Replication of ‘Old Paradigm’ of the developed pharmaceutical markets is unlikely to yield results in the evolving new paradigm of India

Posted on September 3, 2012 by Tapan Ray

“Health leaps out of science and draws nourishment from the society around it”

- Gunnar Myrdal (Swedish Nobel Laureate Economist)

The success concoction of the global pharmaceutical industry for India, by and large, still remains to be sustained attempts in various forms of replication of the ‘Old Paradigm’ of the developed world, even when a ‘Public Health Interest’ oriented new paradigm has started evolving in the country, faster than ever before.

Very interestingly, efforts to arrest this paradigm change still continue, even when healthcare related government policies are getting more and more ‘Public Health Interest’ oriented under increasingly assertive public opinion, together with healthcare cost containment initiatives of various governments also in the OECD (Organization for Economic Co-operation and Development) countries.

Commercial and public relations strategies for replication or recreation of more or less similar business excellence environment of the developed pharmaceutical markets of the world now in India, though some may say is possible and would work, but in my view is highly improbable, at least in the foreseeable future. To be equally successful in India, creation of India centric robust and differentiated business models, broadly aligning with the new evolving paradigm of the country, could probably make more commercial sense for all concerned.

“See things as they are, not way you want them to be”:

“Maintain and sharpen your intellectual honesty so that you’re always realistic. See things as they are, not way you want them to be”, wrote the Management Guru – Mr. Ram Charan in his book titled, ‘Execution: The Discipline of Getting Things Done’ co-authored by Larry Bossidy. In the same book the authors deliberated on ‘The 10 Greatest CEOs Ever’.

One of these 10 greatest CEOs ever, George Merck of the global pharmaceutical giant Merck & Co articulated his vision for the Company way back in 1952 as follows:

“Medicine is for people, not for the profits.”

George Merck believed, the purpose of a corporation is to do something useful, and to do it well, which also ensures decent profits.

I have personally witnessed the Merck (MSD) employees to start their business presentations quoting the above famous vision, even today. George Merck’s vision, I reckon, is more relevant today than any time in the past.

In the same context, another very senior official of a global pharmaceutical major was quoted in the Harvard Business Review in its April 28, 2010 edition saying:

“As western pharmaceutical companies consider how to be successful in emerging markets, they must address two key questions:

How will we bring high-quality health care to patients wherever in the world they may live?
How do we effectively manage the transformation of the traditional pharmaceutical business model to one that meets the diverse range of needs of the emerging markets?”

He further said, “Our approach to providing patients with access to our medicines is evolving. We have extended a flexible-pricing strategy for middle-income countries to improve the affordability of our medicines and increase access for patients with lower income levels, while remaining profitable.”

Though some companies have been able to carefully pick up this important signal and strategize accordingly, many others still prefer to follow ‘their own ways’.

Increasing healthcare consumption of India attracting global players:

Along with the economic progress of India, healthcare consumption of the population of the country is also increasing at a reasonably faster pace. According to McKinsey India Report, 2007, the share of average household healthcare consumption has increased from 4 per cent in 1995 to 7 per cent in 2005 and is expected to increase to 13 per cent in 2025 with a CAGR of 9 per cent, as follows:

Share of Average Household Consumption (AHC) (%)


	Household Consumption	1995	2005 E	2015 F	2025 F	CAGR %
1.	Healthcare	4	7	9	13	9
2.	Education & Recreation	3	5	6	9	9
3.	Communication	1	2	3	6	12
4.	Transportation	11	17	19	20	7
5.	Personal Products and Services	4	8	9	11	8
6.	Household Products	2	3	3	3	5
7.	Housing & Utilities	14	12	12	10	5
8.	Apparel	5	6	5	5	5
9.	Food, Beverages & Tobacco	56	42	34	25	3

(Source; McKinsey India Report 2007)

From this study, it appears that among all common household consumption, the CAGR of ‘healthcare’ at 9 percent will be the second highest along with ‘education’ and ‘communication’ topping the growth chart at 12 percent.

As per this McKinsey study, in 2025, in terms of AHC for ‘healthcare’ (13 percent) is expected to rank third after ‘Food & Beverages’ (25 percent) and ‘transportation’ (20 percent).

Thus, AHC for ‘healthcare’ shows a significant growth potential in India, over a period of time. Hence, this important area needs to attract as much attention of the policymakers, as it is attracting the pharmaceutical players from all over the world, to help translate the potential into actual performance with requisite policy, fiscal support and incentives.

Such a scenario in the pharmaceutical space is difficult to ignore by any player with an eye for the future.

Sectoral break-up of the Healthcare Industry:

Even while looking at the sectoral break-up of the healthcare industry, the significant share of the pharmaceutical industry should be quite enticing to many global companies.

According to IDFC Securities 2010, the sectoral break-up of the US$ 40 billion healthcare industry is as follows:

Industry	%
Hospitals	50
Pharma	25
Diagnostics	10
Insurance & Medical Equipment	15

(Source: IDFC Securities Hospital Sector, November 2010)

A promising market:

Pharmaceutical market of India holds an immense future promise already being globally recognized as one of the fastest growing healthcare markets of the world. All components in the healthcare space of the country including hospital and allied services are registering sustainable decent growth, riding mainly on private investments and now fueled by various government projects, such as:

National Rural Health Mission (NRHM)
National Urban Health Mission (NUHM)
Rashtriya Swasthya Bima Yojana (RSBY)
Universal Health Coverage (UHC)
Free Medicine from the Government hospitals
Centralized procurement by both the Central and the State Governments

Supported by newer, both public and private initiatives, like:

Increase in public spending on healthcare from 1.0 per cent to 2.5 per cent of GDP in the 12th Five Year Plan period
Increasing participation of the private players in smaller towns and hinterland of the country
Wider coverage of health insurance
Micro-financing
Greater spread of telemedicine
More number of mobile diagnosis and surgical centers

Need to strike a right balance:

The pharmaceutical companies need to strike a right balance between ‘Public Health Interest’ and their expectations for a high margin ‘free market-like’ business policies in India.

Pharmaceuticals come under the ‘Essential Commodities Act’ in India, where government administered pricing for all drugs featuring in the ‘National List of Essential Medicines 2011’ is expected and cannot be wished away, at least, for now.

Despite all these concerns, India still remains a promising market for the pharmaceutical players, both global and local. McKinsey & Company in its report titled, “India Pharma 2020: Propelling access and acceptance realizing true potential” estimated that the Indian Pharmaceutical Market (IPM) will grow to US$ 55 billion by 2020 and the market has the potential to record a turnover of US$ 70 billion with a CAGR of 17 per cent during the same period.

Domestic Pharmaceutical Industry has come a long way:

Domestic pharmaceutical companies have positioned themselves as formidable forces to reckon with, not just locally but in the global generics market too.

Currently India:

Ranks 3rd in the world in terms of pharmaceutical sales volume.
Caters to around a quarter of the global requirements for generic drugs.
Meets around 70 per cent of the domestic demand for Active Pharmaceutical Ingredients (API).
Has the largest number of US FDA approved plant outside USA
Files highest number of ANDAs and DMFs
One of most preferred global destinations for contract research and manufacturing services (CRAMS)

Patients are still being exploited:

Unfortunate and deplorable incidences of exploitation of patients, mainly by the private players, are critical impediments to foster growth in quality healthcare consumption within the country.

In this context, ‘The Lancet’, January 11, 2011 highlighted as follows:

“Reported problems (which patients face while getting treated at a private doctor’s clinic) include unnecessary tests and procedures, rewards for referrals, lack of quality standards and irrational use of injection and drugs. Since no national regulations exist for provider standards and treatment protocols for healthcare, over diagnosis, over treatment and maltreatment are common.”

Prevailing situation like this calls for urgent national regulations for provider-standards and treatment-protocols, at least for the common diseases in India and more importantly their stricter implementation across the country by both the global and local players.

Pharmaceutical key business processes in India are almost a ‘free-for-all’ type:

Despite many challenges and damning reports of the Indian Parliamentary Standing Committees, overall key business processes in India are something like ‘free-for-all’ types, mainly because of the following reasons:

No pan-India voluntary or mandatory code exists for ethical Sales and Marketing practices
Many regulatory controls and standards are reportedly below par
Regulatory control on clinical trials done in India is reportedly sub-standard. In many cases even adequate compensation towards trial related deaths is reportedly not paid to the victims families by the companies, mostly fixing responsibilities to the ‘Ethics Committees’.

Key factors to take note of in the changing paradigm:

While looking at the big picture, the global pharmaceutical players, I reckon, should take note of the following factors while formulating their India- specific game plan to be successful in the country without moaning much:

At least in the short to medium term, it will be unrealistic to expect that India will be a high margin / high volume market for the pharmaceutical sector in general, unlike many other markets, across the world.
India will continue to remain within the ‘modest-margin’ range with marketing excellence driven volume turnover.
The government focus on ‘reasonably affordable drug prices’ may get extended to patented products, medical devices / equipment and other related areas, as well.
Although innovation will continue to be encouraged in the country, the amended Patents Act of India is ‘Public Health Interest’ oriented and different from many other countries. 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)”.

Government no longer accepts that medicine prices are cheapest in India:

Pharmaceutical companies in India will be constrained to live with the continuing focus of the government and also of the civil society on ‘reasonably affordable medicines’ irrespective of the fact whether they are generic or patented.

The Department of Pharmaceuticals has reportedly started comparing the Indian drug prices with international equivalents in terms of the ‘purchasing power parity’ and ‘per capita income’ and not just their prevailing prices in various developed markets converted to rupees.With such comparisons the government has already started voicing that prices of medicines in India are not the cheapest but on the contrary one of the costliest in the world.

The above argument though interesting, worth taking note of, by all concerned to successfully chart-out their respective game plans for India.

A recent media report highlighted that an inter-ministerial group constituted for regulating prices of patented medicines in India has recommended using a per capita income-linked reference pricing mechanism for such products.

The above news item also mentions that Tarceva, a Roche lung cancer drug, costs Rs 1.21 lakh in Australia and France while it costs Rs 35,450 in India. But when adjusted for per capita income, which is significantly more in these countries compared with India, the price falls to Rs 10,309 and Rs 11,643, respectively, for both countries as indicated below:

Country	India	France	Australia
Per capita gross national income (PCGNI) (US$)	3260	33940	38510
Ratio of PCGNI of other countries to India	1	10.4	11.8
Eriotnib (Tarceva) 100 mg price in India (Rs.)	35450	121085	121650
Eriotinib (Tarceva) 100 mg Price in terms of weighted PCGNI (Rs)	35450	11643	10309
Sunatinib (Stutent) capsule 50 mg (Rs)	46925	363216	310384
Sunatinib (Stutent) 50 mg price in terms of weighted PCGNI (Rs)	46925	34925	26303

(Source: The Economic Times, August 16, 2012)

Government encouraging R&D Focus on the diseases of the poor:

Many in India, including ‘Council of Scientific & Industrial Research (CSIR)’ feel that the pharmaceutical R&D activities should also focus on the diseases of the poor, which constitute the majority of the global population.

However, global pharmaceutical companies argue that greater focus on the development of new drugs for the diseases of the poor should not be considered as the best way to address and eradicate such diseases in the developing countries. On the contrary, strengthening basic healthcare infrastructure along with education and the means of transportation from one place to the other could improve general health of the population of the developing world quite dramatically.

The counterpoint to the above argument articulates that health infrastructure projects are certainly very essential elements of achieving longer-term health objectives of these countries, but in the near term, millions of unnecessary deaths in the developing countries can be effectively prevented by offering more innovative drugs at affordable prices to this section of the society.

Recognition of India’s healthcare priorities is important:

Despite chaos in many areas, as mentioned above, a paradigm change in the way pharmaceutical business to be conducted in India, is slowly but surely taking place, where replication of any western business model could be counterproductive. The strategy has to be India specific, accepting the priorities of the countries, even with all its ‘warts and moles’

Participative strategies should yield better results:

To achieve excellence in the pharmaceutical market of India, there is a dire need for all stakeholders to join hands with the Government, without further delay, to contribute with their global knowledge, experience and expertise to help resolving the critical issues of the healthcare sector of the nation, like:

Creation and modernization of healthcare infrastructure leveraging IT
Universal Health Coverage
Win-Win regulatory policies
Creation of employable skilled manpower
Innovation friendly ecosystem
Reasonably affordable healthcare services and medicines for the common man through a robust government procurement and delivery system

Right attitude of all stakeholders to find a win-win solution for all such issues, instead of adhering to the age-old blame game in perpetuity, as it were, without conceding each others’ ground even by an inch, is of utmost importance at this hour.

It is high time for the Government of India, I reckon, to reap a rich harvest from the emerging lucrative opportunities, coming both from within and the outside world in the healthcare space of the country. Effective utilization of this opportunity, in turn, will help India to align itself with the key global healthcare need of providing reasonably affordable healthcare to all.

Conclusion:

Thus in my view, just replication of the ‘Old Paradigm’ of the developed pharmaceutical markets is unlikely to yield results in the new evolving paradigm of India.

In this rapidly changing scenario, the name of the game for all players of the industry, both global and local, I believe, is recognition of the changing market dynamics of India, active engagement in the paradigm changing process of one of the most important emerging pharmaceutical markets of the world and finally adaptation to the countries changing aspirations and priorities to create a win-win situation 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.

Nutraceuticals with Therapeutic Claims: A Vulnerable Growing Bubble Protected by Faith and Hope of Patients

Posted on August 27, 2012 by Tapan Ray

Today a growing number of particularly the aging population wants to live a healthy life without consuming much of chemical drugs, which in turn is becoming a key growth driver for nutraceutical products across the world. Further, increasing interest towards preventive healthcare and self-medication with ‘Over The Counter (OTC)’ products are the additional factors boosting the growth of the nutraceutical products market in India.

It has been reported that by 2020, the number of senior citizens (60 plus age group) is expected to exceed 1.0 billion, with around 70% of them living in the developing world. This further highlights the growth potential of the nutraceutical industry in countries like India with rising per capita income.

Evolution of the terminology ‘Nutraceuticals’:

Dr. Stephen DeFelice of the ‘Foundation for Innovation in Medicine’ coined the term ‘Nutraceutical’ from “Nutrition” and “Pharmaceutical” in 1989. The term nutraceutical is now being commonly used in marketing for such products but has no regulatory definition, other than dietary or nutritional supplements.

It is interesting to note that the dietary supplement industry defines nutraceuticals as, “any nontoxic food component that has scientifically proven health benefits, including disease treatment and prevention.”

Perhaps because of this reason, it is very often claimed by the manufacturers of nutraceutical products that these are not just dietary supplements, but also help prevention and/or treatment of many disease conditions.

In India, nutraceuticals are being promoted to and even prescribed by the medical profession, not just as nutritional supplements but also with off-label claims for the treatment of disease conditions, like arthritis, osteoporosis, cardiology, diabetes, pain management etc.

Are nutraceuticals then ‘Nutritional Supplements’ or ‘Medicines’?

When for any nutraceutical, claims are made either for cure of a specific disease condition or for prevention of a particular ailment, the product assumes the status of a drug substance, which needs to be approved by the drug regulator with undisputed and demonstrable evidence of efficacy and safety on patients.

Thus, the questions that may be very appropriately raised, whether or not such product claims are backed by robust clinical data for efficacy and safety on long term use and whether or not such data have also been published in the peer review journals? The answer will probably be an unambiguous ‘No’.

Unfortunately, clinical trial data proving efficacy and safety are not required for nutraceutical products to get their marketing approval in India, as long as the manufacturers do not put any medicinal or therapeutic claims both on the product label and also in their promotional literature.

However, in practice, making off-label therapeutic claims for nutraceutical products in general, though illegal, are more a routine than exceptions in India.

Relaxed regulatory process for marketing approval of Nutraceutical Products:

As stated above, nutraceutical products do not go through the rigors of stringent regulatory process as followed for the marketing approval of any drug with similar claims. Due to this reason, nutraceutical products currently fall within a grey zone, which has not yet gone through intensive scientific scrutiny for their safety and efficacy on patients, in general.

Ethical issues:

As a result of such relaxed regulatory framework, the nutraceutical products industry also prompts to flag many ethical issues, which include concerns over inadequate disclosure of science based information particularly on the surrogate therapeutic claims based merely on anecdotal evidence, as a part of intensive off-label sales and marketing efforts on their part.

Off-label therapeutic claims for any product are even otherwise illegal in India, like in many other countries.

Appropriate measures by the Government need to be put in place sooner, not only to plug the regulatory loopholes for off-label therapeutic claims, but also to ensure that marketing malpractices are not followed by their manufacturers to boost the sales turnover. This is necessary keeping especially the health outcomes and safety of the patients in mind.

How effective and safe are the nutraceuticals?

As stated above, currently many nutraceuticals are being directly promoted just like any other modern medicines, in the garb of nutritional supplements, to the medical profession, but with illegal claims and intent without being supported by data that can pass through scientific or regulatory scrutiny.

Thus the questions that one can raise logically are as follows:

What happens when the nutraceutical products fail to live up to the tall claims made by the respective manufacturers on their efficacy and safety profile?
Are these substances safe, just because not enough data has been generated on their toxicity profile?

The New Zealand Medical Journal (Vol. 118 No 1219 ISSN 1175 8716) in an article titled, “Lead poisoning due to ingestion of Indian herbal remedies” reported about dangerous and life threatening lead poisoning as follows:

“We believe that our cases of lead poisoning was predominantly due to ingestion of lead contaminated Indian herbal medicines, and it is the first such case to be reported in New Zealand.”

Similarly, Times Health in its March 15, 2010 reported that dangerous “lead poisoning in Indian children in the Boston area were linked to consumption of Indian spices.”

Taking lessons from all these, incidence like ‘Tylenol tragedy’ must not be allowed to be repeated in India, the risk of which primarily lies within inadequate quality and safety standards arising out of overall gross deficiency in the product security measures for many of such substances.

Importance of robust clinical data for therapeutic claims:

Therapeutic efficacy of a drug in the treatment of a disease condition is established with pharmacokinetic, pharmacodynamics, other pre-clinical and clinical studies. Some experts believe that these studies are very important for nutraceutical products, as well, especially when therapeutic claims are made on them, directly or indirectly, as these substances are also involved in a series of reactions within the body.

Similarly, to establish any long term toxicity problem with such products, generation of credible clinical data including those with animal reaction to the products, both short and long term, using test doses several times higher than the recommended ones, is critical. These are not usually followed for nutraceutical products in India, even when therapeutic claims are being made.

The experts, therefore, quite often say, “A lack of reported toxicity problems with any nutraceutical should not be interpreted as evidence of safety.”

Should Nutraceuticals also follow ‘Evidence-Based Medicine (EBM)’ standards?

The term and concept of EBM originated at McMaster University of Canada in early 1990 and has been defined as “the integration of best research evidence with clinical expertise and patient values” (Sackett, 2000).

EBM is thus a multifaceted process of systematically reviewing, appraising and using clinical research findings to aid the delivery of optimum clinical care to patients. EBM also seeks to assess the strength of evidence of the risks and benefits of any particular treatment claim.

Thus many global pharmaceutical companies believe that EBM offers the most objective way to determine and maintain consistently high quality and safety standards of healthcare products in the healthcare practice.

EBM concept, I reckon, is important in the context of nutraceuticals too, because over a period of time more and more users of nutraceuticals will tend to look for authentic scientific evidence within a clinical set up for such products. It is about time that EBM standards are followed for nutraceutical products, as well, by the regulators.

Global pharma companies focus on EBM:

So far, the large global pharmaceutical players have been focusing mainly, if not only on EBM. Companies like, GlaxoSmithKline (GSK), were reported to have discontinued marketing those products, which do not fall under ‘Evidence Based Medicines (EBM)’, even in India.

Nutraceuticals market:

The global nutraceuticals market is currently estimated to be around US$ 117 billion and expected to reach US$ 177 billion by 2013 with a CAGR of 7%, driven mainly by ‘functional foods’ segment with a CAGR of 11%. The top countries in this category are Japan, USA and Europe with the former two together enjoying around 58% market share of the total nutraceuticals consumption of the world.

In 2009 Indian nutraceuticals market was around US$ 1.0 billion growing at 5% (IMS), around 55% of which being functional foods. As per IMS about 2800 brands were competing in the nutritional market in 2009.

The prices of most nutraceuticals products with off-label therapeutic claims, being outside government price regulations in India, are usually quite high.

Although India’s current market share of the global nutraceuticals market is around 1%, a report from PwC predicts that India will join the league of top 10 by 2020, primarily driven by the ‘functional foods’.

The status of nutraceuticals in the USA:

In the USA, Congress passed the ‘Dietary Supplement Health and Education Act’ in 1994. This act allows ‘functional claims’ to Dietary supplements without drug approval, like “Vitamin A promotes good vision” or “St. Johns Wort maintains emotional well-being”, as long as the product label contains a specific disclaimer that the said claim has not been evaluated by the FDA and that the product concerned is not intended to diagnose, treat, cure or prevent disease.

The above Act bestows some important responsibility on the doctors in particular, who are required to provide specific and accurate scientific information for nutraceutical products to their patients. This process assumes critical importance as the patients would expect the doctors to describe to them about the usefulness of nutraceutical products as alternatives to approved drugs. In such cases, if any doctor recommends a dietary supplement instead of pharmaceutical products, the doctor concerned must be aware of the risk that the patient’s health may suffer, for which the affected patient could sue the doctor for malpractice.

It is difficult to understand why is the Indian regulator not following, at least, the above practices in the country.

Only ‘Patented Traditional Medicines’ will soon require mandatory clinical trials:

Here comes possibly the beginning of a refreshing change in the drug regulatory mindset for nutraceuticals in the country.

It has recently been reported that all new traditional medicines will need to undergo clinical trials before their regulatory marketing approval in India.

However, it has also been clarified that “such products will include only the new patented drugs and not the classical formulations that find mention in India’s ancient texts, some of which are 5,000 years old.”

However, it defies scientific logic, when one argues that anecdotal evidence of last 5,000 years should be accepted as robust data for proven efficacy and safety of nutraceutical products on patients, especially during their longer term use, for the reasons as mentioned above.

Thus, this initiative of the government though commendable, will by no means ensure safety and efficacy of existing nutraceutical products making therapeutic claims – off-label or otherwise in their sales and marketing promotion to the medical profession.

An immediate action:

Nutraceutical products, wearing a tag of providing desirable therapeutic benefits with less or no side effects as compared to conventional medicines, is showing just a moderate growth in India, despite being within a favorable pricing and a relaxed regulatory environment.

As deliberated above, it may take some time for the drug regulator to grant marketing approval of nutraceutical products with therapeutic claims based only on robust clinical data for efficacy and safety. Till such time this happens, the Drugs Controller General of India (DCGI) without fail should make a statement, something like the following, mandatory on the packaging of all nutraceutical products, just as what has been done by the US-FDA:

“All claims made for this product have not been evaluated by the DCGI and the product is not intended to diagnose, treat, cure or prevent any disease.”

Conclusion:

I reckon, the nutraceutical products segment with surrogate or off-label therapeutic claims, is just a growing bubble, as it were, which continues to be well protected by faith and hope of the patients, in the absence of stringent drug regulatory measures for substantiation of specific medicinal claims with predictable efficacy and safety profile.

This bubble could easily burst… decisively, if generation of clinical data on safety and efficacy ever becomes mandatory regulatory requirements for getting marketing approval of nutraceutical products in India claiming therapeutic benefits, off-label or otherwise. In which case, to meet those stringent drug regulatory requirements, commensurate increase in price for such products could indeed make commercial survival of this industry extremely challenging.

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.

Should India allow use of Compulsory License as a common tool to improve access to medicines?

Posted on August 20, 2012 by Tapan Ray

Compulsory License (CL) is generally considered a very important provision in the Patent Act of a country to protect public health interest not only by the governments, but also by a large number of experts across the globe and the intelligentsia within the civil society.

The key objectives:

The key objectives of the CL provisions in the statute are to:

Rectify any type of market failure

Discourage abuse of a patent in any form by the patent holder

WHO hails CL provisions:

‘The World Health Organization (WHO)’ says that ‘the provision for Compulsory Licenses (CL) is a critical element in a health-sensitive patent law’. It emphasized that CL constitutes an effective mechanism to:

- Promote competition

- Increase affordability of drugs, while ensuring that the patent owner obtains compensation

for the use of the invention

- Lack or insufficiency of working of patent

- Remedy of anti-competitive practices

- National emergency

- Government use for non-commercial purpose

- Other public interest grounds

WHO also recommends the use of CL for any “abuse of patent rights”. This is primarily to ensure that drug prices remain consistent with local purchasing power.

Even ‘UNAIDS’ have recommended the use of CL, as provided under the TRIPS Agreement, where countries have the right to issue such licenses.

Views of R&D based pharma companies:

It is well known that the provisions for the grant of CL other than national emergencies have been generally opposed by the research-based pharmaceutical industry on the grounds that they discourage investments on R&D.

Despite such opposition, most developed countries have CL provisions in their law, which the respective governments can use to promote competition and access to medicines.

Provisions for CL in TRIPS Agreement:

While TRIPS agreement does not limit the grounds or reasons for granting CL, countries can only use those grounds which are allowed by their own national legislation. The development of appropriate national legislation is therefore crucial.

TRIPs further states that the conditions under which a compulsory license is granted should be regulated in accordance with the TRIPs Agreement (Article 31), under a number of conditions aimed at protecting the legitimate interests of the right holder.

Examples of CL provisions in some important countries:

China: Quite close on the heel of grant of Compulsory License (CL) to Bayer AG’s expensive Kidney and Liver cancer drug Sorafenib Tosylate to the domestic Indian manufacturer Natco by the Indian Patent Office, as provided in the Indian Patent Law, China amended its own Patent Law allowing Chinese pharmaceutical manufacturers to make cheaper generic equivalent of patented medicines in the country not only during ‘state emergencies’, but also in ‘unusual circumstances’ or ‘in the interests of the public’.

U.S: Patent law does not provide for CL, which is allowed under the antitrust law. US has been granting CL to remedy anti-competitive practices and for governmental use, including national security.

Canada: The country introduced CL for drugs, way back in 1923. Canada has granted number of CLs and a robust generic pharmaceutical industry exists in that country.

France: French law authorizes CL when medicines are “only available to the public in insufficient quantity or quality or at abnormally high prices”.

Israel: In Israel a CL can be granted, “if it is necessary to assure the public of a reasonable quantity of a product capable of being used as a medicament, to manufacture a medicament or a patented process for manufacturing a medicament.”

Brazil: The country will grant CL in cases of “national emergency or public interest, declared by the Federal Executive Authorities. A temporary nonexclusive compulsory license can be granted if necessary. Brazil defines Public Health interest to include “public health protection, satisfying nutritional requirements, protection of the environment and other areas of fundamental importance to the technological or social and economic development of the country.”

Very few CLs granted between 1995-2012:

Despite having the provisions for the grant of CL in many countries, not many CLs have been granted across the world from 1995 to date. The details are as follows:

Country	Medicine	CL granted in
Israel	Hepatitis B Vaccine	October 1995
Italy	Imipenem (antibiotic)	June 2005
Italy	Sumatripan Succinate (migraine)	February 2006
Canada	Oseltamivir (influenza)	July 2006
Brazil	Efavirenz (HIV/AIDS)	May 2007
Thailand	Erlotinib, Docetaxel (cancer)	January 2008
India	Sorafenib Tosylate (cancer)	March 2012

Source: DNA, March 9, 2012

India joins the league in 2012:

Indian Patent Office granted a Compulsory License (CL) for Sorafenib Tosylate (Nexavar of Bayer Corporation) to Hyderabad based Natco Pharma Limited under the provisions of Section 84 of the Indian Patents Act. Nexavar is used for treatment for liver and kidney cancer.

The Compulsory License, first of its kind granted in India, enables Natco to sell the drug at a price not exceeding Rs. 8880 (US$ 178 approx.) for a pack of 120 tablets (one month’s therapy) against Rs. 284,428 (US$ 5,690 approx.) being the cost of Nexavar sold by Bayer before the CL was granted to Natco. The license is valid till the expiry of the patent on 2021.

The order on CL also makes it obligatory for Natco to supply the drug free of cost to at least 600 needy and deserving patients per year.

The grant of CL generated adverse impact from many developed nations of the world, as was expected by many.

However, welcoming the order Natco reportedly commented, “This opens up a new avenue of availability of life savings drugs at an affordable price to the suffering masses in India.”

Does grant of CL for non-NLEM products make sense in India?

Currently all government healthcare initiatives in India are focused on ‘The National List of Essential Medicines 2011 (NLEM 2011)’, be it drug price control, free distribution of medicines to all through government hospitals/health centers or even much hyped, ‘Universal Health Coverage’ proposal.

In this situation, another school of thought says that by granting CL to Natco for Sorafenib Tosylate (Nexavar of Bayer), which does not fall under NLEM 2011, hasn’t India diluted its focus on essential drugs? More so, when NLEM 2011 features quite a good number of anti-cancer drugs, as well.

The other side of the argument: Is CL a viable solution to improve access in the developing nations?

International Policy Network (IPN) in an article titled, “Compulsory licensing no solution to health problems in poor countries – say experts from India, Argentina, Canada and South Africa” stated that patents and other forms of Intellectual Property (IP) are an essential component in economic development of any emerging economy, which needs to be well protected by the governments.

The article further opines that any form of interference with IP by the grant of CL or even price controls will undermine investments and cause more harm than good. The paper, therefore, calls for stronger protection of IP across the world.

Yet another paper titled, “The WTO Decision on Compulsory Licensing – Does it enable import of medicines for developing countries with grave public health problems”, states that flexibility of innovator companies to adjust prices according to purchasing power of the people of different countries is constrained by the following two reasons:

A genuine risk that medicines sold at lower prices in the developing countries will be re-exported to high income markets.

Many high income developed countries also regulate the prices of medicines at the national level. There is a high risk that these countries will use prices in the developing markets as external reference pricing.

Thus, the author argues, in both the above situations, patented medicine prices will be undermined in the most important markets, making it difficult for the research-based companies to use prices only of high income countries to fund R&D costs for the discovery of new medicines.

Fostering innovation in India:

The healthcare industry in general and the pharmaceutical sector in particular have been experiencing a plethora of innovations across the world, not only to cure and effectively manage ailments to improve the quality of life, but also to help increasing overall disease-free life expectancy of the population with various types of treatment and disease management options.

Innovation being one of the key growth drivers for the knowledge economy, the creation of an innovation friendly ecosystem in India calls for a radical change in our mind-set.

From process innovation to product innovation, from replicating molecules to creating new molecules- a robust ecosystem for innovation is the wheel of progress of any nation, and India is no exception. It is encouraging to hear that the Government of India is working towards this direction in a more elaborate manner its 12^th 5 year plan.

However, the question that is being raised now: will frequent grant of CL vitiate the attempt of the government to create an innovative culture within the pharmaceutical industry in India.

CL will not arrest increasing ‘OoP’ for healthcare in India:

While India is making reasonable strides in its economic growth, the country is increasingly facing constraints in proving healthcare benefits to a vast majority of its population with ballooning ‘Out of Pocket (OoP)’ expenditure of around 78 per cent of its population.

This is mainly because of the following reasons:

Absence of ‘Universal Health Coverage’
Lack of proper healthcare financing and insurance system for all strata of society
Difficulty in managing the cost of healthcare even when the country is providing generic drugs for a sizable part of the world market

One finds some good initiatives though, for population Below the Poverty Line (BPL) and hears about the success of ‘Rashtriya Swasthya Bima Yojna (RSBY)’ and other health insurance schemes through micro health insurance units, especially in rural areas. It has been reported that currently around 40 such schemes are active in the country.

As the disease pattern is undergoing a shift from acute to chronic non-infectious diseases, OOP on healthcare will increase further.

Currently health insurance schemes only cover expenses towards hospitalization. Ideally, medical insurance schemes in India should also cover domiciliary or in-patient treatment costs and perhaps loss of income too, along with hospitalization costs, if India wants to bring down the OoP for its population or at least till such time the ambitious ‘Universal Health Coverage’ project gets translated into reality.

Greater focus of the Government in these areas, many believe, will help increasing access to essential medicines very significantly in India, rather than frequently granting CL, as is being envisaged by many, especially for drugs, which are outside NLEM 2011.

Access to patented medicines unlikely to be addressed effectively despite frequent grant of CL:

As we know, access to healthcare comprises not just medicines but more importantly healthcare infrastructure like, doctors, paramedics, diagnostics, healthcare centers and hospitals . In India the demand for these services has outstripped supply. There is a huge short fall in ‘Healthcare Manpower’ of the country as demonstrated in the following table:

	Target	Actual	Shortfall %
Doctors	1,09,484	26,329	76
Specialists	58,352	6,935	88
Nurses	1,38,623	65,344	53
Radiographers	14,588	2,221	85
Lab Technicians	80,308	16,208	80

Source: Rural Health Statistics 2011 in 12^th Plan draft chapter

Thus, there is an urgent need to have a holistic approach with the ‘Universal Healthcare’ in developing adequate healthcare infrastructure, efficient delivery system for medical supplies and creation of a talent pool of healthcare professionals and paramedics, to ensure access to healthcare for all the citizens of the country.

Without all these how will the diseases be diagnosed and the patients be treated for ailments, frequent grant of CL not withstanding?

Conclusion:

Be that as it may, the prices of medicines in general and the patented drugs in particular will continue to remain highly sensitive in most parts of the world, if not all, which some astute Global CEOs of the pharmaceutical majors have already contemplated.

One of these Global CEOs very aptly commented, “Pharmaceutical industry, too, on its part, needs to metamorphose to strike a balance in delivering affordable and innovative medicines. It is unacceptable to hear of the US$1billion cost to develop a drug, which includes the cost of failure. We need to fail less often and succeed more often.”

He reiterated, “Pharma companies need to understand that just because you have a patent, people don’t suddenly have money in their pockets, or can afford American prices.”

In the same context another Global CEO said, “Our strategy is really to have affordable medicines because in emerging markets you do not have government reimbursement. So you have to have medicines that people can afford to pay for.…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.”

Keeping all these developments in view, as I said before, the contentious issue of the price of medicines cannot just be wished away across the world, which is perhaps more relevant now than ever before.

This is irrespective of the fact whether the country provides likes of ‘Universal Health Coverage’ or is driven by OoP expenditure by the majority of its population. Gone are those days, as articulated by the above Global CEOs, when a single global price for a product will be acceptable by all the nations across the world. India seems to be moving to this direction cautiously but steadily.

It appears, responsible pricing and effective working of patents are the only answers to respond to the CL issue in India.

Thus, I reckon, it does make sense for India to have the relevant provisions of CL in its Patent Act, not just to rectify any type of market failure, but also to discourage any possible abuse of a patent in any form by the patent holder in the country, as mentioned above.

However, it is also important for India to examine the potential negative impact of CL to foster innovation in the country and the global ramification of the same, including attraction of more ‘Foreign Direct Investments (FDI)’, which has been universally proved to be so important for the economic progress of any country, like India and China.

That said, while none can deny that all citizens of India should have access to affordable life-saving essential medicines, it appears rather impractical to envisage that routine grant of CL by the Indian Patent Office, as enumerated above by Natco et al, will be able to resolve the critical issue of improving access to essential medicines on a longer term basis in India.The decision for grant of CL, I reckon, should be taken in India only after exhausting all other access improvement measures.

As enumerated above, the use of CL as a common tool to improve access to medicines could prove to be counterproductive in the long run for India.

By: Tapan J Ray

The ruckus over Clinical Trials in India compels Government tightening regulations before flooring gas pedal for regional leadership

Posted on August 13, 2012 by Tapan Ray

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

Damning report of the Parliamentary Standing Committee:

Recently the Department Related ‘Parliamentary Standing Committee (PSC)’ on Health and Family Welfare presented its 59^th Report of 118 pages in total on the functioning of the Indian Drug Regulator – the Central Drugs Standard Control Organization (CDSCO) in both the houses of the Parliament on May 08, 2012.

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.

Some critical findings on the Drug Approval Process:

The PSC 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.

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.”

Proper Auditing of Clinical Trials are lacking:

It is sad that that adequate focus on the ‘Clinical Trial Registry’ and even ‘Auditing of Clinical Trials’ is currently lacking in India, which are considered so important not only to maintain the credibility of the studies, but also to demonstrate their scientific integrity and ethical values.

Unfortunately, there seems to be many loose knots in the current clinical trial policy, practices and guidelines in the country, which require to be tightened by the Government to make the system efficient and transparent in the national endeavor of establishing India as one of the most favored destinations for global clinical trials.

Health Ministry recently responded:

Facing this stark reality and pressured by the Parliament, the government has recently demonstrated its intention of tightening the loose knots in the following two critical areas:

Permission to conduct Clinical Trial
Compensation of the Clinical Trial victims

A. “Permission to conduct Clinical Trial in India’ – the draft notification:

In response to the prevailing conundrum, ‘The Ministry of Health and Family Welfare’ of the Government of India issued a draft notification on 17th July, 2012 seeking stakeholders’ views on the ‘Permission to conduct Clinical Trial’.

The draft notification says that the licensing authority after being satisfied with the adequacy of the data submitted by the applicant in support of proposed clinical trial, shall issue permission to conduct clinical trial, subject to the following conditions:

Clinical trial shall be conducted in compliance to the approved GCP Guidelines.
Approval of the ‘Ethics Committee’ shall be obtained before initiation of the study.
Ethical aspects of the clinical trial as described in the “Ethical Guidelines for Biomedical Research on Human Participants” published by the Indian Council of Medical Research (ICMR), shall be fully complied with.
Clinical trial shall be registered at Clinical Trials Registry of India (CTRI) before enrolling the first patient in the study.
Annual status report on clinical trial viz. ongoing or completed to be communicated to the said Licensing Authority.
Any ‘Suspected Unexpected Serious Adverse Reaction (SUSAR)’ occurring during clinical trial shall be communicated within fourteen calendar days to the Licensing Authority and to the other investigator(s) participating in the study.
In case of study related injury or death, the applicant will provide complete medical care, as well as, compensation for the injury or death and statement to this effect shall be incorporated in the Informed Consent Document. The details of compensation provided shall also be intimated to the licensing authority.
The premises of sponsor/Clinical Research Organization (CRO) and clinical trial sites shall be open to inspection by the officer of Central Drugs Standard Control Organization (CDSCO), who may be accompanied by an officer of the concerned ‘State Drug Control Authority’ to verify compliance to the requirements of Schedule Y, GCP guidelines and other applicable regulation.
The sponsor/ CRO, investigators shall allow officers of CDSCO who may be accompanied by an officer of the concerned ‘State Drug Control Authority’, to enter with or without prior notice, any premises of sponsor/ CRO, clinical trial site to inspect, search and seize any record, data, document, books, investigational drugs etc. related to clinical trials and provide adequate replies to any queries raised by the inspecting authority in relation to the conduct of clinical trial.

This area of the clinical trial regulations will be finalized after taking into consideration of all the comments received from the stakeholders within the specified period.

B. ‘Compensation of the Clinical Trial victims’:

To address the pressing issues in this area Central Drugs Control Organization (CDSCO) in August 3, 2012, published an interim “GUIDELINES FOR DETERMINING QUANTUM OF FINANCIAL COMPENSATION TO BE PAID IN CASE OF CLINICAL TRIAL RELATED INJURY OR DEATH”

The document articulates as follows:

“Presently there is no specific provision under Drugs and Cosmetics Rules for payment of compensation in case of clinical trial related injury or death of the subject. However, the Good Clinical Practice (GCP) Guidelines for Clinical Trials of India under para 2.4.7 provides that the research subject who suffers physical injury as a result of their participation in clinical trials are entitled to financial or other assistance to compensate them equitably for any temporary or permanent impairment or disability subject to confirmation from Ethics Committee. In case of death, their dependents are entitled to material compensation. Guidelines further provide that it is the obligation of the sponsor to pay the compensation.”

Such concerns were also raised in the Parliament and other forums regarding payment of compensation in the cases of injury or death, related to clinical trials.

CDSCO’s interim guidelines now prescribe an interesting formula, which will be used to arrive at the financial compensation for all clinical trial related injuries and deaths.

To assess right compensation for clinical trial related injuries or deaths following parameters have been mooted in the document:

Age of the deceased
Income of the deceased
Seriousness and severity of the disease, the subject was suffering at the time of his/her participation into the trial.
Percentage of permanent disability.

Prior to the above new interim guidelines of the CDSCO, there was no standardization for the financial compensation either for clinical trial injuries or for that matter even death. In the past, such compensation was expected to be decided by the ‘Ethics Committee’ on case to case basis.

As stated above, the above formula has been indicated to be an interim measure before the final notification comes into force after taking into consideration all stakeholders’ comments and suggestions on this very important subject.

Drawing a comparison with China:

Driven by the stellar economic growth together with its booming pharmaceutical industry have enabled China to position itself as an emerging hub for global clinical trials. Following are some examples of the key growth drivers in the clinical research space of China:

A large diverse treatment naive patient population
Significant cost arbitrage
Recent improvements in the regulatory standards
Reverse brain drain of Chinese-born scientists educated in the west
Changing disease profile
Incentives to conduct clinical research in the country

However, linguistic and cultural barriers that affect patient reporting, enrollment and other medical practices in China could work as major barriers to the growth of Chinese clinical trial sector.

Clinical Trials: A ‘China – India’ comparison

It has already been reported that India is ahead of China as most favored destination for global clinical trials, although the latter is quite close and breathing on the neck of India and could well even zoom past the former, if appropriate robust regulations and their effective implementation are still not ensured in India.

I. Majority of the Top 10 Pharma Companies conduct higher number of trials in India

Sr. No.	Company	Clinical Trials in India	Clinical Trials in China
1	Astra Zeneca	10	10
2	BMS	17	6
3	Eli Lilly	17	12
4	GSK	22	14
5	J&J	20	13
6	Merck	8	5
7	Novartis	9	6
8	Pfizer	16	5
9	Roche	5	14
10	Sanofi	15	13
	Total	139	98

(Source: clinicaltrials.gov, 26 Oct 2007)

II. India leads China and Russia in Cardiology and Diabetes trials

Therapy	India (%)	China (%)	Russia (%)
Cardiology	5.38	4.93	4.48
Diabetes	3.05	2.09	2.65
Neurology	0.90	0.90	3.62
Oncology	1.59	1.01	2.32

With the highest number of diabetic patients in the World and a very large population of patients with cardiovascular disorders, India has the potential to be the destination of choice for clinical trials in these two therapy areas, as we move on.

(Source: clinicaltrials.gov, 26 Oct 2007)

III. India has a greater % of phase II and III trials while China has more of Phase I and IV

Clinical Trials in India		Clinical Trials in China
Phase I	4%	Phase I	7%
Phase II	16%	Phase II	9%
Phase III	65%	Phase II	51%
Phase IV	15%	Phase IV	33%

(Source: clinicaltrials.gov, 26 Oct 2007)

IV. Of the total Industry sponsored trials only 3.5% are carried out in India and 2.63% in China

Company	Global Trials	India + China
Astra	231	20
BMS	148	23
Eli Lilly	238	29
GSK	347	36
J&J	461	33
Merck	213	13
Novartis	440	15
Pfizer	389	21
Roche	302	19
Sanofi	209	28
Total	2978	237

India	3.50%
China	2.63%
Global	93.87%

India and China’s share in the Industry sponsored Global clinical trial market is miniscule

Source: clinicaltrials.gov

Overall increasing trend of Clinical Trials Initiated in India:

The following table will substantiate the above point:

Year	No. Of Clinical Trials
1999	1
2000	0
2001	6
2002	6
2003	11
2004	26
2005	141
2006	206
2007	220
2008	295
2009	189

(Source: U.S. NIH, Pharmexcil Research)

India has the potential to accelerate its pace of growth significantly:

If robust regulatory measures are put in place, addressing serious concerns on the inadequacy of clinical trial regulations in India, together with uniform requirements for informed patients’ consent and appropriate ethics review, global pharmaceutical majors can be easily attracted to India for several reasons like:

Technically competent and English speaking workforce,
Patient availability and huge pool of naive patients
Low costs and an improving drug-control system.

Thus, quite a number of criteria, as stated above, favor India to establish itself as a global hub for clinical research. Besides, availability of a number of government-funded medical and pharmaceutical institutions with state-of-the-art facilities could be very useful for mufti-centered clinical trials in the country.

Moreover, the cost to conduct a trial in India is lower by almost 50% – 75% than in the United States or in the EU. In addition, a good communication link favors quick recruitment of patients and faster regulatory approvals. Thus, clinical trials in India could be concluded faster, offering a sharp cutting edge for effective competition.

Due to all these reasons, India is gradually attracting more collaborative contract clinical research proposals in the country. Even many global Clinical Research Organizations (CRO) have already started establishing their set up in India. This pace can be accelerated significantly with the regulatory measures, as stated above.

Conclusion:

Clinical trials are the core of research-based pharmaceutical industry. No new drug can come into the market without clinical trials, which involve both potential benefits and risks to the participants. All clinical trials are conducted with the primary aim of bringing to patients new medicines with a favorable benefit–risk ratio.

Global clinical trials being relatively new to India, no wonder there are several misconceptions on the subject. The companies conducting research need to proactively publicize their commitment to protecting the rights, safety and well-being of trial participants.

All concerned must ensure that the proposals for clinical trials are approved by the government regulatory authorities before commencement and the trials must strictly follow the prescribed norms and procedures. For Phase I-IV human trials, the rights and privileges of the participants must be explained and the trials should commence only after their informed consent. The regulatory authorities, at the same time, should also ensure that any attempt of shortcuts or to bend the system by any means is met with severe consequences.

Although the Ministry of Health has already started initiating some action, as stated above, there is an urgent need for the players in this field to reassure the public, in general, about the high ethical standards that the pharmaceutical companies and Clinical Research Organizations require to comply with and continuously practice, while conducting clinical research.

It is therefore, high time for the Government to tighten the loose knots of the Clinical Trial regulations in the country before flooring the gas pedal to help India surging ahead as a major hub in the clinical trials space of the world, significantly distancing itself from China.

By: Tapan J Ray

Balancing Strong IP Protection, Public Health Safeguards and Declining R&D Productivity – A Crafty Gutsy Ball Game

Posted on April 16, 2012 by Tapan Ray

Pharmaceutical innovation has always been considered the lifeblood for the pharmaceutical industry and very rightly so. However, many studies do point out that such innovation has benefited the developed world more than the developing world.

Product Price and Access:

In the paper titled ‘TRIPS, Pharmaceutical Patents and Access to Essential Medicines: Seattle, Doha and Beyond’, published in ‘Chicago Journal for International Law, Vol. 3(1), Spring 2002’, the author argues, though the reasons for the lack of access to essential medicines are manifold, there are many instances where high prices of drugs deny access to needed treatments for many patients. Prohibitive drug prices, in those cases, were the outcome of monopoly due to strong intellectual property protection.

The author adds, “the attempts of Governments in developing countries to bring down the prices of patented medicines have come under heavy pressure from industrialized countries and the multinational pharmaceutical industry”.

While the Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS) of the World Trade Organization (WTO) sets out minimum standards for the patent protection for pharmaceuticals, it also offers adequate safeguards against negative impact of patent protection or its abuse in terms of extraordinary and unjustifiable drug pricing. The levels of these safeguards vary from country to country based on the socio-economic and political requirements.

The Doha Declaration:

Many independent experts in this field consider the Doha Declaration as an important landmark for recognizing the primacy to public health interest over private intellectual property and the rights of the members of WTO to use safeguards as enumerated in TRIPS, effectively.

To protect public health interest and extend access to innovative medicines to majority of their population whenever required, even many developed/OECD countries do not allow a total freehand for the patented products pricing in their respective countries.

Early signals of global empathy:

While expressing similar sentiment ‘The Guardian’ reported that Andrew Witty, the global CEO of GlaxoSmithKline, has decided to slash prices on all medicines in the poorest countries, give back profits to be spent on hospitals and clinics and more importantly share knowledge about potential drugs that are currently protected by patents.

Witty further commented that he believes, drug companies have an obligation to help the poor patients getting appropriate treatment and reportedly challenged other pharmaceutical giants to follow his lead.

An interesting study:

A study titled, ‘Pharmaceutical innovation and the burden of disease in developing and developed countries’ of Columbia University and National Bureau of Economic Research, to ascertain the relationship across diseases between pharmaceutical innovation and the burden of disease both in the developed and developing countries, reported that pharmaceutical innovation is positively related to the burden of disease in the developed countries but not so in the developing countries.

The most plausible explanation for the lack of a relationship between the burden of disease in the developing countries and pharmaceutical innovation, as pointed out by the study, is weak incentives for firms to develop medicines for the diseases of the poor.

Point – Counterpoint:

A contrarian view to this study argues that greater focus on the development of new drugs for the diseases of the poor should not be considered as the best way to address and eradicate such diseases in the developing countries. On the contrary, strengthening basic healthcare infrastructure along with education and the means of transportation from one place to the other could improve general health of the population of the developing world quite dramatically.

A solution emerging:

Responding to the need of encouraging pharmaceutical innovation without losing focus on public health interest, in 2006 the ‘World Health Organization (WHO)‘ created the ‘Inter-governmental Working Group on Public Health, Innovation and Intellectual Property (IGWG)‘. The primary focus of IGWG is on promoting sustainable, needs-driven pharmaceutical R&D for the diseases that disproportionately affect developing countries.

Declining R&D productivity:

Declining R&D productivity adds another dimension to this raging debate with a snowballing effect, as it were.

Over a period of decades, the business models for small-molecule based blockbuster drugs have successfully catapulted the global pharmaceutical business to a high-margin, dynamic and vibrant industry. However, a time has now come when the golden path from the ‘mind to market’ of the drug discovery process is becoming increasingly arduous and prohibitively expensive.

Deploying expensive resources to discover a New Chemical Entity (NCE) with gradually diminishing returns in the milieu of very many ‘me too’ types of new drugs, does no longer promise a strong commercial incentive.

The impact of the above scenario also gets reflected in the status of International patent filings under the Patent Cooperation Treaty (PCT) of the ‘World Intellectual Property Organization (WIPO)’ as follows:

A. Last five years, PCT filings:

The last five years’ PCT filing status does not seem to be encouraging either.

Year	PCT Filings	Change %
2007	159,926
2008	163,240	2.1
2009	154,406	(5.4)
2010	164,316	6.4
2011	181,900	10.7 *(E)

* Estimate

B. Country-wise PCT Filing in 2011:

While having a closer look at the data, it becomes quite evident that in terms of percentage increase in the PCT filings two Asian countries, China and Japan, have registered their overall dominance. However, in terms of absolute number USA still ranks first.

County	No. Of PCT Filings	% Increase
USA	48,596	8
China	16,401	33.4
Japan	38,888	21
Germany	18,568	5.7
South Korea	10,447	8

C. Technical-field-wise PCT Filing in 2011:

In terms of the technical fields, pharmaceuticals ranked fifth in 2011.

Rank	Industry	No. Of PCT Filings
1.	Electrical Machinery, Apparatus, Energy	11,296
2.	Digital Communication	11,574
3.	Medical technology	10,753
4.	Computer technology	10,455
5.	Pharmaceuticals	7,683
6.	Organic fine chemistry	5,283
7.	Biotechnology	5,232

D. Biotech/Pharma companies featuring in WIPO’s Top 100 filers list:

Very few biotech and pharmaceutical companies featured in the Top 100 PCT filers’ list of WIPO as follows:

	Company
1.	Procter & Gamble
2.	Sumitomo Chemical
3.	DuPont
4.	Dow Global
5.	Novartis AG
6.	Roche
7.	Merck GmbH
8.	Sanofi-Aventis GmbH
9.	Bayer CropScience AG

E. The top five university PCT filers in 2011:

Universities of the US dominated among the PCT filings by the Academic institutions as follows:

University	No. Of PCT Filings
University of California, US	277
Massachusetts Institute of Technology, US	179
University of Texas System, US	127
Johns Hopkins University, US	111
Korea Advanced Institute of Science and Technology, South Korea	103

Need to encourage pharmaceutical innovation:

Based on the WIPO data, as mentioned above, the current status of the global pharmaceutical innovation does not seem to be very encouraging.

That said, in the environment of declining R&D productivity of the global pharmaceutical industry, there is indeed a strong requirement to encourage pharmaceutical innovation across the globe, based on the socio-economic environment of each country, together with adequate safeguards in place to protect public health interest.

Why protect patent?

The pharmaceutical major Eli Lilly has very aptly epitomized the reason for patent protection in their website called ‘LillyPad’, as follows:

“Pharmaceutical companies continue to invest in innovation not only because it is good for business, but it is what patients expect. If we want to continue to have breakthrough products, we need patent protection and incentives to invest in intellectual property. The equation is simple, patents lead to innovation – which help lead to treatments and cures”.

Conclusion:

Currently, various socio-economic expectations, demands and requirements, not just for the poor, but also of the powerful growing middle class intelligentsia are gradually getting unfolded on this subject from many parts of the globe. These collective demands cannot be either wished away or negotiated with a strong belief that the future should be a replication of the past.

There should be full respect, support and protection for innovation and the product patent system in the country. This is essential not only, for the progress of the pharmaceutical industry, but also to alleviate sufferings of the ailing population, effectively.

At the same time, available indicators 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 socio-economic status of the local population. Some experts have already opined that prices of life saving innovative drugs, unlike many other patented products, will no longer remain ‘unquestionable’ in increasing number of countries.

Thus, even at the time of declining pharmaceutical R&D productivity, striking a right balance between a strong patent regime and safeguarding overall health interest of its population, particularly of those with a very high ‘out of pocket’ expenditure towards healthcare, will indeed be a crafty gutsy ball game for a country.

By: Tapan J Ray

Arresting continuous job losses in the global pharma industry call for innovation across the value chain

Posted on March 5, 2012 by Tapan Ray

In not too distant past, the stocks of the global pharmaceutical companies, by and large, used to be categorized as ‘blue-chips’ for their high return to investors, as compared to many other sectors.

Unfortunately, the situation has changed significantly since then. Most of those large players now appear to be under tremendous pressure for excellence in performance.

The issues of ‘Patent Cliff’, coupled with patent expiries, price and margin pressures from payors’ group in the developed world, have already started haunting the research based pharmaceutical companies and are assuming larger proportions day by day.

The situation continues to be grim:

Collective impact of all the above factors has prompted the major pharma players to resort to huge cost cutting exercises leading to employee layoffs, quite often, in a massive scale.

According to a study done by Challenger, Gray & Christmas, Inc., which was also quoted in the Forbes Magazine, April 13, 2011, 297,650 employees were laid off by the global pharma industry between the years 2000 and 2011.

Year	Number of Job cuts
2000	2,453
2001	4,736
2002	11,488
2003	28,519
2004	15,640
2005	26,300
2006	15,638
2007	31,732
2008	43,014
2009	61,109
2010	53,636
Total	297,650

Top of the list layoffs:

Forbes, Pharma and Healthcare, June 10, 2011 reported ‘top of the list layoffs’ in the Global Pharmaceutical Industry from 2004 to 2011. This number reported to be comparable to as many people working at the three largest drug companies combined namely, Pfizer, Merck and GlaxoSmithKline GSK in 2011.

Company	No of layoffs
Pfizer	58,071
Merck	44,400
Johnson & Johnson	9,900
Eli Lilly	5,500
Bristol-Myers Squibb	4,600

More recently ‘Mail online’ dated February 3, 2012 reported that ‘Pharmaceutical giant AstraZeneca announces 7,300 job losses as it pares back staff to save money’. Immediately, thereafter, on February 24, 2012 Reuters reported that ‘German drugs and chemicals group Merck KGaA has announced plans for a cost-cutting program across all its businesses that may include job cuts’.

The old paradigm is no longer relevant:

To get insight into the future challenges of the pharmaceutical industry in general ‘Complete Medical Group’ of U.K had conducted a study with a sizable number of senior participants from the pharmaceutical companies of various sizes and involving many countries. The survey covered participants from various functional expertise like, marketing, product development, commercial, pricing and other important areas. The report highlighted that a paradigm shift has taken place in the global pharmaceutical industry, where continuation with the business strategies of the old paradigm will no longer be a pragmatic option.

Learning from the results of the above study, which brought out several big challenges facing the pharmaceutical industry in the new paradigm, my submissions are as follows:

Collaborative Research to overcome R&D productivity crisis: The cost of each new drug approval has now reached a humongous proportion and is still increasing. This spiraling R&D cost does not seem to be sustainable any longer. Thus there emerges a need to re-evaluate the R&D model of the pharmaceutical companies to make it cost effective with lesser built-in risk factors. Could there be a collaborative model for R&D, where multiple stakeholders will join hands to discover new patented molecules? In this model all involved parties would be in agreement on what will be considered as important innovations and share the ‘risk and reward’ of R&D as the collaborative initiative progresses. The Translational Medicine Research Collaboration (TMRC) partnering with Pfizer and others, ‘Patent Pool’ initiative for tropical diseases of GSK and OSDD for Tuberculosis by CSIR in India are examples of steps taken towards this direction. Surely such collaborative initiatives are not easy and perhaps may also not be acceptable to many large global players as on date, but they are not absolutely uncommon either. The world has already witnessed such collaborative research, especially in the sectors, like Information Technology (IT). Thus, it remains quite possible, as the industry moves on, that the world will have opportunities to take note of initiation of various cost effective collaborative R&D projects to create a win-win situation for all stakeholders in the global healthcare space. Greater access to fast growing markets: The increasing power of payors in the developed world and the interventions of the Government on the ground of ‘affordability of medicines’ in the developing countries are creating an all pervasive pricing/margin pressure for the pharmaceutical players.

These critical emerging developments can be effectively negotiated with significant increase in market access, especially in the emerging economies of the world, with each country specific business strategies. ‘One size fits all’ type of standardized approach, currently adopted by some large global players in the markets like India, may not be able to fetch significant dividend in the years ahead.

Better understanding of the new and differential value offerings that the payors, doctors and patients will increasingly look for, much beyond the physical products/brands, would prove to be the cutting edge for the winners for greater market access in the emerging economies.

Current business processes need significant re-engineering: Top management teams of many global pharma companies have already started evaluating the relevance of sole dependance on the current R&D based pharmaceutical business model. They will now need to include in their strategy wider areas of healthcare value delivery system with a holistic disease management focus.

Only treatment of diseases may no longer be considered enough with an offering of just various types of medications. Added value with effective non-therapeutic/incremental disease management/prevention initiatives and appropriately improving quality of life of the patients, especially in case of chronic ailments, will assume increasing importance in the pharmaceutical business process in the emerging markets. Continuous innovation required not just in R&D, but across the value chain: Continuous innovation across the pharmaceutical value chain, beyond pharmaceutical R&D, is the most critical success factor. The ability to harness new technologies, rather than just recognize their potential, and the flexibility to adapt to the fast changing and demanding regulatory environment together with patients’ newer value requirements, should be a critical part of the business strategy of the pharmaceutical companies in the new paradigm. Avoidance of silos, integrating decision making processes: More complex, highly fragmented and cut throat competition have created a need for better, more aligned and integrated decision making process across various functional areas of the pharmaceutical business. Creation of silos, duplication of processes and empire building have long been a significant trend, especially, in the larger pharmaceutical companies. Part of a better decision making will include more pragmatic and efficient deployment of investments and other resources for organizational value creation and jettisoning all those activities, which are duplications, organizational flab producing and will no longer deliver differential value to the stakeholders. Finding newer ways of customer engagement: Growing complexity of the business environment is making meaningful interactions with the customers and decision makers increasingly challenging. There is a greater need for better management of the pharmaceutical communication channels to strike a right balance between ‘pushing’ information to the doctors, patients and other stakeholders and helping them ‘pull’ the relevant information whenever required. Questioning perceived ‘fundamentals’ of the old paradigm:

Despite a paradigm shift in the business environment, fundamental way the pharmaceutical industry appears to have been attempting to address these critical issues over a decade, has not changed much.

In their attempt to unleash the future growth potential, the pharmaceutical players are still moving around the same old dictums like, innovative new product development, scientific sales and marketing, satisfying customer needs, application of information technology (IT) in all areas of strategy making process including supply chain, building blockbuster brands, continuing medical education, greater market penetration skills, to name just a few. Unfortunately, despite all such resource intensive initiatives, over a period of time, nothing seems to have changed fundamentally, excepting, probably, some sort of arrest in the rate of declining process.

Conclusion:

Such incremental focus over a long period of time on the same areas, far from being able to ride the tide of change effectively, does ring an alarm bell to some experts. More so, when all these initiatives continue to remain their prime catalysts for change even today to meet new challenges of a different paradigm altogether.

The moot question therefore remains: what are the companies achieving from all heavy investments being continuously made in these areas since long…and why have they not been able to address the needs of the new ball game for business excellence, effectively, thus far?

When results are not forthcoming despite having taken all such measures, many of them have no options but to resort to heavy cost cutting measures including job losses to protect the profit margin, as much as one possibly can.

If the issues related to declining rate of global pharmaceutical business performance is not addressed sooner moving ‘outside the box’ and with ‘lateral thinking’, one can well imagine what would its implication be, in the endeavor towards arresting continuous job losses through business excellence, in the years ahead.

By: Tapan J Ray

Should high prices of new drugs, causing low access to majority of patients, be attributed to high R&D cost?

Posted on February 13, 2012 by Tapan Ray

Many thought leaders have been arguing since long that pharmaceutical R&D expenses are being over stated and the real cost is much less. An article titled “Demythologizing the high costs of pharmaceutical research”, published by the London School of Economics and Political Science in 2011 indicates that the total cost from discovery and development stages of a new drug to its market launch was around US$ 802 million in year 2000. This was worked out in 2003 by the ‘Tuft Center for the Study of Drug Development’ in Boston, USA.

However, in 2006 the same figure increased by 64 per cent to US$ 1.32 billion, as reported by a pharmaceutical industry association. Maintaining similar trend, if one assumes that the R&D cost will increase by another 64 per cent by 2012, the cost to bring a new drug to the market through its discovery and development stages will be around US $2.16 billion. This will mean a 2.7 times increase from its year 2000 estimate, the article says.

The authors mentioned that the following factors were not considered while working out the 2006 figure of US$ 1.32 billion:

The tax exemptions that the companies avail for investing in R&D.
Tax write-offs amount to taxpayers’ contributing almost 40% of the R&D cost.
The cost of basic research (should not have been included), as these are mostly done in public funded universities or laboratories.

The article comments that ‘half the R&D costs are inflated estimates of profits that companies could have made if they had invested in the stock market instead of R&D and include exaggerated expenses on clinical trials’.

The authors alleged that “Pharmaceutical companies have a strong vested interest in maximizing figures for R&D as high research and development costs have been the industry’s excuse for charging high prices. It has also helped generating political capital worth billions in tax concessions and price protection in the form of increasing patent terms and extending data exclusivity.”

The study concludes by highlighting that “the real R&D cost for a drug borne by a pharmaceutical company is probably about US$ 60 million.”

Declining Pharmaceutical R&D productivity:

That pharmaceutical R&D productivity is fast declining has been vindicated by ‘2011 Pharmaceutical R&D Factbook’ complied by Thomson Reuters, the key highlights of which are as follows:

21 new molecular entities (NMEs) were launched in the global market in 2010, which is a decrease from 26 NMEs of the previous year.
2010 saw the lowest number of NMEs launched by major Pharma players in the last 10 years
The number of drugs entering Phase I and Phase II clinical trials fell 47% and 53% respectively during the year.

Does pharmaceutical R&D always create novel drugs?

According to a recent report, US-FDA approved 667 new drugs from 2000 to 2007. Out of which only 75 (11%) were innovative molecules having much superior therapeutic profile than the existing ones. However, more than 80% of 667 approved molecules were not found to be better than those, which are already available in the market. Thus, the question very often being raised by many is, why so much money is spent on discovery and development of ‘me-too’ drugs and thereafter for their prescription generation through aggressive marketing, when the patients pay for the entire cost of such drugs including the profit after being prescribed by the doctors?

A global CEO challenged the status quo:

By challenging the status quo, Andrew Witty, the global CEO of GlaxoSmithKline (GSK) in his speech in Mumbai on September 27, 2011 to the members of the Indian pharmaceutical industry commented that the cost of over a billion dollar to bring a new molecule to the market through its discovery and development stages is “unacceptable.” He attributed such high R&D expenses to the ‘cost of failure’ by the industry.

Witty said, “High in-house failure rates are slowing progress on pricing affordability… We need to fail less and deliver more”.

He commented during his deliberation that success in reducing the R&D cost to make innovative drugs more affordable to the patients of all income levels, across the globe, will be the way forward in the years ahead.

Ways to reduce the R&D cost:

Some other experts articulated that sharp focus in the following areas may help containing the R&D expenditure to a great extent and the savings thus made, in turn, can fund a larger number of R&D projects:

Early stage identification of unviable new molecules and jettisoning them quickly
Newer cost efficient R&D models, like one implemented by GSK
Significant reduction in drug development time.

An opposite view:

The book titled “Pharmaceutical R&D: Costs, Risks, and Rewards”, published by the government of USA states that the three most important components of R&D investment are:

Money
Time
Risk

Money is just one component of investment together with a long duration of time to reap the benefits of success intertwined with a very high risk of failure. The investors in the pharmaceutical R&D projects not only take into account of how much investment is required for the project against expected financial returns, but also the timing of inflow and outflow of fund with associated risks. It is thus quite understandable that longer is the wait for the investors to get their return, greater will be their expectations for the same.

The publication also highlights that the cost of bringing a new drug from the ‘mind to market’ depends on quality and sophistication of science and technology involved in a particular R&D process together with associated investment requirements for the same. In addition, regulatory requirements to get marketing approval of a complex molecule for various serious disease types are also getting more and more stringent, increasing their cost of clinical development simultaneously. All these factors when taken together make the cost of R&D very high and unpredictable.

Thus to summarize, high pharmaceutical R&D costs involve:

Sophisticated science and technology dependent high up-front financial investments
A long and indefinite period of negative cash flow
High tangible and intangible costs for acquiring technology with rapid trend of obsolescence
High risk of failure at any stage of product development

Conclusion:

While getting engaged in to this debate, one should possibly keep in mind that effective patent exclusivity period in the pharmaceutical industry is much limited as compared to any other industry across the globe. This is mainly because a long period of 8-10 years goes between drug discovery/grant of patent, drug development and market launch of the new molecule, when it starts recovering the cost and making a profit. Thus the period of effective commercial exclusivity that a new drug enjoys through patent protection usually lasts not more than 10 to 12 year period.

For all these reasons and despite such a huge controversy, I wonder, even if the R&D expenditures are brought down to the year 2000 level of US$ 802 million through various productivity improvement measures, whether it will really be possible to develop a commercial R&D model by any pharmaceutical company to deliver low price innovative drugs ensuring high access to majority of the patients. For that one should possibly look at other R&D models like, ‘Patent Pool’ and ‘Open Source Drug Discovery (OSDD)’ systems along with various funding options.

Thus in my view, high prices of new drugs, causing low access to majority of patients, should by and large be attributed to high R&D cost. However, there is not even an iota of doubt about commercial unsustainability of such ballooning research and development expenditures even in the medium term.

That said, the arithmetic of pricing for a new marketable molecule could change dramatically, if “the real R&D cost for a drug borne by a pharmaceutical company be just about US$ 60 million”, as argued by the authors of a publication quoted above, though the figure, I reckon, is quite unrealistic.

By: Tapan J Ray

Pharmaceutical innovation and Public Health Interest: Ways to achieving the dual objectives

Posted on February 6, 2012 by Tapan Ray

Healthcare industry in general and the pharmaceutical sector in particular have been experiencing a plethora of innovations not only to cure and effectively manage ailments to improve the quality of life, but also to help increasing overall disease-free life expectancy of the population with various types of treatment and disease management options. Unfortunately despite all these, over half the global population is still denied of basic healthcare needs and support.

A 2011 official estimate of the current world population reads as 6.93 billion. Out of which over three billion live with a subsistence of less than US$ 2 per day. Another billion population is surviving on even less than US$ 1 per day. According to published reports around 18 million people die from poverty-related causes across the world, every year.

The World Health Organization (WHO) has estimated that over a billion population of the world still suffer from neglected tropical diseases.

On February 3, 2012, quoting a ‘World Bank and PwC report’, ‘The Economic Times’ reported that “70% of Indians spend all their income on healthcare and buying drugs.”

In a situation like this, challenges that the governments and the civil society are facing in many developing and to some extent even in some developed countries (although for different reasons), are multi-factoral. It has been well established that the humongous global healthcare challenges are mostly of economic origin.

In such a scenario, ongoing heated debate on innovation, Intellectual Property Rights (IPR) and public health interest keeps gaining momentum all over the globe and has still remained unabated.

Argumentative Indians have also got caught in this raging debate. I reckon rightly so, as India is not only the largest democracy of the world contributing 16.7% of the global population, it is also afflicted with 21% of the global burden of disease. Thus, the reason for similar heated debate in our country is indeed no brainer to any one.

Thorny issues:

One of the thorny issues in this debate is the belief that huge R&D budgets of the global pharmaceutical companies are worked out without any consideration of relative value of such investments to the vast majority of population in our society, across the world. These thought leaders argue, as the poor cannot pay for the expensive innovative drugs, they are mostly denied of the fruits of pharmaceutical innovation in their battle against diseases.

These experts also say that safeguards built into the patent system in form of compulsory licenses are not usually broad enough to improve access to innovative medicines to a larger section of the society, whenever required.

In addition, they point out that wide scope of patent grants in areas of early fundamental research, quite often is strategically leveraged by the patentee to block further R&D in related areas without significant commercial considerations to them. Such a situation comes in the way of affordable innovative drug development for public health interest, when need arises.

Inadequate access to medicines in India:

The key issue in the country is even more complicated. Inadequate or lack of access to modern medicines reportedly impacts around 50% of our population. It is intriguing to fathom, why has the nation not been able to effectively address the challenge of access to relatively affordable high quality generic medicines to the deprived population of the society over a period of so many decades?

Thus IPR in no way be considered as the reason for poor access, at least, to generic medicines, especially in India. Neither, it is the reason for inadequate availability of affordable essential medicines for the diseases of the poor.

The key reason, as is widely believed, is inadequate focus on the deprived population to address their public health concerns by the government.

Pharmaceutical innovation and the burden of disease:

A healthy debate:

Many experts argue that greater focus on the development of new drugs for the diseases of the poor, should not be considered as the best way to address and eradicate such diseases in the developing countries. On the contrary, strengthening basic healthcare infrastructure along with education and the means of transportation from one place to the other could improve general health of the population of the developing world quite dramatically.

However, another school of experts think very differently. In their opinion, health infrastructure projects are certainly very essential elements of achieving longer-term health objectives of these countries, but in the near term, millions of unnecessary deaths in the developing countries can be effectively prevented by offering more innovative drugs at affordable prices to this section of the society.

Creation of IGWG by WHO:

‘Reward Fund’ for innovation and access – an idea:

A paper titled, “Optional reward for new drug for developing countries” published by the Department of Economics, University of Calgary, Institute of Health Economics, proposed an optional reward fund for pharmaceutical innovation aimed at the developing world to the pharmaceutical companies, which would develop new drugs while ensuring their adequate access to the poor. The paper suggests that innovations with very high market value will use the existing patent system, as usual. However, the medicines with high therapeutic value but low market potential would be encouraged to opt for the optional reward system.

It was proposed that the optional reward fund should be created by the governments of the developed countries and charitable institutions to ensure a novel way for access to innovative medicines by the poor.

The positive effects of the debate:

One positive effect of this global debate is that some global pharmaceutical companies like Novartis, GSK and AstraZeneca have initiated their R&D activities for the neglected tropical diseases of the world like, Malaria and Tuberculosis.

Many charitable organizations like Bill & Melinda Gates Foundation and Clinton Foundation are allocating huge amount of funds for this purpose.

On January 30, 2012, on behalf of the research-based pharmaceutical industry, Geneva based International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) by a Press Release announced donations of 14 billion treatments in this decade to support elimination or control of nine key Neglected Tropical Diseases (NTDs).

Without creating much adverse impact on pharmaceutical innovation ecosystem of the country, the Government of India is also gradually increasing its resource allocation to address the issue of public health, which is still less than adequate as of now.

All these newer developments and initiatives are definitely ushering in an era of positive change for a grand co-existence of pharmaceutical innovation and public health interest of the country, slow and gradual though, but surely a change for the better.

Innovation helps to improve public health:

In India, various stakeholders of the pharmaceutical industry feel that there is a need to communicate more on how innovation and IPR help rather than hinder public health. Some initiatives have already been taken in this direction with the pioneering ‘patent pool’ initiative of GlaxoSmithKline (GSK) in Europe and ‘Open Source Drug Discovery (OSDD)’ by the Council of Scientific and Industrial Research (CSIR) of the Government of India.

The pace needs to be accelerated:

The pace of achieving the dual objectives of fostering pharmaceutical innovation without losing focus on public health has to be accelerated, though progress is being slowly made in these areas through various initiatives. Additional efforts are warranted for sustainability of these initiatives, which have not yet gained the status of robust and sustainable work models.

However in India, the government in power should shoulder the key responsibility garnering all resources to develop and implement ‘Universal Health Coverage’ through appropriate innovative healthcare reform measures. Such steps will help achieving the country its national goal of providing affordable healthcare to all.

At the same time, creation of a variant of ‘reward fund’ to encourage smaller pharmaceutical players of India to pursue pharmaceutical innovation needs to be considered expeditiously. This will help encouraging pharmaceutical innovation in a big way within the country.

Address the basic issue of poverty:

It is a well-accepted fact that the price is one of the key determinants to improve access to modern medicines to a vast majority of the population. However, the moot question remains how does one make medicines more affordable by not addressing effectively the basic issue of general poverty in the country? Without appropriately resolving this issue, affordability of medicines will continue remain a vexing problem and a critical issue to address public health in India.

Conclusion:

Innovation, as is widely acknowledged, is the wheel of progress of any nation. This wheel should move on… on and on with the fuel of IPR, which is an economic necessity of the innovator to make the innovation sustainable.

In the book titled, ‘Pharmaceutical Innovation: Revolutionizing Human Health‘ the authors have illustrated how science has provided an astonishing array of medicines to effectively cope with human ailments over the last 150 years.

Moreover, pharmaceutical innovation is a very expensive process and grant of patents to the innovators is an incentive of the government to them for making necessary investments towards R&D projects to meet unmet needs of the patients. The system of patent grants also contributes to society significantly by making freely available patented information to other scientists to improve upon the existing innovation through non-infringing means.

Altruism, especially in the arena of public health, may be demanded by many for various considerations. Unfortunately, that is not how the economic model of pharmaceutical innovation and IPR works globally. Accepting this global reality, the civil society should deliberate on how innovation and IPR can best be used, in a sustainable manner for public health interest, especially for the marginalized section of the society.

By: Tapan J Ray

PILMAN

A Tapan Ray Website

Tag Archives: innovation

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Balancing Strong IP Protection, Public Health Safeguards and Declining R&D Productivity – A Crafty Gutsy Ball Game

Arresting continuous job losses in the global pharma industry call for innovation across the value chain

Should high prices of new drugs, causing low access to majority of patients, be attributed to high R&D cost?

Pharmaceutical innovation and Public Health Interest: Ways to achieving the dual objectives