‘Rigged’ Payment System Limits Biosimilar Access

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As often discussed, market entry of biosimilars, in general, brings a new hope not just for many patients, but also to biosimilar drug manufacturers – planning to get marketing approvals of these drugs in the United States, the El Dorado of global pharma industry.

Stakeholder expectations keep increasing manifold as biosimilars offer cheaper treatment options with biologic drugs in many life-threatening and rare diseases. However, biosimilars still remain an unfulfilled promise.

The January 2018 paper by Trinity Partners on “The State of US Biosimilars Market Access” in the largest drug market of the world makes an important observation in this regard. It says, the promise of biosimilars offering cost-saving competition in the lucrative US biologic market, remains largely unfulfilled.

As on date, adoption of biosimilars has been hindered by lack of market access due to complex contracting dynamics, besides regulatory and legal uncertainty, and a general lack of clinical comfort with biosimilars.

Consequently, current state of biosimilar acceptance and access appear too insignificant. More so, as compared to traditional small molecule generic markets where their use is fueled by automatic substitution and payer formularies, over higher priced branded reference drugs.

It would not have been difficult, especially for the innovative biologic drug makers to brush this important study aside, had the US-FDA Commissioner – Scott Gottlieb would not have voiced what he did in March this year.

With this perspective, I shall discuss in this article, how access to biosimilar drugs are getting limited. In doing so, I shall begin with what the US-FDA Commissioner has recently highlighted in this area.

Yet another barrier:

As reported by Bloomberg on March 07, 2018, the US-FDA Commissioner Scott Gottlieb unambiguously expressed that biologic drug manufacturers enter into exclusive arrangements with Pharmacy Benefit Managers (PBMs) and insurers, who agree to cover only the old brands in return for rebates or discounts. This “rigged” payment scheme might quite literally scare the biosimilar competition out of the market altogether, he articulated, categorically.

US-FDA Commissioner delivered this speech at the National Health Policy Conference for America’s Health Insurance Plans. During this deliberation, Gottlieb criticized some unwanted and avoidable practices that stifle biosimilar development.

He observed, of the 9 approved biosimilars in the US, only 3 could be launched market. In many instances, patent litigation is the reason for such delay in launch, post FDA approval. Connecting the dots, the Commissioner observed, even after being in the market, biosimilars continue facing more uncertainty due to a ‘rigged payment scheme.’

Started with a great promise:

It is worth noting, till 2010 no regulatory pathway for marketing approval of biosimilars was in place in the world’s largest pharma market – the United States. Hence, despite biosimilar drugs being a treatment option in many countries over the last two decades, the first biosimilar was launched in the US, following this pathway, only in 2015. It was Zarxio ((Filgrastim-sndz) of Novartis – indicated for the treatment of patients with acute myeloid leukemia (AML).

Since then, US-FDA has approved nine biosimilars. Ironically biosimilar market size still remains small and much below the general expectations. Most biosimilar manufacturers are navigating through multiple tough hurdles for market launch of this relatively new genre of complex drugs.

Navigating through tough hurdles:

There are tough hurdles to navigate through, while launching biosimilars, especially in the US. Some of which are as follows:

Protracted litigations: The development and launch of most biosimilars get stuck in the multiple patent web-lock, created around original biologic molecules, leading to long drawn expensive litigations.

Pricing: Following small molecule generic drugs, most payers and consumers expect biosimilar pricing too will be no different. However, in practice, most biosimilars are priced just around 15 percent to 20 percent less than original biologics.

Interchangeability: Lack of interchangeability among presently approved biosimilars in the US limits payers’ and consumer choice for a shift from the reference biologic drugs to suitable biosimilars. This virtually restricts the use of biosimilars mostly to such drug-naïve patients.

Confidence: For various reasons, the confidence and familiarity of both physicians and the consumers on biosimilars remain suboptimal. Whether relatively cheaper biosimilars can be used in the same indications as the reference biologic to the new patients – as an alternative choice, is still not clear to many of them. This situation calls for increasing awareness programs involving all stakeholders.

Manufacturing: The manufacturing process of large molecule biosimilars is quite costly as compared to small molecule generic drugs. Hence, these are unlikely to follow a similar pricing pattern, attracting as high a discount as around 80 percent, compared to original branded drugs.

Some of these barriers I have discussed in my article, titled ‘Improving Patient Access To Biosimilar Drugs: Two Key Barriers’, published in this blog on July 31, 2017.

Conclusion:

Be that as it may, drug manufacturers continue to see tremendous opportunity in biosimilars. The interest is heating up, as about six of the top 10 biologic drugs are expected to go off-patent in the US by 2019.

Despite all this, it is generally believed, the prevailing situation will change even in the US. The regulator is expected to facilitate smoother market entry of biosimilars, facing much less obstacles on the way. As many strongly believe, these are possibly an outcome of intense industry lobbying, with the high-level policy makers.  Many of these hurdles can be removed by the regulators, themselves, including drug interchangeability.

The US-FDA Commissioner Scott Gottlieb has already said in a meeting on March 07, 2018, the FDA will start educating doctors and patients to minimize clinical and other concerns related to biosimilars. Therefore, going forward, greater competition in the biosimilar space is expected to increase the long-awaited price differential, as compared to reference biologic.

With greater support from the regulators, biosimilars still show a unique promise of greater acceptance and access to patients – occasionally ‘Rigged’ maneuvers by the vested interests notwithstanding.

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.

‘Made-to-Measure’ Marketing for ‘Made-to-Measure’ Medicines

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We have entered into a new era of innovation in medical science where ‘one size fits all’ type of treatment is making a sizeable space for a new ‘made-to-measure’ variety of the same. Such medicines are being developed particularly for life-threatening and rare diseases, where individual genetic differences in patients play a key role in the choice of therapy.

The marketers of such drugs, at the same time, will need to make sure that the right sets of messages are delivered to the right person, in the right way and at the right time, for brand success. This isn’t a piece of cake, as it will be akin to finding out a needle from a haystack. It would call for craftily ferreting out from an enormous database, both the patients’ and the prescribers detail profile virtually in each stage of the treatment process.

Such information would form the bedrock for effective brand value creation and its delivery, to achieve best possible business results and also patient outcomes. Thus, ‘made-to-measure’ marketing would be a whole new ball game for many pharma marketers – a  completely different situation that, very often, they know little about.

In this article, I shall dwell on this subject. Let me begin with a brief description of the emerging ‘made-to-measure’ variety of treatments.

‘Made-to-measure’ treatment:

There are many serious and life-threatening disease conditions where ‘One Size Fits All’ sort of treatment approach doesn’t work too well. One such dreaded disease is cancer. Conventionally, following standard treatment guidelines, doctors generally opt for similar treatment for patients suffering from the same type and stage of cancer. Interestingly, it has been conclusively established over a period of time that this approach often yields different outcomes to different patients.

With the progress of genetic science, the researchers have unraveled this mystery from the genetic difference of patients. This understanding heralded the dawn of a new era of targeted or ‘made-to-measure’ drug therapies. These are called “personalized medicine” or “precision medicine”. According to the National Research Council, “personalized medicine” is an older term with a meaning similar to “precision medicine.”

Personalized medicines:

According to the American Society of Clinical Oncology (ASCO), understanding a patient’s genetic makeup and ascertaining how certain gene changes during cancerous tumor growth, doctors can now choose more effective treatment options for each patient. In other words, based on genetic test results, oncologists can now opt for a customize treatment, based on each patient’s specific needs. Such drugs can block or turn off the signals that tell malignant cells to grow and divide, keep cells from living longer than normal, or kill the cancer cells altogether.

Moreover, by performing genetic tests both on the cancer and normal cells, doctors can also:

  • Find out the chances of a person developing cancer and selecting the screening strategies to lower the risk
  • Match patients with treatments that are likely to be more effective and cause fewer side effects
  • Predict the risk of recurrence, which means the return of cancer

The new era began in 1998:

The era of ‘personalized medicine’ for cancer, in all practical purposes, commenced in 1998, when the US-FDA approved the targeted therapy, Herceptin (trastuzumab). Breast cancer patients having high levels of a biomarker, known as “HER-2,” are more likely to be susceptible to this drug.

Since then, the development of targeted therapies has grown rapidly. As reported by the American Journal of Managed Care (AJMC), published on January 31, 2018, one in every 4 drugs approved by the US-FDA over the past 4 years was a personalized medicine, and the agency approved a record-breaking 16 personalized therapy in 2017. The same year, US-FDA also approved the first biosimilar of a personalized medicine - trastuzumab-dkst (Ogivri) for HER-2-positive breast cancer patients. This biosimilar was developed with Herceptin as its reference.

The February 2018 report of Research and Markets titled, ‘Personalized Medicine – Scientific and Commercial Aspects’ says, the aim of ‘personalized medicine’ is to match the right drug to the right patient and, in some cases, even to design the appropriate treatment for a patient according to his/her genotype. I deliberated on genotype-based treatment in my article titled, ‘A Disruptive Innovation to Fight and Cure Intractable Diseases’, published in this blog on October 30, 2017.

At this point, let me hasten to add that the development of personalized medicine raises some ethical issues, as well. Currently, this debate is mostly limited to the area of genetic testing.

Personalized dosage:

An article published on March 23, 2015 in the ‘FDA Voice’ of the US-FDA states, since the 1990s, the agency is also working on personalized drug dosing. This is because individuals differ in how they eliminate a drug. Some eliminate it much more slowly than most other people, and thus are susceptible to overdosing, while others eliminate it much faster, and may not get the desired therapeutic effect. There are biomarkers to identify people who may have these unusual results. Personalized drug dosing makes sure that drug efficacy for such patients are not compromised, or they are not at high risk of any severe side effects.

Marketing ‘personalized medicine’ a whole new ball game:

All this vindicates that ‘personalized medicine’ is not just a flash in the pan. With each passing year, it’s moving ahead at a brisk pace. In this emerging scenario, what happens to marketing of these drugs? Will the marketing of ‘personalized medicine’ remain just the same as the conventional one, or it warrants radically different cerebral inputs?

The opportunities for personalization in pharma marketing are immense. ‘Personalized medicines’ offer a greater scope in leveraging its potential that is yet to be fathomed, meaningfully. Broadly, this will mean targeting customers or potential consumers even at the individual level, to add greater differential value.

This, in turn, will involve making the marketing content, the message format and choosing the effective value delivery platforms, virtually ‘made-to-measure’ for the target audience. Marketing interaction of this ilk, has proven to offer a cutting-edge experience to the target groups with greater outcomes, in tandem, yielding superior financial results to the concerned pharma players.

Recent reports:

On December 18, 2017, Cambridge BioMarketing – one of the world’s leading rare disease agency highlighted, as personalized medicine continues to take hold, it will be more important than ever for healthcare companies to incorporate the ‘hyperpersonalized’ experience in marketing and communications. Patients’ voice has already started becoming more important than ever before, in various facets of pharma business. In 2018, one may expect to witness more pharma companies tapping the experts who can help explain the life-changing benefits of a treatment for the patient, effectively – the report predicted.

Moving forward, patients embarking on new treatments will be better empowered to take charge of their well-being. Physicians and nurses will also be better connected to their patients, along with other care providers, with the support of enhanced digital connections and mobile apps. Interestingly, one can find it happening in several developed countries, especially, in areas like rare diseases, where ‘personalized medicines’ will be used more – underscored this agency.

On January 22, 2018, quoting the same Cambridge BioMarketing, FiercePharma also reported, more ‘personalized medicines’ also mean more ‘personalized marketing’ – and the ‘hyperpersonalization’ trend goes to extremes. Crunching data gathered from multiple sources, such drug marketers need to identify small groups that could be receptive to specific messaging. Advanced data and analytics, would facilitate the marketers to whittle down their targets and tailor messages to consumer audiences, sometimes as small as one person – the report asserted.

Conclusion:

As the February 2018 report of ‘Research and Markets’ highlights, increase in efficacy and safety of treatment by individualizing it, has benefitted in financial terms too. Available information indicates that ‘personalized medicine’ will ultimately be cost-effective in healthcare systems. This would also eliminate the need for various assumptions in the process of diagnosing a disease.

Thus, conventional pharma marketing based on the mostly segmentation strategy used for blockbuster molecules may not work for a ‘personalized medicine’. Instead, ‘personalized marketing, focused on smaller and exclusive markets – identified based on robust research and analytical data, will be the name of the new game for business excellence in this specialized area.

Thus, I reckon, as we move ahead, ‘made-to-measure’ marketing will no doubt be one of the key success requirements to make ‘made-to-measure’ medicines’ – a money spinner.

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.

Why Branded Generics Promise High Quality For Patients?

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Why most branded generic drugs don’t carry any stigma of quality, even when these are manufactured by small companies? The corollary to it is, why non-branded generics always carry a general stigma of inferior quality, even when produced by large Indian pharma companies?

While pondering over the answers to these questions, several other related facts also float at the top of mind, simultaneously, such as:

1. Just as many non-branded generics don’t go through the regular drug quality scrutiny of the regulators, branded generics are no different in this regard.

2. A large number of both branded and non-branded generics gets manufacturing approval by various State Drug Authorities.

3. The process of regulatory approval is exactly the same for both branded and non-branded generics. Even for branded generics regulatory approvals come only in the generic names and not with the brand names.

4. One can find hundreds of varieties of both branded and non-branded generics of the same molecules or of similar fixed dose combinations in the market.

5. Reports of substandard drugs of both non-branded and branded generics are also not significantly different.

6. Legal measures of reasonably stringent punishment in the country are no different between branded and non-branded generics.

This list is not exhaustive. Nevertheless, in this scenario, it is intriguing to fathom the reason of so much of contempt for non-branded generics within the industry, supported by a section of the media. This disgust gets invariably well-displayed as and when any serious discussion revolves around non-branded cheaper generic drug prescriptions in India.

Is it just a perception or based on solid facts?

This is a million-dollar question, but the optics is interesting. This also gets reflected in the recent media report on February 26, 2018. It writes, ‘The central government’s National Health Protection Scheme (NHPS) is going to put all of its focus on quality generic medicines, and not just the branded generic medicines, said Union Chemical and Fertilizer Minister Ananth Kumar while addressing a closed-door session with chief executives (CEOs) of pharmaceutical companies in Bengaluru on February 15.”

Curiously, in his statement the Minister also used the term ‘Quality’ only against non-branded generics and not against branded generics. Does it mean anything? If it does, is that just a perception or based on solid facts?

In this article, I shall try to assess why is this generally negative perception against cheaper non-branded generics gaining strength among many of us?

A general impression:  

An often-repeated fascinating argument is, branding of a generic drug is important as it will ensure high product quality. This reasoning persists, regardless of the fact that the Drug Controller General of India (DCGI) often makes public announcements to the contrary, as happened even recently.

Risks of NSQ drugs don’t lie solely on non-branded generics:

According to the ‘National Drug Survey, 2014-16’, conducted in association with the National Institute of Biologicals, out of the 47,012 samples tested from the country, 13 samples (0.0245 percent) were ‘Spurious’ and 1,850 samples (3.16 percent) were found ‘Not of Standard Quality (NSQ)’.

The data on 1,850 NSQ samples showed that these were from 569 manufacturing units. Of these, 10 percent of manufacturing units were responsible for about 50 percent of NSQ samples. Further, one third of total NSQ samples were from 22 manufacturing units.

Further, quoting the survey carried out through the National Institute of Biologicals, a September 04, 2017 media report also articulated: ‘During its recent survey, the drug regulator found well-known drug manufacturers failing quality tests. In the survey, samples tested from top drug companies were found not to be of standard quality.’

The names of some of these large drug manufacturers in India, including the multinationals, along with their smaller counterparts, appeared in the Public Notice of July 21, 2017 of the Central Drugs Standard Control Organization (CDSCO) of India. Thus, the risks of NSQ medicines can’t possibly be attributed solely to the small time non-branded generic drug manufacturers. This public notice is expected to draw attention of many stakeholders.

More facts:

On April 22, 2017, the Central Drugs Standard Control Organization (CDSCO) reported that popular branded drugs like D-Cold Total, Cetrizine, Combiflam, Panza-40 tablets, Ibuprofen, and antibiotics with ciprofloxacin, ofloxacin, Amoxycillin, Ciprofloxacin have tested sub-standard. Before this, media reports of July 8, 2016 highlighted, “The DCGI has again found Sanofi’s popular painkiller drug, Combiflam, of sub-standard quality, in its latest test last month. It had found the same defect in the medicine in February and April, too.’

Conclusion:

Considering these facts, it is difficult to comprehend why branded generic drugs, irrespective of who manufacturers, will be of high quality perceptually – always. Conversely, non-branded generic drugs, even when manufactured by a reputed manufacturer, say for example – Cipla, are perceptually no good for patients, in terms of quality standard.

Nevertheless, the hard facts indicate, quality is a general issue both for branded and non-branded generic drugs in India, and not particularly for the later one.

This brings me back to where I started from: Do Branded Generics Promise High Quality for Patients? To find the right answer to this question, one should look at the scientific data on the same – sans any perception. Otherwise, it becomes ‘your view’ versus ‘my view’ sort of a mindless, though a highly passionate debate.

I shall refrain from being judgmental in this area. The readers may wish to ponder over it, seriously, and arrive at a well-considered inference on the very basis of this discourse – from the patients’ perspective.

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.

NHPS: “One Nation, One Scheme is Enticing”, But Will It Work?

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Yet another slogan: “One nation – One Universal Health Coverage (UHC)” would indeed be enticing for many, including India.

Nevertheless, that’s just a hope. Let’s now try to get a message out of what has been recently happening around this area through some reality checks.   The reality is, during post union budget (2018-19) television discussions on the ‘National Health Protection Scheme NHPS’, various experts very enthusiastically created a general impression that the scheme is a game changer for India. Many of us also felt that India is moving fast towards a viable UHC in the country!

As a consequence of which, it was widely expected that State Governments, too, will make necessary provision in their respective health budgets towards this ambitious insurance-based healthcare project. This specific step is absolutely essential, as the State Governments are supposed to contribute 40 percent towards NHPS.

Is it happening that way?

Intriguingly, on March 9, 2018, when Maharashtra State budget was announced, one witnessed a different reality altogether on the ground. In its 2018-19 budget, the Maharashtra Government, reportedly, ‘slashed its budget allocation for the health insurance scheme for the poor by over 50 percent.’

The Finance Minister of Maharashtra announced an allocation of ₹576 crore for the ‘Mahatma Jyotiba Phule Jan Aarogya Abhiyan’ in 2018-19 as against the last year’s budget outlay of ₹1,316 crore for the same area.

Keeping this latest development just as an example, in this article I shall explore some of the recent developments on the much talked about NHPS. Before doing that, let me give a perspective on the NHPS.

NHPS: not a new promise:

Rekindling the perennial hope on UHC in India, ‘National Health Protection Scheme NHPS’ was first announced by the incumbent Government in its 2016 budget, but the scheme didn’t take off. In its first avatar NHPS offered ₹100,000 insurance cover, with a top-up of ₹30,000 for senior citizens.

“It couldn’t get implemented, but that scheme is now subsumed by this current scheme,” reportedly, justified Manoj Jhalani, Additional Secretary in the Ministry of Health and Family Welfare, who has been given additional charge and designated as Mission Director of Ayushman Bharat, currently.

There isn’t any doubt that NHPS has been recast in the Union Budget Proposal of 2018-19, with a slight modification in naming it to ‘Ayushman Bharat—the National Health Protection Scheme (AB-NHPS)’. The modified scheme is also termed by many as “Modicare”, probably following ‘Obamacare’ in the United States. The Union Finance Minister of India in his Budget speech also termed this scheme as ‘the world’s largest government funded healthcare program.’

A recast of insurance-based public health coverage:

As a part of ‘Ayushman Bharat Program’, the scheme will now provide health insurance cover of up to ₹500,000 to 100 million poor and vulnerable families. Its benefits are now expected to reach 500 million individuals – 40 percent of India’s population, raising health insurance cover by up to 17 times from the existing Rashtriya Swasthya Bima Yojana (RSBY) that pegs the health coverage at ₹30,000 per year.

Just to give a flavor of the past, the National Family Health Survey-4 (2015-16) indicates that in India only 28.7 percent families have, at least, one person covered by a health insurance policy.

In the health insurance coverage based NHPS, the center and states will split financing the scheme in a 60:40 ratio. However, it is still not clear how would they do it. Neither is it known how the NHPS will fit in with the existing RSBY or various already existing state level schemes.

Apprehension expressed by some States:

Several other Indian States, such as Kerala, Tamil Nadu, Andhra Pradesh, Telangana, Madhya Pradesh, Chhattisgarh, Karnataka, West Bengal and Rajasthan already have a similar health protection scheme in place. Probably because of this reason some of these states, such as West Bengal and Karnataka, reportedly, have raised doubts about whether they will actually join the scheme.

On the other hand, health officials from  Telangana, Tamil Nadu and Kerala intend to seek clarifications from the Centre on various aspects of the plans. As I mentioned before, this is mostly because all States will require to contribute 40 percent of total expenses towards funding the ‘Ayushman Bharat—the National Health Protection Scheme (AB-NHPS).’

A fresh evaluation: Experts don’t rate public health insurance schemes high:

Interestingly, some fresh apprehensions on the effectiveness of insurance-based health coverage continues to come up. One such is as follows:

“The current approach of National Health Mission – whereby states must pre-commit to expenditure allocations across 2,000 budget lines with no real flexibility to subsequently move expenditures between different line items – will render NHPS ineffective.”

This apprehension has been raised by none other than Dr. Arvind Panagariya, currently Professor of Economics at Columbia University and the Vice Chairman of the Government of India’s think-tank NITI Aayog, between January 2015 and August 2017. This article, titled “It’s all in the design: Ayushman Bharat can be transformational if the governance of public healthcare is altered”, was published in the Times of India on March 07, 2018.

Dr. Panagariya further observed: “For the poorest of the poor to seek private hospital care speaks volumes for their lack of confidence in the public healthcare system. Studies by experts do not give high marks to existing insurance schemes either.”

Some key observations:

In his above recent article, Dr. Arvind Panagariya made some key observations that include some of the following:

  • A 2017 study of the Rashtriya Swasthya Bima Yojana (RSBY), published in the journal Social Science and Medicine, concludes, “Overall, the results [of our study] suggest that RSBY has been ineffective in reducing the burden of out-of-pocket spending on poor households.”
  • In 2014-15, private hospitals treated 58 percent of in-patient cases in rural areas. Even among the poorest 20 percent rural households, 42.5 percent of the patients went to private hospitals for in-patient treatment.
  • Resource shortage has resulted in less than adequate infrastructure and personnel in the public health facilities. Consequently, in 2014-15, a mere 28 percent of those needing outpatient care came to the public health facilities. A hefty 72 percent of patients went to private providers.
  • Considering that the private providers are predominantly unqualified individuals, often having no more than a high school education and no formal medical education, such disproportionate reliance on them is indicative of a serious failure at the public health facilities, especially in rural India.
  • Design and implementation challenges facing NHPS are even greater. Hospitals will have an inherent interest in pushing patients towards more expensive procedures or towards procedures not even required. Any lack of clarity in delineating the included and excluded procedures will become a source of abuse.
  • Superior outcomes would require a fundamental change in governance whereby performers are rewarded, and non-performers are punished. The story on secondary and tertiary care is not especially different.

In my view, these observations are worth taking note of, urgently, and more importantly, by learning from the past, avoiding similar mistakes getting repeated. Meaningful implementation of NHPS on the ground should be a top priority, especially when around 7 percent of the country’s population gets pushed below the poverty line, every year, due to high out of pocket health expenditure.

I also discussed the subject in this Blog on February 05, 2018. The article was titled “Union Budget 2018: The ‘WOW’ Moment for Indian Healthcare?”

Conclusion:

Any meaningful initiative on public healthcare for all, will be wholeheartedly welcomed in India, just as many other announcements made earlier by various Governments over a period of time. AB-NHPS – although announced in the very last year of the incumbents Government’s first 5-year term, has attracted similar interest. No less enthusiasm was displayed by the stakeholders, when the NHPS was first announced in the 2016 Union Budget of India.

The good news is, in the midst of all this, on March 06, 2018, Prime Minister Narendra Modi has, reportedly, reviewed the preparedness for the launch of AB-NHPS.’ However, details of the same are not known to many, just yet.

That said, any type of insurance-based public health coverage, spanning across the length and the breadth of India, without access to well-equipped and well-staffed health facilities, currently poses a serious handicap for the nation. It may be a legacy factor, but nothing significant happened in the last four years, either. This is regardless of around 70 percent of the country’s population still live in rural India, with a sizeable majority denied of access to affordable health care, as up till now.

Let me come back to the basic question: ‘One Nation, One Scheme, though, is enticing, but will it work?’ I reckon, unlike, 2016, if NHPS is effectively implemented urgently, together with ‘Ayushman Bharat’ program in its entirety, as desired, things could possibly change for the better, in a medium to long term time frame.

However, it appears, a workable game plan of AB-NHPS is still unclear to many, including a large number of State Governments who are supposed to be the key implementers of NHPS. In this scenario, would AB-NHPS fetch any palpable near-term dividend to the target citizens, at least in 2018 or even in 2019?

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.

 

Providing Unique Patient Experience – A New Brand Differentiator

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“Pharma industry, including the patients in India are so different from other countries. Thus, any strategic shift from conventional pharma brand marketing approach – going beyond doctors, won’t be necessary.”

The above mindset is interesting and may well hold good in a static business environment. But, will it remain so when ‘information enabled’ consumer behavior is fast-changing?

“Shall cross the bridge when we come to it” – is another common viewpoint of pharma marketers.

Many might have also noted that such outlooks are not of just a few industry greenhorns. A wide spectrum of, mostly industry-inbred marketers – including some die-hard trainers too, subscribe to it – very strongly.

Consequently, the age-old pharma marketing mold remains intact. Not much effort is seen around to reap a rich harvest out of the new challenge of change, proactively. The Juggernaut keeps moving, unhindered, despite several storm signals.

Against this backdrop, let me discuss some recent well-researched studies in the related field. This is basically to understand how some global pharma companies are taking note of the new expectations of patients and taking pragmatic and proactive measures to create a unique ‘patient experience’ with their drugs.

Simultaneously, I shall try to explore briefly how these drug companies are shaping themselves up to derive the first-mover advantage, honing a cutting edge in the market place. This is quite unlike what we generally experience in India.

As I look around:

When I look around with a modest data mining, I get increasingly convinced that the quality of mind of pharma marketers in India needs to undergo a significant change in the forthcoming years. This is because, slowly but surely, value creation to provide unique ‘patient experience’ in a disease treatment process, will become a critical differentiator in the pharma marketing ball game. Taking prime mover advantage, by shaping up the change proactively for excellence, and not by following the process reactively for survival, would separate the men from the boys in India, as well.

Patient experience – a key differentiator:

A recent report titled, “2017 Digital Trends in Healthcare and Pharma”, was published by Econsultancy in association with Adobe. This study is based on a sample of 497 respondents working in the healthcare and pharma sector who were among more than 14,000 digital marketing and eCommerce professionals from all sectors. The participants were from countries across EMEA, North America and Asia Pacific, including India.

Regarding the emerging scenario, the paper focuses mainly on the following areas:

  • Pharma companies will sharpen focus on the customer experience to differentiate themselves from their competitors.
  • ‘The internet of things (IoT)’ – the rapidly growing Internet based network of interconnected everyday use computing devices that are able to exchange data using embedded sensors, has opened new vistas of opportunity in the pharma business. Drug players consider it as the most exciting prospect for 2020.
  • Virtual Reality (VR) and Augmented Reality (AR) have started filling critical gaps in pharma and healthcare technologies and systems. Their uses now range from training doctors in operating techniques to gamifying patient treatment plans. Over 26 percent of respondents in the study see the potential in VR and AR as the most exciting prospect for 2020.

Commensurate digital transformation of pharma industry is, therefore, essential.

Prompts a shift from marketing drugs to marketing outcomes:

The above study also well underscores a major shift – from ‘marketing drugs and treatments’ – to ‘marketing outcome-based approaches and tools’, both for prevention and treatment of illnesses. This shift has already begun, though many Indian pharma marketers prefer clinging on to their belief – ‘Indian pharma market and the patients are different.’

If it still continues, there could possibly be a significant business impact in the longer-term future.

Global companies have sensed this change:

Realizing that providing a unique experience to patients during the treatment process will be a key differentiator, some global companies have already started acting. In this article I shall highlight only one recent example that was reported in March 01, 2018.

Reuters in an article on that day titled, “Big pharma, big data: why drugmakers want your health records,” reported this new trend. It wrote, pharma players are now racing to scoop up patient health records and strike deals with technology companies as big data analytics start to unlock a trove of information about how medicines perform in the real world. This is critical, I reckon, to provide a unique treatment experience to the patients.

A recent example:

Vindicating the point that with effective leverage of this powerful tool, drug manufacturers can offer unique value of their medicines to patients, on February 15, 2018, by a Media Release, Roche announced, it will ‘acquire Flatiron Health to accelerate industry-wide development and delivery of breakthrough medicines for patients with cancer.’ Roche acquired Flatiron Health for USD 1.9 billion.

New York based Flatiron Health – a privately held healthcare technology and services company is a market leader in oncology-specific electronic health record (EHR) software, besides the curation and development of real-world evidence for cancer research.

“There’s an opportunity for us to have a strategic advantage by bringing together diagnostics and pharma with the data management. This triangle is almost impossible for anybody else to copy,” said Roche’s Chief Executive Severin Schwan, as reported in a December interview. He also believes, “data is the next frontier for drugmakers.”

Conclusion:

Several global pharma companies have now recognized that providing unique patient experience will ultimately be one of the key differentiators in the pharma marketing ballgame.

Alongside, especially in many developed countries, the drug price regulators are focusing more on outcomes-based treatment. Health insurance companies too, have started looking for ‘value-based pricing,’ even for innovative patented medicines.

Accordingly, going beyond the product marketing, many drug companies plan to focus more on outcomes-based marketing. In tandem, they are trying to give shape to a new form of patient expectation in the disease prevention and treatment value chain, together with managing patient expectations.

Such initiatives necessitate increasing use advanced data analytics by the pharma marketers to track overall ‘patient experience’ – against various parameters of a drug’s effectiveness, safety and side-effects. This would also help immensely in the customized content development for ‘outcomes-based marketing’ with a win-win intent.

Providing unique ‘patient experience’ is emerging as a new normal and a critical brand differentiator in the global marketing arena. It will, therefore, be interesting to track how long the current belief – ‘Pharma industry and the patients in India are so different from other countries’, can hold its root on the ground, firmly. Or perhaps will continue till it becomes a necessity for the very survival of the business.

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.

How Relevant Is A Pharma Brand Name To Patients?

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Are brand names necessary for medicines? Well – its’s a contentious issue, at least, as on date. It becomes the subject of a raging debate when the same question is slightly modified to: – Are brand names necessary for prescription drugs?

The current reality is, almost all pharma companies believe, and have been following this practice. This has been happening for decades, regardless of the fact that unlike other branded non-pharma products, each and every drug also carries another specific name – the generic name. Which is why, questions are often raised, why can’t drugs be prescribed only in generic names by the doctors?

Before I proceed further, let me recapitulate the definition of a ‘brand’. One of the most comprehensive definitions of a brand is: Unique design, sign, symbol, words, or a combination of these that identifies a product and differentiates it from its competitors. It helps create a level of credibility, quality, and satisfaction in the consumer’s mind, by standing for certain benefits and value. And, the creative marketing practices followed in this process is termed as ‘branding’. Keeping this at the center, in this article, let me try to arrive at a relevant perspective on this subject.

The arguments in favor:

Votaries of pharma branding believe that a pharma brand helps establish an emotional connect with the consumers on various parameters, including quality, efficacy, safety and reliability. This is expected to establish a preferential advantage of a brand over its competitors. Quoting the ‘father of advertising’ David Ogilvy, some of these proponents relate the outcome of branding to offering ‘intangible sum of a product’s attributes’ to its consumers, and also prospective consumers.

Entrepreneur India puts across such favorable outcome of ‘branding’ very candidly, which is also applicable to branding medicines – both patented and generic ones. It says, “Consistent, strategic branding leads to a strong brand equity, which means the added value brought to your company’s products or services that allows you to charge more for your brand than what identical, unbranded products command.”

The general belief within the pharma industry is that, ‘branding’ facilitates doctors in choosing and prescribing medicines to patients, especially in those situations where the choices are many. Aficionados of pharma product branding argue, that to save time, doctors usually select those top of mind products, which they are familiar with and feel, can serve the purpose well. This belief prompts the necessity to go all out for ‘branding’ by the pharma companies, even when the process is an expensive one.

Where pharma ‘branding’ is necessary:

There are a few old publications of the 1980’s, which claim that studies based on human psychology have found that medicines with brand names can have a better perceived impact on the actual effectiveness of ‘Over the Counter (OTC)’ medications. One of the examples cited was of aspirin.

Be that as it may, the relevance of branding for OTC pharmaceutical products is undeniable, where a medicinal product is generally treated just as any other Fast-Moving Consumer Goods (FMCG) goods. Establishing an emotional connect of OTC brands with consumers is, therefore, considered an important process to create a preferential perceived advantage over its competitors.

There is no well-laid out legal or procedural pathway, as yet, for pharma OTC brands in India. No ‘Direct to Consumer (DTC) promotion is allowed in the country for Schedule H and Schedule X drugs – the only exceptions being Ayurvedic proprietary medicines and for homeopathy drugs. That said, the question continues to haunt, how relevant is branding for prescription drugs – now?

Relevance of ‘branding’ for prescription drugs:

The juggernaut of ‘branding prescription drugs’, riding mostly the wave of vested interests – of many hues and color, has been made to be perceived as necessary to ensure drug quality and safety for patients. It continues to move on, up until today, even for highly specialized prescription drugs. Nonetheless, some initiatives are visible from some Governments to gradually shift this contentious paradigm.

This move has been catalyzed by a blend of changing times with changing expectations of a large number of patients. They want to be an integral part in their treatment decisions, receive more personalized healthcare from both doctors and pharma companies. Patients, ultimately, want to feel confident that they’re receiving the best treatment – says a fresh study.

A number of other research papers also confirm that, a virtually static bar of patients’ expectations, in the disease treatment process – either for themselves or their near and dear ones, is slowly but surely gaining height, measurably. For better outcomes, patients have started expecting new types of services both from their doctors and the drug manufacturers. This process begins, even before a final decision is taken in the treatment process. As this paradigm shifts, pharma players would be significantly impacted – in several parameters.

Fast expanding digital empowerment options for all, across the world, is expediting this process further, including India. Placing oneself in the midst of it, one may ponder – how relevant is pharma branding today, as is being highlighted by many, since long.

In my view, a part of the answer to the above question arguably lies in a study titled, “Product Launch: The Patient Has Spoken”. The Key findings from the survey that covered 8,000 patients from three generations in the US, the UK, Germany and France, were published by ‘Accenture Life Sciences’ in January 2018. The research reveals how these patients evaluate and select new treatments in eight therapeutic areas (immune system, heart, lungs, brain, cancer, hormone/ metabolism and eye disease) across three generations, spanning across – Baby boomers, Generation X and Millennials.

Brands don’t matter to most patients…outcomes do:

69 percent of patients said, the benefits of the product are more important to them than the brand of the product. The four top factors influencing patients’ while making decisions about their healthcare are listed in the report as:

  • The doctor/ physician relationship: 66 percent
  • The patient’s ability to maintain their current lifestyle: 55 percent
  • Patients’ ease of access to health care they’ll need: 53 percent
  • Patients’ financial situation / ability to pay: 51 percent. When this is read with another finding where, 48 percent of patients believe that their doctors discuss the whole range of product options with them, a more interesting scenario emerges.

Further, lack of knowledge about the treatments available, as expressed by 42 percent of patients obviously indicate, pharma players’ intent to better inform patients by educating the doctors through brand promotion is not working. Interestingly, brand loyalty or popularity appeared relatively unimportant, ranking twelfth out of 14 influencing factors. Just 25 percent of patients characterized themselves as having a strong affinity with brands in a healthcare setting – the above report revealed.

Could there be an alternative approach?

An effective ‘branding’ exercise should lead to creating a ‘brand loyalty’ for any product. For pharma companies, doctors’ brand loyalty should lead to more number of its brand prescriptions. This expectation emanates from the idea that the prescription brand will represent something, such as quality, trust, assured relief, or may well be anything else. That means pharma product ‘branding’ is primarily aimed at the medical profession.

In an alternative approach to the current practice, an article titled, “From Managing Pills to Managing Brands”, published sometime back in the March-April 2000 issue of the Harvard Business Review (HBR), finds its great relevance, even today. It says, pharma companies can retain the loyalty of customers by building a franchise around specific therapeutic areas based on a focused approach to R&D. In other words, their corporate brand can replace individual drug brands. For example, a doctor looking for a treatment for – say asthma, would look for the latest GlaxoSmithKline medicines. Let me hasten to add, I used this example just to illustrate a point. This may appear as a long shot to some. Nonetheless, it would significantly reduce the cost of marketing, and subsequently the cost of a drug to patients. Incidentally, I also wrote about the relevance of ‘Corporate Branding’ in this Blog on June 15, 2015.

Conclusion:

With this fast-emerging backdrop, the Accenture Study raises an important issue to this effect. It wonders, whether the expenses incurred towards branding medicines, especially, during product launch be significantly reduced and be made more productive?

Illustrating the point, the report says, in 2016, the US pharmaceutical and healthcare industry alone spent US$ 15.2 billion in marketing. To earn a better business return, could a substantial part of this expenditure be reallocated to other programs that matter more to patients, such as access to patient service programs, and creating ‘Real-World Evidence (RWE)’ data that can document improved health outcomes, particularly those that matter to patients?

Well-crafted pharma branding and other associated initiatives, targeted predominantly to the medical profession, may make a doctor emotionally obligated to prescribe any company’s specific brands, for now. However, in the gradually firming-up ‘patient outcomes’-oriented environment, where patients want to participate in the treatment decision making process, will it remain so?

Dispassionately thinking, to most patients, a brand is as good or bad as the perceived value it delivers to them in the form of outcomes. Or, in other words, prescription pharma brands may not even matter to most of them, at all, but the outcomes will be. Hopefully, before it is too late pharma players would realize that, especially the well-informed patients are becoming co-decision makers in choosing the drug that a doctor will prescribe to them. If not, the current targeted process of pharma prescription drug branding, may lose its practical relevance, over a period of time.

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.

Antimicrobial Resistance: A Recent Perspective

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On January 23, 2018, at the World Economic Forum in Davos, Switzerland – the first independent analysis of pharmaceutical industry efforts to tackle antibiotic drug resistance, was published by the Netherlands based Access to Medicine Foundation.

The issue of Antimicrobial Resistance (AMR) was brought under focus by the World Economic Forum (WEF) not for the first time at Davos in 2018. Its 2013 Annual Report on global risks, also underscored the gargantuan health hazard that AMR poses to mankind. It said, we live in a bacterial world where we will never be able to stay ahead of the mutation curve. A test of our resilience is how far the curve, we allow ourselves to fall behind. It’s indeed a profound statement!

In that sense, the AMF analysis is important. More so, when the global population is virtually at the threshold of facing a situation very similar to pre-antibiotic era, where even a common infection used to pose threat to a life. And now, a fast-developing AMR to many effective antibiotics or even super-antibiotics, are making them almost redundant in many serious conditions. Consequently, around 700,000 people die every year only due to antimicrobial resistance, the world over.

The World Health Organization (WHO) also reiterated its grave concern in this area by a news release on September 20, 2017. It cautioned, “Antimicrobial resistance is a global health emergency that will seriously jeopardize progress in modern medicine.” Against that backdrop, in this article, I shall dwell on some latest developments in this area, both globally and also in India.

Dire need for newer antibiotics – but dry R&D pipeline:

At the very outset, let me flag another critical area that is intimately related to this concern. An article titled, “Where Are the Antibiotics?”, published by the AARP Foundation adds more to this growing concern. It writes, in an era when many breakthrough innovative drugs are curing some of our most deadly afflictions, the quest for meeting the unmet medical needs, seems to have shifted away from development of critically needed breakthrough antibiotics to effectively address AMR, for various reasons.

The author further highlighted that between the time penicillin was discovered in 1928, and the 1970s – 270 antibiotics were approved – a robust arsenal of powerful drugs that kept almost all bacterial infections at bay. However, since then, research into new antibiotics has declined dramatically. Today, just five of the top 50 big drug companies are reportedly developing innovative antibiotics – the article reiterates.  Nevertheless, some recent developments in this area can’t be ignored, either, which I shall touch upon in this discussion.

Global initiatives for a multi-pronged concerted action:

It is understandable that there are no magic bullets to address the fast-growing menace of AMR. It calls for a multi-pronged strategy with well-orchestrated concerted efforts for its effective implementation with military precision. Following are the three primary constituents who should lead from the front in the battle against AMR, as I reckon:

  • The world leaders
  • Each country, individually
  • Pharmaceutical industry, both global and local

The medical profession, including hospitals, nursing homes, the retail chemists and individual patients, also play a significant role to alleviate this problem, especially in India and other developing countries. But, I shall keep that as a subject for a separate discussion, altogether. Let me now touch-upon the first three constituents, one by one, as follows:

1. The world leaders’ initiative:

Realizing that failure to act on AMR will result in a global health and financial crisis, the world leaders met to address this growing menace. Accordingly, on September 21, 2016, the United Nations General Assembly (UNGA) passed a declaration aimed at slowing the spread of antibiotic-resistant superbugs. At this meeting in New York City, the top UN leaders successfully urged all governments to sign a political declaration to tackle the problem of AMR, both globally and in their respective countries. The joint declaration requires each country to develop a 2-year plan to protect the potency of antibiotics for both livestock and humans. The progress of the initiative for each country at the end of those 2 years will be evaluated. However, in this article, I shall focus only on the agreed human-specific actions, which include the following:

  • Antibiotics should be prescribed only when they are absolutely necessary
  • A massive education campaign about antibiotic resistance.
  • Greater monitoring of superbugs to understand the scope and magnitude of the problem.
  • Safeguarding current antibiotic stockpile.

The leaders suggested that people should be encouraged to help prevent the crisis from turning into a death sentence for millions, with the steps, such as:

  • Get available vaccines to prevent illness
  • Stop asking doctors for antibiotics when they have the cold or flu, as antibiotics treat neither
  • To urge their political leaders to commit to action in combating antibiotic resistance.

2. Country-specific initiatives:

In September 2016, just a year after the UNGA high-level meeting on AMR, an update by the United Nations Foundation reported that 151 countries out of 195 WHO member states have responded. The overall response includes the following, among others:

  • 85 percent of countries are developing or have developed National Action Plans (NAC).
  • 52 percent of countries have a fully developed plan with ‘One Health’ approach that seeks to unify human and veterinary medicine, agriculture, and food providers against the progression of AMR by reducing agricultural antimicrobial use.
  • 52 percent of Low and Middle-Income Countries (LMICs) have national-level measures in place on ‘Infection Prevention and Control (IPC)’ measures in human healthcare.

3. Pharmaceutical industry initiatives: 

I shall cite only the latest commendable developments in this area, as I see it. On Jan. 21, 2016 a document titled the ‘Declaration on Combating Antimicrobial Resistance’, was launched, again, as part of the World Economic Forum at Davos, Switzerland.

For the first time, 85 pharmaceutical, biotechnology, generic-drug, and diagnostic companies agreed on a common set of principles for global action to support antibiotic conservation and the development of new drugs, diagnostics, and vaccines. The document, outlining several critical measures the government and industry must take to increase antibiotic effectiveness worldwide, was also drafted and signed by nine industry associations spanning 18 countries.

Global progress assessment of AMR initiatives in 2018:

This brings me back to where I started from, while analyzing what happened in this regard a year after the above declaration was signed. On January 23, 2018, at the World Economic Forum in Davos, Switzerland – the first independent analysis of pharmaceutical industry efforts to tackle drug resistance, was revealed by the AMF. It found companies are developing new drugs, as well as dismantling the incentives that encourage sales staff to oversell antibiotics, setting limits on the concentration of antibiotics in factory wastewater released into the environment, and tracking the spread of superbugs.

In the AMR Benchmark, GSK and Johnson & Johnson lead among the largest research-based pharmaceutical companies. A separate ranking of manufacturers of generic antibiotics features Mylan, Cipla, and Fresenius Kabi Global, in the leading positions. While Mylan leads the generic medicine manufacturers, Entasis, reportedly, leads the biotechnology group. 

Twenty-eight antibiotics are in late stages of development:

The other key findings of the 2018 study include mention of 28 antibiotics that are in later stages of development, targeting pathogens deemed critical AMR priorities by the WHO, and/or US Centers for Disease Control and Prevention. However, only two of these 28 candidates are supported by plans to ensure they can be both made accessible and used wisely if they reach the market. Be that as it may, the benchmark finds room for all companies to improve in this space, the report indicated.

Some major initiatives in India:

The good news is, ‘The National Policy for Containment of Antibacterial Resistance’, with similar objectives, was put in place in India by the Directorate General of Health Services, Ministry of Health & Family Welfare, way back in 2011. Further, on March 20, 2015, to strengthen the surveillance of antimicrobial resistance (AMR) in the country, Indian Council of Medical Research (ICMR) had set up a National Antimicrobial Resistance Research and Surveillance Network (AMRRSN) to enable compilation of national data of AMR at different levels of health care.

Again, in February 2017, the Indian Council of Medical Research (ICMR)  has put a new ‘Treatment Guidelines for Antimicrobial Use in Common Syndromes’, to achieve the same objectives. Despite this, as many medical experts opine, a large number of General Practitioners (GP), including hospitals, nursing homes continued over-prescribing antibiotics. Alarmingly, considered as the last line of defense antibiotics by many doctors – Colistin and Carbapenem resistant infections have also been reported from several Indian hospitals. All this adds further fuel to the AMR fire.

Another matter of huge worry in India:

The February 04, 2018 article titled, ‘Threats to global antimicrobial resistance control Centrally approved and unapproved antibiotic formulations sold in India,’ published in the British Journal of Clinical Pharmacology, highlight serious hurdles for controlling antimicrobial resistance in India, which has had parliamentary investigations into the failures of the country’s drug regulatory system. The study was conducted by researchers from Queen Mary University in London, Newcastle University and Lakshya Society for Public Health Education and Research in Pune. Some of the key findings of the study are as follows:

  • Extensive use unapproved of fixed dose combination (FDC) antibiotics is contributing to the rising rate of AMR in India, which is already one of the highest in the world.
  • Out of the 118 of FDC antibiotics being sold in India, only 43 (36 percent) were approved by the CDSCO. These 118 antibiotic formulations are being sold in 3307 brand names and manufactured by 476 entities. Of these, 464 were Indian manufactures, and 12 were MNCs.

The authors recommend work on understanding why unapproved formulations are being prescribed by medical professionals.

Conclusion:

As the above AARP Foundation article highlights, like all living beings, bacteria constantly evolve to survive. While encountering a new antibiotic, they quickly find ways to evade it, and continue to live or exist. Some have even developed cell wall like virtually impregnable shields, as it were, keeping antibiotics out. Others pump antibiotics out when they get in. Several deadly bacteria have even devised ways to deactivate antibiotics.

The comments made in the article titled, ‘The Future of Antibiotics and Resistance,’ published by The New England Journal of Medicine (NEJM) on January 24, 2013, is also worth noting. It says, the converging crises of increasing resistance and collapse of antibiotic research and development are the predictable results of policies and processes we have used to deal with infections for 75 years. If we want a long-term solution, the answer is not incremental tweaking of these policies and processes. Novel approaches, based on a reconceptualization of the nature of resistance, disease, and prevention, are needed.

The bottom line still remains, AMR is a humongous threat to the global population, not just in India. While its awareness is gradually increasing, much more painstaking work remains to be done by all, both individually and collectively, to contain this global health menace. It’s our responsibility to protect the well-being of our future generations.

By: Tapan J. Ray  

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

Drug Pricing Pressure to Escalate Further?

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On February 09, 2018, NITI Aayog released its “Healthy States, Progressive India” Report. The study ranked the States based on ‘health index’. Kerala, Punjab and Tamil Nadu featured as top three in terms of overall performance in 2015-16. However, the interstate variation of ‘health indices’ was quite significant, with the highest being 76.55 (Kerala) and the lowest in Uttar Pradesh with 33.69, during the same period.

Importantly, the report also noted: “About one-third of the States have registered a decline in their performance in 2016 as compared to 2015, stressing the need to pursue domain-specific, targeted interventions.” It’s worth noting, the reported decline in performance was registered despite several promises of the Government in this space, during immediately preceding years.

Apparently, as a corrective measure to this effect, the world’s largest government-funded health care program – the ‘National Health Protection Scheme (HPS)’ of India was announced in the Union Budget Proposal, on February 01, 2018. HPS is expected to provide insurance cover of up to ₹500,000 to 100 million poor and vulnerable families, covering around 500 million population in the country.

As enshrined in the National Health Policy 2017 (NHP 2017), HPS too seeks to ensure improved access and affordability of quality secondary and tertiary care services with a significant reduction in Out of Pocket Expenditure (OOPE) on health care, for the common citizens in the country.

Such a massive public health care program as HPS, is obviously expected to use a transparent drug procurement and logistics framework. This, in turn, would necessitate tough price negotiations with the pharma manufacturers for the purchase of medicines, leading to significant reduction in drug prices. This is already happening in some States, like Tamil Nadu.

High OOPE on health:

According to the December 2016 report of the Union Ministry of Health and Family Welfare, of the total 64.2 percent OOPE in 2013-14, 53.46 percent was spent on medicines and 9.95 percent was spent on diagnostics, in India. 82.29 percent of the total OOP medicines expenditure and 67 percent of total OOP diagnostic expenditure was for outpatient treatment. Of the total OOPE, 15.96 percent was on traditional medicines/ AYUSH, of which equal proportion was spent on outpatient and inpatient care.

In an interview, published on December 18, 2017, the Chairman of the Insurance Regulatory and Development Authority of India (IRDAI), reportedly, also said, OOPE makes up about 62 percent of all health care costs in India, causing impoverishment of many patients. In a comparative yardstick, OOPE is about 20 percent in the U.S. and the U.K. and 20-25 percent in BRICS countries. Thus, there is a need to significantly bring it down in India, he said.

Curiously, the ‘Health in India’ report, which draws data from the 71st round of the National Sample Survey conducted from January to June 2014, presents a somewhat different picture. It reportedly says, of the total OOPE, 72 percent in rural and 68 percent in urban areas was towards buying medicines for non-hospitalized treatment. The Health in India report shows, in rural India, 25 percent patients relied on “borrowings” for hospitalization, and 68 percent on household income and other savings. In urban India, 18 percent patients had to borrow while admitted in hospital, and 75 percent relied on income or savings – the report further added.

Containing OOPE – a dire necessity:

Be that as it may, OOPE for health in India and, especially, on drugs, is indeed very high, by any measure. To contain this burden on the general population in the private market, the Government had introduced, since quite some time, a balancing mechanism through various Drug Price Control Orders (DPCO).

Similarly, to contain its own health care expenditure, as HPS comes into force, the Government is expected to choose a digitalized and transparent drug procurement process. This would, almost certainly, prompt tough price negotiations for the purchase of medicines, as well.

Thus, HPS may further add to the current discomfort of the pharma players in this area, as they mostly want free pricing of drugs that will only be regulated by market forces. Unfortunately, market forces do not work for drugs. I explained it in an article, published in this blog on April 27, 2015, titled “Does Free Market Economy Work For Branded Generic Drugs In India?”

Industry lobbying for free pricing of drugs and devices:

It is well known that pharma industry, supported by other businesses dependent on it, including a section of the media, is still against such a move by the Indian policy makers, for various reasons. The primary one being, such pressure on drug prices would stifle  innovation, impacting patient access to the best possible health care.

Pharma Multination Corporations (MNC) appear to be in the forefront of this ‘innovation’ bandwagon to score a brownie point in this area, as many say. This is an ongoing process for them. Even recently, in the report titled, ‘2017 Accomplishments’, the US-India Business Council’s (USIBC) made a strong assertion in this regard, quite expectedly, though.

The report articulated, as part of advocacy around price controls, USIBC had sent a letter to the National Pharmaceutical Pricing Authority (NPPA), detailing American industry concerns on setting up ceiling prices for drugs and medical devices. USIBC, reportedly has also sent a letter, expressing its concern on the “serious problems for US companies that sell these products in the Indian market.” Advocacy initiatives of this kind, reportedly included the then Foreign Secretary, Minister of Commerce and Industries of India, and the Prime Minister’s Principal Secretary, as well.

Pricing pressure getting more intense, even in the US:

Curiously, a similar and equally interesting scenario is rapidly developing alongside in the largest pharma free-market economy in the world – the United States. On January 30, 2018, during his State of the Union address, President Donald Trump said that he wants his administration “to make fixing the injustice of high drug prices one of our top priorities.”

Likewise, as reported by Bloomberg on February 09, 2018, President Trump’s Health and Human Services Secretary – Alex Azar reaffirmed that he plans to take up the President’s promises to do something about pharmaceutical prices to reduce patients’ out-of-pocket spending. He assured, “The president is firmly committed in this space.” Incidentally, Alex Azar is a former executive at drug maker Eli Lilly & Co.

HPS needs efficient public procurement and logistics mechanisms:

As the cost of drugs and devices contribute so much to the total OOPE on health, together with ensuring patients’ easy access to convenient to reach primary, secondary and tertiary health care facilities – access to drugs, devices and diagnostics for the target population of HPS must also increase, effectively. Thus, bulk procurement and distribution of these, free of cost, at the designated health centers, assumes paramount importance for its success. Consequently, the trust of the HPS beneficiaries will keep ascending.

The Public Health Foundation of India (PHFI) too, had aptly asserted, any inefficiency due to poor governance, lack of transparency and inequities in public health financing and delivery would greatly impede access to medicines and diagnostics for those who would need these most.

Admitting its importance, the NHP 2017 noted: “Quality of public procurement and logistics is a major challenge in ensuring access to free drugs and diagnostics through public facilities. An essential prerequisite that is needed to address the challenge of providing free drugs through the public sector, is a well-developed public procurement system.”

Thus, putting in place an effective framework and process for this purpose, at both the central and the state government levels, as the situation would warrant, requires to be a key priority focus area of the HPS implementation process. There doesn’t seem to be any other viable choice, either.

Any need to ‘reinvent the wheel’?

The answer is, of course, ‘no’. Perhaps, to attain similar goals, the Government had established the fully autonomous Central Medical Services Society (CMSS) as a Central Procurement Agency (CPA). This was intended to streamline drug procurement and distribution system of the Ministry of Health and Family Welfare of India. Accordingly, the Gazette Notification on the formation of CMSS said that it:

  • Will be responsible for procuring health sector goods in a transparent and cost-effective manner and distributing them to the States/UTs by setting up an IT enabled supply chain infrastructure including warehouses in 50 locations.
  • Will ensure uninterrupted supply of health-sector goods to the State Government, which will then maintain the flow to the government health facilities, such as district hospitals, primary health centers and community health centers.
  • All decisions on procurement will be taken by the CMSS without any reference to the Ministry of Health and Family Welfare.
  • The Ministry will be responsible only for policy decisions concerning procurement and for monitoring its performance.
  • The CMSS will also assist the State Governments to set up similar organizations in states to reform their procurement.

Currently, CMSS carries out procurement for following ‘Disease Control and Welfare Programs’ of the Union Ministry of Health & Family Welfare:

  • Revised National Tuberculosis Control Program (RNTCP)
  • National Vector Borne Disease Control Program (NVBDCP)
  • Family Welfare Program (FWP)
  • National Aids Control Organization (NACO)

The scope of services of CMSS includes tendering, bid Evaluation, procurement decision, concluding rate agreement, placing purchase orders, receiving in stores, sampling and testing, releasing payment to suppliers and keeping stocks of drugs available in warehouses for distribution to state program offices.

So far as State Governments are concerned, a World Bank article says, the Tamil Nadu Medical Services Corporation (TNMSC) had successfully demonstrated a cost-effective model. This IT enabled system is an integral part in the supply chain infrastructure to support the management decisions, and adequate attention to quality in drug procurement.

CMSS follows similar processes to procure and distribute supplies to States through web-connected warehouses in State capitals. An IT vendor takes up the IT work with a quality control framework in place. Its warehouses are being equipped with necessary storing and warehousing equipment, which will distribute to the States the items that are procured by the Ministry. Since the warehouses will be connected through the IT system, it will be possible for the Society to monitor the inventory in warehouses preventing stock outs and wastage.

Many State governments have also adopted a similar reform process. However, any duplication in the drug procurement and logistics systems needs to be avoided.

Conclusion:

Hence, I reckon, CMSS can be extended to the procurement process of both the new ‘Health Protection Scheme (HPS)’ and also for the ‘Health and Wellness Centers,’ without trying to ‘reinventing the wheel.’

As stated before, this seemingly transparent drug procurement process for public use, would naturally involve tough price negotiations, leading to significant reduction, not just in drug prices, but also containing the overall HPS cost to the Government, enabling the country to experience the roll out of Universal Health Coverage (UHC) for all. From this perspective, it appears, while translating into reality, this noble Government intent of providing wider access to health care, including free medicines, overall pressure on drug prices may escalate further.

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.