On The Flip Side of Pharma Industry: A Saga of Perennial Contradictions

Posted on December 9, 2019 by Tapan Ray

Awesome contribution in the battle against multiple diseases, is obviously the primary facet of the pharma industry. However, on its flip side, one would witness a saga of numerous contradictions. Some of these exist perennially in well-protected opaque cocoons, regardless of what recent research data reveal. The consequences of which leaves a detrimental impact on the patient’s health interests, eventually turning into highly contentious issues, in the socio-political milieu of recent times.

While there are many such contradictions involving the pharma industry, this article will endeavor to understand just one inherent dispute. This is related to the impact of high R&D expenditure on drug prices. It assumes importance, especially at a time, when the world’s most influential pharma trade organization continues arguing in favor of the dictum – high new drug prices are driven by mind-boggling cost of drug innovation, as R&D spending keep shooting north. Incidentally, many others challenge this assertion backed by robust data, claiming it’s not so, actually.

Thus, the question that comes up, if high R&D cost prompts high drug prices, what happens when this major cost of new drug innovation comes down, as is, apparently, happening now. A proper resolution of this contradiction by ushering in transparency in this area, is important to safeguard a critical health interest of many patients. A recent research report, followed by several other important developments in this area, exposes this contradiction, probably more than ever before.

Some recent reports revealing the contradictions:

To drive home the point of contradictions, I shall cite a few references below, from a pool of many others. For example, one such report of September 26, 2019 unfolded: ‘The cost to bring a new drug to market has decreased to under US$ 2Billion’. This was announced by Clarivate Analytics plc while releasing the “2019 Centre for Medicines Research (CMR) International Pharmaceutical R&D Factbook.”

Interestingly, another article had sharply contradicted the above, presenting a different story altogether. Quoting the Tufts University Center for the Study of Drug Development, it highlighted that it costs US$ 2.6 billion growing at 8.5 percent annually. However, adding an estimate of post-approval R&D costs increases, the cost estimate to US$ 2870 million. Many estimated, it would take pharma companies more than 15 years of average sales to reach breakeven.

Curiously, a different research paper, titled ‘Comparison of Sales-Income and Research and Development Costs for FDA-Approved Cancer Drugs Sold by Originator Drug Companies,’ published by the JAMA Network Open on January 04, 2019 concluded quite in line with the ‘2019 CMR International Pharmaceutical R&D Factbook.’ It found, ‘Cancer drugs, through high prices, have generated incomes for the companies far in excess of research and development costs; lowering prices of cancer drugs and facilitating greater competition are essential for improving patient access, health system’s financial sustainability, and future innovation.’

Again, contradicting the above, one more article – ‘The Link Between Drug Prices and Research on the Next Generation of Cures,’ published ITIF (Information Technology & Innovation Foundation) on September 09, 2019, touted to: ‘Put simply, drug companies must make significant profits on their best-selling drugs in one generation in order to reinvest in the next generation.’

The saga of contradiction continues.

A glimpse at the current scenario:

While trying to understand the inherent contradiction in the space of cost of drug innovation by analyzing the available data, let us examine the current scenario, of course with reasons. Going by the oft-repeated justification that high R&D expenses drive the drug prices up, the converse scenario would be – a dip in the R&D expenditure should lead to a reduction in medicine prices, commensurately.

But this is unlikely to happen – drug prices won’t possibly come down due to voluntary measures of the drug manufacturers. As various recent developments indicate, it will be clear in the course of this discussion that the same justification won’t be jettisoned anytime soon.

Pharma CEOs do acknowledge that they have some role to play in helping lower drug prices. However, they continue defending prevailing high new drug prices by highlighting, their multibillion-dollar investments in R&D are responsible for advances in treatments of many serious ailments, such as cancer, hepatitis C, schizophrenia and autoimmune diseases.

This was again contradicted by another BMJ Research Study of October 23, 2019, which concludes: ‘A review of the patents associated with new drugs approved over the past decade indicates that publicly supported research had a major role in the late stage developments of at least one in four new drugs, either through direct funding of late stage research or through spin-off companies created from public sector research institutions. These findings could have implications for policy makers in determining fair prices and revenue flows for these products.’ Nevertheless, in the midst of it, signs of a shift in focus of many pharma companies in this area, is clearly discernible.

Signs of a shift in R&D focus are clearly discernible:

This gets well- reflected in the “2019 Centre for Medicines Research (CMR) International Pharmaceutical R&D Factbook.” As the report unfolds, one of the basic shifts is a change in focus on R&D targets. Until recently, the research focus of most companies was on Noncommunicable Diseases (NCD) such as, Parkinson’s disease, autoimmune diseases, strokes, most heart diseases, most cancers, diabetes, chronic kidney disease, osteoarthritis, osteoporosis, Alzheimer’s disease, and others. Whereas, today there has been an increased focus on rare diseases.

What does it signify?

It obviously signifies, most companies are now trying to launch steeply priced niche products for rare diseases. This includes complex biologic products, gene therapy, personalized medicine and the likes. Which is why, a majority of current new drug approvals, targets smaller patient populations. For example, between 2010 and 2018, the number of addressable patients per drug approval decreased by 15 percent, as the above report revealed.

The bottom-line, therefore, is with the low hanging fruits already been plucked, many pharma players don’t seem to consider targeting innovation of reasonably priced mass market products. It has already happened with antibiotics and would now probably happen with several NCDs.

Two main drivers for this shift:

The two main drivers for this shift, resulting an increase in drug approvals, and significant reduction in cost per new molecular entity (NME), may be summarized as follows:

Increased focus on rare diseases. Of the 57 NMEs launched in 2018, 22 had an orphan drug designation, indicating that they targeted rare disease area.

Increased activity of smaller pharmaceutical companies. In 2018, as high as 74 percent of drug launches were developed by companies with an R&D spend of US$ 700 million to US$2 billion. Major pharma companies (R&D spend of greater than US$2 billion) accounted for just 26 percent of drug launches.

A good news!

The increase in new drug approvals driven by smaller pharma companies is a good news and also encouraging. This suggests, becoming a big company with deep pocket is no longer a prerequisite to bring an innovative drug to the market. On the contrary, making R&D programs more efficient is the name of the game, today.

Changing pharma investment strategies:

As is evident from the CMR International Factbook, drug manufacturers’’ investment strategies are also undergoing a makeover. In the R&D domain, external innovation, in general, is now playing a more critical role. Perhaps, more than ever before. In the first half of 2019 alone, global spend for pharma M&A and licensing activities was, reportedly, around US$140 billion. Interestingly, it outpaced projected 2019 R&D spend by more than 60 percent.

Do high R&D cost impact drug prices and vice versa?

This brings us to the key question: Does the high cost of R&D impact drug prices and vice versa? Or, it is being over-hyped as a tool to justify high drug prices. There are umpteen instances to believe so – for example, the world’s best-selling drug – Humira of AbbVie. According to the Wall Street Journal (WSJ) of September 28, 2017, the initial U.S. patent for Humira expired in December 2016, but the additional patents expire in the 2020s.

Interestingly, according to other reports, AbbVie has collected more than US$115 billion in global Humira sales since 2010. In 2018 alone its sales amounted to US$ 19.9 billion. The report reiterates, ‘AbbVie has made and will continue to make a lot of money from Humira.’ From these facts, one can presume that AbbVie’s R&D expenditure or the product acquisition cost, has long been recovered, but still doesn’t seem to have any significant impact on the drug price.

Pharma CEOs continue to repeat the same argument:

While testifying at a hearing of the Senate Finance Committee, pharma CEOs had to confront with a Senators’ question - “Prescription drugs did not become outrageously expensive by accident, Drug prices are astronomically high because that’s where pharmaceutical companies and their investors want them.” However, acknowledging that their prices are high for many patients for high R&D expenditure, the company chiefs tried to deflect blame onto the insurance industry, government and middlemen known as pharmacy benefit managers.

The CEOs also highlighted the rebates given on list prices to benefit patients. However, the reality is, under the current system, savings from rebates are not consistently passed through to patients in any form. Interestingly, despite such scenario, pharma CEOs don’t want the government negotiating drug prices directly. It’s apparent that none of their reasonings were found to be the genuine reasons for high drug prices, even by the US Senators.

Thus, pharma’s points of justification for high drug prices have not changed, over a long period of time. On the contrary, shifting greater focus on the R&D of rare diseases, where the number of patients is much less, the CEOs seem to be bolstering their same argument on a different ground, despite reducing R&D costs.

Surfaces a glaring contradiction:

Presenting the current situation from the drug industry perspective, the article titled, ‘Drug Prices and Innovation’, published in the Forbes Magazine on June 20, 2019, emphasized on some interesting points.

It said: ‘In 2018 return on investment in drug discovery/development were 1.9 percent, far below the 10.5 percent cost-of-capital - the rate-of-return the industry must provide to compete for capital with similar investments.’ The article also emphasized: ‘Under the current pricing regime, the expected returns from drug discovery do not justify the investment. They have not done so since 2010 and are expected to turn negative by 2020.’ It further added, big pharma, despite one of the highest rates of R&D spending of any industry, chronically fails to fund research sufficient to support adequate growth and returns to the average drug don’t cover the cost of development.

On the other hand, according to a presentation by CVS Health that cited Macrotrends.net as its source,pharmaceutical manufacturers’ profit margins have reportedly exceeded 26 percent for the last three years and 22 percent for the past 10 years.

This brings out again, the glaring contradiction between what is being highlighted and what is actually happening in the pharma business. Lack of transparency in this area of the drug industry, is believed to be the root cause of this confusion among many.

Conclusion:

As it has been recognized the world over, the high new drugs prices are an issue over the contentious argument of ‘high R&D expenditure’ being the ‘root cause’. It is, therefore, imperative for the stakeholders to demand transparency in this area. If finding a solution to this health-related issue is considered critical, without further delay, this needs to be expeditiously addressed.

As the saying goes, once the disease is diagnosed accurately, zeroing in on an effective treatment becomes easier. Let me hasten to add, for new, innovative and patented drugs, the situation in India is generally no different. Thus, there is no scope for any contradiction in this area, whatsoever. As the saying goes, once the disease is diagnosed accurately, zeroing in on an effective treatment becomes easier.

Voluntary implementation of ‘responsible’ drug pricing policies, by pharma manufacturers themselves, has been given a long rope. Time is running out now. If this does not happen soon, government control of drug prices will be essential, just as is being contemplated in the United States – the ‘capital’ of the free-pricing world. Moreover, it has been well documented in several studies that price control won’t jeopardize drug innovation, as pharma manufacturers will have to come out with innovative new products and treatments – event for survival of the business.

Saving lives – more lives, alongside making reasonable profits in the business, remain the primary facet of the pharma industry. However, the flip side of it, revealing a perennial saga of contradictions, such as one we discussed above, raises concerns of their being perceived as profiteering with drug prices, by many. Such practices go not only against patients’ health interest, but also negates the core purpose of existence of the industry – surely, endangering long term survival of this business model – as the modern technology unleashes its mesmerizing power for all.

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.

Are Pharma Business Ethics And Performance Interlinked?

Posted on November 11, 2019 by Tapan Ray

Way back in the 1960s, many could realize that of upcoming consumer-focused business environment will bring business practices under intense stakeholder scrutiny. This prompted both the business schools, as well as the commercial organizations to bring the concept of ‘business ethics’ under focus.

However, a boom in the ‘Business Ethics’ curriculum, virtually in every business school, globally, alongside numerous training programs, was palpable around the 90’s. This trend continues even today with as much gusto, but with increasing participation of various companies, primarily to showcase their commitment to ethical standards and values as fundamental business requirements.

Like many other industries, the same is visible in the pharma business, as well. Which is why, many pharma CEO’s, such as of Novartis, emphasized even in its 2018 CEO’s letter to the company shareholders that: ‘We have made clear to everyone at Novartis that we must never compromise our ethical standards to meet business objectives.’ The previous CEO of the same company also used similar words. Moreover, one can find a similar commitment to business ethics being displayed in the respective websites of many other drug companies.

I have discussed various different aspects on this subject since 2011. One such article is titled, ‘Business Ethics, Values and Compliance: Walking the Talk,’ published in this blog on December 26, 2011. However, in this article, after a broad outline, I shall endeavor to explore whether or not compliance with pharma business ethics is intimately related to the company’s performance, especially in the medium to longer term. While doing so, let me help recapitulate what exactly does ‘business ethics’ mean to all?

‘Business Ethics’:

As many would know, the ‘business ethics’ or ‘ethical business behavior’, is defined as ‘acting in ways consistent with what society and individuals typically think are good values. Ethical behavior tends to be good for business and involves demonstrating respect for key moral principles that include honesty, fairness, equality, dignity, diversity and individual rights.’

When this definition is applied to the pharma industry, in general, one finds, despite bringing to market top innovative drugs, a pharma player with dubious ethical behavior, may face a great risk of losing its reputation – a key element for business success, if not survival.

What is happening today in this area?

As, stated above, from various statements of pharma head honchos and also as displayed in their respective websites, it seems to be a serious area for them. Intriguingly, despite such laudable intent, the situation on the ground for many of these companies are quite different. According to reports, even in the Indian Pharma Industry, blatant disregard for maintaining basic ethical standards is, reportedly, not uncommon, either. Interestingly, no less than the Prime Minister of India is, apparently, aware of some of these issues in the pharma industry.

Ultimate ethical goals and consumer perceptions of ethical behavior:

Many research papers have been discussing this point, since long. They also flagged some critical areas, across pharma business domains, for corrective action. One such paper is titled, ‘Ethical challenges in the pharmaceutical industry,’ published in the April 2012 issue of Pharmaceuticals Policy and Law.

It clearly articulated, the ultimate ethical goal in the pharmaceutical industry is to discover and develop safe, efficacious and high-quality drugs that allow patients to live longer, healthier and more productive lives, while making a profit to reward shareholders and to invest in research for the next generation of medicines. The essence of it holds good also for generic drugs, too.

While this may be mostly happening, as the article noted, overall consumer perception of pharma business ethics is largely negative. This avoidable stakeholder perception is primarily triggered by, among others, pricing, data disclosure, clinical study design, marketing practices, cost effectiveness of treatments, and often reported ‘pharmaceutical frauds’, as quoted earlier.

Regardless of drug industry claim, consumers generally perceive new drug discovery as a fundamental business necessity for the industry. Whereas, they are more interested in access and affordability to these drugs, besides other related business practices. This brings us to the question – Are alleged breach of ‘business ethics’ systemic in nature for pharma?

Are ‘business ethics’ related issues, systemic in nature?

While many pharma CEOs keep highlighting, how ethical their operating standards and corporate values are, reports keep coming that these issues are not superficial but systemic in nature. One such report was published in Fierce Pharma on October 14, 2019 carrying a headline – “Novartis appears to have a systemic ethics problem. What can it do make amends?” Justifying this caption, the news article elaborated:

‘When a company is repeatedly embroiled in scandals or compliance breaches—from on-the-ground sales activities to decisions made at the very top—an isolated infection isn’t to blame. It’s a systemic illness. And judging by the long list of allegations and infractions at Novartis, that’s what the Swiss drug maker is facing. But is there a cure? Some soul-searching and a closer look at the company’s culture could help.’

Quoting a corporate ethics and compliance expert Hui Chen, the article underscored, for such malpractices ‘don’t just blame everything on a few rogue employees.’ Pharma leadership may wish to accept this reality and make amends wherever necessary, soon. With the above perspective, it will also be worth looking at, how is this toxin invading a corporate system, jeopardizing its business performance, and why?

Even patients expect pharma to demonstrate ethical business practices:

Generating new and more prescriptions for patients’ treatment being the lifeblood of any pharma business, the core strategic focus of the business should naturally be on patients, and the society they belong to. This is a fundamental requirement, not just for making profit in business, but for its survival, too. It is now clear that even patients are becoming increasingly aware of this fact.

Consequently, they expect the pharma players to demonstrate ethical behavior and follow ethical business practices, instead of being on a self-serving mode. Scores of instances, across the globe, suggest that many pharma players are failing again, again and again in this critical area of business. One may say that commercial interests overshadowing consumers’ interests, is not uncommon in business. But wait a minute, we are talking here about an industry that patients look up to, while fighting dreaded diseases to save lives. Thus, the question that follows – why is this virus of non-compliance to business ethics invading a corporate system?

How is this virus invading a corporate system?

Search for an answer to this question isn’t new. It was discussed in the Harvard Business Review - more than 25 years ago, in its May-June 1993 article – ‘What’s the Matter with Business Ethics?’ Even at that time, the author noted: The more entrenched the discipline of business ethics becomes in business schools, the more bewildering it appears to managers. This discussion brought to the fore many interesting points. One such was, the field of business ethics is largely irrelevant for most managers. It’s not because that they are hostile to the idea of business ethics, but ‘real-world competitive and institutional pressures lead even well-intentioned managers astray.’

Presumably, because of this reason, as the Author acknowledged, all managers face “hard issues whose solutions are not obvious,” where the “reconciliation of profit motives and ethical imperatives is an uncertain and highly tricky matter.”

Thus, I reckon, many organizations find achieving organizational expectations, especially for demanding short-term financial goals, while maintaining business ethics, is becoming a real challenge. Similar sense would obviously influence many practicing managers, too. Now, the question that comes is, what happens to the organization, if its managers keep doing so to achieve the set financial objectives of the company?

When achieving end-goals by following business ethics is considered impractical:

If the business strategy is increasing brand prescription generation by any possible manner to outperform competition, the means adopted to meet the goals may find easy acceptance by many in the company. In the pharma industry, such situation may arise while chasing annual and monthly targets or at times closing the month-end sales deficits, too. Such acts may help achieve short-term goals with flying colors, regardless of blatant violation of business ethics or breaking legal norms, such as, bribing prescribers for writing prescriptions.

When remains undetected, such practices continue. But, when repeated compromises on the ethical practices of a company at the cost of patients’ interest, surface and reported by the media, one precious asset of the organization gets seriously damaged – its reputation. Again, one may ask, will it have any impact on the company’s medium to long term financial performance?

How are ethical ‘business practices’ and the company’s performance interlinked?

The fine thread that links these two, is the corporate reputation – an invaluable asset of the organization, having a strong connect with stakeholders, including patients – for a sustainable business growth. The broader aspects of its consumer-connection have been discussed by both academia and individual experts. One such illustration may be drawn from the Charter College of the United States.

It underscores: ‘Not only does it feel good to be part of a company with a great reputation, but it’s great for business. When you have a reputation for consistently being ethical in how you source and build products, and treat employees, customers and the community, more people will want to do business with you. This means you’ll appeal to a variety of people and organizations that will be great for boosting your business…’

This means, compromising with ethical business practices to achieve short-term goals comes at a great risk of jeopardizing the medium and long-term success and sustainability of the organization. This is not a mere theoretical possibility. Research studies also vindicate that ‘reputation is an economic multiplier.’

Reputation is an economic multiplier:

Some may conclude, ethical business practices may help enhance company’s reputation, but don’t create any significant impact on business performance. This point has been well deliberated by the Reputation Institute (RI) in its analysis, titled - ‘The Business Case for Reputation.’

The analysis established ‘a strong reputation yields 2.5 times better stock performance when compared to the overall market.’ This vindicates the point that reputation indeed enhances corporate performance for its stakeholders and is an economic multiplier. Understandably, the paper reiterated: ‘This is not a bold claim — it’s a fact.’

Conclusion:

The drug industry, in general, and research-based pharma players in particular, seem to feel that propagating its focus and efforts on bringing innovative drugs to the market, would help build a good reputation. But it doesn’t really happen that way. Instead, public perception that helps create corporate reputation, is often driven mainly by issues such as drug pricing – access and affordability, besides various widely reported alleged unethical business practices of drug companies.

Many such purported breaches in ethical behavior of a company are recurrent, such as one that was reported on October 22, 2019. It said, Novartis’ Zolgensma launch has been anything but boring: First a record-setting price tag, then a data-manipulation scandal and now the company is facing “manufacturing questions” that will delay Zolgensma’s approval in the EU and Japan.

The impact of these alleged unethical business practices of drug companies also got reflected in the 2018 2018 Gallup Poll where the pharma industry came out as the most poorly regarded industry, ranking last on a list of 25 industries that Gallup tests annually. Interestingly, the Reputation Institute (RI) also reported a 3.7 percent decline in pharma reputation between 2017 and 2018.

Thus, the core point that stands out is, ethical business practices and company performance are interlinked. Ethical business behavior plays a key role to enhance a company’s reputation, which in turn add value to the long-term financial performance of the company and vice-versa.

By: Tapan J. Ray

A Link To Ponder: Pharma Digitalization – Cyber Threats – Cyber Immunity

Posted on November 4, 2019 by Tapan Ray

Digitalization in the pharmaceutical industry – slowly but steadily, across its various domains, from drug discovery, clinical development, supply chain, sales and marketing to engage with various stakeholders, is a reality today. Consequently, the concept of data as a business asset, is fast taking the center stage, being the nerve center of the business. It encompasses, conceiving data requirement, generation of a massive pool of credible data accordingly, their analysis and finally – putting a robust data security system in place, against any kind of theft or misuse.

While digitalization of pharma business, helps transform the company to an all-time ready and an agile customer-centric business entity, with one ear always listening to customers to delight them with its deliverables. Conversely, the other ear is on its employees with a similar objective. This is a difficult task and mostly involves disruption of status-quo within the organization, but often produces game changing outcomes for the business, as is known to many.

Which is why, one sees a good number of people around, offering expert digital services for the pharma industry – along with a hope of a never before improvement in the future organizational performance. So far so good, but this transformation process also invites a huge technology-related threat to business – ‘Cyberthreat.’ In this article, I shall focus on the critical need of taking guard against this threat, as is often advised by all well-qualified domain experts. This risk is expected to increase further, as the technology keeps advancing.

Although, I had deliberated on Cybersecurity in my article, ‘Exigency of Cybersecurity in Digitalized Pharma,’ in a different context, before delving into the core point of today’s discussion, let us together try to recapitulate what does ‘Cyberthreat’ mean to us, in the real world.

Cyber-threat in the digitalized business:

Let me paraphrase, especially in context of the pharma industry, what the Cybersecurity and Infrastructure Security Agency (CISA) of the Government of the United States, has stated. It articulates, ‘Cybersecurity’ or ‘Cyber threats’ to a control system, refer to the attempts of unauthorized access to a control system device and/or network using a data communications pathway.

This access can be directed from within an organization by trusted users or from remote locations by unknown persons using the Internet. Threats to control systems can come from numerous sources, including disgruntled employees, and malicious intruders. To protect against these threats, it is necessary to create a secure cyber-barrier around the Industrial Control System (ICS).

Many sources indicate that the threat to cyber security in business, is often triggered to gain access to a company’s digital system to damage or steal data, or even to rattle its digital infrastructure for accomplishing a specific purpose.

Rapid digitalization in pharma may attract more cyber criminals:

According to a senior official of Kaspersky - a global cyber security company: “As rapid digitalization penetrates the healthcare sector, cyber criminals are seeing more opportunities to attack this lucrative and critical industry, which is honestly not equipped enough to face this virtual danger.”

The company further emphasized, with systems are now interconnected and mobile devices extensively used, both for remote access and for data sharing, digitalization in pharma increasingly exposes the organizations to both generic and targeted attacks. Thus, ‘creating Cyber immunity’ to ensure a powerful safeguard against such threats, becomes a top priority area in the digital transformation process of the drug industry.

Interestingly, way back in 2012, another report had also cautioned: ‘Cybercrime costs economy billions annually, with pharmaceutical and biotech companies among the hardest hit.’

Evidences of Cyber-attacks on pharma across the world:

There are numerous evidences of Cyber-attacks on the pharma players, globally. Such as, in June 2017, The Washington Post reported, US-based global pharma major, was among dozens of businesses affected by a sprawling cyberattack, with victims across the globe facing demands to hand over a ransom or have their computer networks remain locked and inaccessible.

Another report of December 13, 2017 wrote, by the third quarter of the year, ‘Merck had a better idea of the financial tab from the attack. While it generally had a very solid quarter, the results were dampened by the impact of the attack. There were $300 million in lost sales and costs.’

The Deloitte paper, titled ‘Cyber & Insider Risk at a Glance: The Pharmaceutical Industry’, also reiterated, the evidence abounds that pharmaceutical companies are the target of sophisticated Internet criminals. Serious cyberattacks are taking place even in the most advanced countries, including the US, Europe and Japan.

In the US, besides Merck, hacking has taken place against other major pharma and medical device makers, such as, ‘Boston Scientific, Abbott Laboratories, and Wyeth, the drug maker acquired by Pfizer Inc. The same group successfully hacked the Food & Drug Administration’s computer center in Maryland, exposing sensitive data (including formulas and trial data) for virtually all drugs sold in the US,’ the paper revealed.

The real impact of the attack often doesn’t come out:

Outside world often doesn’t get to know about the comprehensive impact of numerous cyber-attacks for various reasons. Some of which may include, it’s possible aftermath on both the corporate image and also the brands, besides share prices. At the same time, the situation may prompt many to question the company’s capability to protect its business in the digitalized world.

The key reasons:

As the 2018 Data Security Incidence Report highlights, healthcare-led all industries accounted for around about 25 percent of more than 750 reported incidents, in volume. As identified by Kaspersky from various cyber-attack techniques and behavior of cyber-criminals, on the digital infrastructure of pharma players, let me paraphrase below the three key motivators, besides a few others:

Getting Intellectual Property (IP) related strategic details, including R&D, unpublished clinical trial results and formulation development processes.
Detailed business plans for pre-identified products.
Or, may even be for ransom.

Where does India stand?

According to reports, India ranks 6th for highest cyber-attacks on pharmaceutical companies. Nearly 45 per cent machines in the Indian pharmaceutical organizations more than four in 10 devices were detected with malicious attempts. Ahead of India features - Pakistan (54 per cent), Egypt (53 per cent), Mexico (47 per cent), Indonesia (46 per cent) and Spain (45 per cent).

Such attacks are taking place even in India, as cyber-criminals “are slowly realizing that pharmaceutical companies house a treasure trove of highly valuable data such as the latest drugs and vaccines, the newest researches, as well as medical secrets,” the report says.

Likewise, another article, published in Health Issues India, on September 17, 2019, made some interesting points. The article is titled, ‘Cyberattacks: A crisis in Indian pharma?’ It flagged in the following three areas, in this regard:

Numerous cracks exist in the cyber-security armor of Indian pharmaceutical companies.
Just five to ten percent possess security systems strong enough to protect information from hackers.
And many do learn about a breach for several months.

Quoting a top expert, the paper reemphasized that generally in the Indian pharma companies “current systems don’t have security control and visibility in place to immediately detect the attack and respond on a real-time basis.” Thus, ‘it is unsurprising that Indian pharma has been so hard hit by cybercrime,’ the article further commented.

Conclusion:

Echoing many others, Booz Allen also advised in its article – ‘Understand the risks, and stay ahead of the game.’ This is a critical requirement in the digital age. Although, most pharma companies agree on the possibility of huge business losses from a cyber-attack, the industry continues to lag behind other industries when it comes to cyber-security implementation, the paper reiterated.

On the other hand, just strengthening a company’s IT systems, alongside an installation of powerful anti-virus software may still not be enough. Nor will it be adequate to working closely with the vendors who help protect cyber-security of the digital infrastructure of various companies. Even a robust system of forensic audit and analysis and reevaluating cyber-security protocols on an ongoing basis, may not be able to prevent cyber-attacks.

This is primarily because, a company is run, managed, looked after and cared by its employees. Although, it always remains the endeavor of any company to hire good, trustworthy and high performing employees, it does not always happen that way. It is also equally possible that some of them, at some time, for some reasons, may misuse the digital network for others or personal gain.

Thus, besides putting in place all other safeguards, as stated above, to attain desirable ‘Cyber-Immunity’, it is crucial for the organization to ensure buy-in of each employees a vital concept. This is – protecting cyber-security is everybody’s responsibility in a digital business framework, both individually and collectively. The process should start from the CEO and percolate down to the lowest rung in the ladder of hierarchy.

Hence, the reality is – ongoing digital transformation process of the pharma business would open the door of cyber-threats – often leading to crippling cyber-attacks. Thus, developing a comprehensive and strong cyber-immunity framework becomes essential for the organization. From this perspective, right from the start of this process – and not later on, drug companies need to ponder over the critical link between digitalization and cyber threats to provide adequate cyber immunity to its digital systems, for game changing outcomes.

By: Tapan J. Ray

Dynamics of Cancer Therapy Segment Remain Enigmatic

Posted on October 14, 2019 by Tapan Ray

Currently, cancer is likely to occupy the center stage on any discussion related to the fastest growing therapy segments in the pharma or biotech industries. There are several reasons behind such probability, some of which include:

Cancer is not only the second leading cause of death globally, but also offer outstanding new drug treatment options, though, mostly to those who can afford.

Consequently, these drugs are in high demand for saving lives, but not accessible to a vast majority of those who need them the most.

Alongside, oncology is one of the fastest growing therapy segments in sales in many countries, including the largest and most attractive global pharma market - the United States.

New cancer drugs being complex, involves highly sophisticated cutting-edge technology – creating an entry barrier for many, and are generally high priced, fetching a lucrative profit margin.

These are only a few basic dynamics of the segment. Nevertheless, understanding these dynamics, in a holistic way, is indeed an enigma – caused mostly by directly conflicting arguments on many related issues, within the key stakeholders. Thus, I reckon, this issue will be an interesting area to explore in this article. Later in this discussion, I shall try to substantiate all the points raised, backed by credible data. Let me start with some causative factors, that may make comprehensive understanding of the dynamics of this segment enigmatic.

Some causative factors for triggering the enigma:

Close overlap of several contentious factors is associated with this head-scratcher. These come in a package of reasoning and counter reasoning, a few examples of which may be seen below:

When increasing incidence of cancer related deaths are a global problem, fast growing oncology segment, regularly adding novel drugs in its portfolio, ideally should be a signal for containing this problem. Whereas, the World Health Organization (W.H.O) reports, cancer drugs are beyond reach to millions, for high cost. Nonetheless, the cancer drug sales keep shooting north.

Nearer home, while Indian anti-cancer drug market growth has, reportedly, ‘outstripped that of all other leading countries in recent years and is set to go on doing so,’ another study report underscores, ‘Indians have poor access to essential anti-cancer drugs.’

Although, a 2019 report of W.H.O highlights: Expensive cancer drugs ‘impairing’ access to cure, innovator companies also have their counter argument ready. They claim, higher prices ‘are necessary to fund expensive research projects to generate new drugs.’

When innovator companies keep touting that many new therapies are path-breaking concepts, researchers don’t find these drugs much superior to the existing ones in outcomes, except jaw-dropping prices.

Despite the above argument of research-based drug players to justify unreasonable pricing, several studies have established that the development cost of new cancer drugs is more than recouped in a short period, and some companies are making even more than a 10-fold higher revenue than R&D spending.

While several pharma companies claim that they are providing patients with access to a wide variety of cancer medication through Patient Assistance Programs (PAPs), the findings of several published research on the same concluded, ‘the extent to which these programs provide a safety net to patients is poorly understood.’

Let me now briefly substantiate each of the above points raised in this article.

Incidence of cancer and the oncology market:

Now, while substantiating the above points, let me go back to where I started from. According to the W.H.O fact sheet of September 12, 2018, cancer is the second leading cause of death globally and is responsible for an estimated 9.6 million deaths in 2018 – about 1 in 6 deaths was due to cancer. Approximately 70 percent of deaths from cancer occur in low- and middle-income countries. The Indian Council for Medical Research (ICMR) estimated around 1.4 million new cancer cases in 2016, which is expected to rise to 1.7 million cases by 2020.

According to ‘World Preview 2019, Outlook to 2024’ of Evaluate Pharma, ‘Oncology prevails as the leading therapy segment in 2024, with a 19.4 percent market share and sales reaching USD 237bn.’ The report also highlights: ‘Oncology is the area with the largest proportion of clinical development spending with 40 percent of total pipeline expenditure.’

Similarly, the Indian Oncology market is found to be growing at 20 percent every year and is likely to remain so for the coming 3-5years. In 2012 the cancer market was valued at USD 172m (quoted from Frost & Sullivan). Another report also reiterates, the oncology market in India has outstripped that of all other leading countries in recent years and is set to go on doing so.

Poor access to cancer drugs:

Despite the impressive growth of oncology segment, ‘high prices for cancer medicines are “impairing the capacity of health care systems to provide affordable, population wide access,” emphasizes a recent ‘Technical Report’ of W.H.O. I shall further elaborate on this report in just a bit. However, before that, let me cite an India specific example of the same. The March 2019 study, published in the BMJ Global Health, also highlighted, the mean availability of essential anti-cancer medicines across all hospitals and pharmacies surveyed in India was less than the WHO’s target of 80 percent.

Cancer drug pricing conundrum:

The recent ‘Technical Report of W.H.O – ‘Pricing of cancer medicines and its impacts’ confronts this issue head on. It clearly articulates, the enduring debates on the unaffordability of cancer medicines and the ever-growing list of medicines and combination therapies with annual costs in the hundreds of thousands, suggests that the status quo is not acceptable. The global community must find a way to correct the irrational behaviors that have led to unsustainable prices of cancer medicines. Thus, correction of unaffordable prices is fundamental to the sustainability of access to cancer medicines. Further inertia on this issue and half-hearted commitments from all stakeholders, including governments and the pharmaceutical industry, will only invite distrust and disengagement from the public, the report emphasized.

Another 2019 WHO report says expensive cancer drugs ‘impairing’ access to cure. It pinpointed: “Pharmaceutical companies set prices according to their commercial goals, with a focus on extracting the maximum amount that a buyer is willing to pay for a medicine.” It also reiterated that the standard treatment for breast cancer can drain 10 years of average annual income in India. Unaffordable pricing of cancer medicines set by such intent often prevents their full benefits being realized by scores of cancer patients, the report adds. Yet another paper expressed similar concern about ‘the unsustainability of the high costs of cancer care, and how that affects not only individual patients, but also society at large.

What does the industry say?

The industry holds a different view altogether. According to another recent news, one such company quoted their 2017 Janssen U.S. Transparency Report,” which states: “We have an obligation to ensure that the sale of our medicines provides us with the resources necessary to invest in future research and development.” This is interesting, as it means that even higher pricing may be necessary to fund expensive research projects to generate new drugs for life threatening ailments, such as cancer.

What do research studies reveal?

There are several research studies often disputing the industry quoted claim of R&D spend of over a couple of billion dollar to bring a new molecule to the market. They also keep repeating, this is an arduous and time-intensive process, involving humongous financial risk of failure. One such ‘Original investigation’ titled, ‘Research and Development Spending to Bring a Single Cancer Drug to Market and Revenues After Approval,’ published by JAMA Internal Medicine in its November 2017 issue, presents some interesting facts.

The study brings to the fore: ‘The cost to develop a cancer drug is USD 648.0 million, a figure significantly lower than prior estimates. The revenue since approval is substantial (median, USD 1658.4 million; range, USD 204.1 million to USD 22 275.0 million). This analysis provides a transparent estimate of R&D spending on cancer drugs and has implications for the current debate on drug pricing.’ Thus, the cost of new cancer drug development is more than recovered in a short period, with as much as over 10-fold higher revenue than R&D spending, in many cases, as the analysis concluded.

Even top oncologists, such as Dr. Peter Bach, the Director of Memorial Sloan Kettering’s (MSK)Center for Health Policy and Outcomes, along with other physicians at MSK drew attention to the high price of a newly approved cancer drug. According to available reports, ‘two recently approved CAR-T cell drugs – one is USD 373,000 for a single dose, the other USD 475,000 - are benchmarks on the road to ever-higher cancer drug price tags.’

It happens in India too:

Although, on May 19, 2019, NPPA announced almost 90 percent price reduction of nine anti-cancer drugs, curiously even those cancer drugs, which are not patent protected, continued to be sold at a high price. For example, according to the September 2018 Working Paper Series, of the Indian Institute of management Calcutta (IIM C), the maximum price for Pemetrexed, a ‘not patented’ cancer product was Rs 73,660, though, it is also available at Rs 4,500. Similarly, the price of Bortezomib was between Rs 60,360 and Rs 12,500 and Paclitaxel between Rs 19, 825.57 and Rs 7,380.95. It is intriguing to note that no pricing policy for patented drugs, as promised in the current Drug Policy document, hasn’t been implemented, as yet.

Does Pharma’s ‘Patient Assistance Programs (PAPs) work?

Different pharma companies claim their addressing access to cancer care in developing countries. A report also mentions: ‘16 of the world’s largest pharmaceutical companies are engaged in 129 diverse access initiatives in low- and middle-income countries.’ Whereas, a research study, questioning the transparency of these initiatives, concluded, ‘our results suggest that numerous drug company sponsored PAPs exist to provide patients with access to a wide variety of medications but that many details about these programs remain unclear. As a result, the extent to which these programs provide a safety net to patients is poorly understood.’

During the famous Glivec patent case, which went against Novartis at the Supreme Court of India, the company’s PAP for Glivec in the country, also came under focus. Many articles, with mutually conflicting views of the company and independent experts were published regarding this program. One such write-up emphasized with eulogy, “Novartis provides Glivec free of charge to 16,000 patients in India, roughly 95 percent of those who need it via the Novartis – Glivec International Patient Assistance Program. The remaining 5 percent is either reimbursed, insured, or participate in a very generous co-payment program. Thus, not granting a patent for Glivec really hasn’t prevented patients from getting this life-saving medication.”

However, many were, reportedly, not convinced by Novartis’ claims and counter-argued: “Our calculation says there are estimated 20,000 new patients every year suffering from cancer, this means after ten years there will be two lakh (200,000) patients, hence the program is not enough.” The views of many independent global experts on the same are not very different. For example, even Professor Carlos M. Correa had articulated: “The reported donation of Glivec by Novartis to ‘eligible patients’ under the ‘Glivec International Patient Assistance Program’ (GIPAP) may be a palliative but does not ensure a sustainable supply of the product to those in need.” Be that as it may, new studies now question whether novel anti-cancer drugs are worth their extra cost.

Are novel cancer drugs worth the extra cost?

According to a September 26, 2019 report, the results of two studies investigating the links between clinical benefit and pricing in Europe and the USA, reported at the European Society for Medical Oncology (ESMO) Congress, September 2019, reveal an interesting finding. It found, many new anti-cancer medicines add little value for patients compared to standard treatment and are rarely worth the extra cost. Interestingly, in the midst of this imbroglio, the world continues taking a vow globally to mitigate the cancer patient related issues on February the fourth, every year.

A vow is taken globally on every 4^th February, but…:

On every February 04 – The World Cancer Day - an initiative of the Union for International Cancer Control (UICC), the world takes a noble vow. Everybody agrees on its broad goal that: ‘Life-saving cancer diagnosis and treatment should be equal for all – no matter who you are, your level of education, level of income or where you live in the world. By closing the equity gap, we can save millions of lives.’

UICC also noted, as many cancers are now preventable or can be cured, more and more people are surviving the disease. However, for the vast majority people, the chances of surviving cancer are not getting better. Socioeconomic status of individuals leaves a significant impact on whether one’s cancer is diagnosed, treated and cared for, in an appropriate and cost-effective manner. A customer-focused understanding of the dynamics of the cancer therapy segment, although may help effective ground action, but the status quo continues for various critical reasons. Even on the World Cancer Day 2019, the oncology pricing debate continued.

Conclusion:

The business dynamics for the cancer therapy segment, continues to remain enigmatic regardless of public emotion and sentiments attached to these drugs. Patients access and affordability to the most effective drug at the right time can save or take lives. Surprisingly, despite healthy growth of anti-cancer drugs, especially the newer and pricey ones, the number of deaths due to cancer is also fast increasing, and is the second largest cause of death today.

The pricing conundrum of cancer drugs remains the subject of a raging debate, globally. Nevertheless, the drug industry keeps justifying the mind-boggling prices, with the same sets of contentious reasons, even when various investigative research studies negate those claims. Moreover, when general public expects the drug industry to innovate both in the new drug discovery and also on making the drug prices affordable to a large section of the population, the industry doesn’t exhibit any interest to talk about the latter. Instead, they talk about PAP initiatives for improving access to such drugs. Notwithstanding independent research studies concluding that PAPs lack transparency, and is not an alternative for all those who want to fight the disease, in the most effective way.

The arguments and counterarguments continue. More effective cancer drugs keep coming with lesser number of cancer patients having access to those medicines, as patents prevail over the patients. The reverberation of the power of Big Pharma to stay in the chosen course – come what may, can also be felt from the reported statement of politically the most powerful person in the world – the President of the United States. In view of this, both the business and market dynamics of the cancer therapy segment is likely to remain enigmatic – at least, in the foreseeable future?

By: Tapan J. Ray

Pharma: ‘Digitalization’ Not A Panacea – A Basic Step For Giant Leaps

Posted on October 7, 2019 by Tapan Ray

The hype of ‘Digitalization’ in the pharma industry, virtually as a panacea, is palpable all around. It gives many a feel, directly or indirectly, that this one-time, resource-intensive, disruptive transformation would reap a rich harvest for a long time. In some way, good or bad, the sense of urgency underlying the hype, could possibly be akin to Y2K, that one witnessed before the turn of the new millennium.

Notwithstanding the current ballyhoo, the process of digitization in several Indian pharma companies began since quite some time and is now gathering wind in its wings. Several studies vindicating this point, were reported by the Indian media, as well. One such report of October 31, 2016 highlighted – even around 2013, a number of Indian drug players commenced adopting digitization. They mostly began with the use of modern technology for scientific detailing to doctors, often using algorithms for better insights into issues, like patient compliance. A similar trend was seen also in China, the report added.

Be that as it may, this article will explore whether or not ‘Digitalization’ is a panacea for all pharma business hurdles. Or, it is the backbone to build and maintain a patient-centric organization, with need-based subsequent giant technological leaps, for game changing sustainable outcomes. For better clarity of all, I shall dwell on this concept with AI as the next disruptive step, as it would play an increasingly critical role to be in sync with the customers of the fast-growing digital world.

Digitization is the bedrock to move forward with newer technologies:

That digitization is the backbone of AI adoption was brought out in the May 2019 paper by McKinsey Global Institute - titled, ‘Twenty-five years of digitization: Ten insights into how to play it right.’ It articulated, leveraging, and transitioning from, digital to new frontier technologies is an imperative, as several new frontier technologies are opening up, such as AI. It also spotlighted that early digitization is the foundation of AI deployment.

Elaborating the point further, the article wrote: ‘70 percent of companies that generate 50 percent of their sales through digitization are already investing in one AI domain. The evidence suggests that incumbents that have adopted AI early and are savvy about deploying these technologies have experienced strong profit growth. In effect AI is a new, higher- performance type of digital technology that may boost the ability of firms to accelerate their digital performance.’

No doubt, several hundred AI use cases would provide evidence of widespread benefits to operations and profitability for AI adoption. However, from the drug industry perspective, the possible dilemmas that will be important to understand, what factors are prompting faster adoption of AI in pharma. Besides, how to make out – what type of use of AI is likely to be most effective for an organization.

Regardless of the dilemma, the AI buzz is gaining momentum:

The fervor around AI is now peaking up, more than ever before. Regardless of the general dilemma – ‘what type of use of AI is likely to be most effective for an organization.,’ several companies are working on AI application in various areas. In sales and marketing domain, these include, improving customer interactions, maximizing product launches, understanding patient insights. This was also corroborated in an article, published by ZS on July 24, 2019.

Why is the AI buzz increasing in pharma?

The above paper identifies 3 broad elements for rapid increase of AI buzz in the pharma industry, which I am paraphrasing as follows:

Data requirement for any meaningful business decision-making process has exploded, facilitated by increasing use of internet- based digital platforms.
With the increasing digitization of virtually anything in everyday life, paper-based processes are fast disappearing.
Realization of game changing impact of new AI algorithms with high degree of precision, on business.

As AI-based interventions are making a radical impact on everyday life, most pharma and biotech players are progressively getting convinced that it will eventually transform many critical areas of the business, despite a slow start.

AI can deliver much more than ever before, across pharma domains:

AI has a great potential to meet critical requirements of almost all domains of the drug industry. For example: AI may be used to help a medical representative get top insights for his particular day’s or a week’s or a month’s call with doctors by sifting through all his daily reports for that period. Some companies are already moving into this direction. For example, Novartis, reportedly, has equipped sales representatives ‘with an AI service that suggests doctors to visit and subjects to talk up during their meetings.’

Similar AI-based cognitive insights may be obtained from the patient-collected data in the apps or other digital tools. Deep understanding of the process of thinking of important doctors and patients, would facilitate developing customized content for engagement with them, and thereby help achieve well-defined goals with precision.

There are instances of significant success with the use of AI in R&D, clinical trials, many areas of sales and marketing, including supply chains. Nevertheless, the general concern of sharing confidential patient information, often limits access to requisite data for use in AI solutions. Appropriate regulations are expected to address this apprehension, soon.

Big Pharma players are already in it:

The paper – ‘Artificial Intelligence in Life Sciences: The Formula for Pharma Success Across the Drug Lifecycle,’ published on December 05, 2018 by L.E.K Consulting, discussed this point in detail. It says, ‘each of the major pharma players is investing in the technology at some level.’

For example, pharma and biotech majors, such as Novartis, Roche, Pfizer, Merck, AstraZeneca, GlaxoSmithKline, Sanofi, AbbVie, Bristol-Myers Squibb and Johnson & Johnson, are either collaborating or acquired AI technologies to acquire a cutting-edge in business.

The paper also reiterates, developments in AI applications are occurring across the spectrum of pharma business, from target discovery to post-approval activities to automate processes, generate insights from large-scale data and support stakeholder engagement. Let me illustrate this point with an example below.

Example of use of AI for better patient compliance, improving sales and profit:

As highlighted in my article, published in this blog on May 20, 2019, effective use of AI for better patient compliance, can help improve concerned company’s both top and bottom lines. I mentioned there: ‘According to November 16, 2016 report, published by Capgemini and HealthPrize Technologies, globally, annual pharmaceutical revenue losses had increased from USD 564 billion in 2012 to USD 637 billion due to non-adherence to medications for chronic conditions. This works out to 59 percent of the USD 1.1 trillion in total global pharmaceutical revenue in 2015.’

Several reports vindicate that drug companies are making phenomenal progress in this area. Let me cite an example of achieving huge success to improve treatment adherence of patients during clinical trials. The September 26, 2016 Press Release of AiCure, an AI company that visually confirms medication ingestion on smartphones, announced that use of AiCure AI platform demonstrated 90 percent medication adherence in patients with schizophrenia, participating in Phase 2 of the AbbVie study.

Opportunity to make more effective drugs faster and at reduced cost:

Besides, drug discovery, clinical trials, patient monitoring, compliance monitoring – AI applications have been developed for marketing optimization, as well. As AI technology spreads its wings with a snowballing effect, taking a quantum leap in organizational effectiveness, productivity and outcomes will be a reality for many. Moreover, AI now offers a never before opportunity of making novel, more effective and safer drugs, faster and at much reduced cost.

Thus, I reckon, AI-based technology would be a basic requirement of the drug industry for effective operation with desirable business outcomes, in less than a decade. Its slow start as compared to many other industries, notwithstanding. Further, the pharma industry’s endeavor for a swift digital transformation – the backbone of AI adoption, as captured in recent surveys, also vindicates this belief. Other business realities are also generating a strong tailwind for this process.

Pharma’s swift digital transformation to create a solid base for AI:

The ‘White Paper’, titled ‘Use of Artificial Intelligence and Advanced Analytics in pharmaceuticals’ by FICCI captured this scenario quite well. It pointed out, two seismic shifts in the pharma business, namely, – reducing prices and demonstrating greater value from their therapies, along with a swing from treatment to prevention, diagnostics and cure – are prompting the industry for a holistic transformation of business.

Which is why, pharma players are exhibiting greater intent for ‘Digitalization’ of business, paving the way for quick adoption of different modern technologies, such as AI and advanced analytics. This fundamental shift will not only improve efficiencies and reduce costs, but also significantly help adapting to more patient centric business models. Yet, post digital transformation the key question that still remains to be addressed – how does an organization identify and focus on the right areas or ‘good problems’ for AI intervention, fetching game changing outcomes, on an ongoing basis.

Conclusion:

There could be many approaches to address this situation. However, according to ZS, building the capability and the muscle first for AI, and then looking for the problems, may not be a great idea. This could make a company, even post ‘Digitalization’, flounder with the right applications of AI technology. Thus, while venturing into AI intervention for watershed outcomes, the top priority of an organization will be to resolve this dilemma for precise identification of the right problems.

These areas may even include crucial bottlenecks in the business process, AI interventions for which, would lead to not just incremental benefits, but cutting-edge value creation, for a giant leap in an all-round performance. The name of the game is to start selectively with the right problems, evaluate the upshots of AI use, before scaling up and adding new areas. Ongoing value creation of such nature can’t be achieved just by one-time digital transformation, sans imbibing other disruptive technologies, proactively.

This, in my view, has to happen and is practically unavoidable, primarily driven by two key factors, as below:

The first one was the focal point of the ‘2018 Digital Savvy HCP Survey Report of Indegene.’ It found, the highest jump of digital adoption by healthcare practitioners (HCPs) was seen in 2018, compared to its similar surveys done from 2015 to 2017, signaling physicians’ fast-growing digital preference, as we move on.

The second one comes from an important ‘consumer behavioral perspective.’ and is specially in India. According to a report by the Internet and Mobile Association of India (IAMAI) – with 451 million monthly active internet users at the end of financial year 2019, India is now second only to China in terms of internet users. More, importantly, the digital savvy customers are also using other disruptive technologies, mostly smartphone based.

Thus, disruptive digital transformation in pharma domains, including sales and marketing, is a necessary basic step. It will help companies being all-time ready to imbibe other leading-edge technologies, such as AI, for giant leaps to higher growth trajectories.

By: Tapan J. Ray

A New Facet of ‘Data Integrity’ With Novel Therapy… And Much Beyond

Posted on September 30, 2019 by Tapan Ray

The peril of breach of data integrity involving a top Indian pharma player, jolted many, probably for the first time, on September 17, 2008. On that day, the USFDA, reportedly, issued two ‘Warning Letters’ and an ‘Import Alert’. These were related to deficiencies in the drug manufacturing process and deviations from U.S. current Good Manufacturing Practice (cGMP) at Ranbaxy’s Dewas and Paonta Sahib plants in India.

Since then, instead of demonstrable corrective measures, similar incidents had started ballooning – inviting more serious US-FDA actions, such as Import ban, consent decree, loss of market value, Loss of customer trust, among many others. The research article – ‘Overview of Data Integrity issues in the Pharmaceutical industry,’ published by the International Journal of Pharmaceutical Sciences Review and Research, in its May-June 2018 issue, also reflects the same trend.

Much reported instances of breach of ‘Data Integrity’ were specific to generic drugs and mostly manufactured by Indian companies, besides China. While this may be true at that time, it is now spreading much beyond generic drug manufacturing in India and China – making its way into the global clinical trial arena. I also wrote earlier that ‘Data Manipulation: Leapfrogging Dangerously Into Clinical Trial Domain.’ With greater focus, this article will discuss not just how ‘Data Integrity’ issue is cropping up into clinical trials of even modern, complex, highly innovative and exorbitantly priced lifesaving treatments. Going beyond that, I shall also point towards increasing attempts to exaggerate the success of many cancer drug trials due to strong bias. Nevertheless, let me start by rehashing the relevance of ‘Data Integrity’ on patients’ health interest.

Data Integrity ensures safe, effective and high-quality drugs for patients:

According to US-FDA: ‘Data integrity is an important component of industry’s responsibility to ensure the safety, efficacy, and quality of drugs, and of FDA’s ability to protect the public health.’ Thus, data integrity-related cGMP violations may lead to regulatory actions, including warning letters, import alerts, and consent decrees, as the drug agency notified. In other words, maintain all types of ‘Data Integrity’ is a key requirement in the pharma industry to demonstrate that the final products conform to the required quality parameters.

These requirements are known to all generic drug exporters catering to the regulated markets, including the local manufacturers in the United States. Curiously, it continues to happen despite their full knowledge of the grave consequences of violations. The June 12, 2019 paper – ‘An Analysis Of 2018 FDA Warning Letters Citing Data Integrity Failures,’ published in Pharmaceutical Online, brings out some interesting facts, related to drug manufacturing area.

From the analysis of 194 ‘Data Integrity’ associated ‘Warning Letters (WL).’ from 2008 to 2018, the top 5 countries in this regard came out as follows:

Rank	1	2	3	4	5
Country	China	India	United States	Europe	Japan
No. of WL	58	54	36	14	7
% to Total	29.8	27.8	18.6	7.2	3.6

Interestingly, over 76 percent of US-FDA Warning Letters (WL) are on manufacturing ‘Data Integrity’ and were issued to pharma companies located in China, India and the United States. Moreover, when it comes to all types WL related to various types of regulatory malpractices, India again featured as one of the top violators. Be that as it may, I shall now focus on the spread of this decay in other important drug safety related areas, such as clinical trials.

Ironically, breach of ‘Data Integrity’ in another crucial area, like clinical trials for new drugs, doesn’t seem to attract public attention as much, which I shall reason out below – also explaining why it’s so.

Breach of ‘Data Integrity’ in clinical trial – more crippling for the company:

‘Data Integrity’ concern pertaining to clinical trials was recently expressed in an article, published by the Food and Drug Law Institute, in the April-May 2019 issue of its Update Magazine. The paper reiterated: ‘Good Clinical Practice (GCP) data integrity issues can at times be more crippling to a company than Good Manufacturing Practice (GMP) data integrity issues.’ Elaborating the point further, the authors highlighted, where such issues are severe, the drug regulatory agency may completely reject the data submitted in new drug applications, supplemental drug applications, and abbreviated new drug applications.

This outcome is quite akin to import bans for generic drugs into the United States, as it would cause a huge setback for the company, affecting clinical development programs for the new drug. Moreover, as the article says, such action would be ‘costing the sponsor substantial time, money, and reputational credibility, not to mention delaying patient access to new drugs.’

‘Dozens of recent clinical trials may contain wrong or falsified data’:

This is claimed by the research paper that was discussed in ‘The Guardian’ on June 05, 2017 carrying the headline - ‘Dozens of recent clinical trials may contain wrong or falsified data, claims study.’

In this study, John Carlisle, a consultant anesthetist at Torbay Hospital, reviewed data from 5,087 clinical trials published during the past 15 years in two prestigious medical journals, JAMA and the New England Journal of Medicine, and six anesthesia journals. In total, 90 published trials had underlying statistical patterns that were unlikely to appear by chance in a credible dataset, the review concluded.

As one of the top medical experts quoted in this paper, said: “It’s very scary that we may be treating patients based on false evidence.” He further added: “It may be the case that certain treatments may need to be withdrawn from use.”

Another October 01, 2013 report, citing a specific example of the same, wrote: ‘Japan’s ministry of health has concluded that studies based on clinical trials for Novartis’s blood pressure drug Diovan contain manipulated data.’ It also added: ‘Diovan was approved for use in Japan in 2000, but recently two universities who hosted and analyzed trials for Novartis – the Kyoto Prefectural University of Medicine and Jikei University School of Medicine – reported finding evidence of data fabrication.’

Thus, from available reports, it appears, just as the saga of ‘Data Integrity’ related drug manufacturing keeps continuing, the same related to clinical trials doesn’t seem to fall much behind. But, the valid question that may follow – why then reported instances of breach of clinical trial data integrity isn’t as many?

Breach of ‘Data Integrity’ found by USFDA is rarely reported:

The answer to the above question may be found in The BMJ study, published on February 10, 2015. It brought to the fore – ‘Research misconduct found by FDA inspections of clinical trials is rarely reported in journal studies.’ This review was based on identified 57 published clinical trials for which an FDA inspection of one of the trial sites had found significant evidence of research misconduct, including falsification or the submission of false information, problems with adverse event reporting.

The researcher also noted that serious misconducts related to clinical trials, are rarely mentioned in subsequently published journal articles in the same area. More disturbing to note, this critical gap in the transparency of clinical trial reporting is now sneaking into even highly specialized treatment, such as ‘Gene Therapy’, and that too involving a Big Pharma name.

US-FDA has now raised this question even for a ‘Gene Therapy’:

A media report of September 09, 2019 highlights, that Novartis is facing an uproar over data manipulation involving USD 2.1 million gene therapy Zolgensma, which treats spinal muscular atrophy, a leading genetic cause of death in infants. According to this report, Novartis gave “detailed explanations” on Aug. 23 to the FDA about the company’s investigation into the data manipulation and addressed regulators’ questions over why the company waited until late June to make disclosures. However, quoting the FDA, the report indicates, ‘Novartis could face possible civil or criminal penalties.’

Prior to this, another report of August 13, 2019, stated that ‘documents referenced in a Form 483 by the FDA, which inspected the lab a month after it learned of the falsified records, also suggest the data-fudging began at least in early 2018 and could have been uncovered by managers at AveXis during several steps in the clinical outcome assessment.’ The gene unit of Novartis is called AveXis, which had announced the US-FDA approval of Zolgensma on May 24, 2019.

Such instances involving clinical trials with new, complex and highly innovative therapies, further reinforces already existing ‘Data Integrity’ related health safety concern. The cost of these new treatments being so high, it’s perplexing to fathom the necessity of cutting corners in clinical trials, if at all. More so, when these are avoidable to establish efficacy, safety and high-quality standard of the therapy to drug regulators for marketing approval.

Beyond ‘Data Integrity’ – in clinical trials:

Just as ‘Data Integrity’ issue in generic drug manufacturing has intruded in the clinical trial arena for novel treatments, yet another concern, also related to data, goes much beyond what is happening today in this area. This fast-emerging practice is related to ‘cherry-picking data’ for biased clinical trial reporting, adversely impacting public health safety, as brought by several research studies.

Very recently, this was vindicated by another paper published in The BMJ on September 18, 2019. It raised a serious concern of bias in clinical trial data submitted to regulatory agencies for marketing approval of even lifesaving drugs. The findings of the above paper concluded:

Between 2014 and 2016, almost half of the most pivotal studied forming the basis of European Medicines Agency (EMA) approval were judged to be at high risk of bias, based on their design, conduct or analysis. Accepting that some of these might be unavoidable because of complexity of cancer trials, it noted that regulatory documents and the scientific literature had gaps in their reporting. Journal publications also did not acknowledge the key limitations of the available evidence identified in regulatory documents. This concern too keeps growing.

Conclusion:

As discussed above, six broad and important points to note for any ‘breach of integrity’ or ‘cherry-picking’ of data in the pharma industry:

Takes place mostly in two known areas – manufacturing and clinical trials.
Involves both cheaper generic drug manufacturing, as well as, clinical trials of most innovative and highly expensive treatments – conducted even by Big Pharma constituents.
‘Cherry-picking data’ for biased clinical trial reporting while obtaining marketing approval, involves even cancer drugs.
Any such avoidable malpractices with ‘data’, could seriously impact patients’ health interest, raising a public concern.
Instances of such malpractices usually become public, only when the perpetrators are caught by vigilant drug regulatory agencies, such as the US-FDA, or when external experts can trace their footprints through sophisticated analytical tools.
Multiple instances of wrongdoing of this nature, often by the same company, despite requisite regulations being in place, and also after facing penal actions, make it mostly a self-discipline issue of repeat offenders.

It’s a different discussion all together, whether or not ‘data’ is a new oil – air or water. But maintaining the sanctity of data, while generating, interpreting, presenting or even leveraging these, including for commercial considerations, must not be compromised, at any cost.

Today, breach of ‘Data Integrity’ and ‘Cherry-Picking of Data’ for biased reporting, are creeping into new drug clinical trial domain – from its usual habitat of generic drug manufacturing, posing a greater threat to patient safety. At the same time, none can say, either, that it’s happening with all drugs, at all the time and by all drug manufacturers. But, if and when it happens, it could lead to a catastrophic consequence both for patients and their family.

Be that as it may, country’s top drug regulators should strive harder for an ongoing and meaningful engagement with the pharma industry on this avoidable development. It could well be a carrot and stick approach, where repeat violations by any company would pose a risk of legal survival of the business.

By: Tapan J. Ray

Pharma’s Perception Management

Posted on September 23, 2019 by Tapan Ray

An intriguing input-output relationship in the pharma industry has remained baffling, since the last several years, where increasing financial inputs are resulting in diminishing productivity output. More disturbing is, this input-output relationship has now reached a new low, with their individual swings moving in the diametrically opposite directions – as numerous reports of 2019 point out. The deteriorating situation of this magnitude would make many to feel sad, especially those who were or are intimately associated with this industry, for quite a while.

Strikingly, the trend encompasses even the largest – and one of the most influential pharma markets of the world – the United States. Which is why, the subject assumes greater importance. As one can witness today, regardless of the outcome, most American drug companies and their increasingly resourceful trade associations, reportedly, keep unleashing political, non-political and financial capital to influence pharma related policies in different countries. In tandem, they also try to create a favorable public perception in areas of vested interest, in many important markets, including India. These efforts cost money, and tons of it.

This process is not new, though, and was there in the past, as well. It also yielded results at that time, unlike what is happening today. This was mostly because of less public awareness on health-related issues, and a better general perception of the industry. Curiously, despite a sharp diminishing return, the same process is being followed, even today, with a lot more inputs and internal hype. Ironically, the snowballing effect of pharma’s ‘perception challenge’ is now all pervasive. It is visible even in the most market driven and business-friendly countries, like America. They have a requisite talent pool, financial resources and other wherewithal to manage perception – the best possible way. Then why it’s not happening?

To make it happen, I reckon, the core purpose of pharma business should be to delight the patients – more of them – the better. With a similar vision, the drug industry could achieve what it wanted to in the past, also making a good profit, unlike what has been openly expressed in the recent years. This article would, therefore, explore the reasons behind it’s not happening now, through the prism of perception management. However, before examining that, let me give examples of the quantum of financial inputs that the pharma industry constituents are using today to achieve its lobbying goals, vis-a-vis, its declining public perception, as we see in 2019.

Pharma lobbying expenses are shooting north:

According to the Bloomberg report of January 23, 2019, the main trade group of the pharma industry in America – Pharmaceutical Research and Manufacturers of America (PhRMA), spent a record high amount of USD 27.5 on lobbying in a single year – 2018. This was quoted from the public disclosure reports. Although this was the highest for PhRMA to date, ‘the pharmaceutical industry has upped its spending over the last few years, as it faces immense pressure over high drug prices from the public, Congress and the Trump administration,’ – the news highlighted.

Another article, published in The Guardian also indicated: ‘Pharmaceutical companies spend far more than any other industry to influence politicians.’ It further added, hundreds of millions of dollars flow to shape laws and policies that keep drug company profits growing. One more article highlights, the wide reach of pharma industry money can be traced among people and groups who are in a position to influence drug policy – think tank that has received funding from a major pharmaceutical lobby, and doctors who accepted payments from drug companies.

Moreover, Kaiser Health News (KHN) analysis also found that such money reaches even patient groups for supporting the industry whenever required. The analysis detected ‘about half of the groups representing patients have received funding from the pharmaceutical industry.’

Globally, the general interest of the public on the affordability of quality drug treatment package that pharma companies offer, is fast increasing. Recognizing this fact, the entire approach of pharma lobbying appears blatantly self-serving.

Whereas pharma’s lobbying output is diving south:

The governments in many countries can now make it out, even when this is done covertly – keeping the so called ‘patient groups’ and ‘doctors’, as mentioned above, in the forefront. As many can clearly decipher the core purpose behind such stealth approaches of pharma players, the productivity or output of pharma lobbying is going south in a bottomless pit, as it were. Still, to reduce stakeholder pressure on drug pricing, its apparently getting more intensive, across the world and particularly in America.

The Bloomberg report of January 23, 2019, captures how this situation, on the contrary, is bringing public, government and opposition leaders together on the reduction of drug prices. The news underscores: ‘One of the few issues that unites President Donald Trump and the Democrats newly in charge of the U.S. House of Representatives is reducing the price of prescription medicine. Both sides will be looking for accomplishments to tout at a time when the pharmaceutical industry has become a target of public ire.’

Regardless of these developments, the age-old pharma lobbying approach remains unchanged. There doesn’t seem to be much visible interest, either, for a radical and innovative ‘perception management’ approach to salvage the situation.

Pharma’s ultimate goal has to change to delighting customers – the best possible way, where the quantum of profit earned will be a measure of customer satisfaction. This is what the management guru Peter Drucker said, long ago. Since, this is not happening, both patients’ and public perception on the industry, is getting from bad to worse, which has been captured in the 2019 Gallup poll.

2019 Gallup Poll: Big pharma sinks to the bottom of U.S. industry rankings:

The September 03, 2019 issue of Gallup carried the headline - Big pharma sinks to the bottom of U.S. industry rankings while announcing ‘American’s Views of U.S. Business, Industry Sectors, 2019.’ Being more specific, it said, ‘The pharmaceutical industry is now the most poorly regarded industry in Americans’ eyes, ranking last on a list of 25 industries that Gallup tests annually.’

Elaborating it further, the author stressed, Americans’ net ratings for the pharmaceutical industry have never been lower since Gallup first polled on industries in 2001. Over the past 19 years, few industries have been rated lower than the pharmaceutical industry’s current – 31 net rating. These include the federal government and the oil and gas, real estate, and automobile industries.

The age-old process of pharma lobbying is not working anymore:

‘Lobbying’ is the term that is more frequently used in the United States and the Western countries. In India, similar campaigns are called ‘Advocacy’, by pharma trade associations. These activities are carried out by concerned individuals or companies, industry associations, paid employees – hired for this purpose, or by any other interested groups. But, everybody’s common goal is primarily aimed at influencing government policies, or mold top influencers’ opinion in favor of business – overtly or covertly.

That traditional mindset of pharma lobbying is no longer working, came to the fore some time back. The October 28, 2016 articles, published in the CNBC, cautioned with a headline – ‘A warning for Big Pharma: Lobbying won’t work anymore.’

The article candidly suggested to big pharma players: ‘If you try to use the same old lobbying and crony networks to get your way, it won’t work. Not anymore. And here’s a special warning call just for Big Pharma: You need to change your public relations and marketing strategies now, or die. The good news is, unlike so many other industries, the drug companies have a very effective way out of this mess.’ Making no bones about it the author said, ‘no industry seems more clueless right now than Big Pharma.’

Acknowledging that: ‘Several reports say the Big Pharma lobbying group known as PhRMA is looking to spend as much as $300 million and pull out lots of other stops in order to defend higher prescription drug costs.’ The paper emphasized: ‘this is a battle the drug giants can’t win.’ This is because: ‘Public and political sentiment against expensive medicines and companies that charge those prices is at a fever pitch.’ This, I reckon, is changing the old paradigm of pharma lobbying.

Managing public perception – the new ballgame to influence policies:

Thus, the bottom line to note, today’s public policies are increasingly driven by public sentiments, their needs, aspirations and demand. Thus, the old, and the virtually counterproductive system of lobbying with lawmakers and some key opinion leaders, often including a few media friends, has to change. Even the covert ways of achieving it, under the guise of some trendy events or seminars, hyped by the best communication and PR professionals, are also not yielding commensurate results.

The first task will, therefore, be to come out of this decade old self-created imbroglio, as the pharma’s topmost head honchos will hopefully realize that the name of today’s game is ‘managing public perception’ of the pharma industry. This would simultaneously necessitate replacing the self-serving goals with the ones that would delight the customers – genuinely – sans façade of any kind.

Pharma’s reputation to be on par with the tobacco industry?

According to ZS: ‘Recent polls and surveys demonstrate that the pharmaceutical industry’s reputation continues to be plagued by negative perceptions.’ It further adds: ‘Many consumers still consider pharma’s reputation to be on par with the tobacco industry, positioning one product category that treats cancer just above a product category that causes it.’ It appeared in the Aug 01, 2017 issue of ZS, titled ‘Reputation Is Paramount, So What’s Holding Pharma Companies Back?’

Is reputation mostly driven by perception?

The reputation or image of a person, an organization or any industry is generally a matter of perception of individuals, formed based on multiple reasons. As Edward de Bono - Physician, author, and originator of the term lateral thinking had put it – ‘Perception is real even when it is not reality.’ Accepting this dictum, even more profound is what he said further - ‘You can analyze the past, but you need to design the future.’

It’s critical to understand the process of ‘perception,’ as out of so much available information, only some are selectively received, organized and interpreted to develop individual perception. More important is the fact that perceptions often become strong inputs to take individual decisions, actions or to express views.

‘Designing the future’ from the pharma industry perspective:

To design an inclusive model of the pharma industry future, the first requirement will be establishing a ‘true connect’ between the industry and the public, based on the latter’s expectations, aspirations, needs and demands, from the industry. This new process being far from self-serving in nature, needs to be steered by ‘perception management’ experts, based on credible data pool – and not by the gut feelings of the hard-core lobbyists or self-styled advocacy experts.

The reformed industry objective – ‘delight the customers while making money’, will form the core of this new ‘perception management’ model. This would entail fleshing out – step by step, the blueprint of its action plan, while pharma should be seen by all to walk the talk.

Creating a positive perception for pharma:

As described in the book ‘Getting Ahead,’ creating a positive perception would prompt taking four basic steps, each of which will help enhance the current view that others have and improve any negative opinion that exists.

Taking a cue from what the author suggests, the first step is to discern how pharma industry is generally perceived by others. Each and every industry practice affecting its stakeholders, particularly patients, is being observed, analyzed and directly affects how others perceive the industry. The author further adds, ‘inaccurate perceptions show you how easy it is for others to incorrectly perceive you.’

The second step is also equally important, as it involves knowing, without any bias, how the industry is ‘actually’ perceived and why – mainly based on consumer feedback, collected and analyzed on a scientific platform.

The third step may involve an intensive internal brainstorming of scale, to zero-in to how the pharma industry would ‘want’ it to be perceived and capture the same in an easy to understand format for all, after pilot testing it.

And the fourth step is most challenging that will help determine how to replace the current perception with the most desirable one.

Conclusion:

As rising drug prices increasingly becoming a major political and public talking point, pharmaceutical groups in America are, reportedly, splurging heavily to influence public opinion and policy. With a spending of roughly USD 280 million, it featured at the top spot among lobbying spenders in 2018 – - with no other industry coming close. However, when one looks at the outcome of such spending either in the American political sphere or within the government, one can find what even President Trump is saying - ‘One of my greatest priorities is to reduce the price of prescription drugs.’ Similarly, when it comes to the public – the Gallup Poll 2019 points out:‘The pharmaceutical industry is now the most poorly regarded industry in Americans’ eyes, ranking last on a list of 25 industries that Gallup tests annually.’

The old industry practices - “from generating the highest drug costs in the world to spending massive amounts on lobbying politicians to the industry’s role in the U.S. Opioid crisis,” are no longer yielding results, due to a radical change in public perception of the drug industry. Even the most powerful current political personality and one of the most business-friendly politician – President Trump, can’t risk ignoring it.

If at all, the drug industry and its trade associations are trying to mold a favorable public opinion with such heavy spending, those efforts are also not working at all. Pharma’s public image crash comes, as the general population strongly dislike, disapprove or remain indifferent on various drug-related issues or methods and processes that the industry follows to earn huge money – even at the cost of patients’ health interests. As a result, a strong negative perception of pharma is created that often indirectly impacts many policy decisions.

So far, pharma hasn’t succeeded in achieving one of its key lobbying goals by managing public perception, effectively. To make it happen, its predominating self-serving interest, that is progressively alienating the public, must be jettisoned, forthwith. The time is ripe to create a new, strong and sustainable public perception for the industry, even in India, by managing customer perception, while making them feel genuinely delighted with company’s products and service offerings. With these contemporary inputs, conducive government policies facilitating a strong business performance, will surely be the most cherished output.

By: Tapan J. Ray

Spirit Behind Drug Patent Grant: Secondary Patents: Impact on Drug Access

Posted on September 9, 2019 by Tapan Ray

For more effective treatment against existing diseases, besides combating new or a more complicated form of existing ailments with precision, drug innovation is absolutely necessary and on an ongoing basis. This makes innovative drugs so important for the population, globally.

Besides academia, the pharma industry has remained in the forefront of the search for new drugs, for so long. What makes this process so crucial is, cheaper generic drugs flow from the innovative drugs, post market exclusivity period, which together form the bedrock of the pharma industry’s business model. Consequently, a robust patent protection for the new molecular entities, not only enable the drug innovators to make a reasonably good profit, but also encourage them to keep this virtuous circle moving, faster.

Although, the drug patents are granted for 20 years, after obtaining marketing approval from the respective drug regulators, a time period - ranging between 7 and 12 years, is available to the company to realize its maximum commercial benefits. Thereafter, the patent expires, paving the way of market entry of cheaper generic equivalents to make the drug accessible to a larger population. This is the playbook, which deserves to be accepted and respected by all, both in the letter and spirit.

Currently, the narrative has started changing, apparently, repudiating the spirit behind the grant of new drug patents, especially with the entry of a number of expensive, large molecule biopharmaceutical drugs. After obtaining a fixed-term market exclusivity, more intricate legal measures are being taken to extend the fixed-term market monopoly for an unknown period, delaying market entry of cheaper biosimilar equivalents, post patent expiry, as long as possible.

In this milieu, India appears to be the only country in the world, where the country’s ‘Patents Act’ provides enough safeguard to blunt those legal tools, effectively, to protect patients’ health interest. Quite expectedly, this new narrative of the drug innovators is yielding the best return in the Eldorado of the pharma world – the Unites States. It is also no secret that US vehemently opposes several provisions of the Indian Patents Act 2005, under pressure from the most powerful pharma lobby group, as many believe.

Using the spirit behind drug patent protection as the backdrop, I shall dwell in this article, how this so precious spirit is gradually losing its basic purpose, especially for blockbuster biopharma drugs. Is the key intent behind sacrificing the spirit behind drug patent grant to keep their brands money spinners and big – even after expiry of original patent – as long as possible – at the cost of patients’ health interest?

Despite the original patent expiry, biggest biologic drugs remain big:

The fact that original patent expiries have done little to halt sales of some of the industry’s biggest products – mostly biologic drugs, was clearly elucidated in an Evaluate Pharma article – “Biopharma’s biggest sellers – the oldies that just keep giving,” published on August 14, 2019. This gets vindicated, as we look at the ‘top ten pharma brands with biggest lifetime sales – from launch to 2018’, in the following Table I:

	Product	Company	Launch year	USD Billion
1.	Lipitor	Pfizer	1997	164.43
2	Humira	AbbVie	2003	136.55
3.	Rituxan	Genentech/Biogen	1997	111.50
4.	Enbrel	Amgen	1998	108.16
5.	Epogen	Amgen	1988	107.90
6.	Advair	GSK	1998	104.20
7.	Remicade	Janssen	1998	98.00
8.	Zantac	GSK	1981	97.42
9.	Plavix	Sanofi/BMS	1998	90.63
10.	Herceptin	Genentech/Roche	1998	87.97

(Adapted from Evaluate Pharma data of August 14, 2019)

The point to take note of:

The point worth noting here, with the exception of Advair, Zantac, Lipitor and Plavix, all others – among the top ten brands, are biologic drugs. Moreover, what is most striking in the Table I, despite the expiry of the original patents, a large number of biologic brands were able to expand their sales, pretty impressively, for well over two decades. As we shall see later, this situation is expected to continue, at least, till 2024. As the Evaluate Pharma article states, for various reasons, these multibillion dollar brands have been able to avoid the expected post patent expiry ‘onslaught from biosimilars in the key US market’, which is incidentally the most valuable pharma market in the world.

One of the key reasons that helps delaying cheaper biosimilar drug entry expanding patient access, is a crafty strategic measure adopted by these companies through the creation of a Patent Thicket with secondary patents. As I discussed in this Blog on April 22, 2019, this is a crafty way of ‘evergreening’ patent term beyond 20 years, legally. Whether such measures conform to the spirit of granting 20 years product patent, becomes a moral question, or an issue of probity for the concerned companies, at the most. Be that as it may, a concern over this situation has been raised in many countries, including the United States.

Barrier of secondary patents:

Biosimilar drug developers continue facing multiple non-financial challenges, such as, scientific, regulatory, pricing. I have already discussed some of these barriers in this blog on July 31, 2017. Instead, I shall focus in this article, with greater detail, on the intricate and a well-woven net of secondary patents. However,before delving into this area, it will be worthwhile to have a quick recap on the basic differences between original patents and secondary patents.

According to WIPO, “Patents on active ingredients are referred to as primary patents. In later phases of the drug development, patents are filed on other aspects of active ingredients such as different dosage forms, formulations, production methods etc. These types of patents are referred to as secondary patents.”

Another excellent paper, authored by two distinguished researchers from Columbia University and LSE, makes some important points on this subject. It says, secondary patents have become increasingly important to the pharma industry, especially in the U.S. and Europe over the past three decades. The basic purpose of ‘taking out multiple patents on different aspects of a drug in order to cordon off competitors is now standard practice in the pharmaceutical industry.’ As the authors further said, this is primarily because: ‘Secondary patents can protect market shares by extending periods of exclusivity beyond the dates in which patent protection would otherwise lapse.’

Interestingly. devising patent strategies to extend periods of market exclusivity is generally considered in the industry, as a key component of ‘product life cycle management,’ – not by the marketing whiz kids, but by astute patent attorneys. Nevertheless, as the paper articulates, critics of this practice often use the more pejorative – evergreening, to describe it.

Examples of impact of secondary patents:

Many research papers suggest, besides scientific complexity in biosimilar drug development being a key reason for their delayed market entry, secondary patents are even tougher barriers for the same. This was brought to light a few years ago in a ‘Review Article’ – ‘The Economics of Biosimilars’, published in the September/October 2013 issue of American Health & Drug Benefits.

Some of the key points made on this issue include,AbbVie plan to defend Humira (adalimumab) with more than 200 secondary patents, Merck’s giving up its biosimilar project on Enbrel when Amgen got its expanded patent life. There are many other such instances.

Its effect would last longer:

Experts believe, the effect of creating a strong secondary patent shield around blockbuster biologic would last much longer. As the above Evaluate Pharma article underscores: ‘This ability to fend off biosimilar competition is one of the reasons Humira is set to snatch Lipitor’s crown next year as the industry’s most successful drug.’

The Table II below that lists ‘top 10 pharma brands from their respective launch date, including estimated forecast till 2024’, vindicates its long-lasting impact:

	Product	Company	Launch year	USD Billion
1.	Humira	AbbVie	2003	240.05
2	Lipitor	Pfizer	1997	180.19
3.	Enbrel	Amgen	1998	139.83
4.	Rituxan	Genentech/Biogen	1997	136.07
5.	Revlimid	Celgene	2008	123.64
6.	Remicade	Janssen	1998	117.20
7.	Epogen	Amgen	1988	115.87
8.	Herceptin	Genentech/Roche	1998	114.89
9.	Avastin	Genentech/Roche	2004	114.27
10.	Advair	GSK	1998	113.61

(Adapted from Evaluate Pharma data of August 14, 2019)

Although, Zantac and Plavix no longer feature in this table, one drug that leapfrogged much of the competition to become one of the industry’s biggest future bestsellers is Revlimid. The projected sales of the drug over the next six years will actually outstrip its sales to date. However, much of this is dependent on whether generic competition will arrive ahead of Revlimid’s 2022 patent expiry, the paper indicated.

Concern expressed even in the US for the delay in biosimilar market entry:

Many big spending countries on health care, such as the United States expected that timely biosimilar drug entry will help contain health expenditure significantly. However, the article published in the Fierce Pharma on August 29, 2019, raises an alarm, but with a hope for the future. It says: “It’s no secret biosimilars haven’t made a big dent in U.S. drug spending. Some experts have even said it’s time to give up on copycat biologic.”

This hope gets resonated with what, ‘the former US-FDA commissioner Scott Gottlieb argues’. He feels, ‘It’s too soon for that’, while ‘calling on Congress to bolster the budding market.’ However, in my personal view, this will remain a difficult proposition to implement, as biologic drug players will continue using their relatively new, but powerful weapon of filing a number of complex ‘secondary patents.’ These will help extend the market exclusivity period of their respective brands, much beyond the original patent grant period, unless a counter legal measures are taken by the lawmakers of various countries, including the United States. But, India is an exception in this regard.

Indian patent law doesn’t encourage ‘secondary patents’:

The good news is, Indian Patent Act 2005, doesn’t encourage ‘secondary patent.’ This is because, section 3 (d) of the Indian Patent Act 2005 limits grant of ‘secondary pharmaceutical patents.’ An interesting study reported on February 08, 2018, discussed about 1,700 rejections for pharma patents at the IPO spanning over the last decade. But, there is a huge scope for improvement in this area.

Which is why, the not so good news is under-utilization of the same section 3.d by the Indian Patent Office (IPO), as are being voiced in many reports. One such paper of April 25, 2018 highlighted,72 per cent of pharma patent grants are secondary patents. These were granted for marginal improvements over previously known drugs for which primary patents exist. That said, despite such reported lapses, blocking of some crucial secondary patent grant has benefited a large number of patient population of India.

Blocking secondary patent grant has helped India immensely:

While US recognizes secondary patents, blocking secondary patent grant, especially for biologic drugs has helped Indian patients immensely, with expanded access to those medicines. This was also captured in the above study. Besides the classic case of Novartis losing its secondary patent challenge for Glivec in the Supreme Court of India in 2013, several other examples of secondary patent rejection are also available. This includes, among others, Glivec of Novartis and the world’s top selling drug for several years – Humira of AbbVie.Against a month’s therapy cost of ₹1,6o, ooo for Glivec in the US, its Indian biosimilar version costs for the same period ₹11,100. Similarly, while the treatment cost with Humira in the US is ₹85,000, the same with its biosimilar version in India is ₹ 13,500, as the above study finds.

Conclusion:

The core purpose of drug innovation, as widely touted by the R&D-based drug companies, is meeting the unmet needs of patients in the battles against diseases. Thus, drug innovation of this genre must not just be encouraged, but also be adequately protected and rewarded by granting product monopoly for a 20-year period from the date of the original patent grant. Curiously, piggybacking on this basic spirit behind the drug patent grant, pharma lobby groups are now vocal on their demand for giving similar treatment to secondary patents on various molecules. The tone of demand gets shriller when it comes to section 3. d of the Indian Patents Act, which doesn’t allow such ‘evergreening’ through secondary patents.

Thus, the key question that surfaces, while the original patent grant for innovative drugs help meeting unmet needs of some patients, whose unmet needs would a secondary patent grant meet, except making the concerned company richer? Further, for highly expensive biologic drugs, delayed market entry of cheaper biosimilars in that process, would deny their expanded access – failing to meet the unmet needs of scores of others.

Hopefully, India won’t give in to pressure of multinational pharma lobby groups, channeled through various powerful overseas government entities. At the same time, I hope, the government in power at the Eldorado of the pharma industry, will consider giving a fair chance of market entry to cheaper biosimilars, including those from India, to also grow their business globally, but in a win-win way.

The key objective of all stakeholders involved in this process, should be to uphold the basic spirit behind drug patent grant. It may even call for challenging the core intent behind secondary patent applications, the world over, that deny quicker market entry for cheaper biosimilars, sans heavy litigation expenses. This will help expand access to cheaper biologic medicines to all those who can’t afford those, otherwise.

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.

PILMAN

A Tapan Ray Website

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