NCDs: Any Wolf Around, In Sheep’s Clothing? 

Noncommunicable Diseases (NCDs), such as, cancer, cardiovascular disease, diabetes and chronic respiratory disease, are now the leading cause of death in the world, accounting for 63 percent of annual deaths. Over 80 percent of NCDs occur in lower or middle income countries.

Moreover, wide prevalence of NCDs and inadequate patients’ access to related drugs have a profound negative impact on the economic progress of any country. According to various reports, the increase of around just one year of a country’s average life expectancy, could increase its GDP growth by around four percent.

Since long, the global drug industry has been contributing immensely to discover and bring to the market various amazing medicines to effectively treat a spectrum of NCDs. It is still happening, but with a stark different impact on the majority of the patients, across the world. 

There are many important aspects to NCDs, such as, public and private initiatives in their prevention, continuous screening, proper diagnosis, providing most effective treatment, and population’s lifestyle management for more effective disease control. However, in this article, I shall focus only on modern drug pricing, as one of the key barriers for patients’ access to modern drugs for the treatment of these ailments.

Saying something, and doing something else:

In this context, some large pharma lobby groups pontificate that the drug industry recognizes the economic and social impact of NCDs. Many of them also try to widely publicize, that they are working with various stakeholders, such as, the Governments, other payers and patients’ groups, as an active solution partner in lessening this burden. 

Yes, some of them do actively support some programs, mostly to prevent, screen and diagnose these chronic ailments. There are also instances when they try to showcase some of their occasional and complicated, so called ‘patient access’ programs.

Interestingly, a global major even wanted to reap a rich harvest by highlighting one such initiatives to win a patent litigation in the Supreme Court of India. As many would know, the Apex Court of the country did not take cognizance of its real value to patients, as projected by the concerned company, while dictating its final judgement on the Glivec case.

To many independent experts, these could most probably be part of a grand façade to justify the high drug prices, which most of the patients can’t afford, and also is an attempt to manage their fast eroding overall public image. On the other hand, they ‘religiously’ continue to keep increasing the drug prices arbitrarily, including those of NCDs. I shall dwell on it below.

Impeding patient access to modern drugs:

Despite all these developments, the issue of general affordability of most effective available drugs, even by the payers, such as, many Governments and the health insurance companies, are seriously impeding the patient access to these medicines.

Such exorbitant treatment costs with modern and more effective drugs is creating almost an impregnable barrier for access to these medicines, mostly for those patients incurring Out-of-Pocket (OoP) expenditure on health care. In a situation like this, where the volume sales do not increase significantly, to maintain the business growth the manufacturers of these drugs further hike up their product prices to a jaw dropping level, as perceived by both the patients and the payers.

This overall pricing environment is now posing a major challenge to many even in many developed countries of the world, including the United States.

Even the sky is not the limit:

Today, for a drug price increase not even the sky is the limit. Recently, the Census Bureau, Commerce Department of the United States (US) announced May 2016 sales of merchant wholesalers of various industries in the country. According to this report, the total pharma sales by manufacturers to pharmacies, hospitals, and others in the distribution chain reflected a buoyant increase of a hefty 11.3 percent from a year ago, especially when most other sectors showed sluggishness in growth.

The obvious question, therefore, that comes up, are the Americans now consuming more pharmaceutical products than in the past? The answer, however, is negative, though not very surprising to many.

In that case, is this increase in growth coming primarily from price increases of drugs, which are mostly used for the treatment of chronic ailments? The answer now will be an affirmative one. 

How much price increase is enough?

This question becomes quite relevant, when a large section of even Americans starts raising their voices against high drug price, as it is adversely impacting their access to those drugs. 

If this question is put slightly differently, such as, when Apple Inc. can take an annual price increase of around 10 percent for its iPhones in the Unites States (US), how much drug price increases the pharma companies are possibly taking every year in the same country? This interesting point was deliberated in an article published in The Wall Street Journal (WSJ) on July 14, 2016. 

Price increases driving growth:

According to this article, pharmaceutical prices in the US rose by 9.8 percent from May 2015 through May 2016. This is the second-highest increase among the 20 largest products and services tracked by the Bureau of Labor Statistics’ Producer Price Index, with investment services ranking first.

Majority of pharma companies keeps increasing prices also for a large section drugs used in the treatment of NCDs, which require almost lifelong therapy for the patients to lead a normal and meaningful life.

I am trying to give below a flavor of such drug price increases, both for NCDs and communicable diseases, quoting a few examples from the above WSJ article:

  • Biogen Inc. reported a 15 percent increase to US$ 744.3 million in US sales of its Multiple Sclerosis (MS) drug Tecfidera in the first quarter, primarily due to price increases. The local revenue for Biogen’s other biggest-selling products, Avonex, used in the relapsing form of multiple sclerosis, and Tysabri used in multiple sclerosis and Crohn’s disease, also benefited from higher prices.
  • The sales of Giliead Science’s Truvada, used as a preventive treatment for HIV rose 16 percent in the quarter, on the back of higher prices, and also increased use as a preventive treatment for HIV.
  • Global sales of Amgen Inc.’s anti-inflammatory drug Enbrel rose 24 percent in the first three months of the year, driven primarily by a higher net selling price.
  • US sales for AbbVie Inc.’s anti-inflammatory drug Humira rose 32 percent in the first quarter, due to price increases and higher prescription volume. 
  • Pfizer Inc.’s US price increases and, in some cases greater prescription volume, helped drive higher revenue for nine drugs representing US$2 billion in US revenue.

Payers have started reacting:

Responding to this development, Express Scripts’ National Preferred Formulary (NPF) of the US, which is one of the most widely used drug list in the United States, providing prescription drug coverage guidelines for 25 million Americans, has excluded many drugs from its 2017 list. This exclusion covers some brands, such as, Novo Nordisk’s blockbuster GLP-1 diabetes drug Victoza and two of its top-selling insulins.

Similarly, another large American retail and health care company CVS Health’s 2017 formulary does not feature, among many other drugs, Sanofi’s blockbuster insulin Lantus along with its follow-up Toujeo, making it the largest commercial product ever excluded from a formulary. 

‘The playbook used for a number of years is over’:

In an article of August 04, 2016 titled, “Drug lobby plans a counterattack on prices”, a senior director of the public affairs firm APCO Worldwide, which represents several drug companies, and a former HHS official under President George W. Bush was quoted saying, in the context of pharma companies and their lobby groups that, the reality, the message and the playbook used for a number of years is over. The industry can no longer defend high drug prices by pointing to the pricey research and development that goes into innovative medicines. They have to move on, he added.

Indian scenario:

The Indian scenario is much worse, with OoP expenditure on drugs being around 70 percent of the total treatment cost. It could be even more, if only NCDs are considered. This situation raises a red flag, especially considering the WHO report released on January 20, 2015 that highlights NCDs are estimated to have accounted for 60 per cent of the deaths in India in 2014.

Some of the examples are as follows:

  • An ICMR-INDAIB study, published in September 2011, on diabetes prevalence in India indicate that the epidemic is progressing rapidly across the nation, and has already affected a total of 62.4 million persons in 2011. With proper diagnosis and screening this figure may increase to a dangerous level in India.
  • According to WHO, almost 2.6 million Indians are predicted to die due to coronary heart disease (CHD), which constitutes 54.1 percent of all CVD deaths in India by 2020. 
  • A March 2012 ‘The Lancet’ study found that nearly six lakh Indians die of cancer every year, with 70 percent of these deaths between the ages of 30-69 years.
  • A report titled “Dementia in Asia Pacific Region” released in November 2014, at the 17th Asia Pacific Regional Conference of Alzheimer’s Disease International (ADI) states that by 2050, the number of people in India suffering from dementia will rise to over 12 million.

Carefully assessing the enormous pharma business opportunity, mainly due to increasing health awareness and fast growing per capita income in the country, pharma players operating in India have become very active in the NCD area, in different ways. However, one strategy remains unchanged, which is continuous increase in modern drug prices, even at the cost of volume increase, frequently taking them beyond affordability of a large section of patients in India. 

Indian Government also reacted:

Recognizing, and basically to address this critical problem, just as what has is now happening in other parts of the globe too, the Union Ministry of Health was compelled to take strong measures, especially in the absence of Universal Health Care (UHC) in India. The Government recently revised the National List of Essential Medicines (NLEM) by adding many more modern drugs for NCDs in the list, to facilitate bringing them under the drug price control mechanism of the country.

Many company’s evading drug price control:

The Union Chemicals and Fertilizers minister Mr. Ananth Kumar informed the Rajya Sabha of the Indian Parliament on July 28, 2016 that various drug price regulatory measures taken by the government have helped consumers save Rs 4,988 crore over the last two years.

This saving may well be just on the paper. On the ground, have the consumers been really benefited out of these measures, and if so, to that much extent? 

The answer wouldn’t be too ferret out, when one takes into account the reply of the Minister of State for Chemicals and Fertilizers, Mr. Hansraj Gangaram Ahir to the Lok Sabha of the Parliament on March 08, 2016. The Minister informed the lawmakers that the National Pharmaceutical Pricing Authority (NPPA) is trying to recover a whopping Rs 4,551 crore, including interest, from various pharma companies for overcharging as of February 2016. Out of this total amount, Rs 3,698.32 crore, representing about 82 per cent of the total outstanding amount, is under litigation in various High Courts and Supreme Court spreading across 1,389 cases, the Minister further said.

The question, therefore, arises, how much benefit of the drug price control of essential medicines is actually benefitting the patients, and how much is being evaded by the pharma players?

Price increases driving Indian pharma industry growth:

In India too, a large number of pharma companies are increasing prices, including a large proportion of those drugs, which are used in the treatment of NCDs, requiring almost lifelong therapy for the sufferers to lead a normal and meaningful life.

The exorbitant treatment cost for many NCDs, with the modern and more effective drugs, is seriously impeding the patient access. As a cascading effect, the manufacturers of these drugs are further jacking up their prices to a much higher level for achieving their business growth objectives. This is very similar to what is happening also in the developed countries, including the US. 

That price increases are primarily driving the growth of the Indian Pharmaceutical Market (IPM) is vindicated by the following table, which has been compiled from the monthly retail audit reports of the well-reputed organization AIOCD Pharmasofttech AWACS Private Limited:

IPM growth through price increases versus volume (July 2015 to June 2016):

Growth % Jun 16 May April Mar Feb Jan 16 Dec 15 Nov Oct Sept Aug July 15
Price 3.8 5.0 4.5 5.1 5.4 5.1 5.2 1.0 13.2 9.9 13.2 12.9
Volume -0.6 -4.4 3.2 -5.3 3.7 1.3 2.8 5.0 5.5 1.4 1.6 3.3

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

Conclusion:

Around the world, arbitrary drug price increases almost on a continuous basis, including in the low inflation countries that may now include India, has sparked-off a raging global debate. Even the Presidential nominees for the forthcoming general election in the United States are taking keen interest on the subject.

As highlighted in a recent issue of the magazine Politico, powerful pharma lobby groups are also gearing up to spend hundreds of millions of dollars to counter this ‘threat’, as perceived by them.

A number of hectic activities in this area, apparently, have started in India too, mainly to divert the focus of the stakeholders from arbitrary drug price increases to other important areas such as, NCDs. This usually happens by making the vested interests eulogizing how much good work these pharma companies are doing in this particular area, only to serve the patients’ health interest. 

Many global pharma players seem to still believe that the same old message from the same old playbook would work even today, at least in India, to defend high drug prices on the contentious ground of pricey R&D that goes into innovative medicines. I reckon, almost gone are those days, even in India.

NCDs need to be fought, unitedly, with effective public, private initiatives and without any self-serving agenda of any participants. The issue needs to deliberated not in the five-star hotels, neither in front of a captive audience, nor with an intent of getting favorable media coverage, but on the real ground, along the general population, both in the urban and the hinterlands of India.

These initiatives would appear praiseworthy to many, when the ultimate aim of any stakeholder, including the doctors and the pharma players, won’t be to make the consumers consume more of high priced medicines, in many cases even by selling their frugal assets. The key aim, I believe, should be to facilitate prevention, screening, diagnosis and treatment with affordable modern medicines, and finally to help manage the ailments well, through the rest of the life of any sufferers.

In the battle against NCDs, it is also important to know well and segregate, if there is any wolf around, in sheep’s clothing.

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.

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