Tag Archives: Health

Pharma Marketing in India: 10 Chain Events to Catalyze a Paradigm Shift

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In the matured markets of the world pharmaceutical marketing is quite different in many respect as compared to India. Besides doctors, different sets of customer groups like, healthcare providers, patient advocacy groups, pharmacy benefit managers, clinical assessment authorities play various critical roles for use and consumption of branded or generic pharmaceutical products and related healthcare services.

Quite in contrast, even today, individual doctors have continued to remain almost the sole target customers for the pharmaceutical players in India. This is mainly because, by and large, they are the only decision makers for usage of medicines and other healthcare facilities for most of the patients in the country.

Heralding a new paradigm:

As indicated above, though the current pharmaceutical marketing strategies continue to revolve mostly around the doctors, a distinct change, albeit slowly though, is now anticipated within the pharmaceutical marketing space in India.

Gradual emergence of healthcare providers with medical insurance and other related products, patient advocacy groups and standard treatment guidelines, just to name a few, are expected to facilitate heralding a new paradigm in the strategy dynamics of the Indian Pharmaceuticals Market (IPM) in the coming years. These changes will not be incremental in any way, but disruptive and radical in nature, as they will fully evolve.

This process of transformation, mainly driven by Government policy reform measures like, ‘Universal Health Coverage (UHC)’, ‘Free distribution of medicines’, mandatory prescriptions in generic names, could make the current pharmaceutical business strategy models of majority of companies irrelevant and obsolete, in not too distant future.

It is worth noting that the Government will spend around Rs.14,000 Crores (US$ 2.60 billion, approximately) from the year 2014 to 2017 just on medicine purchases at highly negotiated/discounted prices for free distribution to all through Government hospitals and dispensaries.

10 Chain events envisaged: 


In the evolving scenario, following chain events, taking place almost in tandem, in my view, will gradually usher in a new pharmaceutical marketing paradigm in India:

1. In addition to ‘Universal Health Coverage’, there will be a rapid increase in the number of other healthcare providers with innovative, tailor-made and value added schemes for various strata of the society.

2. This will trigger emergence of very powerful groups of negotiators for adopting treatment guidelines, pharmaceutical products usage and other healthcare related services.

3. These groups will have the wherewithal to strongly and significantly influence the doctors in their prescription and other treatment choices.

4. A significant proportion of the products that the pharmaceutical companies will market, a tough price negotiation with the healthcare providers/ medical insurance companies will be inevitable.

5. Consequently, doctors will no longer be the sole decision makers for prescribing drugs and also the way they will treat the common diseases.

6. Pharmaco-economics or Health Technology Assessment (HTA) or outcome based pricing will gradually play an important role in pricing a healthcare products. Drug Price Control Order (DPCO 2013) has already signaled to this direction for a class of products.

7. An integrated approach towards disease prevention will emerge as equally important as treating diseases.

8. A shift from just product marketing to marketing a bundle of value added comprehensive disease management processes along with the product would be the order of the day.

9. More regulatory control measures on pharmaceutical sales and marketing are expected to be put in place by the Government to prevent alleged widespread sales and marketing malpractices in the country.

10. Over the counter (OTC) medicines, especially those originated from natural products to treat common and less serious illnesses, will carve out a sizable share of the market, as appropriate regulations would be put in place, adequately supported by AYUSH. This will be fueled by overall increase in general health awareness of the population.

Trapped in an ‘Archaic Strategy Cocoon’:

Over a long period of time, Indian pharmaceutical industry seems to have trapped itself in a difficult to explain ‘Archaic  Strategy Cocoon’. No holds bar sales promotion activities, with very little of marketing, continue to dominate the ball game of hitting the month-end numbers, even today.

It is high time to come out of this cocoon and confront the ‘writing on the wall’ upfront, if not try to hasten the process of the evolving changes, boldly and squarely. This will require a strategic long term vision to be implemented in an orderly way to effectively convert all these challenges into possible high growth business opportunities.

A differentiated composite value delivery system:

Moreover, in today’s post product patent regime in the country, product pipelines of the domestic Indian companies with new ‘copycat’ versions of patented products have almost dwindled into nothing, making price competition in the market place even more ‘cut throat’.

In such type of changing environment, all pharmaceutical companies will be under tremendous pressure to create and deliver additional, well differentiated and composite value offerings, beyond physical products, to attract more patients, doctors, healthcare providers and others, in and around related disease areas, for business excellence.

Thus, ability to create and effectively deliver well-differentiated composite value offerings, along with the physical products, will separate men from the boys in the high growth pharmaceutical market of India, in the long run.

This could also possibly create an ‘Alibaba Effect’ for the successful ones in search of pots of gold in the pharmaceutical space of India.

New leadership and managerial skill set requirements:

In the new environment, required skill sets for both the leaders and the managers of Indian pharmaceutical companies will be quite different from what they are today. This will not happen overnight though, but surely will unfold gradually.

New skills:

Leaders and managers with knowledge in just one functional area like, R&D, manufacturing, marketing, regulatory, finance are unlikely to be successful without a broad-based knowledge in the new paradigm. To really understand and handle new types and groups of customers, they will need to break the operational silos and be proficient in other key areas of business too.

These professionals will require ensuring:

• Multi-functional expertise by rotating right people across the key functional areas, as far as possible, even with a stretch.

• Ability to fathom and correctly interpret patients’ clinical benefits against cost incurred to achieve the targeted clinical outcomes, especially in areas of new products.

• Insight into the trend of thought pattern of healthcare providers and other customers or influencers groups.

• Speed in decision-making and delivery…more importantly ability to take ‘first time right’ decisions, which can make or mar an important initiative or a commercial deal.

IPM growing fast, can grow even faster: 

India is now one of fastest growing emerging pharmaceutical markets of the world with 3rd global ranking in the volume of production and 13th in value terms. Domestic turnover of the industry is over US$ 13.1 billion in 2012 (IMS) representing around 1 percent of the global pharmaceutical industry turnover of US$ 956 billion (IMS 2011).

Since 1970, Indian pharmaceutical Industry has rapidly evolved from almost a non-entity to meeting around 20 percent of the global requirements of high quality and low cost generic medicines.

Financial reforms in the health insurance sector and more public investments (2.5% of the GDP) in the healthcare space during the 12th Five Year Plan Period will have significant catalytic effect to further boost the growth of the industry.

Stringent regulations and guidelines of the Government in various areas of pharmaceutical business in India are expected to be in place soon. Ability to ensure system-based rigid organizational compliance to those changing business demands in a sustainable way. will determine the degree of success for the pharma players in India.

One such area, out of many others, is the professional interaction of the Medical Representatives with the doctors and other customer groups.

Require a ‘National Regulatory Standard’ for Medical Representatives in India:

Medical Representatives (MRs) currently form the bedrock of business success, especially for the pharmaceutical industry in India. The Job of MRs is a tough and high voltage one, laced with moments of both elation and frustration, while generating prescription demand for selected products in an assigned business territory.

Though educational qualifications, relevant product and disease knowledge, professional conduct and ethical standards vary widely among them, they are usually friendly, mostly wearing a smile even while working in an environment of long and flexible working hours.

There is a huge challenge in India to strike a right balance between the level and quality of sales pitch generated for a brand by the MRs, at times even without being armed with required scientific knowledge and following professional conduct/ ethical standards, while doing their job.

Straying from the right course:

A recent media report highlighted that ‘Indian subsidiary of a Swiss pharma major has run into trouble with some executives allegedly found to be inflating and presenting fabricated sales data for an anti-diabetic drug.’

The report also indicated that officials from mid-management ranks to sales representatives were allegedly involved in those unethical practices. The company has responded to this incidence by saying that the matter is still under investigation.

It is critical for the MRs not just to understand scientific details of the products, their mode of action in disease conditions, precautions and side effects, but also to have a thorough training on how to ‘walk the line’, in order to be fair to the job and be successful.

As MRs are not just salesmen, they must always be properly educated in their respective fields and given opportunities to constantly hone their knowledge and skills to remain competitive. The role of MRs is expected to remain important even in the changing scenario, though with additional specialized skill sets.

Unfortunately, India still does not have a ‘National Code of Conduct or Regulatory Standards’ applicable to the MRs.

Only the clause 4 of ‘The Magic Remedies (Objectionable Advertisement) Act, 1954’ deals with misleading advertisements. It is about time to formulate not only a ‘National Code on Pharmaceutical Marketing Practices’, but also a mandatory ‘Accreditation program’ and transparent qualifying criteria for the MRs for the entire pharmaceutical industry in India, just like many other countries of the world.

‘Central Drugs Standard Control Organization (CDSCO)’ of the Ministry of Health and Family Welfare of the Government of India in its website lists the “Laws Pertaining to Manufacture and Sale of Drugs in India”. However, it does not specify any regulation for the MRs nor does it recommend any standard of qualification and training for them, which is so critical for all concerned.

There are currently no comprehensive national standards for educational qualification, knowledge, ethics and professional conduct for the MRs. In the absence of all these, it is difficult to fathom, whether they are receiving right and uniform inputs to appropriately interact with the medical profession and others in a manner that will benefit the patients and at the same remain within the boundary of professional ethics and conduct.

Thus, a ‘National Regulatory Standard’ for MRs, I reckon, is absolutely necessary in India… sooner the better.

Global pharmaceutical players:

Facing a huge patent cliff, global pharmaceutical companies are now fast gaining expertise in the ball game of generic pharmaceuticals, especially in the developing markets of the world.

In the emerging markets like India, where branded generic business dominates, global pharmaceutical players seem to be increasingly finding it lucrative enough for a sustainable all round business growth.

However, to outpace competition, they too will need to capture the changing dynamics of the market and strategize accordingly without moaning much about the business environment in the country.

On the other hand, if majority of Indian pharmaceutical companies, who are not yet used to handling such changes, are caught unaware of this evolving scenario, the tsunami of changes, as they will come, could spell a commercial disaster, endangering even very survival of their business.

Managing transition:

During ensuing phase of transition in India, pharmaceutical companies would require to:

• Clearly identify, acquire and continuously hone the new skill sets to effectively manage the evolving challenge of change.

• Get engaged, having clarity in the strategic content and intent, with the existing public/private healthcare providers and health insurance companies like, Mediclaim, ICICI Lombard, large corporate hospital chains, retail chain chemists and others, proactively.

• Drive the change, instead of waiting for the change to take place.

• Ensure that appropriate balance is maintained between different types of marketing strategies with innovative ways and means.

Conclusion:

It may not be easy for the local Indian players to adapt to the new paradigm sooner and compete with the global players on equal footing, even in the branded generic space, with strategies not innovative enough and lacking required cutting edges.

In my view, those Indian Pharmaceutical companies, who are already global players in their own rights and relatively well versed with the nuances of this new ball game in other markets, will have a significant competitive edge over most other domestic players.

If it happens, the global-local companies will offer a tough competition to the local-global players, especially, in the branded generic space with greater cost efficiency.

So far as other domestic players are concerned, the fast changing environment could throw a new challenge to many, accelerating the consolidation process further within the Indian pharmaceutical industry.

As the new paradigm will herald, catalyzed by the above 10 chain events, there will be a metamorphosis in the way pharmaceutical marketing is practiced in India. A well-differentiated composite value delivery system would then, in all probability, be the name of the winning game.

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.

 

Two Paintings on the Same Canvas: ‘Truth About Drug Companies’ and ‘Protecting Access to Medicines’

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As the saying goes, “Great people think alike”, many thought leaders of very high credibility across the globe, seem to think almost in similar lines when it comes to improving access to medicines for a large section of the global population.

In this article, I shall briefly focus on two such instances, both revolving around the same centerpiece – one from India and the other from the land of ‘pharmaceutical innovation’ – America.

An interesting article written recently by the well-regarded Indian expert of global stature Dr. K. Srinath Reddy, President, Public Health Foundation of India (PHFI), reiterates emphatically,  “India must protect access to medicine”.

In a more focused context related to EU-FTA, the author wrote about possible adverse impact of more stringent product patent and regulatory data protection related issues on access to generic medicines in India and other developing countries. Thus, he argued that EU-FTA should be well negotiated by India and cautioned as  follows:

“It must be remembered that India needs to protect its vital interests in any trade agreement, just as other nations strive to. Our interest lies in protecting the lives and safeguarding the health of Indians, without permitting unreasonable restrictions on our ability to produce, use and even export, generic versions of drugs the patents of which have lapsed (or where compulsory licensing has been invoked to protect public health).

India needs to tread carefully while negotiating the FTA with the EU, so that the health of the Indian people is not compromised through provisions that shackle our generic drug industry.”

The debate has assumed a global dimension:

Such raging debates on a critical public health issue, like access to medicines, are also taking place in many other countries, as I write, including America, irrespective of the fact whether these are generic or patented drugs.

Marcia Angell, M.D, a faculty of Harvard Medical School and a former Editor in Chief of the world’s leading medical journal ‘The New England Journal of Medicine’ wrote an interesting book.

In this book titled “The Truth About the Drug Companies: ‪How They Deceive Us and What to Do About It”, she makes many interesting comments on the American pharmaceutical industry on access to medicines and the kind of pharmaceutical innovations that they are involved in.

The world noticed it:

This book arrested global attention and was extensively reviewed. Since, the author wrote more specifically about the American pharmaceutical industry, following are some excerpts quoted from her book reviews in the USA:

New York Times: “A scorching indictment of drug companies and their research and business practices…tough, persuasive and troubling.”

Boston Globe: “A sober, clear-eyed attack on the excesses of Drug Company power…a lucid, persuasive, and highly important book.”

Washington Post: “Always authoritative…[this book] delivers the message—that drug-company money and power is corrupting American medicine—in a convincing, no-nonsense manner.”

Some key issues raised in the book:

Like the above article of Dr. Reddy, here also the author raises some interesting issues related to the American drug companies. I am penning below some of those issues exactly as expressed by the author (verbatim):

  • “The magic words, repeated over and over like an incantation, are research, innovation, and American. Research. Innovation. American. It makes a great story.”
  • “R&D is a relatively small part of the budgets of the big drug companies—dwarfed by their vast expenditures on marketing and administration, and smaller even than profits.”
  • “The great majority of ‘new’ drugs are not new at all but merely variations of older drugs already on the market. These are called ‘me-too’ drugs.”
  • “If I’m a manufacturer and I can change one molecule and get another twenty years of patent rights, and convince physicians to prescribe and consumers to demand the next form of Prilosec, or weekly Prozac instead of daily Prozac, just as my patent expires, then why would I be spending money on a lot less certain endeavor, which is looking for brand-new drugs?”
  • “Over the past two decades the pharmaceutical industry has moved very far from its original high purpose of discovering and producing useful new drugs. Now primarily a marketing machine to sell drugs of dubious benefit, this industry uses its wealth and power to co-opt every institution that might stand in its way, including the US Congress, the FDA, academic medical centers, and the medical profession itself. (Most of its marketing efforts are focused on influencing doctors, since they must write the prescriptions.)”
  • “Now universities, where most NIH-sponsored work is carried out, can patent and license their discoveries, and charge royalties. Similar legislation permitted the NIH itself to enter into deals with drug companies that would directly transfer NIH discoveries to industry.”
  • “Many medical schools and teaching hospitals set up “technology transfer” offices to help in this activity and capitalize on faculty discoveries. As the entrepreneurial spirit grew during the 1990s, medical school faculty entered into other lucrative financial arrangements with drug companies, as did their parent institutions.”
  • “One of the results has been a growing pro-industry bias in medical research—exactly where such bias doesn’t belong.”
  • “In the 1990s, Congress enacted other laws that further increased the patent life of brand-name drugs. Drug companies now employ small armies of lawyers to milk these laws for all they’re worth—and they’re worth a lot. The result is that the effective patent life of brand-name drugs increased from about eight years in 1980 to about fourteen years in 2000.”
  • “The biggest single item in the budget is neither R&D nor even profits but something usually called ‘marketing and administration – a name that varies slightly from company to company.”
  • “The industry is fighting these efforts—mainly with its legions of lobbyists and lawyers. It fought the state of Maine all the way to the US Supreme Court, which in 2003 upheld Maine’s right to bargain with drug companies for lower prices, while leaving open the details. But that war has just begun, and it promises to go on for years and get very ugly.”
  • “The fact that Americans pay much more for prescription drugs than Europeans and Canadians is now widely known.”
  • “There are very few drugs in the pipeline ready to take the place of blockbusters going off patent. In fact, that is the biggest problem facing the industry today, and its darkest secret. All the public relations about innovation is meant to obscure precisely this fact.”
  • “Of the 78 drugs approved by the FDA in 2002, only 17 contained new active ingredients, and only seven of these were classified by the FDA as improvements over older drugs.”
  • “While there is no doubt that genetic discoveries will lead to treatments, the fact remains that it will probably be years before the basic research pays off with new drugs. In the meantime, the once-solid foundations of the big pharma colossus are shaking.”
  • “Clearly, the pharmaceutical industry is due for fundamental reform. Reform will have to extend beyond the industry to the agencies and institutions it has co-opted, including the FDA and the medical profession and its teaching centers.”
  • “The me-too market would collapse virtually overnight if the FDA made approval of new drugs contingent on their being better in some important way than older drugs already on the market.”
  • “A second important reform would be to require drug companies to open their books. Drug companies reveal very little about the most crucial aspects of their business.”
  • “But the one thing legislators need more than campaign contributions is votes. That is why citizens should know what is really going on. Contrary to the industry’s public relations, they don’t get what they pay for. The fact is that this industry is taking us for a ride, and there will be no real reform without an aroused and determined public to make it happen.”

An opposite view:

On this an article in Forbes Magazine commented as follows:

“The problem with Angell’s arguments is that they are rife with inaccuracies and fallacies. Furthermore, she makes no accounting for changes in the industry that have occurred over the last decade.”

“It is time for those in the medical profession to spur a more truthful and factual discussion about the pharmaceutical industry and its role in the discovery and development of new medicines. The pharmaceutical industry is a key player in the evolution of healthcare and this needs to be recognized if the industry is to operate effectively.”

Conclusion:

One of the key counter arguments that very often comes up in this area, including in India is, the protection of Intellectual Property Rights (IPR) is the responsibility of the Government concerned at any cost, even if such protective measures severely restrict access to these drugs to a large population of the society across the globe, due to ‘affordability’ considerations.

It is also claimed that, to come out with innovative medicines, large pharmaceutical companies invest a huge amount of money and time towards R&D related activities.

Thus, the global innovator companies, by and large, with a few exceptions though, believe that stricter enforcement of stringent patent laws by the Governments is the only answer to foster innovation within the industry. Such stringent measures, as they argue, will help them keep investing in R&D to meet the ‘unmet needs’ of patients on a continuous basis.

However, as we have seen above, many experts, like Harvard faculty Marcia Angell and Dr. K. Srinath Reddy have strong and quite different view points. It is certain that the debate on access to affordable medicines is not going to die down, at least any time soon.

Despite all these, it is not difficult, I reckon, to identify an emerging but a clear trend indicating, the priority of the Governments to protect public health interest in the longer term, will ultimately prevail in most parts of the world, including India.

Consequently, the world will probably witness more and more new government policies and legal frameworks in this area striking a right balance between improving access to medicines and fostering innovation, as the countries move on.

That said, taking note of the above two paintings, as it were, painted on the same canvas of ‘improving access to medicines for all’, is it not amazing to note a striking similarity in the thought pattern between two highly credible and independent think tanks, belonging to the oldest and largest democracies of the planet earth, to ensure affordable medicines 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.

Patent Conundrum: Ignoring India Will Just Not be Foolhardy, Not An Option Either

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The recent verdict of the Supreme Court against Novartis, upholding the decision of the Indian Patent Office (IPO) against grant of patent to their cancer drug Glivec, based on Section 3(d) of the Indian Patents Act, has caused a flutter and utter discontentment within the global pharmaceutical industry across the world.

However, on this verdict, the Director General of the World Trade Organization (WTO), Pascal Lamy has reportedly opined, “Recent decisions by the courts in India have led to a lot of protest by pharmaceutical companies. But decisions made by an independent judiciary have to be respected as such.”

The above decision on Glivec came close on the heels of IPO’s decision to grant its first ever Compulsory License (CL) to the Indian drug manufacturer Natco, last year, for the kidney cancer drug Nexavar of Bayer.

Interestingly, no member of the World Trade Organization has raised any concern on these issues, as the Head of WTO, Lamy recently confirmed, “No country has objected to India issuing compulsory license or refusing patent for drugs.” He further added, “TRIPS provides flexibilities that allow countries to issue compulsory licenses for patented medicines to address health urgencies.”

That said, simmering unhappiness within innovator companies on various areas of Indian patent laws is indeed quite palpable. Such discontent being expressed by many interested powerful voices is now reverberating in the corridors of power both in India and overseas.

Point and Counterpoint:

Although experts do opine that patent laws of India are well balanced, takes care of public health interest, encourage innovation and discourage evergreening, many global innovator companies think just the opposite. They feel, an appropriate ecosystem to foster innovation does not exist in India and their IP, by and large, is not safe in the country. The moot question is, therefore, ‘Could immediate fallout of this negative perception prompt them to ignore India or even play at a low key in this market?’

Looking at the issue from Indian perspective:

If we take this issue from the product patent perspective, India could probably be impacted in the following two ways:

  1. New innovative products may not be introduced in India
  2. The inflow of Foreign Direct Investments (FDI) in the pharma sector may get seriously restricted.

Let us now examine the possible outcome of each of these steps one at a time.

Will India be deprived of newer innovative drugs?

If the innovator companies decide to ignore India by not launching such products in the country, they may take either of the following two steps:

  1. Avoid filing a patent in India
  2. File a patent but do not launch the product

Keeping the emerging scenario in perspective, it will be extremely challenging for the global players to avoid the current patent regime in India, even if they do not like it. This is mainly because of the following reasons:

1. If an innovator company decides not to file a product patent in India, it will pave the way for Indian companies to introduce copy-cat versions of the same in no time, as it were, at a fractional price in the Indian market.

2. Further, there would also be a possibility of getting these copycat versions exported to the unregulated markets of the world from India at a very low price, causing potential business loss to the innovator companies.

3. If any innovator company files a product patent in India, but does not work the patent within the stipulated period of three years, as provided in the patent law of the country, in that case any Indian company can apply for CL for the same with a high probability of such a request being granted by the Patent Controller. 

A market too attractive to ignore:

India as a pharmaceutical market is quite challenging to ignore, despite its ‘warts and moles’ for various reasons. The story of increasing consumption of healthcare in India, including pharmaceuticals, especially when the country is expected to be one of the top 10 pharmaceutical markets in the world, is too enticing for any global player to ignore, despite unhappiness in various areas of business.

Increasing affordability of the fast growing middle-class population of the country will further drive the growth of this market, which is expected to register a value turnover of US$50 billion by 2020, as estimated by PwC.

PwC report also highlights that a growing and increasingly sophisticated pharmaceutical industry of India is gradually becoming a competitor of global pharma in some key areas, on the one hand and a potential partner in others, as is being witnessed today by many.

Despite urbanization, nearly 70 percent of the total population of India still lives in the rural villages. Untapped potential of the rural markets is expected to provide another boost to the growth momentum of the industry.

Too enticing to exit:

Other ‘Enticing Factors’ for India, in my views, may be considered as follows:

  • A country with 1.13 billion populations and a GDP of US$ 1.8 trillion in 2011 is expected to grow at an average of 8.2 percent in the next five-year period.
  • Public health expenditure to more than double from 1.1 percent of the GDP to 2.5 percent of GDP in the Twelfth Five Year Plan period (2012-17)
  • Government will commence rolling out ‘Universal Health Coverage’ initiative
  • Budget allocation of US$ 5.4 billion announced towards free distribution of essential medicines from government hospitals and health centers.
  • Greater plan outlay announced for NRHM, NUHM and RSBY projects.
  • Rapidly growing more prosperous middle class population of the country.
  • Fast growing domestic generic drug manufacturers who will have increasing penetration in both local and emerging markets.
  • Rising per capita income of the population and relative in-efficiency of the public healthcare systems will encourage private healthcare services of various types and scales to flourish.
  • Expected emergence of a robust health insurance model for all strata of society as the insurance sector is undergoing reform measures.
  • Fast growing Medical Tourism.
  • World-class local outsourcing opportunities for a combo-business model with both patented and branded generic drugs.

Core issues in patent conundrum:

I reckon, besides others, there are three core issues in the patent conundrum in India as follows, other issues can be sorted out by following:

1. ‘Pricing’ strategy of patented products: A large population across the globe believes that high prices of patented products severely restrict their access to many and at the same time increases the cost of healthcare even for the Governments very significantly.

2. To obtain a drug patent in India, passing the test of inventive steps will not just be enough, the invention should also pass the acid test of patentability criteria, to prevent evergreening, as enshrined in the laws of the land. Many other countries are expected to follow India in this area, in course of time. For example, after Philippines and Argentina, South Africa now reportedly plans to overhaul its patent laws by “closing a loophole known as ‘ever-greening’ used by drug companies to extend patent protection and profits”. Moreover, there does not seem to be any possibility to get this law amended by the Indian Parliament now or after the next general election.

3. Probably due to some legal loopholes, already granted patents are often violated without following the prescribed processes of law in terms of pre or post – grant challenges before and after launch of such products. There is a need for the government to plug all such legal loopholes, after taking full stock of the prevailing situation in this area, without further delay.

Some Global CEOs spoke on this issue:

In this context the Global CEO of GSK commented in October 18, 2012 that while intellectual property protection is an important aspect of ensuring that innovation is rewarded, the period of exclusivity in a country should not determine the price of the product. Witty said, ‘At GSK we will continuously strive to defend intellectual property, but more importantly, defend tier pricing to make sure that we have appropriate pricing for the affordability of the country and that’s why, in my personal view, our business in India has been so successful for so long.’

Does all in the global pharma industry share this view? 

Not really. All in the global pharmaceutical industry does not necessarily seem to share the above views of Andrew Witty and believe that to meet the unmet needs of patients, the Intellectual Property Rights (IPR) of innovative products must be strongly protected by the governments of all countries putting in place a robust product patent regime and the pricing of such products should not come in the way at all.

The industry also argues that to recover high costs of R&D and manufacturing of such products together with making a modest profit, the innovator companies set a product price, which at times may be perceived as too high for the marginalized section of the society, where government intervention is required more than the innovator companies. Aggressive marketing activities, the industry considers, during the patent life of a product, are essential to gain market access for such drugs to the patients.

In support of the pharmaceutical industry the following argument was put forth in a recent article:

“The underlying goal of every single business is to make money. People single out pharmaceutical companies for making profits, but it’s important to remember that they also create products that save millions of lives.”

How much then to charge for a patented drug? 

While there is no single or only right way to arrive at the price of an IPR protected medicine, how much the pharmaceutical manufacturers will charge for such drugs still remains an important, yet complex and difficult issue to resolve, both locally and globally.

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

Should India address ‘Patented Products’ Pricing’ issue with HTA model?

Though some people hate the mechanism of Health Technology Assessment (HTA) to determine price of a patented drug, I reckon, it could be a justifiable and logical answer to price related pharmaceutical patent conundrum in India.

Health Technology Assessment, as many will know, examines the medical, economic, social and ethical implications of the incremental value of a medical technology or a drug in healthcare.

HTA, in that process, will analyze the costs of inputs and the output in terms of their consequences or outcomes. With in-depth understanding of these components, the policy makers decide the value of an intervention much more precisely.

Companies like, Merck, Pfizer and GSK have reportedly imbibed this mechanism to arrive at a value of the invention. National Pharmaceutical Pricing Authorities (NPPA) may well consider this approach for a well judged, scientific and transparent pricing decision mechanism in India, especially for innovative new drugs.

Could local manufacturing be an option?

Considering relatively higher volume sales in India, to bring down the price, the global companies may consider manufacturing their patented products in India with appropriate technology transfer agreements being in place and could even make India as one of their export hubs, as a couple of their counterparts have already initiated.

Accepting the reality responsibly:

In view of the above, the global pharmaceutical players, as experts believe, should take note of the following factors. All these could help, while formulating their India-specific game plan to be successful in the country, without worrying much about invocation of Compulsory License (CL) for not meeting ‘Reasonably Affordable Price’ criterion, as provided in the Patents Act of the country:

  • While respecting IPR and following Doha declaration, the government focus on ‘reasonably affordable drug prices’ will be even sharper due to increasing pressure from the Civil Society, Indian Parliament and also from the Courts of the country triggered by ‘Public Interest Litigations (PIL)’
  • India will continue to remain within the ‘modest-margin’ range for the pharmaceutical business with marketing excellence driven volume turnover.
  • Although innovation will continue to be encouraged with IPR protection, the amended Patents Act of India is ‘Public Health Interest’ oriented, including restrictions on patentability, which, based on early signals, many other countries are expected to follow as we move on.
  • This situation though very challenging for many innovator companies, is unlikely to change in the foreseeable future, even under pressure of various “Free Trade Agreements (FTA)”.  

Sectors Attracting Highest FDI Equity inflows:

When one looks at the FDI equity inflow from April 2000 to March 2013 period as follows, it does not appear that FDI inflow in Drugs and Pharmaceuticals had any unusual impact due to ‘Patent Conundrums’ in the country at any time:

Ranks Sector

US$ Million

1. Service Sector

37,151
2. Construction Development:(Township, Housing, Built-up infrastructure)

22,008
3 Telecommunication(Radio paging, Cellular mobile,Basic telephone services)

12,660
4 Computer Software &Hardware

11,671
5 Drugs & Pharmaceuticals

10,309
6 Chemical

8,861
7 Automobile Industry

8,061
8 Power

7,828
9 Metallurgical Industries

7,434
10 Hotel & Tourism

6,589

Further, if we look at the FDI trend of the last three years, the conclusion probably will be similar.

Year

US$ Million.
2010-11

177.96
2011-12

2,704.63
2012-13

1,103.70

(Source: Fact Sheet on Foreign Investments, DIPP, Government of India)

Conclusion:

In search of excellence in India, global pharmaceutical companies will need to find out innovative win-win strategies adapting themselves to the legal requirements for business in the country, instead of trying to get the laws changed.

India, at the same time, should expeditiously address the issue of blatant patent infringements by some Indian players exploiting the legal loopholes and set up fast track courts to resolve all IP related disputes without inordinate delay.

Responsible drug pricing, public health oriented patent regime, technology transfer/local manufacturing of patented products and stringent regulatory requirements in all pharmaceutical industry related areas taking care of patients’ interest, are expected to be the key areas to address in the business models of global pharmaceutical companies for India.

Moreover,it is worth noting that any meaningful and long term FDI in the pharmaceutical industry of India will come mostly through investments in R&D and manufacturing. Such FDI may not be forthcoming without any policy compulsions, like in China. Hence, many believe, the orchestrated bogey of FDI for the pharmaceutical industry in India, other than brownfield acquisitions in the generics space, is just like dangling a carrot, as it were, besides being blatantly illusive.

Even with all these, India will continue to remain too lucrative a pharmaceutical market to ignore by any. Thus, I reckon, despite a high decibel patent conundrum, any thought to ignore or even be indifferent to Indian pharmaceutical market by any global player could well be foolhardy.

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.

 

More Glivec Like Deals in China and Mounting Global Challenges: Innovators poised Joining Biosimilar Bandwagon

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Pressure from the emerging markets on pricing of patented products is mounting fast. This time the country involved is China.

Recently, the Health Minister of China who stepped down last month after a seven-year stint in the top health job reportedly commented that western drugmakers will require to give hefty subsidies and forgo significant amount of profit on expensive cancer drugs, if they want access to huge market of China. He further voiced as follows:

“If the cost (of patented drugs) is too high, maybe only a few percent of patients can benefit. If we can arrange an appropriate, acceptable, affordable price, then you can have a huge market.”

‘Glivec deal’ in China: 

In the same report, it was indicated that in China Novartis ultimately agreed to donate three doses of its leukemia drug Glivec for every one sold to the government.

It is expected that many more such deals will take place in China.

The situation to get more challenging in the emerging markets: 

Many experts believe that due to high cost of patented drugs, especially biologics, negotiating hefty discounts with the Governments may be the best alternative for the innovator companies to avoid any possibilities of Compulsory Licensing (CL), like what happened to Bayer’s cancer drug Nexavar in India.

An opportunity in biosimilar drugs: 

Biologic drugs came to the international market slightly more than three decades ago, in 1980s. Growing at a scorching pace, the value turnover of these products exceeded US$ 138 billion in 2010 (IMS Health).

Launch of biologics like, Recombinant Insulin, Human Growth Hormone (HGH), Alteplase, Erythropoietin (EPOs), Granulocyte Colony Stimulating Factors (G-CSFs) and Monoclonal Antibodies (MAbs) kept fueling the market growth further.

Patent expiry of a number of biologic drugs over a period of next five years, especially in areas like, various types of cancer, diabetes and rheumatoid arthritis, besides many others, will help opening a huge window of opportunity for the global biosimilar players, including from India, to reap a rich harvest.

Global innovators joining the bandwagon: 

After a dream-run with high priced patented drugs for a reasonably long time, now stung by the current reality in various developed and emerging markets and factoring-in the width/depth/robustness of their own research pipeline, many global players have started taking a hard look at the emerging opportunities offered by biosimilar drugs.

Moreover, high price of original biologic drugs, cost containment pressure by various Governments, encouragement of generic prescriptions, large number of such drugs going off patent and growing demand of their low cost alternatives across the world, are making biosimilar market more and more lucrative from the global business perspective to all interested players, including from India.

According to Bloomberg Industries (2013), during the next six years biologic drugs with a total annual sales turnover of US$ 47 billion in 2012, will go off patent.

Sniffing opportunities for business growth, as stated above, many hard-nosed large research-based global pharmaceutical companies, currently fighting a challenging battle also in the ground of a tougher ‘patent cliff’, have started venturing into the biosimilar market, that too in a mega scale.

Some of them have already initiated developing biosimilar versions of blockbuster biologics, as reported below:

Originator Product Indication Biosimilar development by:
Roche/Genentech Rituxan Rheumatoid arthritis Boehringer Ingelheim
Roche/Genentech Herceptin, Rituxan Breast Cancer, Rheumatoid arthritis Pfizer
Roche/Genentech Rituxan Non-Hodgkin’s lymphoma Novartis
Johnson & Johnson Remicade Rheumatoid arthritis Hospira

Source: Bloomberg BusinessWeek

Thus, I reckon, continuous quest for development of cost-effective alternatives to high-priced biologic medicines would keep on propelling the growth of biosimilar drugs, across the world.

Glivec maker Novartis fought a court battle to launch the first ‘Biosimilar drug’ in America: 

In mid-2006, US FDA approved its first ‘biosimilar drug’-Omnitrope of Sandoz, the generic arm of the Glivec maker Novartis, following a Court directive. Omnitrope is a copycat version of Pfizer’s human growth hormone Genotropin. Interestingly, Novartis had also taken the US FDA to court for keeping its regulatory approval pending for a while in the absence of a well-defined regulatory pathway for ‘biosimilar drugs’ in the USA at that time.

More interestingly, having received the US-FDA approval, the CEO of Sandoz (Novartis) had then commented as follows:

“The FDA’s approval is a breakthrough in our goal of making high-quality and cost-effective follow-on biotechnology medicines like, Omnitrope available for healthcare providers and patients worldwide”.

Biosimilar market started shaping-up:

Internationally most known companies in the biosimilar drugs space are Teva, Stada, Hospira and Sandoz. Other large research based global innovator pharmaceutical companies, which so far have expressed interest in the field of biosimilar drugs, are Pfizer, Astra Zeneca, Merck and Eli Lilly.

Following are examples of some biosimilar drug related initiatives of the global players as the market started developing:

  • Merck announced its entry into the biosimilar drugs business on February 12, 2009 with its acquisition of Insmed’s portfolio for US$ 130 million. The company also paid US$ 720 million to Hanwha for rights to its copy of Enbrel of Amgen.
  • Samsung of South Korea has set up a biosimilars joint venture with Quintiles to create a contract manufacturer for biotech drugs.
  • Celltrion and LG Life Sciences have expressed global ambitions in biosimilar drugs.
  • Some leading global innovator biotech companies also like, Biogen Idec and Amgen have reportedly been mulling entry into biosimilar market.

According to Reuter (June 22, 2011), Merck, Sandoz, Teva and Pfizer are expected to emerge stronger in the global biosimilar market, in the years ahead. 

Why is still so low penetration of lower cost biosimilar drugs?

Although at present over 150 different biologic medicines are available globally, just around 11 countries have access to low cost biosimilar drugs, India being one of them. Supporters of biosimilar medicines are indeed swelling as time passes by.

It has been widely reported that the cost of treatment with patented biologic drugs can vary from US$ 100,000 to US$ 300,000 a year. A 2010 review on biosimilar drugs published by the Duke University highlights that biosimilar equivalent of the respective biologics would not only reduce the cost of treatment, but would also improve access to such drugs significantly for the patients across the globe. (Source: Chow, S. and Liu, J. 2010, Statistical assessment of biosimilar products, Journal of Biopharmaceutical Statistics 20.1:10-30)

Now with the entry of global pharma majors, the biosimilar market is expected to get further heated up and develop at a much faster pace with artificial barriers created by vested interests, if any, being removed.

Recent removal of regulatory hurdles for the marketing approval of such drugs in the US  will indeed be the key growth driver.

Other growth drivers:

According to a study (2011) conducted by Global Industry Analysts Inc., besides recent establishment of the above regulatory guidelines for biosimilars in the US, the key growth drivers for global biosimilar market, will be as follows:

▪   Patent expiries of blockbuster biologic drugs

▪   Cost containment measures of various governments

▪   Aging population

▪   Supporting legislation in increasing number of countries

The business potential in India:

The size of biotech industry in India is estimated to be around US$ 4 billion by 2015 with a scorching pace of growth driven by both local and global demands (E&Y Report 2011).

The biosimilar drugs market in India is expected to reach US$ 2 billion in 2014 (source: Evalueserve, April 2010).

Recombinant vaccines, erythropoietin, recombinant insulin, monoclonal antibody, interferon alpha, granulocyte cell stimulating factor like products are now being manufactured by a number of domestic biotech companies like, Biocon, Panacea Biotech, Wockhardt, Emcure, Bharat Biotech, Serum Institute of India and Dr. Reddy’s Laboratories (DRL), besides others.

DRL is the largest biosimilar player in India with an impressive product portfolio. Reditux of DRL is the world’s first Biosimilar monoclonal antibody, which is a copy version of Mabthera/ Rituxan of Roche and costs almost 50 percent less than the original brands.

Some of the Biosimilar products of the Indian Companies are as follows:

Indian Company

Biosimilar Product
Dr Reddy’s Lab Grafeel, Reditux, Cresp
Intas Neukine, Neupeg, Intalfa, Epofit
Shantha Biotech/Merieux Alliance Shanferon,Shankinase,Shanpoietin
Reliance Life Sciences ReliPoietin, ReliGrast, ReliFeron, MIRel
Wockhardt Wepox, Wosulin
Biocon Eripro, Biomab, Nufil, Myokinase, Insugen

(Source: Stellarix Consultancy Services)

The cost of development of Biosimilars in India is around US$ 10-20 million, which is expected to go up, as “Biosimilar Guidelines” are now in place for marketing approval of such products in India.

The ultimate objective of all these Indian companies will be to get regulatory approval of their respective biosimilar products in the US and the EU, either on their own or through collaborative initiatives.

Indian players making rapid strides:

As stated above, biosimilar version of Rituxan (Rituximab) of Roche used in the treatment of Non-Hodgkin’s lymphoma has already been developed by DRL in India. It also has developed Filgastrim of Amgen, which enhances production of white blood cell by the body and markets the product as Grafeel in India.

Similarly Ranbaxy has collaborated with Zenotech Laboratories to manufacture G-CSF.

On the other hand Glenmark reportedly is planning to come out with its first biotech product soon from its biological research establishment located in Switzerland.

Indian pharmaceutical major Cipla reportedly has invested around US$ 60 million in 2010 to acquire stakes of MabPharm in India and BioMab in China and is planning to launch a biosimilar drug in the field of oncology by 2013.

Another large pharmaceutical company of India, Lupin signed a deal with a private specialty life science company NeuClone Pty Ltd of Sydney, Australia for their cell-line technology. Lupin reportedly will use this technology for developing biosimilar drugs in the field of oncology, the first one of which, will reportedly be launched in India by 2013.

The global Market:

In 2011 the turnover of Biologic drugs increased to over US$ 175 billion in the total market of US$ 847 billion. The sale of Biosimilar drugs outside USA exceeded US$ 1 billion.

Six biologic drugs featured in the top 10 best selling global brands in 2012 with Humira of AbbVie emerging as the highest-selling biologics during the year.  Roche remained the top company by sales for biologics with anticancer and monoclonal antibodies.

According to IMS Health report, by 2015, sales of biosimilars are expected to reach between US$ 1.9 – 2.6 billion. The report also states that this market has the potential to be the single fastest-growing biologics sector in the next five years.

Cost of biosimilar development in the developed markets:

The process of developing a biosimilar drug is complex and requires significantly more investment, technical capabilities and clinical trial expertise than any small molecule generic drug. As per industry sources, average product developmental cost ranges between US$ 100 and 250 million in the developed markets, which is several times higher than the same associated with development of small molecule generics, ranging around US$ 1to 4 million.

All these factors create a significant market entry barrier for many smaller players with similar intent but less than adequate wherewithal.

Even higher market entry barrier with ‘second generation’ biosimilar drugs:

Emergence of second generation branded biosimilar products such as PEGylated products and PegIntron (peginterferon alpha), Neulasta (pegfilgrastim) and insulin analogs have the potential to reduce the market size for first generation biosimilar drugs creating significant entry barrier.

Negotiating the entry barriers:

As stated above, the barriers to market entry for biosimilar drugs are, in general, are much higher than any small molecule generic drugs. In various markets within EU, many companies face the challenge of higher development costs for biosimilar drugs due to stringent regulatory requirements and greater lead-time for product development.

Navigating through such tough regulatory environment will demand different type of skill sets, especially for the generic companies not only in areas of clinical trials and pharmacovigilance, but also in manufacturing and marketing. Consequently, the investment needed to take biosimilar drugs from clinical trials to launch in the developed markets will indeed be quite significant.

The future potential:

According to an IMS Health study, the emerging markets will drive biosimilar market growth with significantly more number of patients. The report estimates that over a period of time US will emerge as the number one global biosimilars market.

By 2020, emerging markets and the US are expected to register a turnover of US$11 billion and US$ 25 billion representing a share of 4 percent to 10 percent of the total global biologics market, respectively.

The report estimates that overall penetration of biosimilars within the off-patent biological market will reach up to 50 percent by 2020, assuming a price discount in the range of 20 to 30 percent.

Is 12 years exclusivity in the US a significant entry barrier?

In the US, the innovator companies get 12 years exclusivity for their original biologic drugs from the date of respective marketing approvals by the USFDA.

The BPCI Act clearly specifies that applications for ‘biosimilar drugs’ to the USFDA will not be made effective by the regulator before 12 years from the date of approval of the innovators’ products. In addition, if the original product is for pediatric indications, the 12-years exclusivity may get an extension for another six months.

The key point to note here is, if the USFDA starts its review process for the ‘biosimilar drugs’ only after the ’12 year period’, the innovator companies will effectively get, at least, one additional year of exclusivity over and above the ’12 year period’, keeping applicants for ‘biosimilar drugs’ waiting for that longer.

Conclusion:

As stated above, with around 40 percent cost arbitrage and without compromising on the required stringent international regulatory standards, the domestic ‘biosimilar’ players should be able to establish India as one of the most preferred manufacturing destinations to meet the global requirements for such drugs, just as small molecule generic medicines.

With experience in conforming to stringent US FDA manufacturing standards, having largest number of US FDA approved plants outside USA, India has already acquired a clear advantage in manufacturing high technology chemical based pharmaceutical products in the country. Now with significant improvement in conformance to Good Clinical Practices (GCP) and honed skill sets in the field of biologics, Indian biosimilar players are clearly poised to catapult themselves to even a higher growth trajectory, either on their own or with appropriate collaborative arrangements with the international partners.

Thus, the initiatives of joining the biosimilar bandwagon by the hard-nosed research based global players, I reckon, will ultimately get translated into a win-win advantage for India in the rapidly evolving pharmaceutical space of the world.

Besides, like what they had to do in China, working with the Government to put in place a robust and win-win mechanism of ‘Price Negotiation for Patented Drugs’ in India could augur well for the global players of pharmaceutical and biologic drugs. This mechanism may also help putting forth even a stronger argument against any Government initiative to grant CL on the pricing ground for expensive patented drugs in India.

With all these developments, patients will be the ultimate winners having much greater access to both innovative medicines and biosimilar drugs than what they have today, fetching a huge relief to all right thinking population in the country.

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.

Does the Landmark Glivec Judgment Discourage Innovation in India?

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No, I do not think so. The 112 pages well articulated judgment of the Supreme Court of India delivered on April 1, 2013, does not even remotely discourage innovation in India, including much talked about ‘incremental innovation’. This landmark judgment reconfirms the rules of the game for pharmaceutical innovation, as captured in the Indian Patents Act 2005.

When one reads the judgment, point 191 in page number 95 very clearly states as follows:

“191. We have held that the subject product, the beta crystalline form of Imatinib Mesylate, does not qualify the test of Section 3(d) of the Act but that is not to say that Section 3(d) bars patent protection for all incremental inventions of chemical and pharmaceutical substances. It will be a grave mistake to read this judgment to mean that section 3(d) was amended with the intent to undo the fundamental change brought in the patent regime by deletion of section 5 from the Parent Act. That is not said in this judgment.”

Thus all ‘incremental innovations’, which some people always paint with a general broad brush of ‘evergreening’, should no longer be a taboo in India. The judgment just says that Glivec is not patentable as per Section 3(d) of Indian Patents Act based on the data provided and arguments of Novartis.

To me, the judgment does also not signal that no more Glivec like case will come to the Supreme Court in future. It vindicated inclusion of Section 3(d) in the amended Indian Patents Act 2005.

It is interesting to note that honorable Supreme Court itself used the terminology of ‘incremental innovation’ for such cases.

That said, I find it extremely complex to imagine what would have happened, if the judgment had gone the opposite way.

A critical point to ponder:

The judgment will also mean that all those products, having valid product patents abroad, if fail to meet the requirements of Section 3(d), will not be patentable in India, enabling introduction of their generic equivalents much sooner in the country and at the same time causing a nightmarish situation for their innovators.

However, this again, in no way, is an outcome of this judgement or a new development, as stated above. It is just vindication of the intent behind inclusion of Section 3(d) in the amended Indian Patents Act, when it was enacted by the Parliament of India in 2005.

Patentability of ‘Incremental Innovations’ in India:

Patentability criteria for any ‘incremental innovations’ has been defined in the Section 3(d) of the Indian statute as follows:

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

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

Supreme Court interpretation of the term “Efficacy” in Section 3(d): 

The Honorable Supreme Court in page 90 of its above order under point 180 stated that in case of medicines, efficacy can only be “therapeutic efficacy”, which must be judged strictly and narrowly. The interpretation goes as follows:

180. “What is “efficacy”? Efficacy means ‘the ability to produce a desired or intended result’. Hence, the test of efficacy in the context of section 3(d) would be different, depending upon the result the product under consideration is desired or intended to produce. In other words, the test of efficacy would depend upon the function, utility or the purpose of the product under consideration. Therefore, in the case of a medicine that claims to cure a disease, the test of efficacy can only be “therapeutic efficacy”.

The Honorable Court under the same point 180 further elaborated:

“With regard to the genesis of section 3(d), and more particularly the circumstances in which section 3(d) was amended to make it even more constrictive than before, we have no doubt that the “therapeutic efficacy” of a medicine must be judged strictly and narrowly…Further, the explanation requires the derivative to ‘differ significantly in properties with regard to efficacy’. What is evident, therefore, is that not all advantageous or beneficial properties are relevant, but only such properties that directly relate to efficacy, which in case of medicine, as seen above, is its therapeutic efficacy.” 

Based on this interpretation of Section 3(d), the Honorable Supreme Court of India ordered that Glivec does not fulfill the required criteria of the statute.

The rationale behind Section 3(d):

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

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

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

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

Possible implications to IPA challenge:

If the argument, as expressed above in the IPA study, is true by any stretch of imagination, in that case, there exists a theoretical possibility of at least 86 already granted product patents to get revoked. This will invite again another nightmarish situation for innovators.

Examples of revocation of patents in India:

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

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

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

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

Though Roche was granted a patent for Pegasys by the Indian Patent Office (IPO) in 2006, this was subsequently contested by a post-grant challenge by the large Indian pharma player – Wockhardt and the NGO Sankalp Rehabilitation Trust (SRT) on the ground that Pegasys is neither a “novel” product nor did it demonstrate ‘inventiveness’, as required by Section 3(d) of Patents Act of India 2005.

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

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

Patent challenges under section 3(d) may come up even more frequently in future:

Some observers in this field have expressed, although ‘public health interest’ is the primary objective for having Section 3(d) in the Indian Patents Act 2005, many generic companies, both local and global, have already started exploiting this provision as a part of their ‘business strategy’ to improve business performance in India, especially when an  injunction is usually not being granted by the honorable Courts for such cases on public health interest ground.

Thus, as stated above, there is likely to be many more cases like, Glivec coming before the Supreme Court in the years ahead.

Another related development of the last week:

It has been reported that American pharma major MSD has last week filed a suit in the Delhi High Court against Indian pharma major – Glenmark for alleged patent violation of its leading anti-diabetic drugs Januvia and Janumet. In this case also no interim injunction has reportedly been granted to MSD by the Honorable Delhi High Court.

Glenmark has stated through a media report, “It is a responsible company and has launched the products after due diligence and research.” The company has also announced that their version of the molecule named Zita and Zita Met will be available to patients at a 20 percent discount to MSD’s price.

Hence, once again, the Indian court to decide, the balance of justice would now point to which direction.

Government has no role to play – patent challenge is a legal process across the world:

The proponents of ‘no change required in the Section 3(d)’ argue, ‘Patent Challenge’ is a legal process all over the world, the Government has hardly got any role to play in settling such disputes. The law should be allowed to take its own course for all disputes related to the Patents Act of the country, including Section 3(d).

They also opine that India must be allowed to follow the law of justice without casting aspersions on the knowledge and biases of the Indian judiciary for vested interests.

That said, there is certainly an urgent need to add speed to this legal process by setting up ‘Fast-track Courts’ for resolving all Intellectual Property (IP) related disputes in a time bound manner.

Arguments against Section 3(d):

Opposition to the Section 3(d) counter-argues by saying, this is a critical period for India to help fostering an appropriate ecosystem for innovation in the country. This group emphasizes, “Providing the right incentives for incremental pharmaceutical innovation can move India forward on this path and encourage the development of drug products that meet the needs of Indian patients. Reforming Section 3(d) to encourage and protect incremental pharmaceutical innovation would create such incentives and help India become a true powerhouse of innovation.”

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

Importance of ‘Incremental Innovation’ in India:

Incremental innovations are indeed very important for the country and have been benefiting the patients immensely over decades, across the world.

A report titled, “The Value Of Incremental Pharmaceutical Innovation” highlighted as follows:

  • As per the National Knowledge Commission, while 37.3% of Indian companies introduced breakthrough innovations in recent years, no fewer than 76.4% introduced incremental innovations.
  • 60 percent of the drugs on the World health Organization’s essential Drug list reflect incremental improvements over older drugs.

The report indicates some of the benefits of ‘Incremental Pharmaceutical Innovation’ for India as follows:

  1. Improved quality of drug products, including products that are better suited to India’s climate.
  2. Development of treatments for diseases that are prevalent in India for which new drug discovery is currently limited or otherwise inadequate.
  3. Increasing likelihood that for every therapeutic class, there is a treatment to which an Indian patient will respond.
  4. Development of the R&D capacity and expertise
 of Indian pharmaceutical companies.
  5. Reduction of healthcare and other social costs in India through improved drug quality and selection.
  6. Increased access to medicine as a result of price competition.

The study concluded by saying that Section 3(d) potentially precludes the patenting of hundreds of incremental pharmaceutical innovations that Indian companies are attempting to patent and commercialize outside India.

There are umpteen numbers of examples that can ably demonstrate, ‘incremental innovation’ of the pharmaceutical innovators help significantly improving the efficacy and safety of existing drugs. All such innovations should in no way be considered “frivolous” as they have very substantial and positive impact in improving conditions of the ailing patients.

Be that as it may, the Supreme Court judgment has categorically mentioned that all ‘Incremental innovations’ should conform to the requirement of the Section 3(d) of the statute.

“West should learn from India’s high patent standards”

An article appeared just yesterday written by a well-regarded Indian economist recommended, “West should learn from India’s high patent standards”. It observed that    over-liberal patent system of the West is now broken and it should learn from India’s much tougher patent system.

Patent monopolies needs to be given only for genuine innovations, as defined in the Indian Patents Act 2005, where the public benefits clearly exceed the monopoly cost.

The author concluded by saying, “This means setting a high bar for innovation. High standards are desirable for patents, as for everything else.”

View of the Glivec inventor: 

In another interview titled, “If you erode patents, where will innovations come from?” Dr Brian Druker, whose work resulted in the development of Glivec, re-emphasizing the need for R&D by the pharmaceutical industry, commented,  “I’m going to stay away from the legal judgment … but as a physician, I do recognize that the advances will come from new products, not modifications.”

Are discordant voices out of step with time?

The interpretation of the Section 3(d) of the statute by the Honorable Supreme Court of India is the last word for all, despite a few voices of discord from within and mostly outside India. These voices, many would reckon, could well be out of step with time, especially in relatively fast growing, modern, independent, thinking and assertive young  India.

Conclusion:

In my view, nothing materially has changed on the ground before and after the Supreme Court judgment on the Glivec case so far as the Indian Patents Act is concerned and also in its interpretation.

While encouraging all types of innovations, including incremental ones and protecting them with an effective IPR regime are very important for any country. No nation can afford to just wish away various socioeconomic expectations, demands and requirements not just of the poor, but also of the growing middle class intelligentsia, as gradually getting unfolded in many parts of the globe.

Available indicators do point out that the civil society would continue to expect in return, just, fair, responsible and reasonably affordable prices for the innovative medicines, based on the overall socioeconomic status of the local population.

This critical balancing factor is essential not only for the progress of the pharmaceutical industry, but also to alleviate sufferings of the ailing population of the country, effectively.

For arguments sake, in an ideal scenario, if the Central and State Governments in India decide to buy such drugs to supply to all patients free of cost, just like any ‘welfare state’, will even the Government be able to afford these prices and fund such schemes in India?

It is, therefore, now widely expected that innovator pharmaceutical companies, which play a pivotal role in keeping population of any nation healthy and disease free to the extent possible, should also proactively find out ways to help resolving this critical issue in India, working closely with the Government of 1.2 billion Indians, including other concerned stakeholders.

In that context, the landmark Supreme Court judgment on the Glivec case has vindicated the need of striking a right balance between encouraging and protecting innovation, including incremental ones and the public health interest of India.

By: Tapan J. Ray

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

New ‘Patient Compensation’ Norms on Clinical Trials in India: Overdue Action, Sharp Reaction and Ethical Issues

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Responding to the damning stricture made by the Supreme Court on January 3, 2013, the Ministry of Health, as expected, by a gazette notification of January 30, 2013 has made the norms of compensation to patients participating in Clinical Trials (CT) more stringent.

‘Patient Compensation’ will now include injury or death, even if those are not related to the drugs being tested in the CT.

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

Just a day after, on February 1, 2013, the Ministry of Health also notified final regulations on the conditions under which CT sites will be authorized by the local licensing and the inspection authorities of the Central Drugs Standard Control Organization (CDSCO).

Key features of the new Government ‘Action’ on patient compensation:

Following are the key features in the new norms for patient compensation:

1. The sponsors of CTs will now be liable for injuries or deaths, which will take place during the course of a clinical trial and will be required to pay compensation to the patients or their families.

2. The investigator of the CT must inform the concerned pharmaceutical company, the Clinical Research Organization (CRO) and the Ethics Committee regarding injury or death during CT within 24 hours.

3. It will be mandatory for all CT Ethics Committees to be pre-registered with the Drug Controller General of India (DCGI), unlike the old system where this was not required and trial sponsors reportedly could staff the committee.

4. The pharmaceutical companies and the CROs will get 10 days time to submit a detailed report on related serious adverse event to the Ethics Committee, which in turn will get another 10 to 11 days to convey its evaluation on compensation to be paid to the independent expert committee. The Expert Panel will then advise the DCGI of an appropriate financial compensation within 30 days from the date of receiving the above report.

5. It will no longer require inclusion of specific amount of compensation for injury or death in the informed consent form and does not refer to insurance coverage for potential liability.

6. It requires the sponsors of CTs to provide the trial subject with free “medical management” for as long as it will require.

Will make CT more expensive in India:

Clinical Trials (CT), as we know, are of critical importance for obtaining marketing approval of any new drug and at the same time forms a major cost component in the new drug development process, across the world.

Any savings in this area, both in terms of time and money, will add significantly to the profit margin of the product. In that context the above notification will now make CT more expensive in India.

Sharp ‘reaction’ of CT related industry:

Understandably, reacting to this notification, some Clinical Research Organizations have expressed concerns in areas like:

  1. Lack of distinction between study-related injuries and non-study related injuries
  2. The use of placebos in placebo-controlled trials,
  3. Lack of any arbitration mechanism in case of disagreement on causality/quantum of compensation and the lack of clarity on who constitutes the Expert Committee and its composition.

Some other Experts related CT industry do highlight a few more troubling issues in the notification, as follows:

1. Compensation to be paid for ‘failure of an investigational product to provide intended therapeutic effect.’ This, they expressed, is intriguing as the very nature of a CT is to ascertain whether the investigational drug is efficacious or not.

2. If compensation is not paid as required, a sponsor or CRO may be banned from conducting any further trials in the country. This, they feel, provision could make India a challenging place to conduct CT.

3. There should also be clarity on the formula to determine compensation, the process for determining a compensation amount, and how an appeal process would work.

The bottom-line is, due to this new policy on ‘Patient Compensation’ CT expenses may go up considerably in India.

Other expert views:

On the other hand, some other experts opined to the International Weekly Journal on Science – ‘nature’ as follows:

“These reforms should go further to restore public confidence and the Indian government should establish special courts to deal quickly with allegations of medical misconduct, such as not fully disclosing to participants the risks involved in a clinical trial”.

Global concern on ethical issues with ‘Placebo Controlled’ studies:

In this context, though issues related to ‘Placebo Controlled’ trials have been raised by the CT related industry in India, very interestingly a paper of Research Administration of the University of California on the ethical issues with ‘Placebo Controlled’ studies’ clearly articulates that the use of a placebo in clinical research has remained a contentious issue in the medical community since long.

Some strongly argue that use of placebos is often unethical because alternative study designs would produce similar results with less risk to individual research participants. Others argue that the use of placebos is essential to protect society from the harm that could result from the widespread use of ineffective medical treatment.

However, as per the Office for Human Research Protections (OHRP) guidebook, “Placebos may be used in clinical trials where there is no known or available (i.e. US-FDA-approved) alternative therapy that can be tolerated by subjects.”

This issue also needs to be deliberated and effectively addressed by the Indian drug regulator in the debate of patient compensation for ‘placebo controlled trials’.

A perspective on CT in India:

Interestingly, in this critical area India is fast evolving as a major hub. This is vindicated by a study conducted by Ernst & Young and the Federation of Indian Chambers of Commerce and Industry of India (FICCI), which states that India now participates in over 7 per cent of all global phase III and 3.2 per cent of all global phase II trials. The key points of attraction of the global players, so far as India is concerned, were reported as follows:

1. Cost of Clinical Trial (CL) is significantly less in India than most other countries of the world

2. Huge patient pool with different disease pattern and demographic profile

3. Easy to enroll volunteers, as it is easy to persuade poor and less educated people as ‘willing’ participants.

Such opportunities, experts believe, should have ideally made the clinical research industry to demonstrate greater responsibility to ensure that patients’ safety needs are adequately taken care of. Unfortunately, despite such expectations, some important areas like ‘patient compensation’ have still remained blatantly neglected.

It has now come to light with the help of ‘Right To Information (RTI)’ query that more than 2,000 people in India died as a result of Serious Adverse Events (SAEs) caused during drug trials from 2008-2011 and only 22 of such cases, which is just around 1 percent, received any compensation. That too was with a meager average sum of around US$ 4,800 per family.

It has been widely reported that pharmaceutical companies often blame deaths that occur during trials on a person’s pre-existing medical condition and not related to CT.

DCGI had hauled-up 9 companies for blatant negligence:

According to another report quoting the Drug Controller General of India (DCGI), 25 people died in clinical trials conducted by nine pharmaceutical companies, in 2010. Unfortunately, families of just five of these victims received” compensation for trial related death, which ranged from Rs 1.5 lakh (US$ 3000) to Rs 3 lakh (US$ 6000).

This report also highlighted that arising out of this critical negligence, for the first time ever, the then DCGI was compelled to summon these nine pharmaceutical companies on June 6, 2011 to question them on this issue and with a clear directive to pay up the mandatory compensation for deaths related to clinical trial by June 20, 2011, or else all other CTs of these nine companies, which were ongoing at that time or yet to start, will not be allowed.

The report also indicates that after this ultimatum all the nine companies as mentioned therein had paid the compensation to the families of the patients who had died related to the CT.

Long exploitation of the fragile CT regulations in India:

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

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

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

“Pharmaceutical industry seeks to run studies in countries with lower costs”:

There seems to be nothing basically wrong in this approach per se. However, a recent report does highlight as follows:

“Clinical trials conducted by global drug makers and their proxies have generated increased scrutiny in recent years as the pharmaceutical industry seeks to run studies in countries with lower costs and populations where patients are not exposed to as many medications that can confound results. India has been a prime example”.

A lesson to learn by the Indian Drug Regulator:

It is worth noting that US-FDA in a communication meant for the consumers has stated as follows:

“The Food and Drug Administration’s job is to make sure medical treatments are safe and effective for people to use. FDA staff members meet with researchers, and perform inspections of clinical trial study sites to protect the rights of participants and to verify the quality and integrity of the data.”

The above approach seems to be drastically missing with the drug regulator in India as on date.

Conclusion:

Over a long period of time, a blatant negligence on reasonable care and financial compensation was allowed to continue by the Drug Regulator and the sponsors alike on the CTs conducted in India. A perceptible intent of justice to the patients, with the enforcement of stricter compensation laws and regulations for CT though belated, could dramatically change the CT scenario in India for the better in the years ahead.

In the fine balance of national priority for this area, patients’ safety and interest, I reckon, should always weigh more than the possibility of increase in the costs of CT in India. Thus,  the new norms of Patient Compensation indeed bring with it a breath of fresh air for the concerned stakeholders.

That said, the lose knots in some areas of the new norms, as discussed above, must be properly addressed and adequately tightened for greater clarity of the CT process, for all concerned.

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.

Counterfeit Drugs and ACTA: Should the global menace related to ‘Public Health and Safety’ be mixed-up with Intellectual Property Rights?

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Here in this article, I am talking about drugs or medicines, which you may ultimately land up into buying, quite innocently though, against your doctor’s prescriptions, without having an inkling that these drugs can push you into serious health hazards, instead of addressing your ailments, as your doctor would have desired to.

These are ‘Counterfeit’, ‘Fake’, ‘Spurious’ or ‘Sub-standard’ drugs, in whatever name we may call them. Such substances in the guise of drugs are therapeutically harmful for the patients and are a global menace. This needs to be addressed urgently and with a military precision.

However, public health policy experts have been arguing since long that the issues of such dimension related to critical ‘Public Health and Safety’ needs to be addressed expeditiously by all concerned with focus, without mixing it up with any other commercial considerations or IP related matter, as is being done by some vested interests across the world. India, in this case as well, is of course no exception.

Some reports:

Following are examples of some reports regarding deliberations on this critical issue:

  • A new study published recently in ‘The Lancet’ reported that 7% of anti-malarial drugs tested in India are of poor quality and many were found fake.
  • A February, 2012 report of ‘The National Initiative against Piracy and Counterfeiting’ of FICCI highlighted that the share of fake/counterfeit medicines is estimated at 15% – 20% of the total Indian pharmaceutical market.
  • Another recent report of the US Customs and Border Protection highlighted, “India and Pakistan both made it to top 10 source countries this year due to seizures of counterfeit pharmaceuticals. Pharma seizures accounted for 86% of the value of IPR seizures from India and 85% of the value of IPR seizures from Pakistan.”

However, in this context, it is worth mentioning that the Indian Pharmaceutical Industry along with the Government has been continuously questioning the original source of fake drugs with prominent ‘made in India labels’ on the outer packaging material. It will not be difficult for many to recall that a couple of years ago consignments of ‘counterfeit or fake drugs’ wearing ‘made in India’ labels were confiscated by the drug regulator of Nigeria (Africa), which after a thorough investigation were found to have originated from China.

A contrarian report – CDSCO Survey:

Central Drugs Standard Control Organization (CDSCO) of the Government of India released the following details on ‘Counterfeit Drugs’ in India from 2006 to 2010, which shows that the issue is not as acute as it is shown above:

Year Drugs samples tested % of sub-standard drugs % of spurious drugs Prosecution for crime Persons arrested
2006 – 07

34738

5.8

0.22

115

12
2007 – 08

39117

6.2

0.19

120

122
2008 – 09

45145

5.7

0.34

220

133
2009 -10

39248

4.95

0.29

138

147

TOTAL

158248

5.66

0.26

593

414

This ‘Pan-India survey report of CDSCO’ shows that from 2006 to 2010 the percentage of both ‘Substandard’ and ‘Spurious’ drugs were quite low in India.

However, the more worrying fact, as seen in the report is, the arrests and prosecutions for this heinous crime are also abysmally low in India.

IP related ‘counterfeit’ drugs are relatively smaller in numbers: 

WHO has identified following types of counterfeit medicines:
• Without active ingredients: 32% • Wrong ingredients: 21.4% • Incorrect quantities of active ingredients: 20.2% • Right quantities of active ingredients but in fake packaging: 15.6% • High levels of impurities and contaminants: 8.5% • “Substituted ingredients of anything from paracetamol to boric acid, talcum powder, rat    poison or road paint”: 2.3%

In addition, 50% of medicines purchased online from illegal internet are ‘counterfeit or fake’

From the above data, it appears that IP related ‘counterfeit or fake’ drugs are relatively small in number.

‘Anti-Counterfeiting Trade Agreement (ACTA)’:

The subject gets more complicated when such critical ‘Public Health and Safety’ related issue is leveraged to further strengthen Intellectual Property Rights (IPR) and address commercial issues in different ways.

One such initiative was ‘Anti-Counterfeiting Trade Agreement (ACTA)’. This was signed mostly by the developed countries of the world in October 2011.

ACTA is a plurilateral international trade agreement aimed at countering more efficiently not only the menace of counterfeit goods, generic medicines and copyright infringement on the internet, but also Intellectual Property (IP) related issues, including stringent enforcement of product patents.

This agreement was primarily designed to form a new forum, outside the existing ones, like for example United Nations (UN), World Trade Organization (WTO) or the World Intellectual Property Organization (WIPO) and was signed by Australia, Canada, European Union, Japan, Morocco, New Zealand, Singapore, South Korea, and the United States. However, the agreement has not been formally approved by any of them, as yet.

According to European Commission, “ACTA is an international trade agreement that will help countries work together to tackle more effectively large-scale IPR violations. Citizens will benefit from ACTA because it will help protect Europe’s raw material – innovations and ideas.”

Two aspects of ACTA definition:

As per ACTA definition, there are two aspects for a medicine being termed as ‘Counterfeit’, which are as follows:

  1. ‘Health and safety’ issues, arising out of therapeutically harmful medicines
  2. Violation of IP rights like, patents, trademark and design

It raises more questions than answers:

ACTA definition, as mentioned above, has led to confusion mainly because, if a patent infringing product is termed ‘counterfeit or fake’ in one country, what will then the same product be called in another country where the molecule has gone off-patent? 

Moreover, countries which consider such types of drugs ‘fake’ or ‘counterfeit’, will have the full right to destroy even the in-transit consignments containing such products, not only causing economic loss to the exporter, but also jeopardizing public health interest at the destination countries. Just to site an example, in not too distant past, consignments of generic medicines exported from India to Brazil were seized at the European ports

Thus, many experts feel that ACTA poses a potential risk for global access to generic medicines endangering public health interest, as it could restrict free passage of such drugs through many ports of the world on IP grounds, as happened more than once in the past.

‘Generic medicines’ to be left unharmed:

In this context, Ellen‘t Hoen, former Policy Advocacy Director of MSF’s Campaign for ‘Access to Essential Medicines’ wrote in April 2009 as follows:

“People often seem to confuse counterfeit, substandard and generic medicines – using the terms interchangeably. But they are very separate issues and clearly defining their differences is critical to any discussion”.

Ongoing WHO debate: 

‘Intellectual Property Watch’ in May 20, 2010 reported that:

“Brazil and India claimed that WHO’s work against counterfeit and substandard medicines is being influenced by brand-name drug producers with an interest in undermining legitimate generic competition. The Brazilian ambassador told ‘Intellectual Property Watch’ there is a ‘hidden agenda’ against generics for countries like Brazil.”

“India and Brazil filed requests for consultations with the European Union and the Netherlands over the seizure of generic medicines in transit through Europe. This is the first step towards a dispute settlement case, and if issues cannot be resolved via consultations then formation of a dispute settlement panel could be requested in the coming months”.

However, as reported by ‘The International Center for Trade and Sustainable Development (ICTSD)’, after the Government of India had taken it up strongly with the EU, the issue of confiscation of in-transit consignments of generic drugs has since been resolved.

Three emerging views:

Arising out of all these, there are following three different clearly emerging views on the global issue of counterfeit drugs:

1. The innovator companies feel that the generic pharmaceutical industry and the drug regulators of the developing countries are not really very keen to effectively address and resolve the global issue of ‘Counterfeit Drugs’.
2. The generic companies and the drug regulators of the developing countries feel that the problem is not as acute as it is being projected to be and the innovator global pharmaceutical companies through their intense advocacy campaigns are trying to exploit the sentiment against spurious and harmful drugs to fight against generic medicines and cheaper parallel imports.
3. Some other important stakeholders, including a section of NGOs claim that an intense ‘Public Health and Safety’ related sentiment is being leveraged by the R&D based global pharmaceutical companies to extend IPR issues to “patients’ safety” related concerns, for vested interest.

The role of WHO:

The leadership role of the WHO is extremely important to effectively eliminate the global menace of ‘Counterfeit Drugs’ for ‘Public Health and Safety’. Across the world, patients need protection from the growing threat of ‘Counterfeit Medicines’. As a premier global organization to address such critical issues effectively, especially for the developing world, the WHO needs to play a more proactive and stellar role in future.

A Rational Approach:

The groups opposing ACTA recommend the following approaches to address the menace of ‘Counterfeit or Fake or Spurious or Harmful Medicines’:

  1. Address the issue of ‘Public Health and Safety’ by strengthening regulatory systems, related laws of the country and the stakeholder awareness program. In case of India, recently amended Drugs and Cosmetics Act needs to be properly implemented in letter and spirit.
  2. The issue of violation of IP should be dealt with through effective enforcement of IP laws of the country.
  3. There should not be any mix-up between ‘Public Health and Safety’ and ‘IP related issues’, in any way or form.

Countries already approached WHO:

Earlier, along with countries like Indonesia and Thailand, India could make the WHO realize that mixing up the above two issues could pose serious impediment for the supply of cheaper generic medicines to the marginalized sections of the society, globally. 

Weak regulatory enforcement lead to more ‘Counterfeit/Fake’ drugs:

The menace of counterfeit medicines is not restricted to the developing countries like, India alone. It is seen in the developed countries, as well, but at a much smaller scale. Thus, it is generally believed that the issue of ‘counterfeit drugs’ is more common in those countries, where the regulatory enforcement mechanism is rather weak.

A study done by IMPACT in 2006 indicates that in countries like, the USA, EU, Japan, Australia, Canada and New Zealand, the problem is less than 1%. On the other hand, ‘in the developing nations like parts of Asia, Latin America and Africa more than 30% of the medicines are counterfeits’.

Conclusion:

In the meeting of the TRIPS Council of the World Trade Organization (WTO) held in June, 2012, developed countries continued to reiterate that ‘Counterfeiting of Drugs’ being a critical issue should be deliberated upon by the council, expeditiously.

However, emerging countries like, Brazil, India and China strongly opposed this view by reemphasizing that in the name of ‘Counterfeit Drugs’ issues of IPR violations should not be clubbed with ‘Public Health and Safety’. They argued that IPR violation should in no way be confused with sub-standard drugs or therapeutically harmful medicines and any attempt to discuss the menace of harmful or substandard medicines at the WTO platform will be improper.

Developing nations, in general, have already alleged in various global forums that being unsuccessful in their efforts to use ACTA in making the IP environment even more stringent, the developed countries are now trying to use the WTO to achieve the same objective.

The debate continues and the moot question still lingers: Why should the issue of ‘Public Health and Safety’ get mixed-up with ‘Intellectual Property (IP)’ related problems?

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.

“Indian Drug Regulator Accords Primacy to Pharma Industry Instead of Safegurding Public Health and Safety” – Parliamentary Committee

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The Department Related Parliamentary Committee on Health and Family Welfare presented its 59th Report of 118 pages in total on the functioning of the Indian Drug Regulator – the Central Drug Standards Control Organization (CDSCO) in both the houses of the Parliament on May 08, 2012.

Regulations and the Regulator for the Pharmaceutical Industry of India – A snapshot:

The pharmaceutical industry in India is regulated, broadly, in the following ways:

  • Drugs and Cosmetics Act of India 1940 together with Drugs and Cosmetics Rules regulate the Pharmaceutical Industry across the country for all types of drugs, irrespective of the fact whether these are locally produced or imported from other countries of the world.
  • The office of the Drug Controller General of India (DCGI) is primarily responsible for effective enforcement of most of these laws and rules across the country.
  • All issues related to clinical trials, product approval and standards, import licenses and introduction of new drugs are the direct responsibilities of the DCGI’s office.
  • Health being a state subject in India, on the ground, Foods and Drugs Administrations (FDA) of the State Governments enforce laws related to approvals for setting up pharmaceutical production facilities and obtaining licenses to stock and sell drugs in their respective states.
  • A valid license from the Drug Regulator is necessary for location-wise manufacturing of each type of drugs in the country with a mandatory requirement of periodic renewal of such licenses, as specified therein.

A key point to ponder from the Report:

The report begins with the following observations:

Medicines apart from their critical role in alleviating human suffering and saving lives have very sensitive and typical dimensions for a variety of reasons. They are the only commodity for which the consumers have neither a role to play nor are they able to make any informed choices except to buy and consume whatever is prescribed or dispensed to them because of the following reasons:

  • Drug regulators decide which medicines can be marketed
  • Pharmaceutical companies either produce or import drugs that they can profitably sell
  • Doctors decide which drugs and brands to prescribe
  • Consumers are totally dependent on and at the mercy of external entities to protect their interests.

In this prevailing condition, the committee felt that effective and transparent drug regulation, free from all commercial influences, is absolutely essential to ensure safety, efficacy and quality of drugs keeping just one objective in mind, i.e., welfare of patients.

Quite in congruence with this critical requirement the Committee examined in detail the functioning of CDSCO, which includes the office of the DCGI, as well, to ascertain whether applicable rules and laws are being implemented efficiently and honestly for the best interest of patients by the Drug Regulator of India.

Why is the ‘Mission Statement’ of CDSCO industry oriented and not patient focused?

Very interestingly, the report highlights with the following examples, how out of line the ‘Mission Statement’ of CDSCO is as compared to the same of other countries by being blatantly industry oriented instead of safeguarding Public Health and safety:

Drug Regulator

The ‘Mission Statement’
1

CDSCO, India

 Meeting the aspirations…. demands and requirements of the pharmaceutical industry.
2.

USFDA, USA

 Protecting the public health by assuring the safety, efficacy, and security of human and veterinary drugs.
3.

MHRA, UK

 To enhance and safeguard the health of the public by ensuring that medicines and medical devices work, and are acceptably safe.
4.

TGA, Australia

 Safeguarding public health & safety in Australia by regulatingMedicines…

Consequently, the Committee took a very strong exception for such utter disregard and continued neglect of patients’ interest by the Drug Regulator of India and recommended immediate amendment of the ‘Mission Statement’ of CDSCO incorporating in very clear terms that the existence of the organization is solely for the purpose of protecting the best interest of patients and their safety. It is needless to say that thereafter, it will require stringent conformance with the same with high precision.

Some very critical findings:

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

  • “A total of 31 new drugs were approved in the period January 2008 to October 2010 without conducting clinical trials on Indian patients.
  • Thirteen drugs scrutinized by the panel are not allowed to be sold in the United States, Canada, Britain, European Union and Australia.
  • Sufficient evidence is available on record to conclude that there is collusive nexus between drug manufacturers, some functionaries of CDSCO and some medical experts.
  • When it comes to approving new drugs, too much is left to the absolute discretion of the CDSCO officials.
  • The Central Government can either issue directions under Section 33P to states to withdraw the licenses of FDCs granted without prior DCGI approval or the Central Government can itself ban such FDCs under Section 26A.
  • Though the Ministry is forming Drug Approval Committees, which are given very important powers, there is no transparent procedure for the selection of experts of such Committees.
  • Accurate information on drugs for patients is absolutely essential to prevent inappropriate use more particularly in children, elderly, during pregnancy and lactation.
  • Due to the sensitive nature of clinical trials in which foreign companies are involved in a big way and a wide spectrum of ethical issues and legal angles, different aspects of Clinical trials need a thorough and in-depth review.”

The Report named some pharmaceutical companies:

While arriving at these points, the report indicted some pharmaceutical companies, both national and international as follows (in alphabetical order):

Company Company Company
1. Bayer 8. Lundbeck 15. Ranbaxy
2. Cipla 9. Macleods 16. Sanofi
3. Centaur 10. Mars 17. Sun Pharmaceuticals
4. Emcure 11. Merck 18. Themis
5. Eli Lilly 12. Novartis 19. Theon
6. GlaxoSmithKline 13. Pharmacia (acquired by Pfizer) 20. UCB
7. Hetero 14. Phamasset Inc. (a subsidiary of Gilead) 21. Venus

A scathing remark against CDSCO:

The report made the following scathing remarks on CDSCO in its point 2.2:

“The Committee is of the firm opinion that most of the ills besetting the system of drugs regulation in India are mainly due to the skewed priorities and perceptions of CDSCO. For decades together it has been according primacy to the propagation and facilitation of the drugs industry, due to which, unfortunately, the interest of the biggest stakeholder i.e. the consumer has never been ensured.”

Allegation of possible collusion needs to be thoroughly probed:

The report also deliberates not only on the utter systemic failure of CDSCO along with the DCGI’s office to enforce law effectively, but also towards a possible collusion between CDSCO and the pharmaceutical industry to implement a self-serving agenda by hoodwinking the system. This is a very serious allegation, which needs to be thoroughly probed and the findings of which should be made public for everybody’s satisfaction.

Parliamentary Committee Report is a ‘considered advice and of persuasive value’:

Though any report of such Parliamentary Committee has been stated to have a persuasive value and be treated as considered advice given by the Committee, which in this case is to CDSCO, DCGI, Ministry of Health and also the industry.

Some probes already initiated:

Reuters in its publication of May 9, 2012 indicated that this Parliamentary Committee Report has prompted greater scrutiny even from the US regulators, which are reportedly investigating a number of drug companies under the Foreign Corrupt Practices Act (FCPA).

Initial reports also indicate that both the Indian Government and some large international pharmaceutical companies have announced detail probe based on this report at their respective ends.

Some remedial measures - Mashelkar Committee Recommendations:

Considering all these, besides taking appropriate remedial measures related to Clinical Trials of drugs in India, it is about time to reconsider the recommendations of Dr. R. A. Mashelkar Committee on the subject and make amendments in the Act accordingly to facilitate creation of a ‘Central Drugs Authority (CDA)’ introducing, along with other measures, a centralized licensing system for the manufacture, sale, export and distribution of drugs.

Why does India need CDA?

I firmly believe that the formation of the ‘Central Drugs Authority (CDA)’ will provide the following significant benefits to the Industry and also to the Government for the best interest of public health and safety:

  1. Achieving uniform interpretation of the provisions of the Drugs & Cosmetics Act & Rules
  2. Standardizing procedures and systems for drug control across the country
  3. Enabling coordinated nationwide action against spurious and substandard drugs
  4. Upholding uniform quality standards with respect to exports to foreign countries from anywhere in India
  5. Implementing uniform enforcement action in case of banned and irrational drugs
  6. Creating a pan-Indian approach to drug control and administration
  7. Evolving a single-window system for pharmaceutical manufacturing and research undertaken anywhere in the country.

Conclusion:

As a consequence of the above report of the Parliamentary Committee identifying gross irregularities in the functioning of the CDSCO, the Minister of Health and Family Welfare (MoHFW) of India Mr. Ghulam Nabi Azad has already announced constitution of a three-member committee to probe into the matter in depth.

Following well-known experts have been named as members of this high powered committee, which will submit its report and recommendations in two months’ time:

  • Dr. V.M. Katoch: Director General, Indian Council of Medical Research (ICMR),
  • Dr. P.N. Tandon: President, National Brain Research Centre
  • Dr. S.S. Aggarwal: Former Director, Sanjay Gandhi Postgraduate Institute of Medical Sciences, Lucknow

The committee has been mandated to:

  • Examine the validity of the scientific and statutory basis adopted for approval of new drugs without clinical trials
  • Outline appropriate measures to bring about systemic improvements in the processing and grant of statutory approvals
  • Suggest steps to institutionalize improvements in other procedural aspects of functioning of the CDSCO

The outcome of the report of this high powered committee, internal probes voluntarily initiated by some pharmaceutical companies and possible implementation of the ‘Mashelkar Committee’ recommendations on the formation of CDA in the country will hopefully bring in some systemic changes in the drug regulatory system of India, for patients’ sake.

By: Tapan 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.