Getting unfolded a global opportunity for India with Biosimilar Drugs

Posted on December 19, 2011 by Tapan Ray

Over a period of time, the trend of a disease treatment process is becoming more targeted and personalized to improve effectiveness of both diagnosis and treatment. Biotechnology being the key driver to this trend, India should not fall out of line from this direction.

There are two clear opportunities for India in this fast evolving arena. One is to get more engaged in the discovery research of new large molecular entity and the other is to make a successful foray in the fast emerging and relatively high value biosimilar drugs (generic versions of biotechnology medicines) markets of the world.

In my view, India has greater probability of success in the field of biosimilar drugs, which could catapult India as a major force to reckon with in the fast growing biotechnology space of the global pharmaceutical industry.

An interesting global collaboration:

On October 19, 2010, the home grown Biotech Company Biocon with its headquarter in the Information Technology (IT) heartland of India – Bangalore created a stir in the Industry by inking an interesting international business deal with the largest global pharmaceutical company – Pfizer.

With this deal of US $350 million Biocon initiated its foray into the global biosimilar market by enabling Pfizer to globally commercialize Biocon’s biosimilar human recombinant insulin and three insulin analogues.

Before this deal, Sanofi-Pasteur, the’ vaccine business unit’ of the global major Sanofi of France had acquired Shantha Biotechnics, located in Hyderabad for a consideration of US$ 602 million, in July 2009.

Global players signal a new aspiration:

Just a year before the above acquisition in India, on December 11, 2008, Reuters reported that just two days after Merck announced a major push into biosimilar medicines, Eli Lilly signaled similar aspirations. This report, at that time, raised many eyebrows in the global pharmaceutical industry, as it was in the midst of a raging scientific debate on the appropriate regulatory pathways for biosimilar drugs globally.

Be that as it may, many felt that this announcement ushered in the beginning of a new era in the pharmaceutical sector of the world, not just for the pharmaceutical players, but also for the patients with the availability of affordable lower priced biologic medicines.

The scenario is heating up with regulatory hurdles relatively easing off:

Within the developed world, European Union (EU) had taken a lead towards this direction by putting a robust system in place, way back in 2003. In the US, along with the recent healthcare reform process of the Obama administration, the regulatory pathway for biosimilar drugs is now being charted out by the US FDA. However, as of November 2011, they do not seem to have finalized the details of the process.

It is worth mentioning that during the same reform process a 12 year data exclusivity period has been granted for biosimilar drugs, against the 5-year period of the same granted to the innovators of small molecule chemical drugs.

In the recent past, the EU has approved Sandoz’s (Novartis) Filgrastim (Neupogen brand of Amgen), which is prescribed for the treatment of Neutropenia. With Filgrastim, Sandoz will now have 3 biosimilar products in its portfolio.

The trigger factor:

Globally, the scenario for biosimilar drugs started heating up when Merck announced that the company expects to have at least 5 biosimilars in the late stage development by 2012. The announcement of both Merck and Eli Lilly surprised many, as the largest pharmaceutical market of the world – the USA, at that time, was yet to approve the regulatory pathway for biosimilar medicines.

What then are the trigger factors for the research based global pharmaceutical companies like Pfizer, Sanofi, Merck and Eli Lilly to step into the arena of biosimilar medicines? Is it gradual drying up research pipeline together with skyrocketing costs of global R&D initiatives, cost containment pressures from the payers or relatively strong market entry barrier for smaller players? I reckon, all of these.

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 innovative and 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 such biologics could 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)

At present, the key global players are Sandoz (Novartis), Teva, BioPartners, BioGenerix (Ratiopharm) and Bioceuticals (Stada). With the entry of pharmaceutical majors like, Pfizer, Sanofi, Merck and Eli Lilly, the global biosimilar market is expected to heat up and develop at a much faster pace than ever before. Removal of regulatory hurdles (ban) for the marketing approval of such drugs in the US , as mentioned above, will be the key growth driver.

Biosimilar Monoclonal Antibodies (mAbs) in the Pipeline:

Company	Location	Biosimilar mAbs	Development Status
BioXpress	Switzerland	16	Preclinical
Gene Techno Science	Japan	6	Preclinical
Zydus Cadilla	India	5	Preclinical
PlantForm	Canada	3	Preclinical
BioCad	Russia	3	Preclinical
Celltrion	South Korea	2	Phase 3
LG Life Sciences	South Korea	2	Preclinical
Gedeon Richter	Hungary	2	Preclinical
Cerbios-Pharma	Switzerland	1	Preclinical
Hanwha Chemical	South Korea	1	Preclinical
PharmaPraxis	Brazil	1	Preclinical
Probiomed	Mexico	1	Phase 3
Samsung BioLogics	South Korea	1	Preclinical
Novartis	Switzerland	1	Phase 2
Teva	Israel	1	Phase 2
Zenotech	India	1	Phase 3
Spectrum	US	1	Preclinical
Biocon/Mylan	India/US	1	Preclinical

(Source: PharmaShare; as of September 10, 2011 from Citeline’s Pipeline database)

Global Market Potential:

According to a study (2011) conducted by Global Industry Analysts Inc., worldwide market for biosimilar drugs is estimated to reach US$ 4.8 billion by the year 2015, the key growth drivers being as follows:

Patent expiries of blockbuster biologic drugs
Cost containment measures of various governments
Aging population
Supporting legislation in increasing number of countries
Recent establishment of regulatory guidelines for biosimilars in the US

On the other hand, according to Alan Shepard, principal of Thought Leadership, Global Generics at IMS Health: ‘Forecasting biosimilar sales is complex because of various factors including the imprecise classification of a biosimilar and pricing policies of the originator resulting in the use of the brand in place of the biosimilar. Some estimates show the market growing from US$ 66 million in 2008 to US$ 2.3 billion in 2015. Others see sales exceeding US$ 5.6 billion in 2013. Whatever the forecast, there remains a US$ 50 billion potential for biosimilars’.

Currently, off-patent biologic blockbusters including Erythropoietin offer an excellent commercial opportunity in this category. By 2013, about 10 more patented biologics with a total turnover of around U.S. $ 15 billion will go off-patent, throwing open even greater opportunity for the growth of biosimilar drugs globally.

The scenario and 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, Dr. Reddy’s Laboratories (DRL) etc.

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 are making rapid strides:

Biosimilar version of Rituxan (Rituximab) of Roche used in the treatment of Non-Hodgkin’s lymphoma has already been developed by DRL in India. Last year Rituxan clocked a turnover of over US$ 2 billion. DRL 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 by 2011 from its biological research establishment located in Switzerland.

Indian pharmaceutical major Cipla reportedly has invested Rs 300 crore 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 end 2012.

In June this year 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 is expected to be launched in India again by 2012.

Oncology is becoming the research hot-spot:

As indicated above, many domestic Indian pharmaceutical companies are targeting Oncology disease area for developing biosimilar drugs, which is estimated to be the largest segment globally with a value turnover of over US$ 55 billion by the end of this year growing over 17%.

As per recent reports, about 8 million deaths take place all over the world per year due to cancer. May be for this reason the research pipeline of NMEs is dominated by oncology. With the R&D focus of the deep-pocket global pharmaceutical majors’ on this particular therapy area, the trend will continue to go north.

About 50 NMEs for the treatment of cancer are expected to be launched globally by 2015.

Current market size of Oncology drugs in India is estimated to be around Rs.1,300 Crore (US$ 260 million) and is expected to double by 2014.

Greater potential for global collaborative initiatives:

It is envisaged that the recent Pfizer – Biocon deal will trigger many other collaborative initiatives between the global and the local pharmaceutical companies.

Among Indian biotech companies, Reliance Life Sciences has already marketed Recombinant Erythropoietin, Recombinant Granulocyte Colony Stimulating Factor, Recombinant Interferon Alpha and Recombinant tissue plasminogen activator and has been reported to have the richest pipeline of biosimilar drugs in India.

Companies like Wockhardt, Lupin, DRL and Intas Biopharmaceuticals are also in the process of developing an interesting portfolio of biosimilar drugs to fully encash the fast growing global opportunities.

‘Patent Cliff’ is hastening the process:

Many large research-based global pharmaceutical companies, after having encountered the ‘patent cliff’, are now looking at the small molecule generic and large molecule biosimilar businesses, in a mega scale, especially in the emerging markets of the world like India.

The country has witnessed major acquisitions like, Ranbaxy, Shantha Biotechnics and Piramal Healthcare by Daiichi Sankyo of Japan, Sanofi of France and Abbott of USA, respectively. We have also seen collaborative initiatives of large global companies like, GSK, AstraZeneca, and Pfizer with Indian companies like DRL, Aurobindo, Claris, Torrent, Zydus Cadila, Strides Arcolab, Sun Pharma and now Biocon to reach out to the fast growing global generic and biosimilar drugs markets.

This trend further gained momentum when immediately after Biocon deal, Pfizer strengthened its footprints in the global generics market with yet another acquisition of 40% stake in Laboratorio Teuto Brasileiro of Brazil with US$ 240 million to develop and globally commercialize their generic portfolio.

Emergence of ‘second generation’ biosimilar drugs and higher market entry barrier:

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

The barriers to market entry for biosimilar drugs are, by and large, 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 a different type of skill sets from 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.

Government support in India:

To give a fillip to the Biotech Industry in India the National Biotechnology Board was set up by the Government under the Ministry of Science and Technology way back in 1982. The Department of Biotechnology (DBT) came into existence in 1986. The DBT now spends around US$ 200 million annually to develop biotech resources in the country and have been making reasonably good progress.

The DBT together with the Drug Controller General of India (DCGI) has now prepared regulatory guidelines for biosimilar Drugs, which are expected to conform to international quality and patients’ safety standards.

Currently, a number both financial and non-financial incentives have been announced by the Central and the State Governments to encourage growth of the biotech industry in India, which include tax incentives, exemption from VAT and other fees, grants for biotech start-ups, financial assistance with patents, subsidies on investment from land to utilities and infrastructural support with the development of ten biotech parks through ‘Biotechnology Parks Society of India’.

However, many industry experts feel that R&D funding for the Biotech sector in the country is grossly inadequate. Currently, there being only a few ‘Venture Capital’ funds for this sector and ‘Angel Investments’ almost being non-existent, Indian biotech companies are, by and large, dependent on Government funding.

Conclusion:

Recent international deal of Pfizer and Biocon to globally commercialize Biocon’s four biosimilar insulin and analogues developed in India, does signal a new global status for the Indian biosimilar drugs to the international pharma majors, who were vocal critics of such drugs developed in India, until recently.

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.

Health being a basic human right, the proposal for ‘Universal Health Coverage’ augurs well for India

Posted on December 12, 2011 by Tapan Ray

“The right to health is relevant to all States: every State has ratified at least one international human rights treaty recognizing the right to health. Moreover, States have committed themselves to protecting this right through international declarations, domestic legislation and policies, and at international conferences.”

- The Factsheet, Office of the United Nations High Commissioner for Human Rights (OHCHR) and the WHO

Universal Health Coverage or Universal Healthcare:

In this context, “Universal Health Coverage (UHC)” is a healthcare system where all citizens of a country are covered for the basic healthcare services. In many countries UHC is also known as “Universal Healthcare” and may have different system types as follows:

Single Payer: The government provides insurance to all citizens.

Two-Tier: The government provides basic insurance coverage to citizens and allows purchase of additional voluntary insurance whenever a citizen wants to.

Insurance Mandate: The government mandates that insurance must be bought by all its citizens, like what happened in the USA in 2010.

Global scenario for UHC:

As per published reports, all 33 developed nations have UHC in place. The United States was the only exception until recently, till President Barack Obama administration implemented the ‘path breaking’ new healthcare reform policy in the country in 2010 against tough political opposition.

The new healthcare reform measures in the US had raised a storm within the local pharmaceutical industry, as well, at that time for various reasons.

The countries providing UHC:

Based on an article titled, ‘ Analyzing our economy, government policy and society through the lens of cost-benefit’ published in ‘True Cost’ following is the list of the countries where UHC is currently in place:

Country	Start Date of Universal Health Care	System Type

Norway	1912	Single Payer
New Zealand	1938	Two Tier
Japan	1938	Single Payer
Germany	1941	Insurance Mandate
Belgium	1945	Insurance Mandate
United Kingdom	1948	Single Payer
Kuwait	1950	Single Payer
Sweden	1955	Single Payer
Bahrain	1957	Single Payer
Brunei	1958	Single Payer
Canada	1966	Single Payer
Netherlands	1966	Two-Tier
Austria	1967	Insurance Mandate
United Arab Emirates	1971	Single Payer
Finland	1972	Single Payer
Slovenia	1972	Single Payer
Denmark	1973	Two-Tier
Luxembourg	1973	Insurance Mandate
France	1974	Two-Tier
Australia	1975	Two Tier
Ireland	1977	Two-Tier
Italy	1978	Single Payer
Portugal	1979	Single Payer
Cyprus	1980	Single Payer
Greece	1983	Insurance Mandate
Spain	1986	Single Payer
South Korea	1988	Insurance Mandate
Iceland	1990	Single Payer
Hong Kong	1993	Two-Tier
Singapore	1993	Two-Tier
Switzerland	1994	Insurance Mandate
Israel	1995	Two-Tier
United States	2010	Insurance Mandate

Highest per capita health spending has no relevance to the quality of health services/ outcome, but early implementation of UHC has:

The following table shows, although per capita spending on health is the highest in the US, the number of doctors, nurses and hospital beds per 10,000 population are highest in Cuba, UK and Japan, respectively. Japan also records the highest life expectancy at birth.Thus it appears, by and large, those countries which have an efficient UHC scheme running since quite some time from now are doing better in the health parameters as indicated below, especially, as compared to the US with the highest per capita health spending.
Country	Per capita spending on health (US $)	Doctors/ 10,000 pop	Nurses and midwives/ 10,000 pop	Hospital beds/10,000 pop	Life expectancy at birth
USA	6719**	26	94	31	78
UK	2815	23	128**	39	80
Russia	698	43	85	97	66
Japan	2581	21	95	140**	83**
Italy	2631	37	72	39	82
Germany	3465	34	80	83	80
France	3420	34	80	73	81
Cuba	674	59**	74	49	78
China	216	14	10	22	74
Canada	3673	19	101	34	81

** Highest

Source: The Guardian, Data Blog, Facts are Sacred)

The current situation in India:

In October 2010, the Planning Commission of India constituted a ‘High Level Expert Group (HLEG)’ on Universal Health Coverage (UHC) under the chairmanship of the well-known medical professional Prof. K. Srinath Reddy. The HLEG was mandated to develop ‘a framework for providing easily accessible and affordable health care to all Indians’.

The HLEG Report starts with:

“This report is dedicated to the people of India whose health is our most precious asset and whose care is our most sacred duty.”

The HLEG defined UHC for India as follows:

“Ensuring equitable access for all Indian citizens, resident in any part of the country, regardless of income level, social status, gender, caste or religion, to affordable, accountable, appropriate health services of assured quality ( promotive, preventive, curative and rehabilitative) as well as public health services addressing the wider determinants of health delivered to individuals and populations, with the government being the guarantor and enabler, although not necessarily the only provider, of health and related services”.

Ten principles for UHC in India:

Following are the ‘Ten Principles’, which guided the HLEG for the formulation of the recommendations for the UHC in India:

Universality
Equity
Non-exclusion and non-discrimination
Comprehensive care that is rational and of good quality
Financial protection
Protection of patients’ rights that guarantee appropriateness of care, patient choice, portability and continuity of care
Consolidated and strengthened public health provisioning
Accountability and transparency
Community participation
Putting health in people’s hands

UHC guarantees access to essential free health services for all:

Because of the uniqueness of India, HLEG proposed a hybrid system that draws on the lessons learned from within India as well as other developed and developing countries of the world.

UHC will ensure guaranteed access to essential health services for every citizen of India, including cashless in-patient and out-patient treatment for primary, secondary and tertiary care. All these services will be available to the patients absolutely free of any cost.

Under UHC all citizens of India will be free to choose between Public sector facilities and ‘contracted-in’ private providers for healthcare services.

It is envisaged that people would be free to supplement the free of cost healthcare services offered under UHC by opting to pay ‘out of pocket’ or going for private health insurance schemes

HLEG recommends ‘Price Control’ of ‘Essential Medicines’, just like draft NPPP 2011:

In its recommendation no. 3.5.1, HLEG postulated price controls and price regulation especially on essential drugs, which is quite in line with the draft National Pharmaceutical Pricing Policy 2011 (NPPP 2011). The HLEG report says:

“We recommend the use of ‘essentiality’ as a criterion and applying price controls on formulations rather than basic drugs. Direct price control applied to formulations, rather than basic drugs, is likely to minimize intra-industry distortion in transactions and prevent a substantial rise in drug prices. It may also be necessary to consider caps on trade margins to rein in drug prices while ensuring reasonable returns to manufacturers and distributors. All therapeutic products should be covered and producers should be prevented from circumventing controls by creating nonstandard combinations. This would also discourage producers from moving away from controlled to non-controlled drugs. At the same time, it is necessary to strengthen Central and State regulatory agencies to effectively perform quality and price control functions.”

Price control on essential medicines is also in force in China:

Chinese Government has put a cap on the prices of about 300 drugs featuring in their ‘National List of Essential Medicines (NLEM).’ Perhaps following the similar concept both the NLEG and NPPP 2011 have recommended price control of about 348 drugs falling under ‘The National List of Essential Medicines 2011 (NLEM 2011)’ of India.

Another recent report on ‘Free Medicines for All’:

Meanwhile,the working group of the Planning Commission on health, constituted for the 12th Five Year Plan (2012-2017) headed by the Secretary of Health and Family Welfare Mr. K. Chandramouli (now retired), has also submitted its report recently.

The Part II of the report titled, “Provisions of ’free medicines for all in public health facilities … recommends that health being a state subject, all the state governments of the country should adopt the successful and well proven Tamil Nadu model of healthcare procurement.

Tamil Nadu government through Tamil Nadu Medical Supplies Corporation (TNMSC) reportedly makes bulk purchases of drugs and pharmaceuticals directly from the manufacturers through a transparent bidding process, which reduces the cost of medicines to 1/10th and even to 1/15th of the Maximum Retail Price (MRP) of the respective product packs.

As per this report, the total running cost for the ‘Free Medicines for All’ project during the plan period would be Rs. 28,675 Crores and an additional allocation of Rs. 1293 Crores will be required as one‐time capital costs. The contribution of the Central Government at 85 % of the total cost would be around Rs 25667 crores for the entire Plan period.

Conclusion:

It was good to read that Ms. Nata Menabde, WHO country-head, India in her interview to ‘The Financial Express’ dated December 7, 2011 said, “We at WHO have been fortunate enough to be consulted on this (UHC). The meeting at planning commission was very productive and positive and we think the recommendations on the road map to Universal Health Coverage in the country is a step in the right direction.”

UHC, I reckon, will also be able to address simultaneously the critical issue of high ‘out of pocket’ healthcare expenses by the common man of the country. Implemented sooner ignoring the motivated stalling tactics, if any, by the vested interests, could usher in an era of a new healthcare reform process in the country.

That said, the proposal of the UHC in its current form does have some ‘loose knots’,which should be appropriately tightened-up through informed public discourse by the stakeholders in the healthcare space of India, sooner.

Does India need an equivalent of ‘The Physician Payment Sunshine Act’ of the US for transparency in pharmaceutical marketing?

Posted on November 14, 2011 by Tapan Ray

Currently a strong and palpable public sentiment against corruption has engulfed India albeit more than what we witness in movements like ‘Occupy Wall Street’ against systemic corruption not only in the US but in a large number of cities across the world.

Long suppressed public sentiment against corruption is fast spreading like a wild fire in India and has now become all pervasive and almost irreversible, as it were.

That said, this strong sentiment is not just against corruption, but also for greater transparency and clean governance both in the government and corporate sectors of the country.

In a situation like this, there is a wide spread belief within the civil society not just in India, but across the world that the pharmaceutical companies try to skew the ‘prescription decision making process’ of the doctors towards their respective brands largely through different types of allurements and not based solely on robust health outcome criteria.

The key reason:

The entire issue arises out of the key factor that the patients do not have any say on the use/purchase of brand/brands that a doctor will prescribe.

It is generally believed by the civil society that doctors predominantly prescribe mostly those brands, which are promoted to them by the pharmaceutical companies in various ways. Thus, in today’s world and particularly in India, the degree of commercialization of the noble healthcare services, as reported often by the media, has reached a new high, sacrificing the ethics and etiquette both in medical and pharmaceutical marketing practices in the rat race of unlimited greed, want and conspicuous consumption.

Growing discontentment:

Many within the civil society feel, as a result of fast degradation of ethical standards, moral and the noble values, just in many other areas of public life, in the healthcare space as well, the patients in general have started losing their absolute faith and trust both on the medical profession and the pharmaceutical companies, by and large. However, health related multifaceted compulsions do not allow them, either to avoid such a situation or even raise a strong voice of protest against the vested interests.

Growing discontentment of the patients both in the private and public healthcare space in the country, is being regularly and very rightly highlighted by the media all over the world, including reputed medical journals like, ‘The Lancet’ to help arrest this moral and ethical decay with demonstrable and tangible proactive measures.

A global issue, not just local:

For quite some time from now this issue has indeed become a global phenomenon. Many countries, including India, have seriously taken note of such examples of socioeconomic decay.

Just the other day, the November 3, 2011 edition of ‘The Guardian’ reported, “British drugs giant GlaxoSmithKline has agreed to pay $3bn (£1.9bn) to settle a series of old criminal and civil investigations by the US authorities into the sales and marketing of some of its best-known products”.

The Scenario in India:

The current scenario in India though not very much different, in terms of seriousness of the issue, from what is being reported in the US, the evolving regulatory standards in the US on this subject are definitely more robust and far superior to what we see India.

In India over 20, 000 pharmaceutical companies of varying size and scale of operations are currently operating. It has been widely reported in the media that the lack of regulatory scrutiny is prompting many of these companies to adapt to ‘free-for-all’ types of aggressive sales promotion and cut-throat marketing warfare involving significant ‘wasteful’ expenditures. Such practices reportedly involve almost all types of their customer groups, excepting perhaps the ultimate consumer, the patients.

It has been well reported that industry’s gifts to physicians in India can range from expensive cars, dinners in exotic locations, pricey vacations at various places of interest of the world and sometimes with the doctors’ families to hefty consulting and speaking fees.

Unfortunately in India there is no single government agency, which is accountable to take care of the entire healthcare needs of the patients and their well-being, in a holistic way.

The pharmaceutical industry of India, in general, has expressed many a time, the need for self-regulation of marketing practices in the absence of any regulatory compulsion, as is not uncommon in many other countries of the world, in various ways.

Be that as it may, after a protracted debate on the alleged ‘unethical marketing practices’ by the pharmaceutical companies, in May 2011, the Department of Pharmaceuticals (DoP) came out with a draft ‘Uniform Code of Pharmaceutical Marketing Practices (UCMP)’ to address this issue squarely and effectively in India. It has been reported that the final draft of UCMP is now lying with the Ministry of Health and Family Welfare of the Government of India for its clearance.

This decision of the government is the culmination of a series of events, covered widely by the various sections of the press, at least, since 2004.

However, many activists groups and NGOs still feel that the bottom-line in this scenario is the demonstrable transparency by the pharmaceutical companies in their dealings with various customer groups, especially the physicians.

“Market malpractices is a barrier to healthcare access”: The WHO report of 2006:

A 2006 report of the ‘World Health Organization (WHO) and ‘The Ministry of Health and Family Welfare, Government of India’ titled ‘Options for Using Competition Law/Policy Tools in Dealing with Anti-Competitive Practices in Pharmaceutical Industry and Health Delivery System’ states:

“The right to health is recognized in a number of international legal instruments. In India too, there are constitutional commitments to provide access to healthcare. However despite the existence of any number of paper pledges assuring the right to health, access to health remains a problem across the world”.

“There are several factors that are responsible for such deprivation. Market malpractices in general, and in particular, anti-competitive conduct in the pharmaceutical industry and the health delivery system are also among them.”

The scenario in the US:

Like in India, a public debate started since quite some time in the US as well, on allegedly huge sum of money being paid by the pharmaceutical companies to the physicians on various items including free drug samples, professional advice, speaking in seminars, reimbursement of their traveling and entertainment expenses etc. All these, many believe, are done to adversely influence their rational prescription decisions for the patients.

As the financial relationship between the pharmaceutical companies and the physicians are getting increasingly dragged into a raging public debate, making disclosure of all payments made to the physicians by the pharmaceutical companies’ is being made mandatory by the Obama administration, as a part of the new US healthcare reform process of the last year.

Some global pharmaceutical majors have set examples by taking absolutely voluntary measures to make their relationship with the physicians transparent. Eli Lilly, the first pharmaceutical company to announce such disclosure voluntarily around September 2008, has already uploaded its physician payment details on its website.

US pharma major Merck followed suit and so are many other large companies like, Pfizer, GSK, AstraZeneca and Johnson & Johnson.

Cleveland Clinic and the medical school of the University of Pennsylvania, USA are in the process of disclosing details of payments made by the Pharmaceutical companies to their research personnel and the physicians. Similarly in the UK the Royal College of Physicians has been recently reported to have called for a ban on gifts to the physicians and support to medical training, by the pharmaceutical companies.

The New York Times (NYT) in its April 12, 2010 edition in an article titled, “Data on Fees to Doctors is Called Hard to Parse”, reported that though some big pharmaceutical companies have started disclosing payments to doctors who act as consultants or speakers, many still find it far too difficult to follow the money trail.

NYT reported in the same article, “Senate researchers have found that some prominent doctors at academic medical centers have failed to disclose millions of dollars in drug company payments, despite university requirements that they do so. Federal prosecutors say some payments are really kickbacks for illegal or excessive prescribing”.

‘The Physician Payment Sunshine Act’:

To address this issue effectively in the US, ‘The Physician Payment Sunshine Act’, which was originally proposed in 2009 by Iowa Republican Charles Grassley and Wisconsin Democrat Herb Kohl, became a part of the US healthcare law in 2010. This Act came as an integral part of the healthcare reform initiatives of President Obama to reduce healthcare costs and introduce greater transparency in the system.

The Act requires all pharmaceutical and medical device companies of the country to report all payments to doctors above US $10. As stated earlier, the industry’s gifts to physicians in the US, reportedly, can range from expensive hospitality/dinner in exotic locations, pricey golfing vacations in various places of interest to consulting and speaking fees. After the Act comes in force with all its rules in place, failure to provide such details will attract commensurate penal provisions.

However, on November 1, 2011 Reuters reported that the Department of Health and Human Services of the US Government missed the October 1, 2011 deadline for drafting the regulations for ‘The Physician Payment Sunshine Act’ to outline procedures for the concerned companies for reporting the requisite information and sharing the same with the public.

US health officials will now delay the enforcement of the Act to ensure that they can implement the statutory goals of the Act with minimal regulatory burden on the pharmaceutical and the medical device companies.

Last year, ‘The New York Times (NYT)’ in its April 12, 2010 edition commented that come 2013, under the new ‘The Physician Payment Sunshine Act’, disclosure of such database will become mandatory for all pharmaceutical and medical device makers, who will then be subjected to stricter disclosure requirements aimed at making their marketing practices much more transparent.

Conclusion:

In the US, ‘The Physician Payment Sunshine Act’ is now in place, though its effective implementation has got delayed. It appears that Obama Administration, with the help of this new law, will make the disclosure of payments to physicians by all pharmaceutical and medical device companies transparent and effective as the rules and procedures for the same are being worked out.

If President Obama administration can take such an important regulatory step with the enactment of ‘The Physician Payment Sunshine Act’ to ensure transparency in pharmaceutical marketing practices, will Dr. Man Mohan Singh government stay much behind in taking similar measures or give the self-regulatory mechanism, as is being charted by the Department of Pharmaceuticals, one last chance?

Does branding of generic drugs offer value to the patients in India?

Posted on November 7, 2011 by Tapan Ray

It appears that the government has accepted the submission of the ‘Parliamentary Standing Committee for Health and Family Welfare’ made to the ‘Rajya Sabha’ of the Indian Parliament on August 4, 2010, recommending prescription of medicines by their generic names.

It has now been reported that the Drugs Technical Advisory Board (DTAB) has already considered the proposal to amend the rules of the Drugs and Cosmetics Act of India for approval of all drug formulations containing single active ingredient only in the generic names by the State Licensing Authorities. The proposal to publish the draft rules has been forwarded to the Ministry of Health for necessary approval. The Fixed Dose Combinations (FDC) will be kept out of the purview of this amendment.

This recommendation of the ‘Parliamentary Standing Committee for Health and Family Welfare’ appears to be based on the premises that the ‘Brand Building’ exercise of the generic drugs in India, includes ‘very high sales and marketing expenditure’, which can easily be eliminated to make medicines available to the common man at much cheaper prices. ‘Jan Aushadhi’ scheme of the Government is often cited as an example to drive home this point.

This recommendation, on the face of it, makes immense sense. However, the moot question remains, “Is it a practical proposition to implement in India?”

The generics and the branded-generic drugs and their value proposition: As we know generic name is the actual chemical name of a drug. The brand name is selected by the producer of a formulation and is built on various differential value parameters for its proper position in the minds of health professionals as well as the patients. Thus, brand names offer a specific identity to a chemical name in their value proposition.

Some other countries are also taking similar steps:

Just to cite an example, as reported by ‘The Guardian” on August 23, 2011, the Spanish government recently enacted a law compelling the doctors of Spain to prescribe generic drugs rather than more expensive patented and branded pharmaceuticals, wherever available. This move is expected to help the Spanish government to save €2.4 billion (£2.1billion) a year, as in Spain the drugs are partly reimbursed by the government.

As a result, the doctors in Spain will now have to prescribe only in the generic or chemical names of the respective drugs. Consequently the pharmacies will be obliged to dispense ‘the cheapest available versions of drugs, which will frequently mean not the better-known brand names sold by the big drugs firms’.

Quality standards of both generic and branded generic drugs are no different:

Drugs and Cosmetics Act of India requires all generic or branded generic drugs to have the same quality and performance. Thus when a generic drug is approved by the drug regulator, one should logically accept that it has met the required standards with respect to identity, strength, quality, purity and potency. It is not uncommon that there could be some variability taking place during manufacturing process for both branded generic and generic drugs and for that matter it is applicable to all drugs. However, all formulations of both types of these drugs manufactured by different manufacturers do not need to contain the same inactive ingredients.

In any case, all formulations of both generic and branded drugs must be shown to be bioequivalent to the reference drugs with similar blood levels to the respective reference products. Regulators even in the USA believe that if blood levels are the same, the therapeutic effect will be the same.

A recent study:

As reported by the US FDA, ‘A recent study evaluated the results of 38 published clinical trials that compared cardiovascular generic drugs to their brand-name counterparts. There was no evidence that brand-name heart drugs worked any better than generic heart drugs. [Kesselheim et al. Clinical equivalence of generic and brand-name drugs used in cardiovascular disease: a systematic review and meta-analysis. JAMA. 2008;300(21)2514-2526]‘.

Prescriptions for generic medicines were a record high in America in 2010:

As per published reports, last year i.e in 2010, generic medicines accounted for more than 78% of the total prescriptions dispensed by retail chemists and long-term care facilities in the US. This is a record high and is four percentage points more than what it was in 2009 and came up from 63% as recorded in 2006.

Points to ponder and resolve in the current Indian situation:

While the intention of the Government is indeed good, some practical issues must be considered before its implementation, which are as follows:

1. Increased chances of error while dispensing:

Chemical names of medicines are complex. In case of any mistake of dispensing the wrong drug by the chemist inadvertently, the patients could face serious consequences.

2. There could be differences even within single ingredient formulations:

Different brands of even single ingredient medicines may have inherent differences in their formulations like, in the drug delivery systems (controlled/sustained release), kind of coatings allowing dissolution in different parts of alimentary canal, dispersible or non-dispersible tablets, chewable or non-chewable tablets etc. Since doctors are best aware of their patients’ conditions, they may wish to prescribe a specific type of formulation based on specific conditions of the patients, which may not be possible by prescribing only in generic names.

3. Price differences between branded generics and generic generics may not exist:

It is intriguing to fathom, just for a switch over from the brand name to the generic name how will the Maximum Retail Price (MRP) of a single ingredient formulation, bearing only the generic name, come down. Currently, MRPs printed on the product packs of generic formulations without any brand name, as available in the retail outlets, are similar to comparable branded generic formulations. In that case, what benefits that Government will expect a patient to get out of this well hyped change?

4. Manufacturers may switch from single ingredient formulations to FDCs:

There is a theoretical possibility that to retain brand names, the pharmaceutical companies may be encouraged to change their formulations from single ingredient to FDCs. In that situation, single ingredient formulations may not be available and comparable FDCs could cost more to the patients.

5. The key decision will shift from physicians to retail chemists:

The major issue with prescriptions by the chemical/generic names is that retail chemists will then be the sole decision makers to choose the prescribed product from within a whole lot of over 30 to 40 manufacturers for a particular product.

What then will prompt the retailers to buy, store and sell different generic formulations of various companies and what could possibly be the key selection criteria for such drugs by them?

I reckon, there could only be one criterion for the choice of such medicines by a chemist i.e. to select only those which will give them highest margin of profits.

In such a case, the ultimate decision making authority for the prescription medicines shifts from the physicians to the chemists. This could make the situation far worse for the patients.

In interest of the patients, it is, therefore, extremely important that the government, regulators, physicians, chemists and even the patients’ groups are aware of such risks and ensure that patients are not adversely impacted in any way.

Conclusion: Viewing purely from the Indian perspective, while the generic drugs per se are not bad for the patients, weighing all the above issues and possible risk factors against expected benefits, I reckon, without effectively addressing the above issues to start with, if the prescriptions of single ingredient formulations are made mandatory only in generic names, it could seriously jeopardize patients’ safety and interest.

In any case, when single ingredient formulations contribute just around 30% of the total prescriptions in India, how could then prescriptions of all single ingredient formulations only in generic names address the stated concern of the government, in a holistic way?

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.

Should India follow the US way to regulate all types of lobbying in the country?

Posted on October 31, 2011 by Tapan Ray

Currently, India is one of the fastest-growing economies of the world along with China. Even during the recent global financial meltdown process both India and China could register a very impressive average GDP growth of around 7% consistently during the last so many years. This growth is over three times more than that of the developed countries like the US, which has been growing just around 2% in the recent years.

India growth story, I reckon, is now attracting a large number of companies across the industries from all over the world including India to lobby hard and participate in the process of spectacular growth across many industry sectors. Such lobbying activities in India are expected to increase by manifold in the years ahead.

As per newspaper reports the large corporations involved with these activities, besides pharmaceuticals, include the world’s largest retailers, the coffee shop giants, financial services, insurance companies and technology majors in addition to chemicals, telecom, defense and aerospace giants.

Currently, many US-based companies, as reported in the lobbying disclosure reports filed by them with the US Senate, are lobbying for various issues ranging from facilitating the market access to easing of foreign direct investment caps in retail, insurance and other financial services sectors in India to facilitate their business expansion in the country.

Indian Pharmaceutical sector is becoming more and more attractive to many:

Keeping pace with other high growth industries of the country, Indian Pharmaceutical Market (IPM) with the current domestic turnover of around US$ 12.1 Billion has been registering a scorching pace of CAGR growth of around 15%, since over a decade. The domestic pharmaceutical industry now caters to about 20% of global requirements of high quality and affordable generic medicines of all types.

IPM is, therefore, a global success story and India has already established itself as a major force to reckon with, especially in the development and manufacturing of high quality generic pharmaceuticals, as well as in Contract Research and Manufacturing Services (CRAMS), in the pharmaceutical industry of the world.

IPM is creating newer jobs:

As per reports, in roughly around 20,000 pharmaceutical organizations and its ancillary units over one million people are currently employed by the Industry. As mentioned above, though India has globally established itself as a producer of high-quality medicines available at reasonable prices, predominantly due to a very high of around 80% ‘Out of Pocket’ expenses towards healthcare in India, ‘common man’ still finds it extremely difficult to bear the cost of illness. Such critical public health interests India can ill afford to ignore.

Spectacular progress of the Indian Pharmaceutical Industry:

India, during its independence on August 15, 1947 inherited the patent system of its British colonial masters. Drugs and Pharmaceuticals used to be largely imported from the developed world in that period with local production being absolute minimal.

This abysmal trend and pattern of the IPM of pre-independent India took another 20 years to make any significant change worth mentioning. It will be quite difficult even for the staunchest skeptics to brush aside the fact that the Indian pharmaceutical industry started blossoming since 1970, mainly due to abolition of product patent act and government encouragement with various fiscal and tax incentives paving the way for the emergence of a vibrant high quality drug manufacturing sector in the country. However, that was the need of the 70’s and certainly not for now.

It is good to know that so far as national self-sufficiency in pharmaceuticals is concerned, as per Indian Drug Manufacturers Association (IDMA), it is far above 70% despite many tough challenges.

Patent regime of many ‘developed economies’ had a stormy beginning:

While deliberating on product patents, it should be noted that in many industrial nations of the world, the protection of inventions through patents started taking place in around the last 40 years.

For example, pharmaceuticals product patents in Switzerland came into effect only since 1978. History tells us that at the fag end of the 19^th century the pharmaceutical industry in Switzerland fought vehemently against the enactment of a patent law to be able to imitate foreign drugs, such as Aspirin of Bayer. Mainly because of this reason, at that time, Germany used to consider Switzerland a ‘state of robber barons’. Similarly, France used to be known as a ‘country of counterfeiters’.

Some historians have written that exactly in the same way like India, as mentioned above, the economies of Korea, Taiwan and the ‘land of the rising sun’ – Japan were able to thrive in their formative years due to absence of patent protection in those countries.

Young India is possibly crossing, if not has already crossed that stage much sooner than many others.

Innovation is the ‘Wheel of Progress’ of any nation:

However, it is an undeniable fact that ‘innovation’ is the wheel of progress of any nation. Without innovation, it is virtually impossible for any country to make significant economic progress. The Prime Minister of India has thus termed the current decade of 2010 as the ‘decade of innovation’ for India.

It has been well established by now that ‘Technology Transfer’ from the developed nations not only brings profit to those countries from patent protection and shields them from low-cost competition, but also helps the developing nations to add requisite speed to their growing economy.

However, most developing nations want access to such technological innovations at an affordable and lesser cost without any possible future risk of oligopoly and ‘technological recolonisation’.

New Product Patent regime in India came much after China and Brazil:

India signed the WTO agreement to become its member in January 1, 1995 and following a 10-year transition period, on January 1, 2005 the country amended its national patent legislation to usher in the product patent regime. The lose knots, if any, in the amended Patents Act of India are widely expected to get strengthened as the domestic innovators will feel the need for the same and possibly not due to any extraneous pressure.

Compared to India, product patent came much earlier in China and Brazil. China enacted its first patent law on March 12, 1984. However, it provided little protection to pharmaceutical and chemical inventions. In 1992, China amended the 1984 patent law in compliance with an agreement between China and the United States, as well as to join the WTO. Similarly, the new patent law came into force in Brazil way back on October 6,1999, which also has the provision of issuing Compulsory Licenses (CL).

International independent domain experts feel that it will take some more time for India to gauge the real benefits of product patents for the country.

Public interest for ‘Health and Nutrition’:

The philosophy of India since decades has been to ‘promote the principle of relying on one’s own strength’, especially in the critical and a very sensitive areas of public interest for ‘Health and Nutrition’. Many independent experts in this field both from India and abroad have opined that India seems to be following this path without compromising on its TRIPS compliance status. However, there are some dissenting voices in this area, who feel that a more rigorous and robust patent regime in India is in the best interest of the country.

Should the government regulate lobbying activities?

Considering the fast emerging environment, as mentioned above and arising out of some recent very sensational lobbying related financial/policy scams in India, the moot question, as is being raised by many across the country is: “Should the government regulate the lobbying activities in India?”.

Even in the Pharmaceutical Industry, some instances of lobbying activities carried out both within and outside India, had led to raging debates and controversies.

To cite an example, not so very long ago, some consumer activists from the civil society vehemently protested against the ‘Intellectual Property Conferences’ held in India, which were allegedly sponsored by some interested groups in a guise to influence the policy makers and the judiciary of India.

It was widely reported that the consumer activists viewed these IP summits, organized by the George Washington University Law School of USA as ‘attempts to influence sitting judges on patent law enforcement issues that are pending in Indian courts.’

In a letter dated February 26, 2010 addressed to Shri Anand Sharma, Minister of Commerce and Industry of India, over 20 NGOs demanded transparency and more information on such meetings and wanted the government of India ‘to put a stop to such industry sponsored lobbying with Indian judges and policymakers to promote their own requirements for intellectual property and to lobby for either law amendments or even to plead their cases currently pending before, various courts and the Indian Patent Office,”

In raising their concerns, the civil society groups argued that the posture adopted by the lobbyists and their supporters is to “force India to adopt greater standards” of IP protection “beyond the mandatory levels” required by the WTO, which may go against public health interest in India.

Lobbying activities are expected to gain further momentum:

It is quite logical to expect that lobbying activities in such and many other areas both ‘for’ and ‘against’ are expected to gain momentum in the times to come. However, it is widely believed that long-term interest of India is expected to ultimately prevail in this closely watched ball game.

Lobbying is legal in many countries like the US with the government ground rules firmly in place:

We all know that in many countries like the US, lobbying is a legal activity. Many Indian companies, including the government of India have been lobbying in the US since so many years to present their cases and argument with the American law and policy makers.

When President Obama came to power in the US, it was reported: ‘one of the first acts of the Obama administration in office was to have an executive order which prohibited the Obama Administration either from hiring lobbyists – those who had lobbied within two years of joining the administration or allowing people who had left the Obama administration to service lobbyists for two years. The idea is that you want to break the chains where there is undue influence of special interest groups upon the government’.

However, there are no government ground rules still in place for lobbying in India either for the local or the global companies and their lobbyists, across the industry sectors.

Surrogate lobbying:

It was discussed somewhere about ‘surrogate lobbying’ in many industries from various parts of the world. I have really no idea about what these are and the legality of such activities without appropriate well-drafted government specified disclosures in place, for public interest.

Conclusion:

Be that as it may, in the US such activities are required to be intimated to the US senate by the companies concerned and their lobbyists highlighting their activities in form of a quarterly disclosure reports detailing not only the issues, but also the concerned government departments and institutions and the related expenses.

Let me hasten to add that despite a long history with regulated and legalized lobbying in the US, still there has been severe criticism in that country of the way lobbying has worked there in the past so many years. India has plenty to learn from such experiences.

Thus, as a part of following the global ‘public interest best practices’, a large section of the civil society in India has been voicing in so many ways, mainly after the recent financial and policy related mega scams, that it may be a good idea, if the government also puts system driven adequate checks and balances in place for lobbying activities in India, sooner.

It is believed by many that such regulations will ensure perfectly legal lobbying initiatives in India always maintain complete transparency and follow appropriate processes/procedures of disclosures to maintain a right balance between long-term public interest and the growing requirements of a healthy business ecosystem to accelerate the inclusive economic growth of the nation.

‘Maira Committee’ delivers: Resolves 100% FDI issue in the pharma sector of India

Posted on October 17, 2011 by Tapan Ray

On October 10, 2011, Dr Man Mohan Singh, the Prime Minister of India accepted the recommendation of the ‘Maira Committee’ on Foreign Direct Investment (FDI) in the Pharmaceutical Sector of India and decided that the Competition Commission of India (CCI) will continue to scrutinize all Mergers and Acquisitions (M&A) in this area to avoid any possible adverse impact on Public Health Interest arising out of such deals.

Finance Minister Mr. Pranab Mukherjee, Health Minister Mr. Ghulam Nabi Azad, Commerce and Industry Minister Mr. Anand Sharma, Deputy Chairman of the Planning Commission Mr. Montek Singh Ahluwalia and the head of the ‘Maira Committee’ Mr. Arun Maira were reported to be present in the meeting.

Finer details are still not known:

Although the details of the ‘Maira Committee Report’ nor the discussion with the Prime Minister are not known, as yet, the key recommendation, as reported by the press was to be in relaxation of the threshold limits of CCI scrutiny for pharmaceutical M&As, which under the current law involve target companies with a turnover of above Rs 750 Crore (Rs 7.5 billion) and assets worth more than Rs 250 Crore (Rs 2.5 billion).

The CCI will now be strengthened and directed to set up a standing advisory committee especially to look into M&A in the pharmaceutical sector of India to address the concerns of the stakeholders in this matter.

The new system in CCI within six months:

The new system will be put in place within a period of six months. By the time CCI equips itself to handle the recommendations of the ‘Maira Committee’, as an interim measure, all brownfield pharma M&A proposals will be routed through Foreign Direct Investment Promotion Board (FIPB) for a period not exceeding six months.

A press note from the commerce & industry ministry announced at the same time that “India will continue to allow FDI without any limits (100 per cent) under the automatic route for Greenfield investments in the pharma sector. This will facilitate the addition of manufacturing capacities, technology acquisition and development.”

Looking back:

While looking back, the consolidation process within the Pharmaceutical Industry in India started gaining momentum since 2006 with the acquisition of Matrix Lab by Mylan. 2008 witnessed one of the biggest mergers in the Industry till that period, when Daiichi Sankyo of Japan acquired Ranbaxy of India for USD 4.6 billion.

Key apprehensions and counter arguments ‘for and against’ FDI cap:

Last year, Abbott’s acquisition of Piramal Healthcare with USD 3.72 billion followed several media reports on the Government’s keen interest in instituting new restrictions on Foreign Direct Investment (FDI) in the pharmaceutical sector for the following apprehensions:

The first apprehension of some stakeholders was that such FDI will create ‘Oligopolistic Market’ with adverse impact on ‘Public Health Interest’. It was argued by others that Indian Pharmaceutical Market (IPM) has over 23,000 players and around 60,000 brands. Consolidated Abbott, being the largest domestic player, enjoys a market share of just 6.1% in a highly fragmented market. Thus, the apprehension that an ‘Oligopolistic Market’ will be created through acquisitions by the MNCs is unfounded.

The second apprehension was on limiting the power of government to grant Compulsory License (CL). With a CL, the Government, under the Indian Patents Act can authorize any pharmaceutical company to manufacture any medicine required by the country in an emergency situation for ‘Public Health Interest’. On this point the argument put forth was that with more than 20,000 registered pharmaceutical manufacturing companies operating in India, many of them with high skill sets, there will always be skilled manufacturers willing and be able to make needed medicines in an emergency situation, as happened during H1N1 influenza pandemic.

Creation of a legal barrier by putting a cap on FDI to prevent domestic pharma players from voluntarily selling their respective companies at a lucrative price, just from the CL point of view, others argued, sounds highly protectionist in the globalized economy.

The third apprehension was that lesser competition will push up drug prices. The counter-argument was that equity holding of a company has no bearing on prices or access, especially when prices are governed by the National Pharmaceutical Pricing Authority (NPPA) and competition pressure. Thus, prices of medicines of Ranbaxy, Shantha Biotechnics and Abbott have reportedly remained stable even after their acquisition.

India needs FDI in the Pharmaceutical sector:

Both ‘Greenfield’ and ‘Brownfield’ FDI contribute not only to the creation of high-value jobs for the country, but also improve access to high-tech equipment and capital goods. Technology cooperation with the MNCs stimulates growth in manufacturing and R&D spaces of the domestic industry. It was articulated that any restriction to FDI in the pharmaceutical industry could make overseas investment even in the R&D sector less attractive. India has already suffered a 40% drop in FDI between 2009 and 2010 with a 17% drop in pharmaceutical FDI.

Foreign investors look up to India for cost arbitrage and expertise in Contract Research and Manufacturing Services for improved market access. Thus, it is believed by many that FDI can lead to increased domestic pharmaceutical exports by India, as happened in countries like China and Brazil, where they have programs to encourage partnerships with MNCs to bolster their domestic industry, helping the nation to benefit more from FDI.

India is against protectionist measures by other countries – Safeguards are in place:

Moreover India as a country, is known to be quite vocal and against any form of protectionist measures by other countries which will adversely impact the trade and commerce of our nation. It was perhaps felt by the ‘Maira Committee’ that any policy decision to do away with the current practice of allowing 100% FDI will be taken by the international community as a ‘protectionist measure’ in the pharmaceutical sector of India. It was reportedly felt by them that any possible adverse impact of M&A on competition could be effectively scrutinized by the Competition Commission. At the same time, it is a known fact that any unreasonable price increase is currently being effectively addressed by the NPPA. Thus it appears, effective safeguards to protect ‘Public Health Interest’ arising out of any M&A in the pharmaceutical sector of India, have been put well in place.

FDI policy needs predictability and stability to attract more investments:

Pharmaceutical sector was opened up for 100% FDI through automatic route only in 2002 as a part of the financial reform process, positioning India as an attractive investment destination for pharmaceuticals. This reform process, investors feel, needs stability, as by partnering with MNCs local drug companies have begun to gain access to international expertise, technology, resources, good manufacturing practices and markets.

It now appears that the ‘Maira Committee’, some key ministers present in the meeting and the Prime Minister himself felt that any move, at this stage of economic progressive of the country to restrict FDI in the pharmaceutical sector, especially when appropriate safeguards are in place, will be a retrograde step in the financial reform process of India. This could adversely impact FDI not only in the Pharmaceutical sector but possibly far beyond it.

Conclusion:

The final decision of the PM is a victory to all participants in this raging debate. All stakeholders seem to be satisfied with the decision, as their concerns have been well taken care of by the ‘Maira Committee’.

The issue of 100% FDI in the pharmaceutical sector, without putting any cap on it, has now been finally resolved, as it has come from the highest decision making authority of the country.

Both ‘Greenfield’ and ‘Brownfield’ FDI in the pharmaceutical industry of India, I reckon, will continue to contribute not only to high-value job creation, improving access to high-tech equipment and capital goods, boosting global technology cooperation in manufacturing and R&D spaces of the domestic industry, but will also make a significant contribution to the overall progress of the pharmaceutical industry of India.

The decision taken by the PM on the ‘Maira Committee’ report on October 10, 2011, therefore, seems to be a right step towards a long term nation building process without compromising with the ‘Public Health Interest’ of our country in any form.

‘Maira Committee’ has indeed delivered!

Seeing ghosts where there aren’t any

Posted on October 10, 2011 by Tapan Ray

Seeing ghosts almost everywhere in the Indian pharmaceutical industry, especially where there aren’t any, has indeed become quite common nowadays, across the spectrum of stakeholders. The ‘ghosts’ could well reside in ‘100% Foreign Direct Investments (FDI) through automatic route in the pharmaceutical sector’ or ‘threat to the generic industry of the country by the MNCs’ or ‘abysmal Intellectual Property environment vitiating investment climate of the global players’ or even presence of ‘invisible foreign hands’ in shaping important policies of the country, just to name a few.

“Seeing ghosts”: Both from inside and outside the country:

The incidence of encountering with ‘ghosts’, from both inside and outside the country, would possibly increase further as the economic attractiveness of India in general and pharmaceutical consumption in the country in particular, will keep growing fast in the years ahead.

India attracting:

Currently McKinsey & Company in its report titled, “India Pharma 2020: Propelling access and acceptance, realizing true potential”, estimates that the Indian Pharmaceuticals Market (IPM) will record a turnover of US$ 55 billion in 2020 from around US$ 12.1 billion in 2011. The report further highlights that with aggressive growth boosters it is quite possible to make the IPM attain a turnover of US $70 billion during the same period. Rapid urbanization, increasing accessibility to drugs due to expansion of healthcare infrastructure, fast growing rural markets, increasing resource allocation to public health, patented products, consumer healthcare, biologics and vaccines will be the key growth drivers for the industry.

The burning issue of affordability for healthcare is expected to be addressed by 650 million people coming under health insurance and additional 73 million people getting added to middle and upper class segments by 2020.

All ‘ghost’ seeing are not unjustifiable:

In this evolving scenario, ‘encounter with ghosts’ in some areas may perhaps be justifiable, especially, within the country. Commensurate justifiable measures will require to be put in place to allay those justifiable fears.

Recent India visit of two global iconoclasts:

However, last week, when India witnessed visits of two global CEOs of two global pharmaceutical majors, Andrew Witty of GlaxoSmithKline (GSK) and Chris Viehbacher of Sanofi, from the media reports it appeared to me that we are made to see ‘ghosts’ in some of the key areas of the Indian Pharmaceutical Industry, where there aren’t infact any. As per media reports, both Witty and Viehbacher, who are also Chairpersons of the European Federation of Pharmaceutical Industries and Associations (EFPIA) and the Pharmaceutical Research and Manufacturers of America (PhRMA), respectively, articulated great commitments of their respective companies to India by aligning their business goals with the national healthcare policy and objectives of the country.

Long term commitment to India:

Last year Andrew Witty dedicated the new Albendazole manufacturing facility of GSK at Nashik in India to the ‘Global Program Filariasis’ to the ‘World Health Organization (WHO)’ being the largest drug donation program in the history of global pharmaceutical industry.

Early October this year during his visit to Mumbai, Witty reiterated in unequivocal terms that the cost of around US$ 2 billion to innovate and develop a successful drug is unacceptable to him as it includes to a large extent the cost of failure in that endeavor. “We need to fail less often and succeed more often”, he said while emphasizing that the global pharmaceutical industry needs to metamorphose and must learn to strike a right balance between the cost of R&D projects and delivering innovative medicines to the patients at affordable prices.

Witty also mentioned that GSK globally follows a tiered pricing strategy, linked to the economic conditions of the individual countries. He feels that pharmaceutical product price should be commensurate to per capita income of a nation.

Without any hesitation Andrew Witty said that India will be one of the most prominent markets among the emerging economies that the global drug makers are concentrating now.

Closely followed by Andrew Witty’s visit to India, another iconoclast Christopher A Viehbacher, global CEO of Sanofi stepped into our soil and announced that Sanofi will invest US$ 300 million in a “state-of-the-art” manufacturing plant and R&D initiatives of Shantha Biotechnics in Hyderabad to make it the biggest vaccine plant of Asia not only to cater to the needs of India, but also to reach affordable vaccines across the globe.

Viehbacher emphasized that Sanofi wants to continue to build its long term business in India because of its market attractiveness. Like Witty, he emphasized that Sanofi strategy is also to have affordable medicines in emerging markets like India so that people can afford to pay for.

He reportedly reiterated, “I do not want us to be a colonial company with a colonial approach where we say we decide on the strategy and pricing. If you have to compete locally then the pricing strategy cannot be decided in Paris but will have to be in the marketplace. People here will decide on the pricing strategy and we have to develop a range of products for it”.

Viehbacher feels that emerging markets including India are expected to account for 40% sales of Sanofi by 2015.

Conclusion:

October 2011 India visit of these two visionaries of the global pharmaceutical industry, reinforced the fact that in many areas of the Indian Pharma sector we fancy to see “Ghosts where there aren’t any”, just as it happens outside the shores of India with equal intensity, gusto and zest.

A National Regulatory Standard is necessary for MRs of the Indian Pharmaceutical Industry

Posted on October 3, 2011 by Tapan Ray

Medical Representatives (MR) form the bedrock of business success, especially for the pharmaceutical industry in India. The Job of MRs is tough and high voltage one, laced with moments of elation and sprinkles of 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.

Currently, 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.

It is critical for the MRs to understand scientific details of the products, its mode of action in a disease condition, precautions and side-effects 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 constantly hone their knowledge and skills to remain competitive.

A qualitative study:

Indian J Med Ethics, 2007 Apr-June; 4(2) reported a qualitative study to determine a wide range of pharmaceutical promotional practices by the MRs influencing prescription of medicines in Mumbai. The study highlighted:

“An unholy alliance: Manufacturers, chemists and doctors conspire to make profits at the expense of consumers and public health, even as they negotiate with each other on their respective shares of profits”.

The paper identified misleading information, incentives and unethical trade practices as methods to increase the prescription and sale of drugs. It reported, besides other points that MRs provide incomplete medical information to influence prescribing practices.

‘Code of Pharmaceutical Marketing Practices’ is necessary, but just not enough:

Gift-giving, ethical vs. unethical promotion, transparency and self-regulation appear to be the main issues in the pharmaceutical industry right across the globe. Owing to inadequate national legislation and the lack of universally accepted self-regulatory codes, the pharmaceutical industry in India has yet to tackle the problem of alleged “Unethical drug marketing practices”.

After a protracted debate on this subject by the pharmaceutical companies, in May 2011, the Department of Pharmaceuticals (DoP) came out with a draft ‘Uniform Code of Pharmaceutical Marketing Practices (UCMP)’ to address this issue squarely and effectively in India.

This decision of the government is the culmination of a series of events, covered widely by the various sections of the media, since 2004. Be that as it may, the UCMP, in my view, is just not enough to address the issue of alleged, “Unethical drug marketing practices” holistically.

A mandatory ‘accreditation/certification’ program for MRs is the need of the hour:

Countries like United Kingdom (UK) and Australia with much longer experience of dealing with pharmaceutical industry than India, have appropriate mechanisms, safeguards and legislation in place to deal with the pharmaceutical marketing practices. Even the pharmaceutical industry in the UK and Australia have controlling authorities with comprehensive standards in place to deal with proper education, professional conducts and ethics for the MRs. Similar mandatory ‘accreditation/certification’ program for MRs, in my view, is also necessary in India without any further delay.

India should learn from others to work out a robust process:

Even with such systems and regulations in place, both in the UK and Australia, some ethical issues still remain unresolved. In Australia the largest consumer organization highlights, “that it is a conflict of interest for the Code to be administered by the industry peak body.” and “it is also concerned that the sanctions available in the Code do little to prevent breaches”. United Kingdom is no exception in this regard.

Other markets are fast catching up:

Very recently in Turkey, Turkish Ministry of Health published a new pharmaceutical promotion regulation, which specifies for the first time a certification obligation for the MRs.

In Philippines, ‘MR Accreditation Program (MRAP)’ started about 8 to10 years ago. MRAP is administered by the Pharmaceutical and Healthcare Association of Philippines. The certifying examination is accredited by the Professional Regulation Commission (PRC) under its Board of Pharmacy of the Government of Philippines.

In Japan there is a certification program for the MR since 1997, which is administered by the MR Education and Accreditation Center of Japan, a public service corporation. One has to receive over 450 hours education and training in Japan to be qualified for the examination. Even after being qualified in the certification examination, at least 50 hours of continuing education is required every year to keep the certification updated that expires after 5 years.

In Germany, under German law and practice, MRs have either the status of “pharma advisors” (“Pharmaberater”) as specified in German Drugs Act or they have to pass the examination for certified MRs (“Pharmareferent”), which is accessible online.

“Pharma Advisors” have science background as a pharmacist, chemist, physician, veterinarian etc. whereas other MRs are required to obtain scientific and medicinal knowledge through suitable education and training program, which will lead to an examination for certification by the German authorities. All MRs are required to start the program within 6 months of employment in the industry and complete the five modules within 2 years.

In Canada ‘the Code of Ethical Practices’ requires the MRs to complete an accreditation course offered by the Council for Continuing Pharmaceutical Education within two years of commencing their employment.

In USA, there is no official MR certification program.

In Hungary, the MR certification program is administered officially by the Health Authority of the country.

In Indonesia, this is administered officially by the state/ governmental bodies or by the industry through an outside consulting organization, which issues certificates after successful completion of the examination.

In Argentina, MR Certification Program is required by the law of the land. In order to include the name in the ‘Registry of MR’, a qualifying degree as medical sales representative, issued by a tertiary educational institution and/or officially acknowledged training institutions, is essential.

In South Africa, they have certification only for marketing code training, which is administered by an independent Marketing Code Authority.

In Sweden, this course is administered by an external course organizer on behalf of LIF Sweden.

However, Swedish companies nowadays prefer to employ pharmacists, who do not need to take the examination.

A National regulatory standard for MRs is necessary in India:

India is now one of fastest growing emerging pharmaceutical markets of the world with 3rd global ranking in volume of production and 13th in value terms. Domestic turnover of the industry is around US$ 12.1 billion in June 2011 (IMS) representing just over 1% of the global pharmaceutical industry turnover of US$ 850 billion (IMS). Since 1970, Indian pharmaceutical Industry has rapidly evolved from almost a non-entity to meeting around 20% of the global requirements for high quality and low cost generic medicines.

Unfortunately, despite a fast evolving scenario, appropriate regulations in various areas of the industry in India have not been worked out, as yet, to derive the best mileage out of this scorching pace of growth of the industry. India still does not have a national code of conduct or regulatory standards applicable to MRs.

Only the clause 4 of ‘The Magic Remedies (Objectionable Advertisement) Act, 1954’ deals with misleading advertisements. It is about time to formulate not just a national code on pharmaceutical marketing practices, but also a mandatory accreditation program and qualifying criteria for the MRs for entire pharmaceutical industry in India, 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.

Conclusion:

In the above scenario, the moot question is without any comprehensive and formalized uniform national standards of educational qualification, knowledge, ethics and professional conduct being in place for the MRs, are they getting right uniform inputs, across the board, to appropriately interact with the medical profession in a manner that will benefit the patients and at the same remain within the boundary of professional conduct and medical ethics?

Thus, a National regulatory standard for MRs, I reckon, is absolutely necessary in India… sooner the better.

PILMAN

A Tapan Ray Website

Tag Archives: India

Getting unfolded a global opportunity for India with Biosimilar Drugs

Health being a basic human right, the proposal for ‘Universal Health Coverage’ augurs well for India

Does India need an equivalent of ‘The Physician Payment Sunshine Act’ of the US for transparency in pharmaceutical marketing?

Does branding of generic drugs offer value to the patients in India?

Should India follow the US way to regulate all types of lobbying in the country?

‘Maira Committee’ delivers: Resolves 100% FDI issue in the pharma sector of India

Seeing ghosts where there aren’t any

A National Regulatory Standard is necessary for MRs of the Indian Pharmaceutical Industry