A Patient-Centric State Initiative To Revolutionize Disease Treatment

Posted on February 9, 2015 by Tapan Ray

In his State of the Union address, just before the recent visit to India in January 2015, President Barack Obama articulated the need to develop “Precision Medicine” in his country – a bold, giant and perhaps unprecedented State initiative to remarkably improve effectiveness of disease treatment.

To set the ball rolling, in his budget proposal for the year 2016, President Obama earmarked an amount of US$ 215 million for this purpose. This includes an allocation of US$130 million for the National Institutes of Health (NIH) to create a national research database of about a million American volunteers by studying their genetics together with other relevant factors, such as the environments they live in and the microbes that live in their bodies.

‘Precision Medicine’ initiative is similar to path breaking 13-year and US$3 billion Human Genome Project, that has formed the bedrock of modern genomics, President Obama said. He also expressed hope that the private healthcare sector too, including universities and foundations, will get involved to “lay the foundation” for this new initiative of the Government for the interest of patients.

Why is this approach so relevant in today’s healthcare?

In an article published in the ‘British Medical Journal (BMJ) in October 2012, Richard Smith - an editor of BMJ until 2004 and a Director of the United Health Group’s chronic disease initiative wrote:

“Doctors know that many of the patients they treat with drugs will not benefit. Many patients know that too.”

Dr. Smith also emphasized, for centuries medicine classified diseases by what could be seen, felt, and smelt. Thereafter, medical scientists in this area started defining diseases anatomically, physiologically, and biochemically. Even today, this is by and large the paradigm where most medicines fall.

Smith underscored, because of imprecise diagnosis the treatment also becomes haphazard. There is big variation in how individuals respond to drugs and yet that variation is not usually recorded. The regulators approve drugs based on their average performance even today.

The White House release also reiterates, most medical treatments have been designed for the “average patient.” This “one-size-fits-all-approach,” treatments can be very successful for some patients but not for others.

This calls for broadening the scope of disease treatment – from the conventional and error-prone ‘Disease Oriented’ approach, to relatively more unconventional and better targeted with greater value – ‘Patient-Centric’ ones, wherever needed.

Two current trends:

To address this key deficiency in the effective treatment of several dreaded diseases for many patients, following two are the current trends, as stated by William Pao, M.D., Ph.D., who led Roche’s Oncology Discovery & Translational Area research unit since May 2014:

We now know that on a molecular level every cancer is different – not only between different tumors, but even between different areas within a single tumor! This means that we need to match the right drug to the patient who we know will respond best to the drug, at the right time during the course of treatment.

Patients will have their tumors profiled not only for genetic drivers, but also for predictive immunotherapy markers at different time points in their course of treatment.

Personalized and Precision Medicine:

The above trends in the endeavor of making treatments more patient specific – thus more effective, have thrown open scientific discourse and intense research on ‘Personalized’ and ‘Precision’ medicines.

As Pfizer has described in its website:

Personalized Medicine is a unique approach to medical practice in which the individual aspects of a patient are directly considered to guide treatment planning, including his or her genetic make-up, key biomarkers, prior treatment history, environmental factors and behavioral preferences. This approach can be used to optimize pharmaceutical treatments and overall care.

Whereas, Precision Medicine is an approach to discovering and developing medicines and vaccines that deliver superior outcomes for patients, by integrating clinical and molecular information to understand the biological basis of disease. Precision medicine is the biopharmaceutical research and development paradigm that will help enable more patient-centered clinical practice, including treatment decision-making based on genetic information – an emerging standard now often described as “personalized medicine”.

As President Obama said while announcing the proposal on January 30, 2015, ‘Precision Medicine’ promises delivery of the right treatment at the right time, every time, to the right person.

He also said that the new effort will “bring us closer to curing diseases like cancer and diabetes…and give all of us access to the personalized information we need to keep ourselves and our families healthier.”

‘Precision Medicines’ Dominate Oncology segment:

In the European Society for Medical Oncology (ESMO) 2014 Congress, pharma majors reported their latest advances on precision medicines in the cancer care. Bristol-Myers Squibb, Roche, AstraZeneca, GlaxoSmithKline (GSK), and Merck & Co. were among the companies presented updates of their most promising cancer drugs closer to this area.

According to a large pharma lobby group in the United States – The Pharmaceutical Research and Manufacturers of America (PhRMA):

“Recent advances in diseases such as cancer and cystic fibrosis are delivering on the promise of targeted treatments, and between 12 and 50 percent of all compounds currently being researched by the industry are potential personalized medicines. These advances hold great promise in improving patient outcomes and controlling costs by targeting the right medicines to the right patients.”

‘DCAT Connect’ Report of September 2014 also indicates significant increase in ‘Precision Medicines’ in the pipelines of the leading global pharma companies, which is a key change over the past decade.

In 2013, targeted therapies increased their share of the global oncology market, accounting for 46 percent of total sales, up from 11 percent a decade ago. According to IMS Institute for Healthcare Informatics, the global oncology drug market reached US$ 91 billion in 2013 with CAGR of 5.4 percent from 2008 to 2013.

Taking note of this trend, it appears that in the near future ‘Precision Medicines’ would possibly be the most promising class in the treatment of cancer, particularly in breast cancer, lung cancer and certain types of leukemia. This is mainly because medical scientists are already quite acquainted with the molecular signatures of different types of cancer related tumors.

Medical scientists and researchers are also working on ‘Precision Medicines’ to more effectively address many other diseases, such as, diabetes, cardiovascular and ailments related to several types of infections.

Increasing potential:

Realization of the potential of ‘Precision Medicines’ to improve care and speed the development of new treatments has just only begun to be tapped.

In recent times, scientists and researchers have accelerated efforts to understand more about biomarkers for this purpose. A study conducted by the German Association of Research-Based Pharmaceutical Companies (vfa) indicates that more than 20 percent of clinical trials carried out since 2005 focused not just on agents, but also on biomarkers. Before 1990, only one in twenty clinical trials addressed biomarkers.

According to another report, last year, 20 percent of all new drug approvals in the United States were for “Precision Medicine” treatments. This vindicates, yet again, the immense potential to turn genetic discoveries into innovative disease treatments for patients.

A bold state sponsored research initiative:

State funded, ‘Precision Medicine’ initiative is a bold new step of the American Government to revolutionize improvement in healthcare and treating disease. It is expected to pioneer a new model of patient-powered research that promises to accelerate biomedical discoveries and provide clinicians with new tools, knowledge, and therapies to select which treatments will work best for which patients.

As the White House release reiterates, most medical treatments have been designed for the “average patient.” As a result of this, “one-size-fits-all-approach” treatments can be very successful for some patients but not for others. This is changing with the emergence of ‘Precision Medicine’, an innovative approach to disease prevention and treatment that takes into account individual differences in people’s genes, environments, and lifestyles.

In this process, ‘Precision Medicine’ gives clinicians tools to better understand the complex mechanisms underlying a patient’s health, disease, or condition, and to better predict which treatments will be most effective.

Opposite view:

In an op-ed titled, ‘Moonshot’ Medicine Will Let Us Down, published recently in The New York Times, the author argued with his differing viewpoints.

I am quoting below three of those arguments:

“For most common diseases, hundreds of genetic risk variants with small effects have been identified, and it is hard to develop a clear picture of who is really at risk for what. This was actually one of the major and unexpected findings of the Human Genome Project. In the 1990s and early 2000s, it was thought that a few genetic variants would be found to account for a lot of disease risk. But for widespread diseases like diabetes, heart disease and most cancers, no clear genetic story has emerged for a vast majority of cases.”

“Another unexpected finding of the Human Genome Project was the problem of ‘missing heritability.’ While the statistics suggest that there is a genetic explanation for common conditions and diseases running in families or populations, it turns out that the information on genetic variants doesn’t explain that increased risk.”

“The idea behind the “war on cancer” was that a deep understanding of the basic biology of cancer would let us develop targeted therapies and cure the disease. Unfortunately, although we know far more today than we did 40-plus years ago, the statistics on cancer deaths have remained incredibly stubborn.”

I am sure, you will analyze the above points with the facts that you have at your disposal on this subject to arrive at a logical conclusion.

Current Applications:

Though these are still early days, initial benefits of ‘Precision Medicines’ have been reported in many areas, such as:

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.

Cystic fibrosis: In America, patients with a rare form of cystic fibrosis now can choose a drug designed specifically to target the genetic defect causing their illness. Specialized medical centers, such as “individualized medicine centers” at the Mayo Clinic, are also available to the patients for effective treatment.

Ethical issues:

While following this pursuit of excellence of the genetic scientists in the realm of disease treatment, some experts have reportedly raised flags 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 investigates 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 ‘Precision Medicine’ primarily in the area of genetic testing need to be effectively addressed, sooner.

Conclusion:

The quest for moving away from conventional and error-prone ‘Disease Oriented Treatment’ paving the way for unconventional and value added individual patient-specific ones, may soon come to fruition.

Advances in ‘Precision Medicine’ have already led to powerful new discoveries and several new treatments that are tailored to specific characteristics of individuals, such as a person’s genetic makeup, or the genetic profile of an individual’s tumor. This is leading to a transformation in the way the world can treat diseases such as cancer.

Patients with breast, lung, and colorectal cancers, melanomas and leukemia, for instance, should be provided with facilities in specialist hospitals to undergo molecular testing as a part of patient care, enabling physicians to select treatments that improve chances of survival and reduce exposure to adverse effects.

Although, the potential for precision medicine to improve care and speed the development of new treatments has only just begun to be tapped, some skeptics do say that tailoring medical treatments to individual characteristics of each patient is both overly optimistic and cost-prohibitive.

Be that as it may, in the balance of probability the benefits of prudent use of ‘Precision Medicine’ far outweigh the concerns expressed. This evolving new paradigm would help saving not just significant expenses, but also precious time that is usually spent on ‘trial-and-error treatments’, by enabling clinicians to determine quickly which therapies are most likely to succeed.

Though lot many grounds would still need to be covered in this area, the State sponsored ‘Precision Medicine’ initiative of America to revolutionize disease treatment, in my view, is indeed a laudable one, every way.

By: Tapan J. Ray

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

Is The Core Purpose of Pharma Business Much Beyond Profit Making?

Posted on November 10, 2014 by Tapan Ray

Dr. Margaret Chan, the Director General of the World Health Organization (WHO), at a briefing to discuss the Ebola outbreak in West Africa at the UN Foundation in Washington on September 3, 2014 said:

“Big Pharma’s greed for profits, not lack of funding, delaying Ebola treatment development.”

Highlighting that the disease has already taken lives of 4,951 people in West Africa, Dr. Chan castigated the pharmaceutical industry for failing to develop an effective treatment for the deadly virus Ebola since 1976. “Though the Ebola crisis has become the most severe acute public health emergency seen in modern times, a profit-driven industry does not invest in products for markets that cannot pay”, Dr. Chan added.

That said, the Big Pharma has now initiated some efforts in this area, as the disease currently poses a significant threat to non-African countries, including America.

The sentiment reverberates:

Echoing similar sentiment, an article published in the BBC News on November 7, 2014 reiterated:

“Big pharma companies are in the business to make money, so will generally develop those drugs that offer the greatest potential for profit. This means a number of important drugs are neglected – the current Ebola crisis being a case in point.”

The profit oriented approach isn’t restricted just to the diseases of Africa:

The above article also points out that, besides diseases of the developing world, the Big Pharma has been slow to develop newer and multi-drug resistant antibiotics, as well.

This is mainly because, it is lot more difficult for the pharma companies to make huge quantum of profit from discovery of newer antibiotics for acute infections having limited use for around 7 to 10 days, as compared to the medicines for chronic illnesses that people will have to necessarily take every day, for life.

It appears today that the ongoing public opinion and pressure are possibly not adequate enough to trigger even a slightest change in the fetish for profit-making incentives of the Big Pharma companies.

Despite high profitability, the fetish for even more profit continues:

The pharma industry that basically exists to help saving lives of patients of all types, status and color in various ways, now seems to focus mostly on generation of more and more profit than ever before.

- The following table would vindicate the point of profitability of the industry:

Highest and Lowest Profit Margins of 5 key Industrial Sectors, 2013 (Profit Margin in %)

No.	Sectors	Highest	Lowest
1.	Pharmaceuticals	42	10
2.	Banks	29	5
3.	Carmakers	10	3
4.	Oil & Gas	24	2
5.	Media	18	6

NB: Highest and lowest margins achieved by individual company (Source: Forbes, BBC News)

To generate mind boggling profits, many of the Big Pharma constituents have reportedly resorted to various types of gross misconduct and malpractices too, the Chinese saga being the tip of the iceberg.

- The following are some recent examples to help fathom the enormity of the problem:

In September 2014, GlaxoSmithKline was reportedly fined US $490m by China for bribery.

In March 2014, the antitrust regulator of Italy reportedly fined two Swiss drug majors, Novartis and Roche 182.5 million euros (U$ 251 million) for allegedly blocking distribution of Roche’s Avastin cancer drug in favor of a more expensive drug Lucentis that the two companies market jointly for an eye disorder.

Just before this, in the same month of March 2014, it was reported that a German court had fined 28 million euro (US$ 39 million) to the French pharma major Sanofi and convicted two of its former employees on bribery charges.

In November 2013, Teva Pharmaceutical reportedly said that an internal investigation turned up suspect practices in countries ranging from Latin America to Russia.

In May 2013, Sanofi was reportedly fined US$ 52.8 Million by the French competition regulator for trying to limit sales of generic versions of the company’s Plavix.

In August 2012, Pfizer Inc. was reportedly fined US$ 60.2 million by the US Securities and Exchange Commission to settle a federal investigation on alleged bribing of overseas doctors and other health officials to prescribe medicines.

In April 2012, a judge in Arkansas, US, reportedly fined Johnson & Johnson and a subsidiary more than US$1.2 billion after a jury found that the companies had minimized or concealed the dangers associated with an antipsychotic drug.

Many more of such instances are regularly being reported by the international media, unabated.

More profit through high drug pricing – The key argument in favor:

The Big Pharma argues that high drug pricing is absolutely necessary to generate a kind of profit, that is essential to fund heavy investments for drug innovation to meet the unmet needs of patients. Moreover, only 3 out of 10 drugs launched are profitable, on an average.

This argument really goes over the top. It does not hold much water either, as the Big Pharma reportedly spends more on the process of drug marketing than on innovation (R&D) of new drugs.

The following table would paint a different picture altogether, marketing expenditure being far more than the R&D costs:

R&D and Marketing Spend of World’s largest Pharmaceutical Companies

Company	Total Revenue (US$ Bn.)	R&D Spend (US$ Bn.)	Marketing Spend (US$ Bn.)	Profit (US$ Bn.)	Profit Margin (%)
J & J (US)	71.3	8.2	17.5	13.8	19
Novartis (Swiss)	58.8	9.9	14.6	9.2	16
Pfizer (US)	51.6	6.6	11.4	22.0	43
Roche (Swiss)	50.3	9.3	9.0	12.0	24
Sanofi (France)	44.4	6.3	9.1	8.5	11
Merck (US)	44.0	7.5	9.5	4.4	10
GSK (UK)	41.4	5.3	9.9	8.5	21
AstraZeneca(UK)	25.7	4.3	7.3	2.6	10
Eli Lilly (US)	23.1	5.5	5.7	4.7	20
AbbVie (US)	18.8	2.9	4.3	4.1	22

(Source: GlobalData, BBC News)

Thus, it is difficult to fathom why are numbers of drugs, such as, Sovaldi and others costing as much as US $ 84,000 and above for a treatment course, when the cost of manufacturing is no more than an insignificant fraction of that treatment cost?

Considering all these and looking at the published profit and loss accounts of various pharma companies, it appears that, the line between ‘making reasonable profit’ and ‘profiteering’ is getting increasingly blurred in the pharma world.

Why is the marketing cost so high?

Since about the last decade and half, despite reasonably high expenditure on R&D there does not seem to have been many reports on breakthrough innovations. According to an expert of the World Health Organization (WHO), “of the 20 or 30 new drugs brought to the market each year, typically 3 are genuinely new, with the rest offering only marginal benefits.”

In a situation like this, when the challenge mostly is of generating targeted revenues with the new products of ‘me-too values’ rather than with those having intrinsic ‘unmet values’, marketing costs to generate doctors’ prescription would obviously escalate disproportionately. Even the process followed to generate these prescriptions, often cross the red line of regulatory, ethics and compliance standards, as have been cited above.

The following questions come up consequently:

- Are these exorbitant avoidable marketing expenditures adding any tangible or intangible values to the ultimate consumers – the patients?

- If not, why burden the patients with these unnecessary costs?

India is no different against similar parameters:

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

The quality of the pharmaceutical sales and marketing process in India has touched a new low and continues to go south, causing suffering to a large number of patients. Well documented unethical drug promotion is increasingly becoming an emerging threat to the society.

Even today, the Ministry of Health and the Department of Pharmaceuticals of the Government of India provide few checks and balances on unethical drug promotion in India and prefer to keep the eyes meant for vigilance, closely shut.

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

I deliberated on a similar issue in one of my earlier blog posts of September 1, 2014, titled, “Pharma And Healthcare: Mounting Trust deficit In Post Halcyon Days”

Conclusion:

While it is well-acknowledged that pharma industry has contributed immensely for the development of a large number of life saving new drugs to save precious lives all over the globe, none can also deny that for such efforts the companies concerned have not been hugely profited either…and, as we have been witnessing, not necessarily through legitimate means, always.

That said, in the backdrop of all the above examples, the core issue that emerges today as raised by many, including the World Health Organization (WHO), is the growing inherent conflict between predominantly the profit driven business goals of the pharma players and the public health interest of a nation.

Considering a number of recent serious public outbursts of the global thought leaders and also from the international media on the ‘profit dominating goals’ of the pharma industry, in general, the following questions need to be addressed with all seriousness:

- Is there a need to define afresh the core purpose of pharmaceutical business for all?

- Does the core purpose go much beyond profit making?

- If so, how would the industry plan to engage the stakeholders for its credible public demonstration?

Meanwhile, taking a serious note of it and learning from the past examples, India should initiate experts’ debate on the subject soon, to effectively resolve the conflict of two different mindsets, not resting on the same page in many ways.

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.

An Aggressive New Drug Pricing Trend: What It Means To India?

Posted on October 27, 2014 by Tapan Ray

A new class and an aggressive drug-pricing trend is now evolving in the global pharmaceutical industry, exerting huge financial pressure on the patients and payers, including governments, especially, in the developed nations of the world.

Another aspect of this issue I deliberated in one of my earlier blog posts of August 18, 2014 titled, “Patented Drug Pricing: Relevance To R&D Investments.”

Let me start my deliberation today by citing an example. According to 2013 Drug Trend Report of the pharmacy benefits manager Express Scripts, the United States will spend 1,800 percent more on Hepatitis C Virus (HCV) medications by 2016 than it did last year. This is largely attributed to new Hepatitis C cure with Sovaldi of Gilead, priced at Rs 61,000 (US$ 1,000) per tablet with a three-month course costing around Rs. Million 5.10 (US$ 84,000), when it reportedly costs around U$130 to manufacture a pill.

In a Press Release, Express Scripts stated, “Never before has a drug been priced this high to treat a patient population this large, and the resulting costs will be unsustainable for our country…The burden will fall upon individual patients, state and federal governments, and payers who will have to balance access and affordability in a way they never have had to before.”

The magnitude of impact – an example:

According to another report from the Centers for Medicare and Medicaid of the US, the cost to treat all Americans, who have hepatitis C, with Sovaldi would cost US$227 billion, whereas it currently costs America US$260 billion a year for all drugs bought in the country. According to Express Scripts, no major therapy class has experienced such a hefty increase in spending over the last 21 years.

This gives us a feel of the net impact of the evolving new aggressive drug pricing strategy on the lives of the patients and payers of one of the richest nations of the world.

Three critical parts of the evolving pricing strategy:

In an era, when new drug pricing has come under great scrutiny of the stakeholders globally, this strategy seems to have three critical components as follows:

1. Strategy for the developed countries: Set the launch price as high as possible and generate maximum profit faster from wealthy minority who can afford to pay for the drug.

It helps establishing the base price of the product globally, despite all hue and cries, maintaining a very healthy top and bottom line business performance, amidst ‘Wall Street cheering’.

Implementing this strategy meticulously and with precision, Gilead has reportedly registered US$ 5.8 billion in sales for Sovaldi in the first half of 2014. That too, in the midst of huge global concerns on alleged ‘profiteering’ with an exorbitantly priced HCV drug.

At that time, the company noted on its earnings call that it believes 9,000 people have been cured of HCV so far with Sovaldi, which means that the 6-month turnover of Sovaldi of US$ 5.8 billion was generated just from the treatment of 9000 patients. If we take the total number of HCV infected patients at 150 million globally, this new drug benefited less than one percent of the total number of HCV patients, despite clocking a mind-boggling turnover and profit.

2. Strategy for the developing countries: Create a favorable optic for the stakeholders by lowering the drug price significantly, in percentage term from its base price, earning still a decent profit. However, in reality the discounted price would continue to remain high for a very large number of patients.

Gilead is now in the process of implementing this strategy for 80 developing countries. For these markets, it has already announced a minimum threshold price of US$ 300 a bottle, enough for a month. With three months typically required for a full course and taking into account the currently approved combination with interferon, the total cost per patient would be about US$ 900 for a complete treatment against its usual price of US$ 84,000.

If we convert the discounted treatment cost, it comes down to around Rs. 55,000 from the base price of around Rs. Million 5.10. This discounted price, which is significantly less than the base price of the drug, creates an extremely favorable optic. No one discusses how many Hepatitis C patients would be able to afford even Rs. 55,000, say for example in a country like India? Thus, setting a high base price in the developed market for a new drug could make many in the developing world perceive that the treatment cost of Rs. 55,000 is very reasonable for majority of not so privileged patients.

Under the second strategy, Gilead has targeted mostly the world’s poorest nations, but also included some middle income ones such as Egypt, which has by far the highest prevalence of HCV in the world.

A ‘Financial Times’ report, also states, “At the US price, Gilead will recoup its Sovaldi development investment . . . in a single year and then stand to make extraordinary profits off the backs of US consumers, who will subsidize the drug for other patients around the globe.”

If other global pharma companies also follow this differential strategy, one for the developed markets and the other for the developing markets, it could be a masterstroke for the Big Pharma. This would help address the criticism that its constituents are facing today for ‘obscene’ pricing of important new life saving drugs, as they target mostly the creamy layer of the society for business performance.

However, many in the United States are also articulating that they understand, the countries getting steep discounts from Gilead have high levels of poverty, but clearly points out that the disease affects lower-income patients in America, as well. To substantiate the point, they reiterate, according to the World Health Organization (WHO) about 150 million people worldwide have HCV, out of which around 2.7 million HCV diagnosed people live in the US. They highlight that currently even less than 25 percent of Americans with chronic HCV have had or are receiving treatment. In Europe, just 3.5 percent of patients of are being treated.

Thus, keeping in view of the increasing number of voices in the developed countries against abnormally high prices of the new drugs, the moot questions that come up are as follows:

Is Strategy 1 sustainable for the developed markets?
If not, would Strategy 2 for the developing market could ever be broader based?

3. Strategy for Voluntary License (VL) in those countries, where grant of product patent is doubtful.

Thanks to the Indian patent regime, global companies would possibly consider following this route for all those products that may not be able to pass the ‘Acid Test’ of Section 3(d) of the Indian Patents Act 2005. Gilead has followed this route for Sovaldi and before that for tenofovir (Viread).

In this context, it is worth noting that the Indian patent office has not recognized Sovaldi’s patent for the domestic market, just yet. Thus, following this strategy Gilead announced, “In line with the company’s past approach to its HIV medicines, the company will also offer to license production of this new drug to a number of rival low-cost Indian generic drug companies. They will be offered manufacturing knowhow and allowed to source and competitively price the product at whatever level they choose.”

Accordingly, on September 15, 2014, international media reported that Cipla, Ranbaxy, Strides Arcolab, Mylan, Cadila Healthcare, Hetero labs and Sequent Scientific are likely to sign in-licensing agreements with Gilead to sell low cost versions of Sovaldi in India.

It was also reported that these Indian generic manufacturers would be free to decide their own prices for sofosbuvir, ‘without any mandated floor price’.

Indian companies would require paying 7 per cent of their revenues as royalty to Gilead, which, in turn would ensure full technology transfer to them to produce both the Active Pharmaceutical Ingredients (API) and finished formulations. The generic version of Sovaldi is likely to be available in India in the second or third quarter of 2015, at the earliest.

However, the final decision of the Indian Patent Office on the patent grant for Sovaldi holds the key to future success of similar high-voltage, seemingly benign, VL based game plan of the global pharma majors.

The new trend:

In April 2014, Merck and Co. announced that its two HCV drug candidates had a 98 percent cure rate in a mid-stage trial. In addition, AbbVie is also expected to launch a high-end hepatitis C drug within the next year. The prices for these drugs are yet to be announced.

However, a new report of October 2014 states that USFDA has approved this month a new drug named Harmony, a ledipasvir/sofosbuvir combo formulation, again from Gilead for curative treatment of chronic HCV genotype 1 infection in adults. Harmony, which is called the son of Sovaldi, would cost a hopping US$ 94,500 for a 12-week regimen, as against US$ 84,000 for Sovaldi.

Hence, I reckon, similar aggressive pricing strategy for new drugs would gain momentum in the coming years and at the same time.

Is this pricing model sustainable?

Though Gilead pricing model for patented drugs works out better than what is prevailing today in India, the question that comes up yet again, whether the new model is sustainable for various reasons as mentioned above or would it be followed by majority of the global drug innovators?

In a situation like this, what then could be a sustainable solution in India?

The desirable pathway:

A transparent government mechanism for patented drugs pricing, as followed by many countries in the world, would be quite meaningful in India. The Department of Pharmaceuticals (DoP) of the Government of India could play a constructive role in this area, as already provided in the Drug Policy 2012 of the country.

This measure assumes greater urgency, as the astronomical prices of patented drugs, especially for life-threatening illnesses, such as cancer, have become a subject of great concern in India too, just as it has become a critical issue across the world.

DoP is in inactive mode:

It is not difficult to fathom that CL for all patented life-saving drugs would not be a sustainable measure for all time to come. Thus, the need for a robust mechanism of price negotiation for patented drugs was highlighted in the Drug Policy 2012.

The DoP first took up the issue for consideration in 2007 by forming a committee. After about six years from that date, the committee produced a contentious report, which had hardly any takers.

Today, despite the new government’s initiative to inject requisite energy within the bureaucracy, administrative lethargy and lack of sense of urgency still lingers with the DoP, impeding progress in this important subject any further.

Intense lobbying on this issue by vested interests from across the world has further pushed the envelope in the back burner. Recent report indicates, the envelope has since been retrieved for a fresh look with fresh eyes, as a new minister is now on the saddle of the department.

According to reports, a new inter-ministerial committee was also formed by the DoP under the chairmanship of one of its Joint Secretaries, to suggest a mechanism to fix prices of patented drugs in the country. The other members of the committee are Joint Secretary, Department of Industrial Policy and Promotion (DIPP); Joint Secretary, Ministry of Health and Family Welfare; and Member Secretary, National Pharmaceutical Pricing Authority (NPPA).

Unfortunately, nothing tangible has been made known to the stakeholders on this matter, just yet. I sincerely hope that the new government expedites the process now.

Three critical factors to consider:

While arriving at the patented products price in India, three critical factors should be made note of, as follows:

The discussion should start with the prices adjusted on the Purchasing Power Parity factor for India.
Any price must have a direct relationship with the per capita income of the population of the country.
Details of other public healthcare measures that the government would undertake, by increasing its healthcare spends as a percentage of GDP, should also be clearly articulated.

Conclusion:

The evolving and aggressive new product-pricing trend has three following clearly identifiable facets:

One, the base price of the drugs would be established at a very high level to help increase both the turnover and profit of the companies significantly and quickly. This measure would consequently make the drug bills of the developed world even more expensive, which could limit healthcare access wherever co-payment exists or the expenditures are Out of Pocket (OoP) in nature.

Two, against intense global criticism for aggressive drug pricing strategy, to create a favorable optic, the concerned companies would launch these products at a deep discount on the base price in the developing world. However, the net price would still remain high in absolute terms, considering per capita income in those countries.

Three, for many of these new products, Section 3(d) of the Indian Patents 2005 would place India at an advantage. Thus, in absence of evergreening type of product patents, to salvage the situation, many of these companies would prefer to offer Voluntary License (VL) to Indian generic manufacturers under specific terms and conditions. However, such VL may not have any potential value, if IPO refuses to grant patents to those products, which would fall under the above section. In that case, generic competition would further bring down the prices.

No doubt, the above pricing model for patented drugs works out better than what is prevailing today in India. However, the question that comes up, whether the new model is sustainable or would be followed by majority of the global drug innovators in the same way? Considering all these, it does not seem to be the most desirable situation. Moreover, the current patent regime is a deterrent mostly to evergreening of patents.

Thus, the Indian government should play a more specific and proactive role in this game by first putting in place and then effectively implementing a country specific mechanism to tame the spiraling patented drug prices in India, for the interest of patients.

The world has taken serious note of this fast evolving aggressive new drug-pricing trend, as different countries are in the process of addressing the issue in various country-specific ways. Unfortunately, the DoP still remains in a deep slumber, having failed once to half-heartedly put a clumsy mechanism in place to address the issue.

As India is now under a new political regime, let us sincerely hope, the new minister in charge succeeds to make it happen, sooner, reducing vulnerability of a vast majority of patients during many life threatening ailments and…of course, in tandem, ensuring justifiable profit margin for the innovator drug companies…the evolving aggressive new drug pricing trend notwithstanding.

By: Tapan J. Ray

Drugs From The Same Indian Plant: Safe For Europe, Unsafe For America, Why?

Posted on June 9, 2014 by Tapan Ray

Good number of stories on US-FDA banning several drug manufacturing facilities of major domestic players of India over serious quality related issues, have been doing the rounds since about a year and almost at a regular interval.

The quagmire has snowballed into serious apprehensions on the quality of Indian generic drugs, across the globe. Various statements of US-FDA Commissioner Margaret Hamburg, during her much talked about maiden visit to India, in February 2014, added further credence to the issue.

“If you want our market, meet our standards”:

During Hamburg’s India visit, her reported candid warning to the Indian drug exporters to America added further fuel to the above concern in India. She clearly underscored:

“If you want our market, meet our standards.”

Even in the face of this stern warning, when major drug manufacturers of India, such as, Ranbaxy, Wockhardt, Sun Pharma and some others continued to fail in meeting US-FDA drug quality standards in their respective plants, I wrote the following in one of my earlier blog posts titled, “Does India Believe in Two Different Drug Quality Standards?”:

“In a situation like this, especially when many Indian manufacturers are repeatedly failing to meet the American quality standards, the following questions come up:

Is the US-FDA manufacturing requirement too troublesome, if not oppressive?

If not, do the Indian and other patients too deserve to have drugs conforming to the same quality standards?

Answers to these questions are absolutely vital to convince ourselves, why should Indian patients have access to drugs of lower quality standards than Americans, with consequential increase in their health risks?”

The first question on ‘troublesomeness’ now partly answered?

This is because another recent media report brought to the fore that, having completed their assessment of drug manufacturing violations at Ranbaxy’s facility in Toansa, European regulators have said although deficiencies were found, they pose no risk to public health. The regulators said they were satisfied by corrective measures put in place by the company after U.S. regulators found deviations in January.

The report also highlights that this assessment of the European regulators stands in stark contrast to the response of US regulators to the deficiencies found at the same plant.

It is worth noting that US-FDA continues to restrict Ranbaxy from making and selling pharmaceutical ingredients from the Toansa facility “to prevent substandard quality products from reaching US consumers.”

The same plant meets drug safety standards of Europe, but ‘unsafe’ for America!

Quite contrary to the above stern statement of US-FDA, according to the above report from Reuters, European drug regulators commented as follows:

“The inspection team concluded that there was no evidence that any medicines on the EU market that have an active pharmaceutical ingredient manufactured in Toansa were of unacceptable quality or presented a risk to the health of patients taking them.”

The further added, “This conclusion was supported by tests of samples of these medicines, all of which met the correct quality specifications.”

Regulatory audit standards were the same for both EU and US regulators:

It is also interesting to note from the report that according to a statement from the US-FDA:

“EMA and FDA inspected the Toansa facility using similar quality standards and underlying principles of current good manufacturing practices.”

Was the decision of US-FDA ‘import ban’ subjective?

This critical question arises because of another US-FDA statement that states as follows:

“While inspections were similar, the two regulatory authorities applied their own, differing, regulatory and legal standards to address the violations.”

Subjectivity in decision-making could encourage “Conspiracy Theory”:

Generic drugs currently contribute over 80 percent of prescriptions written in the US. Around 40 percent of prescriptions and Over The Counter (OTC) drugs that are now sold in the United States come from India. Almost all of these are cheaper generic versions of patent expired drugs. Total annual drug export of India, currently at around US$ 15 billion, is more than the domestic turnover of the pharma industry. Hence, India’s commercial stake in this area is indeed mind-boggling.

In a situation like this, the apprehension of subjectivity in the decision making process of US-FDA related to ‘import bans’, if linked with, say for example, even the missed opportunities for ‘first to launch’ generic versions of several patent-expired blockbuster drugs in the United States by Ranbaxy, could lead to much undesirable ‘Conspiracy Theory’, further souring the relationship between India and America.

As I mentioned in one of my earlier blog posts titled “Loss of Ranbaxy Gain of Big Pharma…And Intriguing Coincidences”, when the emerging dots associated with the missed opportunities for ‘first to launch’ generic versions of drugs like, Lipitor (Pfizer), Diovan (Novartis) and Nexium (AstraZeneca) are connected, an uncomfortable pattern could emerge favoring Big Pharma and obviously adversely affecting Indian companies like Ranbaxy.

The First Dot: Uncertainty over Lipitor generic launch:

Like many other large Indian players, ‘first to launch’ strategy with the new generic drugs has been the key focus of Ranbaxy since long, much before its serious trouble with the US-FDA begun in 2008. ‘Import Bans’ on two of its manufacturing facilities by the US regulator in that year created huge uncertainty in its launch of a generic version of Pfizer’s anti-lipid blockbuster drug Lipitor in 2011. On time launch of a generic version of Lipitor was estimated to have generated a turnover of around US$ 600 million for Ranbaxy in the first six months and commensurate loss to Pfizer for the generic entry.

Despite its neck deep trouble with the US-FDA at that time, Ranbaxy ultimately did somehow manage to launch generic Lipitor, after partnering with Teva Pharmaceutical of Israel.

The Second Dot: Indefinite delay in Diovan generic launch:

Lipitor story was just the beginning of Ranbaxy’s trouble of not being able to translate its ‘first to launch’ advantage of patent-expired blockbuster drugs into commercial success, thus allowing the Big Pharma constituents to enjoy market monopoly with their respective blockbuster drugs even after patent expiry.

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

US-FDA drug ‘Import Ban’ from the concerned manufacturing facility of Ranbaxy gave rise to this hurdle favoring the Big Pharma, as discussed above.

As a result, Novartis in July 2013 reportedly raised its guidance announcing that the company now expects full-year sales to grow at a low single-digit rate, where it had earlier predicted net sales to turn up flat. It also guided for core earnings to decline in the low single digits, revising guidance for a mid-single-digit drop.

The Third Dot: Delay in Nexium generic launch:

Ranbaxy had earlier created for itself yet another opportunity to become the first to launch a generic version of the blockbuster anti-peptic ulcerant drug of AstraZeneca – Nexium in the United States, as the drug went off patent on May 27, 2014. However, due to recent US-FDA import ban from its Toansa plant, this opportunity too seems to be fading away for Ranbaxy.

Delay in the launch of generic Nexium, which incidentally is the second-biggest seller of AstraZeneca, would make a big impact on the predator-chased company’s profit.

With the global sales of Nexium at US$ 3.87 billion and US sales at US$ 2.12 billion in 2013, retaining its monopoly status in the all-important US market beyond the end of May would not only limit a forecast decline in AstraZeneca’s 2014 earnings, but would also protect bonuses for top management of the British pharma giant, as the above report says.

Conclusion:

Let me hasten to add yet again, while highlighting the stark differences of interpretations on drug quality standards of the same plant between the European and American regulators and connecting the dots of significant missed opportunities of the Indian drug manufacturers, I do not intend to postulate any ‘Machiavellian Hypothesis’.

I just wanted to establish that both alleged ‘subjective’ decision making process of the US-FDA and coincidences of a series of missed opportunities encountered by the Indian drug manufacturers related to first to launch generics in America are now realities, which if remain unaddressed could germinate into a ‘Conspiracy Theory’, at least in some corners. This could further sour existing Indo-US relationship.

While, I am confident that the new government of India with its, so far, well demonstrated ‘Can Do’ spirit would take these critical issues up in the ensuing bilateral ministerial level meetings, an immediate and in-depth study should also be initiated with valuable inputs from the independent experts to ferret out the real reasons behind these facts, including:

Why are the cGMP related issues in India repeatedly arising mainly with the US-FDA?
Are the requirements of the US-FDA though too onerous for the Indian drug manufacturers, yet reasonable as per global norms?
If so, how come the drugs manufactured in the same Indian plant though declared unsafe by the US-FDA, considered safe by the European regulators?

By: Tapan J. Ray

Big Pharma Demands Transparency, Keeping their ‘Black-Boxes’ Tight and Safe?

Posted on October 28, 2013 by Tapan Ray

Pharmaceutical Industry across the globe wants absolute transparency in all government laws, policies, guidelines, transactions and overall governance. They also expect the trade environment should be predictable, non-manipulative and business-friendly. These expectations are indeed well justified and deserve whole-hearted support from all concerned.

However, when similar expectations of transparency are voiced by stakeholders in the Big Pharma business operations, that will have direct or indirect impact on public health interests, one would mostly encounter a well guarded, mammoth and impregnable ‘Black Box’, wearing a ‘Top Secret’ label, with all relevant information kept inside.

Such areas of stakeholders’ interests on Big Pharma could well be related to details, like for example:

Actual break-up of R&D expense details,
Transparency in all clinical trials data for experts review,
Patented products’ pricing rationale,
Enormous total costs of lobbying and related expenses at the global level,
Marketing spend on doctors and other decision makers, directly or indirectly, just to name a few.

Mounting curiosity:

Continuation of such opaque practices for a long time, in turn, sparks the curiosity of the intelligentsia to know more in details, especially, about the areas as stated above.

Various research studies are now coming up, with huge revelations and strong findings in these areas. All of these together indicate, it is about time for the global pharma to also demonstrate transparency in their respective business practices and corporate governances, without further delay.

If it does not happen, probably respective governments in various countries will start acting on these areas of opaque self-serving pharma business practices, with the enactment and more importantly, stricter enforcement of requisite laws and policies. President Obama Administration in the United States has already initiated some important actions in these areas with proposals and laws, like for example, the “Physicians Payment Sunshine Act’ .

The ‘Power Game’:

An interesting article of May 3, 2013 highlighted that the global pharmaceutical industry exerts incredible influence over the prescription medicines across the globe. This power, as many will know, flows from robust political contacts and influences over various important government agencies administrating the entire healthcare system, executed immaculately by expensive lobbying and PR campaigns by their globally integrated trade bodies.

Similar powerful influences also get extended to doctors and the people who matter to further their interests. These well crafted plans are reportedly executed through sponsored or paid opinion-modifying articles, ‘advertorials’, DTC advertisements (wherever legally permitted) and well-organized, seemingly third party, speeches to push the envelopes further.

Most probably, keeping such ongoing practices in mind and coming under intense media pressure, the Medical Council of India (MCI) on December 10, 2009 amended the “Indian Medical Council (Professional Conduct, Etiquette and Ethics), Regulations 2002″ for the doctors in India. Unfortunately, its implementation on the ground is rather tardy.

The above article also stated, “In fact, in the United States the industry contributes heavily to the annual budget of the U.S. Food and Drug Administration (FDA), which is charged with regulating drugs and devices made by those same companies.”

Avoidable Expenditures:

The paper indicates that in the United States alone the industry associations:

Have 1,100-plus paid lobbyists on Capitol Hill,
Allocated US$ 188 million annual lobbying budget
Doles out around US$ 14 million to political candidates every year

The report also comments, ‘Drug companies spend substantially more on marketing than they do on research and development.’

Influencing opinion against patients’ interest?

The article in the ‘drugwatch’ also states:

“Doctors are persuaded by the pharma companies to attach their names (ghost writing), against financial considerations, to favorable article on a particular drug ensuring that it is published in a well reputable medical journal.”

The author continues that ‘Ghost writings’ are being used to promote numerous drugs to influence concerned stakeholders.

In 1998, a study of the prestigious New England Journal of Medicine found that ‘out of 75 published articles, nearly half were written by authors with financial conflicts. And, worse than this, only two of the articles disclosed interests.’

Richard Smith, former editor of the British Medical Journal, was quoted saying, “All journals are bought – or at least cleverly used – by the pharmaceutical industry.”

Striking facts:

Following are some striking facts as reported in the article, as mentioned above:

“Advertising instead of research: For every US$ 1 spent on “basic research,” Big Pharma spends US$ 19 on promotions and advertising.

Distribution of free drug samples: The United States has 1 pharmaceutical sales representative for every 5 office-based physicians.

Sponsorship of symposiums and medical conventions: Drug and medical device makers spend lavishly on doctors, including covering meals, travel, seminars and conventions that may look more like vacations.”

Pressure on publications:

The paper highlights that large global pharma majors may even pull its advertisements out, if the concerned medical journal will question the accuracy of an ad. Such types of threats have very serious effects on these journals in running their businesses without getting lucrative advertisement dollars from the drug manufacturers.

Making drugs looking good:

The same article highlights:

“Quite often the academics and scientists are hired hands who supply human subjects and collect data according to the instructions from their corporate employers. Sponsors keep the data, analyze, write the papers and decide whether and when and where to submit them for publication. Drug companies have discovered ways to stage-manage trials to produce predetermined outcomes that will put their products in the best light.”

With this strategy even a bad drug can allegedly be made looking good by doing many things, like for example:

Comparing them to a placebo
Comparing them to a competitor’s medication in the wrong strength
Pairing them with a drug that is known to work well
Shortening a trial before any bad results surface
Testing in groups too small to provide valid evidence

Pay-for-delay deals:

A recent report titled, “Top twenty pay-for-delay drugs: How Industry pay-off delay generics” highlights that ‘Pay-for-delay deals’ have forced patients in the United States to pay an average of 10 times more than necessary for at least 20 blockbuster drugs.

Key findings of the analysis on the impact of pay-for-delay deals are as follows:

This practice has held back generic medicines used by patients with a wide range of serious or chronic conditions, ranging from cancer and heart disease, to depression and bacterial infection.

These payoffs have delayed generic drugs for five years, on average, and as long as nine years.

These brand-name drugs cost 10 times more than their generic equivalents, on average, and as much as 33 times more.

These patented drug companies have made an estimated US$ 98 billion in total sales of these drugs while the generic versions were delayed.

Citing example, the paper says, a pay-for-delay deal kept a generic version of the breast cancer drug Tamoxifen off the US market for nine years, while Pfizer made $7.4 billion in sales of its cholesterol-lowering drug Lipitor (atorvastatin) in 2012 alone.

The point to ponder yet again is, why such practices are being surreptitiously carried out for years sacrificing patients’ interest and without the regulators’ strong interventions, in general?

French Government has initiated a probe:

The French Competition Authority is reportedly expected to publish a report on the findings of its inquiry, initiated in February 2013, into the costs and pricing of medicines in France. The report will also look at whether industry practices are interfering with the market entry of generic drugs, including distribution arrangements between drug manufacturers, wholesalers and pharmacists.

An appreciable initiative in America, but why not in India?

There is still a simmering hope. As indicated above, President Obama’s Affordable Care Act reportedly requires that from September 2013, pharmaceutical companies will need to collect data and openly report information on payments, investment interests, ownership and items of value given to doctors and hospitals. Very unfortunately, the Department of Pharmaceuticals of the Government of India has not taken any such steps, as yet, despite the situation turning grave in the country.

The power of pharma lobby in the US:

According to a recent NYT report, in the United States, government health programs are forbidden from rejecting new drugs on cost grounds.

When the issue of drug prices came up as part of President Obama’s ‘Affordable Care Act’ debate, it was summarily rejected in Congress. Simultaneously, a move toward comparative-effectiveness studies, putting rival drugs or treatments through trials to determine which work better, was also decried.

The report highlights, the mere suggestion of the US government throwing its weight around on drug prices stirs up talk of ‘socialism’. The pharma lobby doesn’t have to look far for support in fighting that idea. In the US, the so-called ‘free market’ is trusted to regulate drug prices, despite the reality that the healthcare market is far from transparent, ‘with byzantine pricing mechanisms and costs that vary wildly region-by-region, pharmacy by pharmacy and even patient-by-patient’.

The usual supply/demand/pricing relationships do not apply to drug prices at the consumer level in the US too, just as it has been proved in India.

A large part of creation of this environment is attributed to pharmaceutical and other health-products firms, who reportedly spent a total of US$ 250 million on lobbying last year.

Big Pharma keeps failing credibility tests:

This happened very recently, when The Guardian in July 2013 reported, the pharmaceutical industry has “mobilized” an army of patient groups to lobby against plans to force companies to publish secret documents on drug trials. This is related to the news that the European Medicines Agency (EMA) could force drug companies to publish all Clinical Trial (CT) results in a public database.

The above report says, while some pharma players agreed to share data, important global pharma industry associations have resisted this plan of the EMA. The report continues, a leaked letter from two large pharma trade associations, the Pharmaceutical Research and Manufacturers of America (PhRMA) of the United States and the European Federation of Pharmaceutical Industries and Associations (EFPIA), have drawn out a strategy to combat calls by drug regulators to force companies to publish all CT results.

The strategy reportedly shows how patient groups, many of which receive some or all of their funding from drugs companies, have been drawn into this battle by these Big Pharma lobby groups.

The e-mail reportedly seen by ‘The Guardian’ was from Richard Bergström, Director General of EFPIA, addressed to directors and legal counsel at Roche, Merck, Pfizer, GSK, AstraZeneca, Eli Lilly, Novartis and many smaller companies.

The e-mail leaked by an employee of a pharma company describes a four-pronged campaign that starts with “mobilizing patient groups to express concern about the risk to public health by non-scientific re-use of data”.

Translated, as ‘The Guardian’ reported, “that means patient groups go into bat for the industry by raising fears that if full results from drug trials are published, the information might be misinterpreted and cause a health scare.”

This appears to be another classic case of vested interests working against patients’ interests.

Global lobbying started taking the center stage in India too:

With the above back-drop and lobbying scandals reportedly being surfaced in many other countries, it is about time that India puts its acts together with India-specific stricter disclosure policies, including R&D, Clinical Trials (CTs), Patented Products Pricing, Marketing Practices and Trade Lobbying.

Interestingly, to influence Government policies India’s top lobbying spenders in 2012 (US$ million) were reported as follows:

1	US Chamber of Commerce	136.3
2	National Association of Realtors	41.5
3	Blue Cross / Blue Shield	22.5
4	General Electric	21.1
5	American Hospital Association	19.2
6	National Cable & Telecom. Association	18.9
7	Pharmaceutical Research & Mfrs. of America (PhRMA)	18.5
8	Google	18.2
9	Northrop Grumman	17.5
10	AT&T	17.4
11	American Medical Association	16.5
12	Boeing	15.6

Source: The Center for Responsive Politics (Economic Times, June 4, 2013)

According to the latest lobbying disclosure reports filed with the US Senate and the House of Representatives, at least two dozen American companies and industry associations are reportedly lobbying hard with the US lawmakers on issues in India, which include:

Intellectual Property (IP)
Patent
Market access

Another recent report comments as follows:

“The US Chamber of Commerce has become a portal for dubious reports that claim India’s intellectual property regime is worse than China’s. Such “research” by paid lobbyists and disseminated through the halls of US Congress…”

Hefty fines for illegal practices, yet Black Box remains tight and safe:

In December 2010, Healthcare advocacy group Public Citizen published a report that, for the first time, documented all major financial settlements and court judgments between pharmaceutical manufacturers and the federal and state governments of the United States since 1991.

It says, almost US$ 20 billion was paid out by the pharmaceutical industry to settle allegations of numerous violations, including illegal, off-label marketing and the deliberate overcharging of taxpayer-funded health programs, such as Medicare and Medicaid.

Three-fourths of the settlements and accompanying financial penalties had occurred in just the five-year period prior to 2010. There has been no indication that this upward trend is subsiding.

10 Largest Settlements and Judgments on Big Pharma mis governance:
(Period: Nov. 2, 1010 – July 18, 2012)

	Company	Amount US$ Million	Year	Reasons
1.	GlaxoSmithKline	3, 000	2012	Unlawful promotion, kickbacks, concealing study data, overcharging government health programs
2.	Abbott	1,500	2012	Unlawful promotion, kickbacks
3.	Johnson & Johnson	1,200	2012	Unlawful promotion
4.	Merck	950	2011	Unlawful promotion
5.	Ranbaxy	500	2012	Poor manufacturing practices, falsifying data on FDA applications.
6.	Johnson & Johnson	327	2011	Unlawful promotion
7.	Boehringer Ingelheim	280	2011	Overcharging government health programs
8.	Mylan’s Dey Pharma unit	280	2010	Overcharging government health programs
9.	Elan	203	2010	Unlawful promotion, kickbacks
10.	Johnson & Johnson	158	2012	Unlawful promotion

Conclusion:

All such expenditures, including expensive lobbying and court settlement charges for illegal business practices, as mentioned above, I reckon, are wasteful and avoidable. These are mostly outcomes of self serving measures, shorn of public health interest,

If all these costs are eliminated and actual R&D expenses are reflected, in a transparent manner, there could be significant reduction in the costs of newer innovative drugs, extending their access to billions of patients, across the world.

Thus to help evaluating the innovative drugs with greater transparency, there is an urgent need for the Big Pharma to set examples by voluntarily disclosing the secrets hidden within the ‘Black Boxes’, as deliberated above. These disclosures should be made to the independent experts and the respective Governments under appropriate statutes.

Expectations of transparency in Governance should not, therefore, be restricted just to Government laws, policies and decisions, the industry should reciprocate it too, in equal measures.

To be patient-centric, transparency in governance needs to be a two-way traffic, where pharma industry should volunteer to be an integral part, sooner than later. Otherwise it may be too late for them to avoid harsh interventions of the respective regulators, as the intense pressure from intelligentsia, civil society and media, keep mounting.

That said, the question lingers:

When the ‘Big Pharma is rightly demanding transparency in all areas of public discourse, why are they so reluctant in making their intriguing ‘Black Boxes’ transparent, that too only in areas of public health interest, for fair experts review?

By: Tapan J. Ray

Buying Physicians’ Prescriptions in Cash or Kind: A Global (Dis)Order?

Posted on September 9, 2013 by Tapan Ray

Recently a European business lobby reportedly raised its voice alleging pharma Multinational Corporations (MNCs) in China have been ‘unfairly targeted’ by a string of investigations into bribery and price-fixing cases despite their generally ‘strong legal compliance’ and has suggested that China ‘must step back.’

Two comments of this European lobby group, presumably with full knowledge of its past records, appear indeed intriguing, first – ‘unfairly targeted’ and the second – ‘China must step back’, that too when a reportedly thorough state investigation is already in progress.

Reality is all pervasive:

However, while looking over the shoulder, as it were, an altogether different picture emerges and that reality seems to be all pervasive.

Over the past several decades, the much charted sales and marketing frontier in the pharmaceutical industry has been engagement into a highly competitive ‘rat race’ to create a strong financial transactional relationship, of various types and forms, with the physicians, who only take the critical prescription decisions for the patients. Most of the times such relationships are cleverly packaged with, among many others, a seemingly noble intent of ‘Continuing Medical Education (CME)’ by the companies concerned.

Increasingly, across the globe, more questions are now being raised whether such pharmaceutical business practices should continue even today. These voices are gradually getting louder fueled by the recent moves in the United States to ‘separate sales and marketing related intents of the drug industry from the practice of medicine’, especially in large medical teaching hospitals, in tandem with the enactment and practice of ‘Physician Payment Sunshine Act 2010’.

A recent article titled, “Breaking Up is Hard to Do: Lessons Learned from a Pharma-Free Practice Transformation”, published in the ‘Journal of the American Board of Family Medicine’ deliberated on an interesting subject related to much talked about relationship between the doctors and the pharmaceutical players.

The authors argue in this paper that significant improvement in the quality of healthcare in tandem with substantial reduction in the drug costs and unnecessary medications can be ensured, if the decision makers in this area show some willingness to chart an uncharted frontier.

‘Questionable’ relationship in the name of providing ‘Medical Education’:

‘The Journal of Medical Education’ in an article titled “Selling Drugs by ‘Educating’ Physicians” brought to the fore the issue of this relationship between the pharma industry and individual doctors in the name of providing ‘medical education’.

The article flags:

“The traditional independence of physicians and the welfare of the public are being threatened by the new vogue among drug manufacturers to promote their products by assuming an aggressive role in the ‘education’ of doctors.”

It further elaborates that in the Congressional investigation in the United States on the cost of drugs, pharma executives repeatedly stated that a major expenditure in the promotion of drugs was the cost of ‘educating’ physicians to use their products.

The author then flagged questions as follows:

“Is it prudent for physicians to become greatly dependent upon pharmaceutical manufacturers for support of scientific journals and medical societies, for entertainment and now also for a large part of their ‘education’?”

“Do all concerned realize the hazards of arousing wrath of the people for an unwholesome entanglement of doctors with the makers and sellers of drugs?”

Financial conflicts in Medicine:

Another academic paper of August 13, 2013 titled, “First, Do No Harm: Financial Conflicts in Medicine” written by Joseph Engelberg and Christopher Parsons at the Rady School of Management, University of California at San Diego, and Nathan Tefft from the School of Public Health at the University of Washington, states:

“We explored financial conflicts of interest faced by doctors. Pharmaceutical firms frequently pay physicians in the form of meals, travel, and speaking fees. Over half of the 334,000 physicians in our sample receive payment of some kind. When a doctor is paid, we find that he is more likely to prescribe a drug of the paying firm, both relative to close substitutes and even generic versions of the same drug. This payment-for-prescription effect scales with transfer size, although doctors receiving only small and/or infrequent payments are also affected. The pattern holds in nearly every U.S. state, but it is strongly and positively related to regional measures of corruption.”

On this paper, a media report commented:

“The findings – based on recently released data that 12 companies have been forced to make public as a result of US regulatory settlements – will rekindle the debate over the limits of aggressive pharmaceutical marketing, which risks incurring unnecessarily costly medical treatment and causing harm to patients.”

A call for reform:

The first paper, as quoted above, titled “Breaking Up is Hard to Do” reiterates that even after decades, individual practitioner still remains the subject to undue influence of the pharmaceutical companies in this respect. It categorically points out:

“The powerful influence of pharmaceutical marketing on the prescribing patterns of physicians has been documented and has led to fervent calls for reform at the institutional, professional, and individual levels to minimize this impact.”

The rectification process has begun in America:

Interestingly, even in the United States, most physicians practice outside of academic institutions and keep meeting the Medical Representatives, accept gifts and drug samples against an expected return from the drug companies.

Many of them, as the paper says, have no other process to follow to become ‘pharma-free’ by shunning this hidden primitive barrier for the sake of better healthcare with lesser drug costs.

To achieve this objective, many academic medical centers in America have now started analyzing the existing relationship between doctors and the drug companies to limit such direct sales and marketing related interactions for patients’ interest.

This unconventional approach will call for snapping up the good-old financial transactional relationship model between the doctors and Medical Representatives of the Pharma players, who promote especially the innovative and more costly medicines.

An expensive marketing process:

The authors opine that this is, in fact, a very powerful marketing process, where the pharmaceutical players spend ‘tens of billions of dollars a year’. In this process more than 90,000 Medical Representatives are involved only in the United States, providing free samples, gifts along with various other drug related details.

The study reiterates that deployment of huge sales and marketing resources with one Medical Representative for every eight doctors in the United States, does not serve the patients interests in any way one would look into it, even in terms of economy, efficacy, safety or accuracy of information.

“But Don’t Drug Companies Spend More on Marketing?”

Yet another recent article, captioned as above, very interestingly argues, though the drug companies spend good amount of money on R&D, they spend much more on their marketing related activities.

Analyzing six global pharma and biotech majors, the author highlights that SG&A (Sales, General & Administrative) and R&D expenses vary quite a lot from company to company. However, in this particular analysis the range was as follows:

SG&A	23% to 34%
R&D	12.5% to 24%

SG&A expenses typically include advertising, promotion, marketing and executive salaries. The author says that most companies do not show the break up of the ‘S’ part separately.

A worthwhile experiment:

Removing the hidden barriers for better healthcare with lesser drug costs, as highlighted in the above “Breaking Up is Hard to Do” paper, the researchers from Oregon State University, Oregon Health & Science University and the University of Washington outlined a well conceived process followed by one medical center located in central Oregon to keep the Medical Representatives of the pharmaceutical companies at bay from their clinical practice.

In this clinic, the researchers used ‘a practice transformation process’ that analyzed in details the industry presence in the clinic. Accordingly, they educated the doctors on potential conflicts of interest and improved patient outcomes of the clinical practice. The concerns of the staff were given due considerations. Managing without samples, loss of gifts, keeping current with new drugs were the key concerns.

Based on all these inputs, various educational interventions were developed to help the doctors updating their knowledge of new drugs and treatment, even better, through a different process.

The experiment established, though it is possible to become “pharma free” by consciously avoiding the conflicts of interest, implementation of this entire process is not a ‘piece of cake’, at least not just yet.

Need for well-structured campaigns:

The researchers concluded that to follow a “pharma sales and marketing free” environment in the clinical practice, the prevailing culture needs to be changed through methodical and well-structured campaigns. Although, initiation of this process has already begun, still there are miles to go, especially in the realm of smaller practices.

One researcher thus articulated as follows:

“We ultimately decided something had to be done when our medical clinic was visited by drug reps 199 times in six months. That number was just staggering.”

Where else to get scientific information for a new drug or treatment?

The authors said, information on new drugs or treatment is currently available not just in many other forum, but also come with less bias and more evidence-based format than what usually are provided by the respective pharmaceutical companies with a strong motive to sell their drugs at a high price to the patients.

The paper indicated that there are enough instances where the doctors replaced the process of getting information supplied by the Medical Representatives through promotional literature with monthly group meetings to stay abreast on the latest drugs and treatment, based on peer-reviews.

‘Academic detailing’:

In the process of ‘Academic detailing’ the universities, and other impartial sources of credible information, offer accurate information without bias, whenever sought for. In the United States, some states and also the federal government are reportedly supporting this move now, which is widely believed to be a step in the right direction.

Moves to separate sales and marketing of the drug industry from the practice of medicine:

As stated above, there are many moves now in the United States to ‘separate the sales and marketing influence of the drug industry from the practice of medicine’, especially in large medical teaching hospitals, as the paper highlights.

The study also reported that of the 800,000 physicians practicing in the United States only 22 percent practice in the academic settings and 84 percent of primary care physicians continue to maintain close relationships with the pharmaceutical companies.

Citing examples, the new report indicated various tangible steps that primary care physicians can possibly take to effectively mitigate these concerns.

Emerging newer ways of providing and obtaining most recent information on new drugs and treatment together with educating the patients will hasten this reform process.

A commendable move by the Medical Council of India:

Taking a step towards this direction, the Medical Council of India (MCI) vide a notification dated December 10, 2009 amended the “Indian Medical Council (Professional Conduct, Etiquette and Ethics), Regulations 2002″. This move was welcomed by most of the stakeholders, barring some vested interests.

The notification specified stricter regulations for doctors in areas, among others, gifts, travel facilities/ hospitality, including Continuing Medical Education (CME), cash or monetary grants, medical research, maintaining professional Autonomy, affiliation and endorsement in their relationship with the ‘pharmaceutical and allied health sector industry’. These guidelines came into force effective December 14, 2009.

With this new and amended regulation, the MCI, on paper, has almost imposed a ban on the doctors from receiving gifts of any kind, in addition to hospitality and travel facilities related to CMEs and others, from the pharmaceutical and allied health sector industries in India.

Moreover, for all research projects funded by the pharmaceutical industry and undertaken by the medical profession, prior approval from the appropriate authorities for the same will be essential, in addition to the ethics committee.

Although maintaining a cordial and professional relationship between the pharmaceutical industry and the doctors is very important, such relationship now should no way compromise the professional autonomy of the medical profession or any medical institution, directly or indirectly.

It is expected that the common practices of participating in private, routine and more of brand marketing oriented clinical trials would possibly be jettisoned as a pharmaceutical strategy input.

However, inability of the Indian regulator to get these guidelines effectively implemented and monitored has drawn sharp flak from all other stakeholders, as many third party private vendors are reportedly coming up as buffers between the industry and the physicians to facilitate the ongoing illegal financial transactions, hoodwinking the entire purpose, blatantly.

No such government guidelines for the industry yet:

MCI under the Ministry of Health, at least, came out with some measures for the doctors in 2009 to stop such undesirable practices.

However, it is difficult to fathom, why even almost four years down the line, the Department of Pharmaceuticals of the Government of India is yet to implement its much hyped ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’ for the entire pharmaceutical industry in India.

‘Physicians payment induced prescriptions’ – a global phenomenon:

Besides what is happening in China today with large pharma MNCs alleged involvement in bribery to the medical profession soliciting prescriptions of their respective drugs, world media keep reporting on this subject, incessantly.

For example, The Guardian in its July 4, 2012 edition reported an astonishing story. Since quite some time many pharmaceutical giants are being reportedly investigated and fined, including out of court settlements, for bribery charges related to the physicians.

In another very recent article titled “Dollars for Docs Mints a Millionaire” the author stated as follows:

“The companies in Dollars for Docs accounted for about 47 percent of U.S. prescription drug sales in 2011. It’s unclear what percentage of total industry spending on doctors they represent, because dozens of companies do not publicize what they pay individual doctors. Most companies in Dollars for Docs are required to report under legal settlements with the federal government.”

In India, deep anguish of the stakeholders over this issue is also getting increasingly reverberated all across, without much results on the ground though. It has also been drawing attention of the patients’ groups, NGOs, media, Government and even the Parliament of the country.

Another article titled, “Healthcare industry is a rip-off” published in a leading business daily of India states as follows:

“Unethical drug promotion is an emerging threat for society. The Government provides few checks and balances on drug promotion.”

Physician Payment Sunshine Act of 2010:

To partly address this issue under President Obama’s ‘Patient Protection Affordable Care Act’, ‘Physician Payment Sunshine Act’ came into force in the United States in 2010.

Under this Act, any purchasing organization that purchases, arranges for, or negotiates the purchase of a covered drug, device, biological, or medical supply or manufacturer of a covered drug, device, biological, or medical supply operating in the United States, or in a territory, possession, or commonwealth of the United States is required to publicly disclose gifts and payments made to physicians.

Penalty for each payment not reported can be upto US$ 10,000 and the penalty for knowingly failing to submit payment information can be upto US$ 100,000, for each payment.

Centers for Medicare and Medicaid Services (CMS) has already released their ‘Physician Payment Sunshine Act’ reporting templates for 2013. The templates apply for reports dated August 1, 2013 – December 31, 2013.

Should the Government of India not consider enacting similar law in the country without further delay?

Conclusion:

That said, these well-researched papers do establish increasing stakeholder awareness and global concerns on the undesirable financial influence of pharma players on the doctors. Product promotion practices of dubious value, especially in the name of ‘Continuing Medical Education (CME), seem to strongly influence the prescribing patterns of the doctors, making patients the ultimate sufferer.

The studies will help immensely to establish that achieving the cherished objective of a ‘pharma sales and marketing free’ clinic is not only achievable, but also sustainable for long.

The barriers to achieving success in this area are not insurmountable either, as the above article concludes. These obstacles can easily be identified and overcome with inputs from all concerned, careful analysis of the situation, stakeholder education and identifying most suitable alternatives.

Thus, I reckon, to effectively resolve the humongous ‘physician payment induced prescriptions’ issue for the sole benefit of patients, it is about time for the pharmaceutical players to make a conscientious attempt to shun the ‘road much travelled, thus far, with innovative alternatives. However, the same old apprehension keeps lingering:

“Will the mad race for buying physicians’ prescriptions in cash or kind, much against patients’ interest, continue to remain a global (dis)order, defying all sincere efforts that are being made today?

By: Tapan J. Ray

Balancing IPR with Public Health Interest: Brickbats, Power Play and Bouquets

Posted on July 1, 2013 by Tapan Ray

It is now a widely accepted dictum that Intellectual Property Rights (IPR), especially pharma patents, help fostering innovation and is critical in meeting unmet needs of the patients.

However, the moot question still remains, what type pharmaceutical invention, should deserve market exclusivity or monopoly with overall freedom in pricing, keeping larger public health interest in mind.

In line with this thinking, for quite sometime a raging global debate has brought to the fore that there are quite a large number of patents on drug variants that offer not very significant value to the patients over the mother molecules, yet as expensive, if not more than the original ones. In common parlance these types of inventions are considered as ‘trivial incremental innovations’ and described as attempts to ‘evergreening’ the patents.

The terminology ‘evergreening‘ usually ‘refers to a strategy employed by many pharmaceutical companies to extend their market monopoly by slightly changing the existing molecules and obtaining new patents to continue to enjoy market exclusivity and pricing freedom, which otherwise would not have been possible.

Path breaking or jaw-drooping ‘W-O-W’ types of innovations are not so many. Thus most of the patented drugs launched globally over the last several decades are indeed some sort of ‘me-too drugs’ and generally considered as ‘low hanging fruits’ of R&D, not being able to offer significantly greater value to patients than already exiting ones. Many of these drugs have also achieved blockbuster status for the concerned companies, backed by high voltage marketing over a reasonably long period of time. It is understandable, therefore, that from pure business perspective why serious global efforts are being made to push the same contentious system in India too.

Example of some of these molecules (not necessarily in the written order), are as follows:

Cemetidine – Ranitidine – Famotidine – Nizatidine – Roxatidine (to treat Acid-peptic disease)

Simvastatin – Pravastatin – Lovastatin – Pitavastatin – Atorvastatin – Fluvastatin – Rosuvastatin (to treat blood lipid disorder)

Captopril – Enalepril – Lisinopril – Fosinopril – Benzapril – Perindopril – Ramipiril – Quinalapril – Zofenopril (Anti-hypertensives)

However, pharmaceutical companies do argue that such ‘incremental innovations’ are the bedrock for growth of the pharmaceutical industry and are essential to continue to fund pharmaceutical research and development.

An interesting paper:

A paper titled, “Pharmaceutical Innovation, Incremental Patenting and Compulsory Licensing” by Carlos M. Correa argued as follows:

Despite decline in the discovery of New Chemical Entities (NCEs) for pharmaceutical use, there has been significant proliferation of patents on products and processes that cover minor, incremental innovations.

A study conducted in five developing countries – Argentina, Brazil, Colombia, India and South Africa has:

Evidenced a significant proliferation of ‘ever-greening’ pharmaceutical patents that can block generic competition and thereby limit patients’ access to medicines.
Found that both the nature of pharmaceutical learning and innovation and the interest of public health are best served in a framework where rigorous standards of inventive step are used to grant patents.
Suggested that with the application of well-defined patentability standards, governments could avoid spending the political capital necessary to grant and sustain compulsory licenses/government use.
Commented, if patent applications were correctly scrutinized, there would be no need to have recourse to CL measures.

A remarkable similarity with the Indian Patents Act:

The findings of the above study have a striking similarity with the Indian Patents Act. As per this Act, to be eligible for grant of patents in India, the pharmaceutical products must pass the ‘two-step’ acid test of:

Following the inventive step: Defined under Section 2(ja) of the Patents Act as follows:

“Inventive step” means a feature of an invention that involves technical advance as compared to the existing knowledge or having economic significance or both and that makes the invention not obvious to a person skilled in the art.

Passing scrutiny of Section 3(d) of the law: It categorically states, inventions that are a mere “discovery” of a “new form” of a “known substance” and do not result in increased efficacy of that substance are not patentable.

Supreme Court of India clarifies it:

The Honorable Supreme Court of India in page 90 of its its landmark Glivec judgement has clearly pronounced that all ‘incremental innovations’ may not be trivial or frivolous in nature. However, only those ‘incremental innovations’, which will satisfy the requirements of both the above Sections of the Act, wherever applicable, will be eligible for grant of patents in India.

An opposite view:

Another paper presents a different view altogether. It states that incremental improvements on existing drugs have great relevance to overall increases in the quality of healthcare.

With the progress of the pharmaceutical industry, such drugs have helped the physicians to treat diverse group of patients. They also represent advances in safety, efficacy along with newer dosing options significantly increasing patient compliance.

The paper claims that ‘even from an economic standpoint, expanding drug classes represent the possibility of lower drug prices as competition between manufacturers is increased’. It states that any policy aimed at curbing incremental innovation will ultimately lead to a reduction in the overall quality of existing drug classes and may ultimately curb the creation of novel drugs.

Pricing:

Experts, on the other hand, argue, if patents are granted to such ‘incremental innovations’ at all, their prices need to be determined by quantifying ‘Incremental Value’ that patients will derive out of these inventions as compared to the generic versions of respective original molecules.

Use of such drugs may lead to wasteful expenditure:

A large majority of stakeholders also highlight, though many of such drugs will have cheaper or generic alternatives, physicians are persuaded by the pharma players to prescribe higher cost patented medicines with the help of expensive avoidable marketing tools, leading to wasteful expenditure for all. The issue of affordability for these drugs is also being raised, especially, in the Indian context.

The ‘2012 Express Scripts Canada Drug Trend Report’ unfolded that the use of higher-cost medications without offering additional patient benefits resulted in waste of $3.9 billion annually in Canada.

Another recent Geneva-based study concluded as follows:

“Evergreening strategies for follow-on drugs contribute to overall healthcare costs. It also implies that policies that encourage prescription of generic drugs could induce saving on healthcare expenditure. Healthcare providers and policymakers should be aware of the impact of evergreening strategies on overall healthcare costs.”

Some other studies reportedly revealed, “Medicines sold in France are 30 times more expensive than what it costs pharmaceutical companies pay to manufacture them.” Industry observers opine, if that is happening in France what about India? Quoting experts the same report comments, “If pharmaceutical companies are forced to follow moral and human values, it could save the tax payer at least 10 billion euros, an amount which could fill up the deficit of the national health care system.”

Yet another article questioned, “What if a physician is paid speaking or consulting fees by a drug maker and then prescribes its medicine, even if there is no added benefit compared with cheaper alternatives?”

More debate:

According to a paper titled, ‘Patented Drug Extension Strategies on Healthcare Spending: A Cost-Evaluation Analysis’ published by PLOS Medicine, European public health experts estimate that pharmaceutical companies have developed “evergreening” strategies to compete with generic medication after patent termination. These are usually slightly modified versions of the existing drugs.

Following are some brands, which were taken as examples for evergreening:

S.No.	Evergreen	Medical Condition	Original Brand
1.	Levocetirizine (Vozet)	Allergies	Cetirizine (Zyrtec)
2.	Escitalopram (Lexapro)	Depression	Citalopram (Celexa)
3.	Esomeprazole (Nexium)	Acid reflux	Omeprazole (Prilosec)
4.	Desloratadine (Clarinex)	Allergies	Loratadine (Claritan)
5.	Zolpidem Extended Release (Ambien CR)	Insomnia	Zolpidem (Ambien)
6.	Pregabalin (Lyrica)	Seizures	Gabapentin (Neurotonin)

Source: Medical Daily, June 4, 2013

In this study, the researchers calculated that evergreening – where pharmaceutical companies slightly modify a drug molecule to extend its patent, had cost an extra 30 million euros to the healthcare system in Geneva between 2000 and 2008. The authors argue that ‘evergreening’ strategies, “more euphemistically called as ‘life cycle management’ are sometimes questionable benefit to society.”

As the paper highlights, in this scenario the companies concerned rely on brand equity of the original molecule with newer and more innovative marketing campaigns to generate more prescriptions and incurring in that process expenses nearly twice as much on marketing than on research and development.

Brickbats:

In this context, recently a lawmaker rom America reportedly almost lambasted India as follows:

“I’m very concerned with the deterioration in the environment for protection of US intellectual property rights and innovation in India. The government of India continues to take actions that make it very difficult for US innovative pharmaceutical companies to secure and enforce their patents in India.“

On this, the Indian experts comment, if the situation is so bad in India, why doesn’t America get this dispute sorted out by lodging a formal complaint against India in the WTO, just as what India contemplated to do, when consignments of generic drugs of Indian manufacturers were confiscated at the European ports, alleging those are counterfeit medicines.

Yet another recent news item highlighted a “concerted effort, which involves letters from US corporations and business groups to the president, testimony by Obama administration officials before Congress, and lawmakers’ own critiques, came ahead of US secretary of state John Kerry’s trip to India later this month (has already taken place by now) for the annual strategic dialogue, which will precede Prime Minister Manmohan Singh’s visit to Washington DC in September.”

The report stated, the above letter complained that over the last year, “courts and policymakers in India have engaged in a persistent pattern of discrimination designed to benefit India’s business community at the expense of American jobs … Administrative and court rulings have repeatedly ignored internationally recognized rights — imposing arbitrary marketing restrictions on medical devices and denying, breaking, or revoking patents for nearly a dozen lifesaving medications.”  

At a recent Congressional hearing of the United States, a Congressman reportedly expressed his anger and called for taking actions against India by saying,  “Like all of you, my blood boils, when I hear that India is revoking and denying patents and granting compulsory licenses for cancer treatments or adopting local content requirements.”

Indian experts respond to these allegations by saying, patent disputes, patent challenges, revocation of patents, compulsory licensing etc. are all following a well-articulated judicial process of the country, where Indian government has hardly any role to play or intervene. American government and lawmakers are also expected to respect the rule of law in all such cases instead of trying to denigrate the Indian system.

The Power Play:

This short video clipping captures the Power Play in America on this matter.

The Government of India responds:

Ministry of Commerce and Industries of India reportedly countered the allegations of the United States over patents to the US Trade Representive arguing that the Indian IPR regime is fully TRIPS-compliant and Indian Patents Act “encourages genuine innovation by discouraging trivial, frivolous innovation, which leads to evergreening”.

Countries adopting the Indian model:

The above report also highlighted as follows:

Argentina has issued guidelines to reject ‘frivolous’ patents.
Peru, Columbia, other South American countries have placed curbs.
Philippines has similar provisions.
Australia is contemplating making the law tougher.

Revised report of Dr. R. A. Mashelkar Committee:

Even the revised (March 2009) ‘Report of the Technical Expert Group (TEG) on Patent Law Issues’, the TEG, chaired by the well-known scientist Dr. R.A. Mashelkar, in point number 5.30 of their report recommended as follows:

“Every effort must be made to prevent the practice of ‘evergreening’ often used by some of the pharma companies to unreasonably extend the life of the patent by making claims based sometimes on ‘trivial’ changes to the original patented product. The Indian patent office has the full authority under law and practice to determine what is patentable and what would constitute only a trivial change with no significant additional improvements or inventive steps involving benefits. Such authority should be used to prevent ‘evergreening’, rather than to introduce an arguable concept of ‘statutory exclusion’ of incremental innovations from the scope of patentability.”

Bouquets:

As stated above, many experts across the world believe, the criticism that Section 3 (d) is not TRIPS Agreement compliant is unfounded, as no such complaint has been lodged with the World Trade Organization (WTO) in this matter, thus far. The safeguards provided in the patent law of India will help the country to avoid similar issues now being faced by many countries. Importantly, neither does the section 3(d) stop all ‘incremental innovations’ in India.

Quoting a special adviser for health and development at South Centre, a think tank based in Geneva, Switzerland, a recent report indicated, “Many developing countries will follow India’s example to protect the rights of their populations to have access to essential medicines”.

Yet another report quoting an expert articulates, “India’s top court’s decision affirms India’s position and policy on defining how it defines inventions from a patenting point of view for its development needs. It challenges the patenting standards and practices of the developed countries which are the ones really in much need of reform.”

The Honorable Supreme Court in its Glivec judgment has also confirmed that such safeguard provisions in the statute are expected to withstand the test of time to protect public health interest in India and do not introduce any form of unreasonable restrictions on patentability of drug inventions.

Conclusion:

Not withstanding the report of the US-India Business Council (USIBC) titled ‘The Value of Incremental Innovation: Benefits for Indian Patients and Indian Business’, arguing for abolition of section 3(d) of the Indian Patents Act to pave the way for patentability for all types of incremental innovations in pharmaceuticals, realistically it appears extremely challenging.

As the paper quoted first in this article suggests, denial of patents for inventions of dubious value extending effective patent period through additional patents, is a significant safeguard to protect public health interest. This statutory provision will also pave the way for quick introduction of generics on expiry of the original patent.

Taking all these developments into active consideration, keen industry watchers do believe, for every effort towards balancing IPR with Public Health Interest, both brickbats and bouquets will continue to be showered in varying proportion together with the mounting pressure of power play, especially from the developed world and still for some more time.

However, in India this critical balancing factor seems to have taken its root not just deep and strong, but in all probabilities - both politically and realistically, the law is now virtually irreversible, come what may.

By: Tapan J. Ray

“New drug prices are Astronomical, Unsustainable and Immoral” – Anatomy of Unique Protests

Posted on May 6, 2013 by Tapan Ray

Yes. The quoted sentiment captured in the headline was reportedly voiced recently by many cancer specialists, including researchers and that too in the heartland of pharmaceutical innovation of the world– the United States of America.

These specialist doctors argued:

“High prices of a medicine to keep someone alive is profiteering, akin to jacking up prices of essential goods after a natural disaster”

Thus, not just in India, high prices of new drugs have started prompting large-scale protests in various types and forms across the world. This time the above unique protest assumed an extra-ordinary dimension, with the eye of the storm being in America.

The news item highlighted quite a different type of public protest by the top doctors, originated at a major cancer center located in New York and actively supported by over 120 influential cancer specialists from more than 15 countries spanning across five continents. These crusaders, though reportedly are working in favor of a healthy pharmaceutical industry, do think, especially the cancer drug prices are beyond the reach of many.

About 30 of these doctors hail from the United States and work closely, as mentioned earlier, with pharmaceutical companies engaged in R&D, including clinical trials.

As the cost of many life saving cancer drugs are now exceeding US$ 100,00 per year, all these doctors and researchers involved in the patients’ fights against cancer, are now playing a pivotal role in resisting such high drug prices vigorously.

Examples of astonishingly high drug prices:

In the area of treating rare diseases, the situation in every sense is mind-boggling. When a drug to treat such ailments comes with a price tag of over US$ 400,000 just for a year’s treatment, it is indeed astonishingly high by any standard. Some protestors even described the cost of these drugs as ‘obvious highway robbery’ in the guise of high R&D cost, while some others would continue to wonder as to why is not there a regulatory intervention for the same?

Here below are the top 10 most expensive drugs of the world…and just hold your breath:

World’s Most Expensive Medicines

No.	Name	Disease	Price US$ /Year
1.	ACTH	Infantile spasm	13,800,00
2.	Elaprase	Hunter Syndrome	657,000
3.	Soliris	Paroxysmal nocturnal hemoglobinuria	409,500
4.	Nagalazyme	Maroteaux-Lamy Syndrome	375,000
5.	Folotyn	T-Cell Lymphoma	360,000
6.	Cinryze	Hereditary Angioedema	350,000
7.	Myozyme	Pompe	300,000
8.	Arcalyst	Cold Auto-Inflammatory Syndrome	250,000
9.	Ceredase / Cerezyme	Gaucher Disease	200,000
10.	Fabrazyme	Fabry Disease	200,000

(Source: Medical Billing & Coding, February 6, 2012)

The good news is protests against such ‘immoral pricing’ have started mounting.

Protests against high drug prices for rare diseases:

Probably due to this reason, drugs used for the treatment of rare diseases are being reported as ‘hot properties for drug manufacturers’, all over the world.

The above report highlighted a changing and evolving scenario in this area.

In 2013, the Dutch Government had cut the prices of new enzyme-replacement therapies, which costs as high as US$ 909,000. Similarly, Ireland has reduced significantly the cost of a cystic fibrosis drug, and the U.K. rejected a recommendation to expand the use of a drug for blood disorders due to high costs.

Soon, the United States is also expected to join the initiative to reduce high prices of orphan drugs as both the government and private insurers increasingly come under the cost containment pressure.

Yet another protest prompted cancer drug price reduction by half:

Another report highlights that last year physicians at the Memorial Sloan-Kettering Cancer Center in New York refused to use a new colon cancer drug ‘as it was twice as expensive as another drug without being better’.

After this protest, in an unusual move, the manufacturer of this colon cancer drug had cut its price by half.

Even developed countries with low out of pocket expenditure can’t sustain such high prices:

With over one million new cancer cases reportedly coming up every year in India, there is an urgent need for the intervention of the Government in this area, especially for poor and the middleclass population of the country.

Further, it is worth noting that in countries like India, where out of pocket expenditure towards healthcare is very high, as public health system is grossly inadequate, such ‘astronomical prices’ will perhaps mentally knock-down many patients directly, well before they actually die.

That said, even in those countries where out-of-pocket expenditure towards healthcare is nil or very low, respective health systems, by and large, be it public or run by other payors, will still require paying for these high cost drugs, making the systems unsustainable.

Moreover, patients on assistance program of the pharmaceutical companies, reportedly also complain that these ‘Patient Access Programs’ are always not quite user friendly.

Protests spreading beyond cancer and rare disease treatment:

The concern for high drug prices is now spreading across many other serious disease areas, much beyond cancer. It has been reported that the issue of drug prices for various other disease areas was discussed in October 2012 at the Cowen Therapeutic Conference in New York. Many doctors in this conference felt that the drugs with no significant benefit over the existing therapy should not be included in the hospital formulary.

Pressure on diabetic and cardiac drug prices:

Various Governments within the European Union (EU) are now reportedly exerting similar pressures to reduce the costs of drugs used for the treatment of diabetes and cardiac disorders. These measures are now reportedly ‘putting the brakes on an US$ 86 billion sector of the pharmaceutical industry that’s been expanding twice as fast as the market as a whole’.

It is worth noting that each nation within EU is responsible for deciding the price of a new drug, though the European Commission approves drugs for all 27 members of the EU.

Flip side of the story – Commendable initiatives of some global companies:

There is another side of the story too. To address such situation some global companies reportedly are increasing drug donations, reinvesting profits in developing countries and adopting to a more flexible approach to intellectual property related issues. However, as per media reports, there does not seem to be any unanimity within the global companies on country-specific new drug pricing issue, at least not just yet.

To encourage pharmaceutical companies to improve access to affordable drugs for a vast majority of population across the world, an independent initiative known as Access to medicine index ranks 20 largest companies of the world. This ranking is based on the efforts of these companies to improve access to medicine in developing countries.

As indicated by the World Health Organization (WHO), this Index covers 20 companies, 103 countries, and a broad range of drugs, including vaccines, diagnostic tests and other health-related technologies required for preventing, diagnosing and treating disease.

The index covers 33 diseases, including maternal conditions and neonatal infections. The top 10 companies in ‘Access to Medicine Index’ ranking for 2012 are as follows:

No.	Company	Index
1.	GlaxoSmithKline plc	3.8
2.	Johnson & Johnson	3.6
3.	Sanofi	3.2
4.	Merck & Co. Inc.	3.1
5.	Gilead Sciences	3.0
6.	Novo Nordisk A/S	3.0
7.	Novartis AG	2.9
8.	Merck KGaA	2.5
9.	Bayer AG	2.4
10.	Roche Holding Ltd.	2.3

Source: http;//www.accesstomedicineindex.org/ranking

How high is really the high R&D cost?

A recent article published this month raises some interesting points on this subject, which I am quoting below:

No direct and transparent details are available from the industry for public scrutiny on the total cost of innovation.
What one does have access to are studies on the issue funded by pharmaceutical MNCs themselves.
For most NCEs, public-funded programs in the U.S largely invest in drug discovery.
In industry sponsored studies there is lack of transparency on the real costs of drug research and development.
Various tax benefits allowed under U.S. law are also ignored by industry studies.
Researching new drugs gives one Tax breaks to the extent of 50 per cent in the U.S. If one researches and markets an orphan drug for rare diseases, again, tax breaks are available to the tune of half the expenditure.

Further, a 2011 study by Donald W. Light and Rebecca Warburton published by the London School of Economics and Political Science indicates, “based on independent sources and reasonable arguments, one can conclude that R&D costs companies a median of US$ 43.4 million per new drug.”

It is interesting to note, the above cost estimate is a fraction of what is available from the industry source (over US$ 1.2 billion).

An interesting pricing model prescribed:

Another article recently published in the Harvard Business Review (HBR) commented, while pharmaceutical companies reportedly spend billions on research, the actual cost of manufacturing a treatment (such as a pill) is minimal. This cost structure enables pricing flexibility.

The author suggests:

Adopt a smarter pricing model, where a company can charge the highest price that each customer is willing to pay.

To implement smarter pricing that saves more lives, and brings in more revenue, the pharmaceutical industry should create a straightforward grid that specifies the annual maximum a patient should pay out of pocket on drug expenses.

Key variables that determine this maximum include income, family size, and their other drug costs. Patients can submit this data to a third party agency to avail discounts based on these criteria.

However, implementability of this model, especially in the Indian scenario, seems to be challenging.

Conclusion:

Despite this gloom and doom, as ‘Access to Medicine Index 2012′ indicates, some pharmaceutical companies do want to become an integral part in finding out a solution to the access problem in general. Though, there are still many more miles to cover, some companies, though small in number, are demonstrably trying to improve access to health care in the developing countries of the world.

Rising prices of new drugs in general and for dreaded disease like cancer and other rare disorders in particular have now started reaching a crescendo, not just India, but in many other countries across the world and in various forms. Probably due to this reason, currently in Europe, regulators tend to be depending more and more in the concept of cost to efficacy ratios for new drugs.

It is interesting to note, the world is witnessing for the first time and that too in the developed world that a large number of specialist doctors are protesting against this trend, unitedly and with strong words.

The anatomy of initial phase of this groundswell, many would tend to believe, signals ushering in a new era of checks and balances to set right ‘astronomical, unsustainable and immoral new drug prices’ in the patients’ fights especially against dreaded diseases, the world over.

By: Tapan J. Ray

PILMAN

A Tapan Ray Website

Tag Archives: America

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Balancing IPR with Public Health Interest: Brickbats, Power Play and Bouquets

It is now a widely accepted dictum that Intellectual Property Rights (IPR), especially pharma patents, help fostering innovation and is critical in meeting unmet needs of the patients.

However, the moot question still remains, what type pharmaceutical invention, should deserve market exclusivity or monopoly with overall freedom in pricing, keeping larger public health interest in mind.

However, pharmaceutical companies do argue that such ‘incremental innovations’ are the bedrock for growth of the pharmaceutical industry and are essential to continue to fund pharmaceutical research and development.

Experts, on the other hand, argue, if patents are granted to such ‘incremental innovations’ at all, their prices need to be determined by quantifying ‘Incremental Value’ that patients will derive out of these inventions as compared to the generic versions of respective original molecules.

“New drug prices are Astronomical, Unsustainable and Immoral” – Anatomy of Unique Protests