time increase consumption of overall healthcare, giving a boost to the growth of the pharma industry together with other healthcare sectors.

Implemented sooner, ignoring motivated stalling tactics by the vested interests, if any, could usher-in the dawn of a new healthcare reform process in India for all.

5. Announcement of Distribution of Essential Drugs free of cost to all, from Government Hospitals and Dispensaries:

In July 2012 the Government of India took a landmark ‘Public Healthcare’ related initiative to provide unbranded generic formulations of all essential drugs, featuring in the ‘National List of Essential Medicines 2011’, free of cost to all patients, from the public hospitals and dispensaries across the country.

This social sector project was expected to roll out, as reported in the media, from October/November 2012 with a cost of around US$ 5 billion during the 12^th Five Year Plan period of the country. Considering medicines account for around 70% of the total ‘Out of Pocket’ expenses, this particular initiative is expected to be yet another game changer to benefit, especially the poorer patients of the society.

This new scheme, I reckon, has also the potential to hasten the overall growth of the pharmaceutical industry, as poor patients who could not afford will now have access to essential medicines. On the other hand, rapidly growing middle class population will continue to favor branded generic drugs prescribed by the doctors at the private hospitals and clinics.

Some people are apprehending that generic drug makers will have brighter days as the project starts rolling on. This apprehension is based on the assumption that large branded generic players will be unable to take part in this big ticket drug procurement process of the Government, which seems to be imaginary.

However, in my view, it could well be a win-win situation for all types of players in the industry, where both the generic-generic and branded-generic businesses will continue to grow simultaneously.

That said procedural delays and drug quality issues, while procuring cheaper generics, may pose to be a great challenge for the Government to ensure speedier implementation of this project. Drug regulatory and law enforcing authorities will require to be extremely vigilant to ensure that while sourcing cheaper generic drugs, “Public health and safety” due to quality issues do not get compromised in any way.

A Crystal Gazing into 2013:

While Crystal Gazing into 2013, following seven possible developments come to the top of my mind:

New Drug Policy may get caught in Public Interest Litigation (PIL).
UHC related pilot projects may start coming up.
More stringent regulatory requirements for Clinical Trials, Product Marketing approvals, Pricing of Patented Medicines and Ethical Marketing practices may come into in-force.
Along with public investments more private initiatives, both global and local, are expected in the healthcare infrastructure space including in e-healthcare.
Domestics Pharma Companies could challenge increasing number of patents and may also apply for Compulsory Licenses following the set precedence of 2012.
The Supreme Court judgment on Glivec case could bring more clarity in ‘incremental innovation’ in general and the Section 3(d) in particular.
More consolidation within the pharmaceutical industry may take place with valuation still remaining high.

Conclusion:

The year 2012, especially for the pharmaceutical industry in India, was indeed eventful. The ‘Top Five’ that I have picked-up out of various interesting developments during the year, could in many ways be the ‘Game Changers’ for the industry during the years ahead.

Key measures, both in the public and private space, be it fostering R&D or improving access to healthcare for the general population, fell well short of adequate even in 2012.

My ‘Crystal Gazing into 2013’, if comes true, will make the year even more eventful in India. The new year could signal herald of yet another interesting paradigm. A paradigm that may churn quite different sets of rapidly evolving issues requiring more innovative honed skill-sets for their speedy redressal, as the time keeps moving on.

By: Tapan J Ray

A Ten Step Strategy Prescribed

Posted on December 24, 2012 by Tapan Ray

In India, there are various hurdles to address the healthcare issues in a comprehensive way. Though, these do not seem to be insurmountable, the country needs a clear time-bound grand strategy to squarely address this vexing concern, which also has its consequent socioeconomic fallout.

If we look at the history of development of the industrialized countries of the world, we shall easily be able to fathom that all of them not only had heavily invested, but even now are investing to improve the socioeconomic framework of the country where education and health are the center pieces. Continuous reform measures in these two key areas are proven key drivers of economic growth of any nation.

Just as focus on education is of utmost importance to realize the economic potential of any country, so is the healthcare. It will be extremely challenging for India to realize its dream of becoming one of the economic superpowers of the world, without a sharp strategic focus and significant resource allocation in these two areas.

The World Health Statistics:

As reported by the ‘World Health Statistics 2011′, India spends around 4.2 percent of its Gross Domestic Product (GDP) on health, which is quite in line with other BRIC countries like, China and Russia.This has been possible mainly due to increasing participation of the private players in the healthcare sector and not so much by the government. The following table on ‘Health Expenditure’ will highlight this point:

Type	Brazil	Russia	India	China
Exp. on Health (% of GDP)	8.4	4.8	4.2	4.3
Govt. Exp. on Health(% of Total Exp. on Health)	44	64.3	32.4	47.3
Pvt. Exp. on Health (% of Total Exp. on Health)	56	35.7	67.6	52.7
Govt. Exp. on Health (% of Total Govt. Exp.)	6	9.2	4.4	10.3
Social Security Exp. on Health (% of General Govt. Exp. on Health)	-	38.7	17.2	66.3

Key healthcare goals:

As articulated in a recent paper titled ‘Meeting the Challenges of Healthcare Needs in India: Paths to Innovation’, the key healthcare goals of any country have been described as follows:

Improved quality of care and population health as measured by life expectancy and other measures of wellness

Cost containment and pooled risk-sharing by the population to allow financial access to care as well as avoid catastrophic ruin
Provide access to care in an equitable manner for all citizens

Specifically to India one of the key challenges to healthcare is ‘Universal Access’ to care and health equity. However, in terms of pure concept the country has a universal healthcare system, where theoretically any citizen is entitled to avail the public health facilities irrespective of socioeconomic status. Unfortunately, the reality is far out of the line.

Health is a ‘State subject’:

In Indian system, health is primarily a state subject and the Central Government deals with:

Health related policies
Health related regulations
Initiatives related to identified disease prevention and control

Whereas, each state needs to take care of:

Healthcare administration
Healthcare delivery
Healthcare financing
Training of personnel related to healthcare

The system:

Primary Health Centers (PHCs) of India located in the cities, districts or rural villages are expected to provide medical treatment free of cost to the local citizens. The focus areas of these PHCs, as articulated by the government, are the treatment of common illnesses, immunization, malnutrition, pregnancy and child birth. For secondary or tertiary care, patients are referred to the state or district level hospitals.
The public healthcare delivery system is grossly inadequate and does not function, by and large, with an optimal degree of efficiency, though some of the government hospitals like, All India Institute of Medical Science (AIIMS) are among the best hospitals in India.

Most essential drugs, if available, are dispensed free of cost from the public hospitals/clinics. Outpatient treatment facilities available in the government hospitals are either free or available at a nominal cost. In AIIMS an outpatient card is available at a nominal onetime fee and thereafter outpatient medical advice is free to the patient.

However, the cost of inpatient treatment in the public hospitals though significantly less than the private hospitals, depends on the economic condition of the patient and the type of facilities that the individual will require. The patients who are from Below Poverty Line (BPL) families are usually not required to pay the cost of treatment. Such costs are subsidized or borne by the government.

Private sector is expensive:

That said, in India health facilities in the public sector being inadequate, generally under-staffed and under-financed, a large section of population still does not have access to affordable modern healthcare. As a result, more often than not, common patients are compelled to go to expensive private healthcare providers. Majority of the population of India cannot afford such high cost private healthcare, though comes with a much better quality.

Thus, as things stand today the public sector actually provides just about 20% of actual care services. The balance is catered by the private sector.

A great potential:

A 2012 report on ‘Indian Healthcare Industry’ indicates that in 2010 the size of the industry was around US$ 50 billion and is expected to register a turnover of US$ 140 billion in 2017 with a CAGR of 15 percent. This growth momentum, despite all these, positions India as one of the most lucrative markets within the developing countries of the world. On a global perspective as well, healthcare industry is one of the fastest growing segments clocking a turnover of US$ 5.5 trillion in 2010.

Growth drivers:

The main drivers of growth for the Indian healthcare industry are considered as follows:

Second highest growing economy in the world
Changing demographic profile
Increasing disposable income
Higher incidence of Non-infectious Chronic Diseases (NCD)
New investment avenues
A large talent pool
Cost-effective human resource

Besides above, other growth drivers are as follows:

Increased penetration of pharmaceuticals in the rural markets
Increased export potential for low cost and high quality generic pharmaceuticals, as a large number of patents are going to expire in the next 5 years
Emergence of various health cities and also single specialty clinics offering quality healthcare
Health insurance portability is expected to increase the penetration of insurance, improve quality of service and raise competition among insurers to retain customers
Telemedicine: E-healthcare in rural areas is gaining popularity with the involvement of both
public and private players like, ISRO, Mazumdar Shaw Cancer Center and Narayana Hrudayalaya. Some telecom companies like, Nokia and BlackBerry are also contemplating to extend the use of mobile phones for remote disease monitoring as well as diagnostic and treatment support. Introduction of 3G and in the near future 4G telecom services will
further enhance opportunities of e-healthcare through mobile phones, expanding the field of healthcare.

Promising sectors:

Within the healthcare industry, the most promising sectors are:

Pharmaceuticals
Hospitals and Nursing Homes
Medical equipment
Pathological labs and other diagnostic service providers

According to the Investment Commission of India, the healthcare sector of the country has registered a robust CAGR of over 12 percent during the last four years and the trend is expected to be ascending further.

Quite in tandem, other important areas of the healthcare sector, besides pharmaceuticals, have also recorded impressive performance as follows:

Areas	Growth %
Hospitals/Nursing Homes	20
Medical Equipment	15
Clinical Lab Diagnostics	30
Imaging Diagnostics	30
Other Services (includes Training & Education; Aesthetics & Weight loss; Retail Pharmacy, etc.)	40

Government initiatives:

On its part, the Indian government is also in the process of giving a thrust to the healthcare sector as a whole by:

Increasing public expenditure on healthcare from 1 percent to 2.5 percent of GDP in the 12th Five Year Plan Period
Encouraging public-private partnerships (PPP) in hospital infrastructure and R&D
Encouraging medical tourism
Attracting Indian and foreign players to invest in Tier-II and Tier-III cities with huge untapped market potential. For example:

- Expansion of major healthcare players in tier-II and tier-III cities of India like, Apollo, Narayana Hrudayalaya, Max Hospitals, Aravind Eye Hospitals and Fortis

- BCG Group will reportedly open shortly a multidisciplinary health mall that would provide a one-stop solution for all healthcare needs starting from doctors, hospitals, ayurvedic centers, pharmacies including insurance referral units at Palarivattom in Kochi, Kerala.

BCG’s long-term plan, as reported in the media, is to set up a health village spanning across an area of a 750,000 sq. ft. with an estimated cost of US$ 88.91 million. Along the same line, to set up more facilities for diagnostic services in India, GE Healthcare reportedly has planned to invest US$ 50 million for this purpose

Introduction of the ‘National Commission for Human Resources for Health Bill 2011( NCHRH Bill 2011)’, which will bring all independent bodies like the Medical Council of India (MCI), the Dental Council of India (DCI), the Pharmacy Council of India (PCI) and the Nursing Council of India (NCI) under a centralized authority for a more cohesive action.

Attracting FDI:

According to the Department of Industrial Policy & Promotion (DIPP), the healthcare sector is undergoing significant transformation and attracting investments not only from within the country but also from overseas.

The Cumulative FDI inflow in the healthcare sector from April 2000 to October 2012, as per DIPP publications, is as follows:

Sector	FDI inflow (US$ million)
Hospital and diagnostic centers	1482.86
Medical and surgical appliances	571.91
Drugs and pharmaceuticals	9775.03

(Source: Fact Sheet on FDI – April 2000 to October 2012, DIPP)

Job creation:

The trend of new job creation in the healthcare sector of India is also quite encouraging, as supported by the following facts:

The Healthcare sector in India recorded a maximum post-recession recruitment to a total employee base of 36, 21,177 with a new job creation of 2, 73, 571, according to ‘Ma Foi Employment Trends Survey 2012’.

Despite slowdown in other industries, in the healthcare sector the new job creation continues at a faster pace.

With many new hospital beds added and increasing access to primary, secondary and tertiary / specialty healthcare, among others, the ascending trend in job creation is expected to continue in the healthcare sectors of India in the years ahead.

A Strategy Prescribed:

Though the report of the High Level Expert Group (HLEG) on the ‘Universal Health Coverage (UHC)’ is already in place, without going into the implementability issues of the report in this article, I would like to propose a ten pronged approach towards a new healthcare reform process to achieve the national healthcare objectives:

1. The government should focus on its role as provider of preventive and primary healthcare to all, through public hospitals, dispensaries and PHCs, including free distribution of essential medicines.

2. In tandem, the government should play the role of enabler to create Public-Private partnership (PPP) projects for secondary and tertiary healthcare services at the state and district levels with appropriate fiscal and other incentives.

3. PPP also may be extended to create a robust health insurance infrastructure urgently.

4. The insurance companies will be empowered to negotiate with concerned doctors, hospitals and other organizations, all fees payable by the patients to doctors, hospitals, for diagnostic services etc., including cost of medicines for both inpatients and outpatients treatment, with the sole objective to ensure access to affordable high quality healthcare to all.

5. Create an independent regulatory body for healthcare services to regulate and monitor the operations of both public and private healthcare providers/institutions, including the health insurance sector.

6. Levy a ‘healthcare cess’ to all, for effective implementation of this new healthcare reform process.

7. Effectively manage the corpus thus generated to achieve the healthcare objectives of the nation through the Healthcare Services Regulatory Authority (HSRA).

8. Make HSRS accountable for ensuring access to affordable high quality healthcare to the entire population of the country together with a grievance redressal mechanism.

9. Make HSRS accountable, its operation transparent to the civil society through HSRS website and cost-neutral to the government, through innovative pricing model based on economic status of an individual.

10. Allow independent private healthcare providers to make reasonable profit out of the investments made by them

Conclusion:

All the ten steps prescribed as above, will help ensure a holistic approach to healthcare needs of India and reduce prevailing socioeconomic inequalities within the healthcare delivery systems of the country.

Rapidly growing urban centric five-star private healthcare initiatives are welcome but these are now just catering to the privileged few, perpetuating the pressing healthcare issues unanswered.

Only a well-orchestrated, comprehensive, time-bound and holistic approach is capable of addressing the humongous healthcare needs of India and at the same time providing much required growth momentum to the Indian healthcare industry, positioning India as one of the most lucrative healthcare hubs within the emerging economies of the world.

By: Tapan J Ray

Hysteria on Corporate Lobbying in India

Posted on December 17, 2012 by Tapan Ray

The ‘hysteria’ on ‘Corporate Lobbying’ influencing the key policy decisions of India, reverberated in the corridors of power of the Indian Parliament last week with consequent media attraction and triggering a raging public debate.

On Monday, December 10, 2012 the Upper House of the Indian Parliament reportedly expressed itshuge concern over a lobbying disclosure in the United States related to a contentious government policy decision India.

Taking part in the debate a distinguished Member of the Parliament and an eminent lawyer Mr.Ravishankar Prasad reportedly articulated, “Lobbying is illegal in India and is a kind of bribe. If Wal-Mart has said that hundreds of crores of rupees were spent on India, then it is a kind of bribe.Government should tell who was given this bribe.”

Responding to the opposition demand on this subject, the Government has already ordered a judicial probe on this allegation.

Corporate Lobbying:

The term ‘Lobbying’ has been defined as “a form of advocacy with the intention of influencing decisions made by the government by individuals or more usually by Lobby groups; it includes all attempts to influence legislators and officials, whether by other legislators, constituents, or organized groups”.

April 21, 2012 edition of ‘The Economist’ in an article titled. “The Chamber of Secrets - The biggest business lobby in the United States is more influential than ever”, reported that ‘Americas first chamber of commerce was founded in Charleston in 1773.

Many a times the key issues of corruption, morality and ethics are being used with ‘lobbying’ activity. However, following two different perceptions remain generally associated with this terminology:

Corporates or people with mighty socioeconomic power, by themselves or through their industry bodies, corrupt the laws to serve a self-serving agenda by bending or deflecting them away from general fairness to majority of the population.
It gives an opportunity to defend minority interest against corruption and tyranny of the majority.

An article published in the ‘The Washington Post’ on August 14, 2011 argued that “Blame for financial mess starts with the corporate lobby” in America.

In a recent book titled, “Time to Start Thinking – America and the Specter of Decline”, the author described how the big money in America has almost completely bought over the political process along with a pen picture of the organized lobbying group continuing to wield their mighty power despite reported ban of this activity in the ‘White House’ by President Barrack Obama.

Lobbying is legal in many countries:

It is worth mentioning that lobbying is a legal activity in many countries, such as, the United States of America, Europe and Canada. In the US, many Indian companies, including the government of India have been lobbying since so many years to present their cases and argument with the American law and policy makers.

When President Obama came to power in the US, it was reported: ‘one of the first acts of the Obama administration in office was to have an executive order which prohibited the Obama Administration either from hiring lobbyists – those who had lobbied within two years of joining the administration or allowing people who had left the Obama administration to service lobbyists for two years. The idea is that you want to break the chains where there is undue influence of special interest groups upon the government’.

‘Disclosure’ required in the US:

In the US, lobbying being recognized as a legitimate business activity, the companies are required to inform all such activities through quarterly disclosure reports to the US Senate.

In America, in 2012 alone and only in Washington DC there were reportedly 12,016 active registered lobbyists, who spent a whopping US$ 2.45 Billion for lobbying activities . Similarly, as per publishedreports, there are currently an estimated 15,000 individual lobbyists and 2,500 lobbyist organizations in Brussels to seek favorable business decisions through the legislative process of the European Union.

It has been reported that in the U.S. lobbying is a huge and established industry. This is quite contrary to Indian situation, where lobbying has not been legalized and the activity, going by general perception, ‘smacks of illegal gratification and is ravished by corruption scandals like 2G scams”.

Indian corporates also lobby in the US:

Records with the US House of Representatives reportedly show that around 27 Indian companies have spent money on lobbying in the US. Some examples are as follows:

Reliance Industries (RIL): Unspecified issue
Tata Sons:
Ranbaxy Lab,
The National Association of Software and Service Companies (Nasscom )
Wipro
Gems and Jewellery Export Promotion Council, among others.

Some sensational recent reports:

Following are some sensational recent reports on Corporate Lobbying:

The ‘Pharma Letter’ in its in its March 29, 2012 edition reported that “New research reveals that the pharmaceutical industry lobby is spending more than 40 million Euros (US$ 53.5 million) annually to influence decision making in European Union.”

Back home ‘Live Mint (The wall Street Journal)’ reported on October 6, 2011 as follows:

“Wal-Mart has disclosed earlier, “discussion related to India FDI (Foreign Direct Investment)” as one of the issues in its lobbying with the US lawmakers in the first two quarters of 2011, during which it spent nearly US$ 4 million on various lobbying activities.”

On December 13, 2012, ‘The Telegraph‘ reported that in a recent regulatory disclosure in the United States, Walmart has stated that it spent US$ 25 million in the last four years on lobbying for, among other its hopes for “enhanced market access for investment in India”.

Not legalized in India:

As stated above, though Lobbying is considered a legal business activity in many countries, in India it is still not considered as a legally and recognized business activity. However, many industrial sectors have formed their respective associations primarily for lobbying with the government, which is generally termed as ‘advocacy’.

A recent article published in the India Law Journal titled, ‘Corporate Lobbying and Corruption-Manipulating Capital’ articulates that “lobbying is the preferred means for exerting political influence in developed countries and corruption the preferred one in developing countries. However, lobbying and corruption are symbiotic in nature as both are ways of obtaining help from the public sector in exchange for favors.”

The article further states that corporate lobbying or advocacy has expanded in India mostly as intensive briefings and presentations to the ministers and senior bureaucrats, though it is not yet recognized in a statutory or non-statutory form in the country.

Thus, right from the debate on Bofors Guns to the telephone tapes of high profile lobbyist Niira Radia related to 2G telecom scam and then Tatra trucks scam of the Indian Army and now on Walmart debate in the Parliament, one gets a clear feel that corporate lobbying falls in a grey zone under the Indian law.

Difference between ‘Lobbying’ and ‘Advocacy’:

According to the article titled, ‘Lobbying and Advocacy—Similarities and Differences, published by Charity Lobbying for the Public Interest’, when nonprofit organizations advocate on their own behalf, they seek to positively affect majority of the society, whereas lobbying refers specifically to advocacy efforts that attempt to influence policy or legislation of a country by interested groups, irrespective of its best outcome to the society.

More debate:

In a very recent reported debate published on December 15, 2012 titled, “Is lobbying an acceptable business practice? “, one distinguished professional said, ‘While lobbying can be considered routine, the response to it should not be, as it can be deeply harmful to our country’.

In the same debate, another equally distinguished person commented, ‘Lobbying may be a legitimate activity subject to strict regulatory oversight in the US. But in India, it a sophisticated alibi for the more brazen bribe-giving, what with cash still ruling the roost with its subterranean links lubricating all sections of the economy.”

More controversy:

Not so very long ago, some consumer activists from the civil society vehemently protested against the ‘Intellectual Property Conferences’ held in India, which were allegedly sponsored by some interested groups in a guise to influence the policy makers and the judiciary of India.

It was widely reported that the consumer activists viewed these IP summits, organized by the George Washington University Law School of USA as ‘attempts to influence sitting judges on patent law enforcement issues that are pending in Indian courts.’

In a letter dated February 26, 2010 addressed to Shri Anand Sharma, Minister of Commerce and Industry of India, over 20 NGOs demanded transparency and more information on such meetings and wanted the government of India ‘to put a stop to such industry sponsored lobbying with Indian judges and policymakers to promote their own requirements for intellectual property and to lobby for either law amendments or even to plead their cases currently pending before, various courts and the Indian Patent Office.”

In raising their concerns, the civil society groups argued that the posture adopted by the lobbyists and their supporters is to “force India to adopt greater standards” of IP protection “beyond the mandatory levels” required by the WTO, which may ‘go against public health interest of India’.

The need for a middle path:

In the current volatile scenario, it is quite reasonable to expect that lobbying activities in India, especially after the current uproar in the Parliament, may come under greater scrutiny both by the media and the government. The intervention of the courts against ‘Public Interest Litigation (PIL)’ cannot also be ruled out.

However, it is also believed by many that long-term interest of India is expected to ultimately prevail in this closely watched raging debate with the acceptance of a middle path.

A strong argument in favor of lobbying/advocacy:

As stated above, there is also a strong argument in support of lobbying or advocacy, based on the following grounds:

In a democratic country like India, people from across the spectrum, including the industries and its associations, should have the right to convey their views to policy makers.
Lobbying should be regarded as a “fundamental basis to express a point of view”, industry included.
Trying to influence the government is a natural process by all, including the civil society, other stakeholders and the industry alike.

Regulating lobbying activities – An option:

Considering the fast changing environment and arising out of some recent very sensational lobbying related financial/policy scams in India, as mentioned above, the moot question, as is being raised by many across the country is: “Should the government regulate lobbying activities in the country with appropriate regulations?”

Surrogate lobbying:

The instances of ‘surrogate lobbying’ by the industries with funds coming from various parts of the world are also being raised by the civil society, media and recently by the Government. The contentious issue became the subject of a heated debate related to ‘Kudankulam Nuclear Power Plant’ in Tamil Nadu.

In February 2012, Prime Minister Manmohan Singh’s reportedly charged that foreign NGOs for stoking protests with foreign funds at the ‘Kudankulam Nuclear power Plant’ for vested interests and ordered further investigation by the Ministry of Home Affairs to track the trails of funds.

As a result of all these developments, the Government is reportedly becoming increasingly more vigilant against direct or indirect ‘foreign hand’ through surrogate lobbying in the policy related issues of the country, against majority interest of the society. The ‘Walmart saga’ is a case in point, at this stage.

Industry observers have opined, probably many other forms of surrogate lobbying are currently operational in India, which needs to be thoroughly probed and in case of any illegal activity, the perpetrators must be brought to justice, sooner than later, whether it is related to ‘Kundamkulam Nuclear Power Plant’ or any other .

Examples of political fall-out of lobbying activities:

On June 1, 2012, FiercePharma reported as follows:

“The cat is out of the bag so to speak with the disclosure of memos today detailing the level of drug industry support for passage of President Obama’s prized healthcare reform”

It continued to state, “Big Pharma came around to support the original bill, trading about $80 billion in additional taxes and some price rebates to federal programs for an expanded pool of insured.”

Back home in India, The Outlook Magazine reported on June 6, 2010 on the political fall-out of lobbying related to 2G telecom spectrum allocation scam in India as follows:

“Since Outlook published extracts from the CD of Radia’s phone conversations (submitted to the court) taped by the I-T department and put the 140 conversations up on its website, there has been a raging debate on what they tell us about the role of lobbyists in the 2G spectrum allocation scam, how the media interplays in such a system, and how our political class and retired bureaucrats are more often than not willing partners in the game.”

“These debates do not detract from the aim of punishing the guilty behind the 2G scam; rather they raise disturbing questions we all have to answer. Who is this woman who can speak to the “highest and mightiest” in this country in this way? From where does she draw her power? And what does it tell us about our society? When ‘Outlook’ asked her, whether she would like to give her version of these recent events, Radia SMSed back: “No. Thank You.” This is her story..”

Conclusion:

Despite a long history of regulated and legalized lobbying in the US, there are still severe criticisms even in that country about the way lobbying activities have worked there in the past so many decades. India has plenty to learn from such experiences.

In the prevailing situation within India many experts often question, whether the economic/ other critical policy decisions of the country are mostly based on what the local population would require or depend on the money power of vested interests or business houses within and outside the country to influence such decisions.

To eliminate any possibility of illegal gratification, directly or indirectly or in any other manner or form, the process of lobbying or advocacy should be made absolutely transparent for all through appropriate rules and regulations, legally acceptable lobbyists and an appropriate disclosure mechanism for all such related expenses, just as exists in the United States of America.

In absence of these transparent and robust measures, lobbying or advocacy will continue to be perceived not just as an illegitimate activity, but also an ignoble and dubious profession in the eyes of majority living in India.

The fantastic vocabulary of ‘Good Governance’ should not be used just for others to practice. It is a time to ‘walk the talk’ for all stakeholders, including the government to douse histrionics of various kinds like, what happened last week on ‘Corporate Lobbying in India’.

By: Tapan J Ray

A NEW Study on Ballooning Pharma R&D Cost: Exploring a Sustainable Model for Greater Patients’ Access

Posted on December 10, 2012 by Tapan Ray

The high-decibel debate on increasing prices for patented drugs affecting patients’ access to innovative medicines gets a new fuel. A brand new study dated December 2012 carried out by the Office of Health Economics (OHE), UK, which was partly supported by a grant from AstraZeneca, estimated that the cost of developing new medicine has risen by ten times from US$100 million in the 1970s to as high as US$ 1.9 billion in 2011.

The study identifies the following key reasons for a galloping increase in the cost of research and development:

Inflation-adjusted investments
Sharp increase in the rate of failure
Stringent regulatory demands together with scientific complexity
Longer time for clinical development
Significant increase in the cost of capital

Another recent study goes even beyond:

Many experts have gone even further on this subject, arguing that pharmaceutical R&D expenses are over stated and the real cost is much less.

An article titled “Demythologizing the high costs of pharmaceutical research”, published by the London School of Economics and Political Science in 2011 indicates 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 the same figure increased by 64 per cent to US$ 1.32 billion, as reported by a pharmaceutical industry association. Maintaining similar trend, if one assumes that the R&D cost will increase by another 64 per cent by 2012, the cost to bring a new drug to the market through its discovery and development stages will be around US $2.16 billion. This will mean a 2.7 times increase from its year 2000 estimate, the article articulates.

The important caveat:

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

The tax exemptions that the companies avail for investing in R&D.
Tax write-offs amount to taxpayers’ contributing almost 40% of the R&D cost.
The cost of basic research (should not have been included), as these are mostly done in public funded universities or laboratories.

The article commented 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’.

The authors alleged that “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.”

A positive side of the story:

The book titled “Pharmaceutical R&D: Costs, Risks, and Rewards”, published by the government of USA states that the three most important components of R&D investment are:

Money
Time
Risk

Money is just one component of investment, along with a long duration of time, to reap benefits of success intertwined with a very high risk of failure. The investors in the pharmaceutical R&D projects not only take into account how much investment is required for the project against expected financial returns, but also the timing of inflow and outflow of fund with associated risks. It is thus quite understandable that longer is the wait for the investors to get their return, greater will be their expectations for the same.

This publication also highlights that the cost of bringing a new drug from ‘mind to market’ depends on quality and sophistication of science and technology involved in a particular R&D process together with associated investment requirements for the same. In addition, regulatory demand to get marketing approval of a complex molecule for various serious disease types are also getting more and more stringent, significantly increasing their cost of clinical development simultaneously. All these factors when taken together make the cost of R&D not only very high, but unpredictable too.

Thus to summarize from the above study, high pharmaceutical R&D costs involve:

Sophisticated science and technology dependent high up-front financial investments
A long and indefinite period of negative cash flow
High tangible and intangible costs for acquiring technology with rapid trend of obsolescence
High risk of failure at any stage of product development

The ground reality: R&D productivity is going south

That pharmaceutical R&D productivity is fast declining has been vindicated by ‘2011 Pharmaceutical R&D Factbook’ complied by Thomson Reuters, the key highlights of which are as follows:

21 new molecular entities (NMEs) were launched in the global market in 2010, which is a decrease from 26 NMEs of the previous year.
2010 saw the lowest number of NMEs launched by major Pharma players in the last 10 years
The number of drugs entering Phase I and Phase II clinical trials fell 47% and 53% respectively during the year.

According to findings of the latest review of ‘Pharmaceutical R&D returns performance’ by Deloitte and Thomson Reuters of December 2012, the R&D Internal Rate of Return (IRR) of leading pharmaceutical companies has fallen for a second successive year to 7.2 percent in 2012 from 7.7 percent in 2011.

High cost of failure:

By challenging the status quo, Andrew Witty, the global CEO of GlaxoSmithKline (GSK) in his speech in Mumbai on September 27, 2011 to the members of the Indian pharmaceutical industry commented that the cost of over a billion dollar to bring a new molecule to the market through its discovery and development stages is “unacceptable.” He attributed such high R&D expenses to the ‘cost of failure’ by the industry.

Witty said, “High in-house failure rates are slowing progress on pricing affordability… We need to fail less and deliver more”.

He commented during his deliberation that success in reducing the R&D cost to make innovative drugs more affordable to the patients of all income levels, across the globe, will be the way forward in the years ahead.

Conventional thinking and an unsustainable model:

Research scientists have already articulated that sharp focus in the following areas may help containing the R&D expenditure to a great extent and the savings thus made, in turn, can fund a larger number of R&D projects:

Early stage identification of unviable new molecules and jettisoning them quickly
Newer cost efficient R&D models, like one implemented by GSK
Significant reduction in drug development time.

Unfortunately, sustainability of the above model still remains a wishful thinking and a question mark to many for various other reasons.

Exploring a seemingly ‘Sustainable Model’:

Should Pharmaceutical R&D move from the traditional models to a much less charted frontier?

Perhaps towards this direction, in November, 2010 a report of Frost & Sullivan titled, “Open Source Innovation Increasingly Being Used to Promote Innovation in the Drug Discovery Process and Boost Bottom-line”, underscored the urgent need of the global pharmaceutical companies to respond to the challenges of high cost and low productivity in their respective Research and Development initiatives, in general.

‘Open Innovation’ model, they proposed, will be most appropriate in the current scenario to improve not only profit, but also to promote more innovative approaches in the drug discovery process. Currently, on an average it takes about 8 to 10 years to bring an NCE/NME to market with a cost of around U.S$ 1.9 billion.

The concept of ‘Open Innovation’ is being quite successfully used by the Information Technology (IT) industry since nearly three decades all over the world, including India. Web Technology, the Linux Operating System (OS) and even the modern day ‘Android’ – the open source mobile OS, are excellent examples of commercially successful ‘Open innovation’ in IT.

In the sphere of Biotechnology Human Genome Sequencing is another remarkable outcome of such type of R&D model.

On May 12, 2011, in an International Seminar held in New Delhi, the former President of India Dr. A.P.J. Abdul Kalam commented, “Open Source Drug Discovery (OSDD) explores new models of drug discovery”. He highlighted the need for the scientists, researchers and academics to get effectively engaged in ‘open source philosophy’ by pooling talent, patents, knowledge and resources for specific R&D initiatives from across the world. In today’s world ‘Open Innovation’ in the pharmaceutical R&D has a global relevance, especially, for the developing world of many ‘have-nots’.

‘Open Innovation’:

As the name suggest, ‘Open Innovation’ or the ‘Open Source Drug Discovery (OSDD)’ is an open source code model of discovering a New Chemical Entity (NCE) or a New Molecular Entity (NME). In this model all data generated related to the discovery research will be available in the open for collaborative inputs. The licensing arrangement of OSDD where both invention and copyrights will be involved, will be quite different from any ‘Open Source’ license for a software development.

In ‘Open Innovation’, the key component is the supportive pathway of its information network, which is driven by three key parameters of:

Open development
Open access
Open source

As stated earlier, ‘Open Innovation’ concept was successfully used in the ‘Human Genome Project’ where a large number of scientists, and microbiologists participated from across the world to sequence and understand the human genes. However, this innovation process was first used to understand the mechanics of proteins by the experts of the biotech and pharmaceutical industries.

Making innovative drugs affordable through ‘Open Innovation’:

The key objective of ‘Open Innovation’ in pharmaceuticals is to encourage drug discovery initiatives at a reasonably cheaper price, especially for Non-infectious Chronic Diseases (NCD) or the dreaded ailments like Cancer, Parkinson’s, Alzheimer, Multiple Sclerosis etc. and also many neglected diseases of the developing countries, to make innovative drugs affordable even to the marginalized people of the world.

Multiple benefits:

According to the above report of Frost & Sullivan on the subject, the key benefits of ‘Open Innovation’ in pharmaceuticals will include:

Bringing together the best available minds to tackle “extremely challenging” diseases
Speed of innovation
Risk-sharing
Affordability

The key barrier: Shared IPR

Industry observers feel that the key barrier to ‘Open Innovation’ is that IPR needs to be shared. Hence, large innovator companies, by and large, have not evinced much commercial interest in this initiative as yet. Other issues for ‘Open Innovation’ model are:

Who will fund the project and how much?
Who will lead the project?
Who will coordinate the project and find talents?
Who will take it through clinical development and regulatory approval process?

However, the experts feel that all these do not seem to be an insurmountable problem at all, as the saying goes, ‘where there is a will, there is a way’.

The Global initiatives on ‘Open Innovation’:

In June 2008, GlaxoSmithKline announced that it was donating an important slice of its research on cancer cells to the cancer research community to boost the collaborative battle against this disease. With this announcement, genomic profiling data for over 300 sets of cancer cell lines was released by GSK to the National Cancer Institute’s bioinformatics grid. It has been reported that over 900 researchers actively contribute to this grid from across the industry, research institutes, academia and NGOs. Many believe that this initiative will further gain momentum to encourage many more academic institutions, researchers and even smaller companies to add speed to the drug discovery pathways and at the same time make the NCE/NME coming through such process much less expensive and affordable to a large section of the society, across the globe.

The Alzheimer Disease Neuroimaging Initiative (ADNI) is another example of a Private Public Partnership (PPP) project with an objective ‘to define the rate of progress of mild cognitive impairment and Alzheimer’s disease, develop improved methods for clinical trials in this area and provide a large database which will improve design of treatment trials’.

Recently announced ‘Open invitation’ strategy of GlaxoSmithKline (GSK) to discover innovative drugs for malaria is yet another example where GSK has collaborated with European Bioinformatics Institute and U.S. National Library of Medicine to make the details of the molecule available to the researchers free of cost with an initial investment of US$ 8 million to set up the research facility in Spain involving around 60 scientists from across the world to work in this facility.

Indian initiative:

In India, Dr. Samir Brahmachari, the Director General of the Council of Scientific and Industrial Research (CSIR) is the champion of the OSDD movement. CSIR believes that for a developing country like India OSDD will help the common people to meet their unmet medical needs in the areas of neglected tropical diseases.

‘Open Innovation’ project of CSIR is a now a global platform to address the neglected tropical diseases like, tuberculosis, malaria, leishmaniasis by the best research brains of the world working together for a common cause.

To fund this initiative of the CSIR the Government of India has allocated around U.S$ 40 million and an equivalent amount of funding would be raised from international agencies and philanthropists.

Conclusion:

Currently pharmaceutical R&D is an in-house initiative of innovator global companies. Mainly for commercial security reasons, only limited number of scientists working for the respective innovator companies will have access to the projects.

‘Open Innovation’ on the other hand, is believed to have the potential to create a win-win situation, bringing in substantial benefits to both the pharmaceutical innovators and the patients.

According to available reports, the key advantage of the ‘Open Innovation’ model will be substantial reduction in the costs and time of R&D projects, which could be achieved through voluntary participation of a large number of Researchers/Scientists/Institutions in key R&D initiatives. This in turn will significantly reduce ‘mind-to-market’ time of more affordable New Chemical/Molecular Entities in various disease areas making innovative medicines affordable to all.

Thus, many experts argue, high prices of new patented drugs, giving rise to low access to majority of patients, at least, in the developing world, should by and large be attributed to high R&D cost. They feel, such ballooning increase in research and development expenditures is commercially unsustainable even in the medium term.

Many thought leaders now believe, despite hard commercial consideration related to IPR, which perhaps has to be amicably sorted out willy-nilly in the long run, ‘Open Innovation’ concept could well be an important commercial model for tomorrow’s global R&D initiatives. This sustainable model would possibly address the issue of improving access to innovative affordable Medicines to a larger number of patients of the world, meeting their unmet medical needs, more effectively and with greater care.

By: Tapan J Ray

Revocation and Denial of Patents on Patentability Ground in India: The Fallout and the Road Ahead

Posted on December 3, 2012 by Tapan Ray

On November 26, 2012, the Intellectual Property Appellate Board (IPAB) reportedly denied patent protection for AstraZeneca’s anti-cancer drug Gefitinib on the ground that the molecule lacked invention.

The report also states that AstraZeneca suffered its first setback on Gefitinib in June 2006, when the Indian generic company Natco Pharma opposed the initial patent application filed by the global major in a pre-grant opposition. Later on, another local company, GM Pharma, joined Natco in November 2006.

After accepting the pre-grant opposition by the two Indian companies, the Indian Patent office (IPO) in March 2007 rejected the patent application for Gefitinib citing ‘known prior use’ of the drug. AstraZeneca contested the order through a review petition, which was dismissed in May 2011.

Prior to this, on November 2, 2012 the IPAB revoked the patent of Pegasys (Peginterferon alfa-2a) – the hepatitis C drug of the global pharmaceutical giant Roche. Interestingly Pegasys was granted patent protection across the world.

Though Roche was granted a patent for Pegasys by the Indian Patent Office (IPO) in 2006, this was subsequently contested by a post-grant challenge by the large Indian pharma player – Wockhardt and the NGO Sankalp Rehabilitation Trust (SRT) on the ground that Pegasys is neither a “novel” product nor did it demonstrate ‘inventiveness’ as required by the Patents Act of India.

It is worth noting, although the IPO had rejected the patent challenges by Wockhardt and SRT in 2009, IPAB reversed IPO’s decision revoking the patent of Pegasys.

Similarly the patent for liver and kidney cancer drug of Pfizer – Sutent (Sunitinib), which was granted by IPO in 2007, was revoked by the IPAB in October, 2012 after a post grant challenge by Cipla and Natco Pharma on the ground that the claimed ‘invention’ does not involve inventive steps.

A twist and turn:

However, on November 26, 2012 in a new twist to this case, the Supreme Court of India reportedlyrestored the patent for Sutent. Interestingly, at the same time the court removed the restraining order, which prevented Cipla from launching a copy-cat generic equivalent of Sunitinib.

The key reason:

All these are happening, as the amended Patents Act 2005 of India includes special protections for both patients and generic manufacturers by barring product patents involving ‘incremental’ changes to existing drugs. This practice is called “evergreening” by many.

It is worth noting, such ‘incremental innovations’ qualify for the grant of patents across the world including, Europe, Japan and the USA and that reason prompted initiation of a raging debate throwing strong arguments both in favor and against of this issue, though the subject conforms to the law of the land.

‘Incremental innovation’ still a contentious issue in India:

As on today in the Indian Patents Act 2005, there is virtually no protection for ‘incremental innovation’, as the section 3(d) of the statute states as follows:

“The mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.

Explanation: For the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy.”

The apprehension:

A published report on ‘Patentability of the incremental innovation’ indicates that Indian Patents Act 2005 was formulated by the policy makers keeping the following points in mind:

The strict standards of patentability as envisaged by TRIPS pose a challenge to India’s pharmaceutical industriy, whose success depended on the ability to produce generic drugs at much cheaper prices than their patented equivalents.
A robust patent system would severely curtail access to expensive life saving drugs.
Grant of a product patents should be restricted only to “genuine innovations” and those “incremental innovations” on existing medicines, which will demonstrate significantly increased efficacy over the original drug.

Is it ‘MNC Interest’ versus ‘Indian Interest’ issue?

Many domestic stakeholders reportedly are looking at this particular subject as ‘MNC Interest’ versus ‘Indian Interest’ in the realm of intellectual Property Rights (IPR). While others holding opposite view-points counter it by saying, this is a narrow and unfair perspective to address the much broader issue of fostering innovation within the Indian pharmaceutical industry helping capacity building, attracting talent and investments, while creating an IPR friendly ecosystem for the country in tandem.

Incidentally many MNCs, as reported by a section of the media, have demonstrated proven long-standing commitment to India, as they have been operating in the country with impeccable repute for a much longer period than most of the domestic pharmaceutical players, if not all, spanning across all scale and size of operations.

Are the patent challenges under section 3(d) being used as a ‘business strategy’?

Some observers in this field have expressed, although ‘public health interest’ is the primary objective for having Section 3(d) in the Indian Patents Act 2005, many generic companies, both local and global, have already started exploiting this provision as a part of their ‘business strategy’ to improve business performance in India.

This game seems to have just begun and may probably assume unhealthy dimension, if not openly debated and appropriate remedial actions are taken, as will deem necessary by the law makers keeping in view the long term, both global and local, implications of the same.

The beginning of the dispute:

As we know, way back in 2006 IPO refused to grant patent to the cancer drug Glivec of Novartis on the ground that the molecule is a mere modification of an existing substance known as imatinib. However, Novartis challenged the decision in the Supreme Court of India and in September, 2012, the final arguments in the Glivec case commenced. The matter is now sub judice.

Experts have opined that this interesting development has put Section 3(d) of the Indian Patents Act 2005 to an ‘Acid Test’ and the final verdict of the apex court will have the last say on the interpretation of this much talked about section of the statute.

Industry observers from both schools of thought – pro and against, are now waiting eagerly for the final outcome of this long standing dispute with bated breath, as it were.

Differing view points on impact:

Though the domestic stakeholders, including the local pharmaceutical industry, by and large, have expressed satisfaction with the law having taken its own course, the adversely affected companies articulated their strong disappointments with the developments. These companies argue, since valid patents were granted across the world for all these products, they had deployed significant financial and other resources starting from the regulatory approval process to market launch of such products in India with reasonable confidence.

Now with the such revocation and denial of patents, the concerned companies feel that they will have to suffer significant financial losses besides high ‘Opportunity Costs’ for these molecules in India.

Interestingly, neutral observers have reportedly opined that this contentious issue, if not addressed appropriately and sooner by the government keeping in view the global business climate, will ultimately leave a lasting negative impression on the global community regarding the quality of IP ecosystem and investment climate in India, which consequently could lead to far reaching economic consequences extending even beyond the pharmaceutical industry of the country.

However, most of the local stakeholders advocate that there is no need to have a relook at it, in any way.

Opposition from the domestic industry:

It has been reported that a detailed study commissioned by the ‘Indian Pharmaceutical Alliance (IPA)’ and authored by Mr. T. C. James, Director, National Intellectual Property Organization, and a former bureaucrat in the ‘Department of Industrial Policy and Promotion (DIPP)’, articulated as follows:

“There is no clinching evidence to show that without a strong patent protection regime innovations cannot occur, that minor incremental innovations in the pharmaceutical sector do not require patent protection and that Section 3(d) of the Patents Act is not a bar for patenting of significant incremental innovations.”

In his report Mr. James also criticized large ‘Multinational Companies (MNCs)’ for “exploring strategies to extend their hold on the market, including through obtaining patents on minor improvements of existing drugs.”

The author continues to argue in favor of the section 3(d) the as follows:

It will be incorrect to conclude that Section 3 (d) is not compatible with TRIPS Agreement.
It has stood the test of time and does not introduce any unreasonable restrictions on patenting.
It is a major public health safeguard as it blocks extension of patent period through additional patents on insignificant improvements paving the way for introduction of generics on expiry of the original patent.
Pharma companies need to be given incentives for undertaking more research and development, but removing section 3(d) will be counterproductive.
A good marketing strategy for the companies would be to concentrate on R & D in diseases which are endemic to countries like Brazil, China and India which are fast emerging as major economies.

IPA challenges: 86 pharmaceutical patents granted by IPO fall under Section 3(d):

A study by the Indian Pharmaceutical Alliance (IPA) indicates that 86 pharmaceutical patents granted by the IPO post 2005 are not breakthrough inventions but only minor variations of existing pharmaceutical products and demanded re-examination of them.

Possible implications to IPA challenge:

If the argument, as expressed above in the IPA study, is true by any stretch of imagination, in that case, there exists a theoretical possibility of at least 86 already granted product patents to get revoked. This will indeed be a nightmarish situation for innovators of all caste, creed and colors, irrespective of national or multinational background.

Recapitulation of ‘Revised Mashelkar Committee Report’:

In August 2009, the Government accepted the revised report of the ‘Mashelkar Committee’, which observed the following:

1. “It would not be TRIPS compliant to limit granting of patents for pharmaceutical substance to New Chemical Entities only, since it prima facie amounts to a statutory exclusion of a field of technology.”

2. “Innovative incremental improvements based on existing knowledge and existing products is a ‘norm’ rather than an ‘exception’ in the process of innovation. Entirely new chemical structures with new mechanisms of action are a rarity. Therefore, ‘incremental innovations’ involving new forms, analogs, etc. but which have significantly better safety and efficacy standards, need to be encouraged.”

Could it have an impact on FDI?

Keen observers of these developments have reportedly expressed that revocation of granted patents or denial of patents on patentability criteria for the molecules, which hold valid patents elsewhere in the world, is sending a very negative signal to the global community and vitiating, among others, the Foreign Direct Investment (FDI) climate in the country. However, many local experts interpret this observation as mere ‘posturing’ at the behest of the MNCs’ interest.

The point to ponder:

The innovator companies have been arguing since quite some time that innovation involving any New Chemical Entity (NCE) never stops just after its market launch. Scientists keep working on such known molecules to meet more unmet needs of the patients within the same therapeutic class.

They substantiate their argument by citing examples like, after the discovery of beta-blockers, incremental innovation on this drug continued. That is why, from non-cardio-selective beta-blockers like Propranolol, the world received cardio-selective beta-blockers like Atenolol, offering immense benefits and choices to the doctors for the well being of patients.

Thus, global innovators reiterate very often that such examples of high value ‘incremental innovation’ are important points to ponder in India.

Patent challenge is a legal process, but…:

The proponents of ‘no change required in the Section 3(d)’ argue with gusto that ‘Patent Challenge’ is a legal process and the law should be allowed to take its own course.

However, the opposition counter-argues that the main reason in favor of Section 3(d) being that the provision will prevent grant of frivolous patents and the ultimate fallout of which will result in limited access to these drugs due to high price, is rather difficult to accept. This, they point out, is mainly because the Government is now actively mulling a structured mechanism of price negotiation for all patented drugs to improve their access to patients in India.

Conclusion:

The spirit of ‘public health interest’ and avoidance of frivolous patents behind Section 3(d) of the Indian Patents Act is indeed commendable.

However, exclusion of almost all kinds of ‘incremental innovation’ for not meeting the very subjective and highly discretionary ‘efficacy’ criterion in the above section could prove to be counterproductive in the long run, even for the domestic players. The reason being, many such innovations will help enhancing safety, efficacy and compliance, besides other properties, of already existing molecules meeting various unmet needs of the patients.

Looking from a different perspective altogether, restrictive provisions in Section 3(d) could well go against the public health interest in the longer term, especially when the government is considering a mechanism of price negotiation for the patented drugs in India, as stated above.

Thus weighing pros and cons of both the arguments, in the finer balance of probability in terms of net gain to India as a nation, I reckon, appropriate legislative amendment in the section 3(d) of the Indian Patents Act 2005 will give a much required boost and incentive to pharmaceutical research and development in India.

This long overdue course-correction, if dealt with crafty win-win legal minds, will be able to protect not only high value “incremental innovations” of all innovators, global or local, in pursuit of significantly better and better drugs for the patients of India, but at the same time will effectively address the genuine apprehensions of ‘evergreening’ through frivolous patents.

…Or else should we wait till the final verdict of the Supreme Court comes on the Glivec case of Novartis?… Keeping my fingers crossed.

By: Tapan J. Ray

PILMAN

A Tapan Ray Website

Category Archives: Blog

Government Ups the Ante for More Compulsory Licenses in India

‘Havoc’ and its ‘Aftermath’: Clinical Trials in India

‘Disease Oriented Treatment’ to ‘Patient Oriented Treatment’ – An evolving trend

The Game Changers in 2012 and A Crystal Gazing into 2013

A Ten Step Strategy Prescribed

Hysteria on Corporate Lobbying in India

A NEW Study on Ballooning Pharma R&D Cost: Exploring a Sustainable Model for Greater Patients’ Access

Revocation and Denial of Patents on Patentability Ground in India: The Fallout and the Road Ahead