‘Disease Oriented Treatment’ to ‘Patient Oriented Treatment’ – An evolving trend

Posted on January 7, 2013 by Tapan Ray

The quest for moving away from conventional and error-prone ‘Disease Oriented Treatment’ paving the way for unconventional individual patient-specific ones, may soon come to fruition. Dramatic progress in the research for developing ‘Personalized Medicines’ could soon offer a choice for individual ‘Patient Oriented Treatment’ with precisely predictable efficacy and safety, especially for the treatment of various intractable and dreaded diseases.

Sir John Bell, Professor of Medicine at Oxford University, adviser on genetics to the government and chair of its human genomics strategy group has reportedly said in early December 2012 that ‘Personalized Medicine’ for all could soon be a clear possibility, as everybody will be able to have their entire DNA make-up mapped for as little as £100 (Rs.8, 700 approx.).

This estimate seems to be quite realistic as Sir John said, the price of genome sequencing has fallen by 100,000-fold in 10 years and genetics being a key component of all common diseases, genome sequencing will help immensely in the use of new drugs, as well.

Raising a flag:

While watching the pursuit of excellence by the genetic scientists in the realm of disease treatment, some experts have reportedly been sounding a note of caution. They strongly feel that DNA code sequencing brings to light a “very real privacy concerns” of individuals.

GeneWatch UK, is an organization that investigate how genetic science and technologies will impact on our food, health, agriculture, environment and society. They have been strongly arguing, if genome sequencing is extended to entire population, individuals and their relatives could then be identified and tracked by matching their DNA with the genome stored in the respective health records. This move, as contemplated by them, could “wipe out privacy” with an impact on the society.

Thus, the ethical and social issues in the development of ‘Personalized medicines’ primarily in the area of genetic testing and consideration of race in the development of such medicines, these thought leaders feel, need to be effectively addressed, sooner.

That said, the Prime Minister of UK Mr David Cameron has reportedly said:

“By unlocking the power of DNA data, the NHS will lead the global race for better tests, better drugs and above all better care. We are turning an important scientific breakthrough into a potentially life-saving reality for NHS patients across the country. If we get this right, we could transform how we diagnose and treat our most complex diseases not only here but across the world, while enabling our best scientists to discover the next wonder drug or breakthrough technology.”

Increasingly more in development pipeline:

Rapid strides in pharmacogenomics bring in a promise of radically different ways of treating diseases, as major pharmaceutical companies of the world make progress in developing much more effective medicines designed to target smaller populations.

Tufts Center for the Study of Drug Development (Tufts University) in its publication named ‘Impact Report’, November/December 2010 articulated, “Bio-pharmaceutical companies are committed to researching and developing personalized medicines and within their development pipelines, 12% – 50% of compounds are personalized medicines.”

Experts envisage that over a period of time ‘Personalized Medicines’ will be targeted to biological/genomic profile of a patient or patient types to significantly improve the quality of treatment.

The definition:

The above report defines Personalized Medicines as “Tailoring of medical treatment and delivery of health care to individual characteristics of each patient, including their genetic, molecular, imaging and other personal determinants. Using this approach has the potential to speed accurate diagnosis, decrease side effects, and increase the likelihood that a medicine will work for an individual patient.”

Mainly due to all these reasons, ‘Personalized Medicines’ are expected to be an effective alternative to quite unwieldy current ‘blockbuster drug’ business model.

Makes a perfect fit:

The aim of ‘personalized medicines’ is, therefore, to make a perfect fit between the drug and the patient. It is worth noting that genotyping is currently not a part of clinically accepted routine. However, it is expected to acquire this status in the western world, very shortly.

Consequent changes and shifts:

This potential paradigm shift in the healthcare space would prompt similar changes in various disease diagnostic technologies, which will not only be able to detect a disease well before appearance of symptoms, but would also indicate which patients will best respond to or be adversely affected by which medications.

‘Personalized Medicines’ will in that process ensure a critical shift from the ‘Disease Oriented Treatment’ to a ‘Patient Oriented Treatment’, which can be initiated even before the clinical manifestations of a disease are detected.

The technological march towards this direction is indeed risky and arduous one. However, the benefits that the humanity will accrue out of this disruptive innovation will far outweigh the risks in all forms.

Towards this direction:

The Economist, March 12-18, 2011 in its article titled “Toward the 15-minute genome” reported that ‘nanopore sequencing’ of human genome is now gaining momentum. This could make sequencing of entire genome of cancerous and healthy cells possible to accurately point out what has exactly changed in individual patients, enabling the oncologists to determine patient specific drugs for best possible results in each case, separately.

New cancer marker has been reported to aid earlier detection of the disease, where repetitive stretches of RNA are found in high concentrations in cancer cells.

A new blood test will accurately detect early cancer of all types with an accuracy of greater than 95%, when repeated the accuracy will even be even greater than 99%.

‘Breast On A Chip’ will test nano-medical detection and treatment options for breast cancer.

A brain scan will detect the telltale “amyloid plaques” ,the protein fragments that accumulate between nerves in Alzheimer’s disease.

A difference that matters:

With ‘Personalized Medicines’ the health of a patient will be managed based on personal characteristics of the individual, including height, weight, diet, age, sex etc. instead of defined “standards of care”, based on averaging response across a patient group. Pharmacogenomics tests like, sequencing of human genome will determine a patient’s likely response to such drugs.

All these are expected to offer more targeted and effective treatment with much safer drugs, and in all probability at a lesser real cost. Such medicines will also help identify individuals prone to serious ailments like, diabetes, cardiovascular diseases and cancer and help physicians to take appropriate preventive measures, simultaneously.

Each patient is unique:

‘Personalized medicines’ in that process will focus on what makes each patient so unique, instead of going by the generalities of a disease.

To give a quick example, genetic differences within individuals determine how their bodies react to drugs such as Warfarin – a blood thinner taken to prevent clotting. It is of utmost importance to get the dosing right, as more of the drug will cause bleeding and less of it will not have any therapeutic effect.

‘Personalized medicines’, therefore, have the potential to usher in a revolutionary change, the way patients are offered treatment by the medical profession. Genomic research will enable physicians to use a patient’s genetic code to arrive at how each patient will respond to different types of available treatments.

In the field of cancer, genetic tests are currently being done by many oncologists to determine which patients will be benefited most, say by Herceptin, in the treatment of breast cancer.

Indian initiatives:

Some companies, both well known and little known, are making quiet collaborative progress in the genome sequencing area in India, which will ultimately make expensive treatments like cancer more affordable to many.

Other advantages:

The expected benefits from the ‘Personalized Medicines’, besides very early diagnosis as stated above, are the following:

1. More Accurate Dosing: Instead of dose being decided based on age and body weight of the patients, the physicians may decide and adjust the dose of the medicines based on the genetic profiling of the patients.

2. More Targeted Drugs: It will be possible for the pharmaceutical companies to develop and market drugs for patients with specific genetic profiles. In that process, a drug needs to be tested only on those who are likely to derive benefits from it. This in turn will be able to effectively tailor clinical trials, expediting the process of market launch of these drugs.

3. Improved Healthcare: ‘Personalized Medicines’ will enable the physicians to prescribe ‘the right dose of the right medicine the first time for everyone’ without any trial or error. This would give rise to much better overall healthcare.

Reduced Clinical Trial cost:

Genome sequencing will help identifying a patient population, which will be far more likely to respond positively to the new treatment. In that process, if it reduces costs of clinical trial by even 5%, expected net savings for the industry towards clinical trial in real term will be significant.

With ‘personalized medicines’ the innovator companies will be able to significantly reduce both time, costs and the risks involved in obtaining regulatory approvals and penetrating new markets with simultaneous development of necessary diagnostic tests. Such tests will be able to identify patients group who will not only most likely to be benefited from such medicines, but also will be least likely to suffer from adverse drug reactions.

Therefore, considerable cost advantages coupled with much lesser risks of failure and significant reduction in the lead time for clinical trials are expected to make ‘personalized medicines’ much more cost effective, compared to conventional ‘blockbuster drugs’.

A sustainable business model:

Realization of deficiencies in the deep-pocket economics of ‘block buster drug R&D business model’ has made ‘personalized medicines’ a reality today. Large number of smaller and exclusive markets for ‘personalized medicines’ is also expected to be quite profitable for the pharmaceutical companies. On the other hand, better efficacy and safety profile of ‘personalized medicines’ will prove to be cost-effective in the overall healthcare systems.

However, smaller segmentation of the market may not leave enough space for the conventional ‘blockbuster model’, which is the prime mover of the global pharmaceutical industry, even today.

Reports indicate that some renowned global pharmaceutical companies like, Roche, AstraZeneca, GlaxoSmithKline are making good progress towards this direction through collaborative initiatives.

A different marketing ball game:

With ‘personalized medicines’ the ball game of marketing pharmaceuticals is expected to undergo a paradigm shift. Roche’s model of combining necessary diagnostic tests with new drugs will play a very important role in the new ball game.

Roche is reportedly ensuring that with accompanying required diagnostic tests, the new oncology products developed at Genentech can be precisely matched to patients.

Use in ‘Primary Care’:

Currently there is no widely successful model for use of ‘personalized medicines’ in a ‘primary care’ situation. However, it has been reported that in states like, Wisconsin in the U.S, initiative to integrate genomic medicines with ‘primary care’ has already been undertaken.

Scaling-up operations of such pilot projects will give a big boost to revolutionize the use of ‘personalized medicines’ for precision and targeted treatment for the ailing population.

Current Applications:

Though these are still the early days, initial benefits of ‘personalized medicines’ are now being reported in many areas like:

Genetic analysis of patients dealing with blood clots: Since 2007, the U.S. Food and Drug Administration has been recommending genotyping for all patients being assessed for therapy involving Warfarin.
Colorectal cancer: For colon cancer patients, the biomarker that predicts how a tumor will respond to certain drugs is a protein encoded by the KRAS gene, which can now be determined through a simple test.
Breast cancer: Women with breast tumors can now be effectively screened to determine which receptors their tumor cells contain.

Above applications of ‘personalized medicines’ will help saving not only significant expenses, but also precious time, which is usually spent for ‘trial-and-error treatments’. In addition, this approach also helps clinicians to determine quickly which therapies are most likely to succeed.

A truly patient centric treatment approach:

Generally speaking, unlike conventional ‘one size fits all’ type treatment approach, where same medicine with varying efficacy is tried on a large number of patients with equally varying rates of failure, ‘personalized medicines’ in true sense starts with the patients.

This may not necessarily mean unique treatment for each patient every time. With ‘personalized medicine’-based treatment approach, depending on biological, genetic and genomic characteristics, patients can be divided into groups and targeted treatment with specific drugs showing most efficacy and least side-effects can be worked out for each of these groups. Hence ‘personalized medicines’ by all means are truly patient centric.

Conclusion:

One of the key issues today in the realm of conventional ‘Disease Oriented Treatment’ is that lot many drugs do not work on significantly large number of patients with same efficacy and safety standards. ‘Personalized medicines’ will be able to address this issue with right diagnosis, ensuring treatment with the right medicine in right doses for the right type of patients.

Though in Europe and to some extent in the US, ‘Patient Oriented Treatment’ approaches with ‘personalized medicines’ have already been initiated, these are still early days for this novel concept to get translated into reality for wider use.

Lot many grounds may still need to be covered especially in the areas of medical research and also to work out the regulatory pathways for ‘personalized medicines’ in healthcare by the pioneers of this great concept.

That said, the evolving transition from the conventional ‘Disease Oriented Treatment’ to unconventional ‘Patient Oriented Treatment’ seems to be irreversible now.

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 and also do not contribute to any other blog or website with the same article that I post in this website. Any such act of reproducing my articles, which I write in my personal capacity, in other blogs or websites by anyone is unauthorized and prohibited.

The Game Changers in 2012 and A Crystal Gazing into 2013

Posted on December 31, 2012 by Tapan Ray

Wish You and Your Dear Ones Best of Health, Happiness, Success and Prosperity in The Brand New Year.

Welcome 2013

The Global Pharmaceutical Industry (GPI), by and large, used to be considered as ‘recession-proof’ for various valid reasons. However, the waves of ‘global economic meltdown’ since last several years prompted the rating service Moody to downgrade its outlook to ‘Negative’ in 2007.

However, on September 24, 2012 the same rating service upgraded the outlook of the GPI to ‘Stable’ from “Negative,” indicating subsiding impact of the wave of drug patent expiration, come 2013.

Various other sources also vindicate that the GPI has in fact now bottomed-out. Available data from IMS Health estimates that the industry will grow from US$ 956 billion in 2011 to around US$ 1004 billion by end 2012 with a growth of approximately 5 percent driven mainly by:

- Cost optimization

- Higher disease prevalence across the world

- Increasing per capita income

The United States continue to maintain its top slot in the industry followed by the European Union and Japan.

All may not be hunky-dory in the GPI just yet, nevertheless 2013 does point towards some early signs of revival after a very uncertain period, prompting a paradigm shift, especially in the mind-set of the global players. This emerging trend could well form a separate topic of discussion altogether in some other time.

Buoyancy in India:

Back home in India the situation is quite different. The Indian Pharmaceutical Industry (IPI) still remains recession-proof. The market buoyancy continued as ‘PharmaTrac India’ reported a turnover of the domestic pharmaceutical market at around US$ 12.6 billion growing over 15 percent annually.

In this article I shall focus on the domestic pharmaceutical market of India.

The Game Changers of 2012:

Looking back, during the year 2012 the ‘Top Five Game Changers’ for the Indian Pharmaceutical Market (IPM), in my opinion, are as follows:

1. A DIFFERENT ‘Drug Policy’ after 10 years:

The ‘National Pharmaceutical Pricing Policy 2012 (NPPP 2012)’ heralds a paradigm shift in the pharmaceutical price control regime of India for the years ahead with a switch from the ‘Cost Based Pricing CBP)’ methodology to ‘Market Based Pricing (MBP)’ and also in its ‘National List of Essential Medicines 2011 (NLEM 2011)’ based span of price control.

The industry has already articulated, though the new policy will make an immediate and significant adverse financial impact on them, market based pricing is directionally prudent for all in the longer term. They feel that MBP is expected to help improving both affordability and availability of medicines.

Such a policy, some stakeholders believe, along with the Government initiative to make essential medicines available free of cost through public hospitals and health centers will benefit all sections of the society, giving a boost to overall consumption of pharmaceutical products in India. It is also good to note that the new policy promises price control exemptions for patented drugs and products with NDDS developed in India through indigenous R&D.

NPPP 2012, is expected to be a game changer for the industry by many, as it will help bringing more stability in the pharma pricing regulation system of India.

However, there is a flip side to this story.

All stakeholders are not equally happy with the NPPP 2012.

In this context, it is worth noting that in an ongoing Public Interest Litigation before the Supreme Court by ‘All India Drug Action Network (AIDAN)’, the petitioner has already drawn the attention of the Court to their ‘Interim Application’ challenging the NPPP 2012 by stating that the ‘policy finalized by the Government will in effect do away with the very notion of price controls’. In response the apex court reportedly had observed that it will consider the averments of AIDAN in the next hearing of January 15, 2013, once the printed Gazette Notification is put on record before the Court by the Government.

2. First ever grant of Compulsory License in India:

On March 12, 2012, Indian Patent Office (IPO), in its landmark ruling, granted its first ever Compulsory License (CL) for Bayer’s patented kidney and liver cancer drug Nexavar (Sorafenib), to the generic pharma player Natco, broadly citing the following reasons:

Reasonable requirements of public under Section 84 have not been satisfied.
The Patented Drug was not available to the public at a reasonably affordable price as per Section 84 (1) (b).
Patented invention is not worked in the territory of India as per Section 84 (1) (c)

The 62 page order of the Controller General of Patents, Designs and Trade Mark (CGPDTM) granted the CL to Natco for the rest of patent life of sorafenib in India at the high end of the UNDP 2001 royalty guidelines at 6 percent.

Though the research based pharmaceutical industry across the world expressed its deep disappointment and anguish over the judgment, many experts and NGOs from different parts of the globe, on the contrary, have reportedly hailed this order as a game changer to improve access to high-priced patented medicines in the country with a firm conviction that the ‘Intellectual Property Rights (IPR)’ and ‘Patients’ Access Issues’ can not tread different paths. They have reportedly opined that CGPDTM has set a right precedence by granting a CL for an exceptionally high-priced sorafenib, which will ensure, in the times to come, that “patent monopolies are kept limited, especially when the patented products are not ‘reasonably affordable’, as stated in the statute”.

Many people, therefore, envisage that if responsible pricing strategy for patented medicines is not followed in India even after the grant of first ever CL by the IPO, one could well expect other generic players applying for CL mainly for the imported high priced patented medicines purely as a business strategy, but citing the reason of improving patients’ access in the country.

3. First ever Guidelines for Biosimilar Drugs in India:

Across the world, biologic drugs have a successful record in treating many life threatening and other complicated ailments. Expiration of product patents of the first major group of originators’ biologic molecules has led to the development of products that are designed to be ‘similar’ to the originators’ products, as it is virtually impossible to replicate any protein substances, unlike the ‘small molecule’ drugs. These are ‘Biosimilar Drugs’, which rely, in part, on prior information obtained from the innovators’ products and demonstration of similarity with the originator’s molecule based on detailed and comprehensive product characterization, for their marketing approval.

India has the potential to become one of the key players in the development and manufacture of biosimilar drugs, not only to serve the needs of the local population, but also for export to large developed markets. However, for this dream to materialize, a science-driven ‘Biosimilar Guidelines’ are absolutely necessary. These guidelines provide a regulatory framework or pathway to ensure that ‘Biosimilar Drugs’ are of good quality and demonstrably similar in efficacy, safety and immunogenicity to the original reference products.

Considerable developments have occurred across the globe, in the scientific and regulatory understanding of biosimilar drugs. Nearly all developed nations and many developing countries have now defined appropriate regulatory framework for the same. However, due to lack of such guidelines in India, until recently, there have been instances of so called ‘biosimilar drugs’ being approved for marketing, reportedly with sub-optimal testing and dossiers, thereby putting into question product quality, comparability and patient safety.

Under this back-drop, the need for such a regulatory framework and comprehensive guidelines is even greater in India, mainly in the light of sub-optimal pharmacovigilance system in the country, besides other reasons.

Keeping these issues in view, the Ministries of Health & Family Welfare and the Science and Technology released India’s first “Guidelines on Similar Biologics: Regulatory Requirements for Marketing Authorization in India” in 2012. These Guidelines have been made operational effective September 15, 2012.

Long awaited new ‘Biosimilar Guidelines’ of India, demonstrating an overall similarity in the philosophy and approach with the those in the U.S and Europe, though a belated move by the Government, but certainly yet another game changer of 2012.

I reckon, this critical step will help ‘Made in India’ biosimilar drugs availing opportunities in the emerging biosimilar markets of the world including Europe and America.

4. Increase in National Health Expenditure Budget from 1% to 2.5% of GDP:

This decision of the Government in 2012 could help paving the way to provide basic healthcare services to all citizens of India through “Universal Health Coverage (UHC)”, which has the vast potential to be another game changer in the healthcare space of India.

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

Under UHC all citizens of India will be free to choose between Public Sector facilities and ‘contracted-in’ Private Providers for healthcare services. It is envisaged that people would be free to supplement the free of cost healthcare services offered under UHC by opting to pay ‘out of pocket’ or going for private health insurance schemes.

Thus, UHC, I reckon, will also be able to address simultaneously the critical issue of high ‘out of pocket’ healthcare expenses of the common citizens and at the same time increase consumption of overall healthcare, giving a boost to the growth of the pharma industry together with other healthcare sectors.

Implemented sooner, ignoring motivated stalling tactics by the vested interests, if any, could usher-in the dawn of a new healthcare reform process in India for all.

5. Announcement of Distribution of Essential Drugs free of cost to all, from Government Hospitals and Dispensaries:

In July 2012 the Government of India took a landmark ‘Public Healthcare’ related initiative to provide unbranded generic formulations of all essential drugs, featuring in the ‘National List of Essential Medicines 2011’, free of cost to all patients, from the public hospitals and dispensaries across the country.

This social sector project was expected to roll out, as reported in the media, from October/November 2012 with a cost of around US$ 5 billion during the 12^th Five Year Plan period of the country. Considering medicines account for around 70% of the total ‘Out of Pocket’ expenses, this particular initiative is expected to be yet another game changer to benefit, especially the poorer patients of the society.

This new scheme, I reckon, has also the potential to hasten the overall growth of the pharmaceutical industry, as poor patients who could not afford will now have access to essential medicines. On the other hand, rapidly growing middle class population will continue to favor branded generic drugs prescribed by the doctors at the private hospitals and clinics.

Some people are apprehending that generic drug makers will have brighter days as the project starts rolling on. This apprehension is based on the assumption that large branded generic players will be unable to take part in this big ticket drug procurement process of the Government, which seems to be imaginary.

However, in my view, it could well be a win-win situation for all types of players in the industry, where both the generic-generic and branded-generic businesses will continue to grow simultaneously.

That said procedural delays and drug quality issues, while procuring cheaper generics, may pose to be a great challenge for the Government to ensure speedier implementation of this project. Drug regulatory and law enforcing authorities will require to be extremely vigilant to ensure that while sourcing cheaper generic drugs, “Public health and safety” due to quality issues do not get compromised in any way.

A Crystal Gazing into 2013:

While Crystal Gazing into 2013, following seven possible developments come to the top of my mind:

New Drug Policy may get caught in Public Interest Litigation (PIL).
UHC related pilot projects may start coming up.
More stringent regulatory requirements for Clinical Trials, Product Marketing approvals, Pricing of Patented Medicines and Ethical Marketing practices may come into in-force.
Along with public investments more private initiatives, both global and local, are expected in the healthcare infrastructure space including in e-healthcare.
Domestics Pharma Companies could challenge increasing number of patents and may also apply for Compulsory Licenses following the set precedence of 2012.
The Supreme Court judgment on Glivec case could bring more clarity in ‘incremental innovation’ in general and the Section 3(d) in particular.
More consolidation within the pharmaceutical industry may take place with valuation still remaining high.

Conclusion:

The year 2012, especially for the pharmaceutical industry in India, was indeed eventful. The ‘Top Five’ that I have picked-up out of various interesting developments during the year, could in many ways be the ‘Game Changers’ for the industry during the years ahead.

Key measures, both in the public and private space, be it fostering R&D or improving access to healthcare for the general population, fell well short of adequate even in 2012.

My ‘Crystal Gazing into 2013’, if comes true, will make the year even more eventful in India. The new year could signal herald of yet another interesting paradigm. A paradigm that may churn quite different sets of rapidly evolving issues requiring more innovative honed skill-sets for their speedy redressal, as the time keeps moving on.

By: Tapan J Ray

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

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.

‘Free Essential Medicines for All’ – A Laudable Public Healthcare Initiative of India, Tough Challenges Notwithstanding

Posted on July 16, 2012 by Tapan Ray

Recently the Government of India has taken a landmark ‘Public Healthcare’ related initiative to provide unbranded generic formulations of all essential drugs, featuring in the ‘National List of Essential Medicines 2011’, free of cost to all patients from the public hospitals and dispensaries, across the country.

This social sector project is expected to roll out, as reported in the media, from October/November this year with a cost of around US$ 5 billion during the 12^th Five Year Plan period of the country.

Considering medicines account for around 70% of the total ‘Out of Pocket’ expenses, this particular initiative is expected to benefit, especially the poorer patients, significantly.

Recommendations of the Parliamentary Standing Committee:

Noting the keen interest of the Government for speedier implementation of this scheme, it appears that the Ministry of Health has accepted the recommendations made by the ‘Parliamentary Standing Committee (PSC) for Health and Family Welfare’ to the Indian Parliament on August 4, 2010, regarding prescription of medicines by their generic names in the Public hospitals and dispensaries, to start with.

In this context, it is worth noting that the ‘Drugs Technical Advisory Board (DTAB)’ has also reportedly considered the proposal to amend the rules of the ‘Drugs and Cosmetics Act of India’ for regulatory approval of all drug formulations containing single active ingredient in the generic names by all State Licensing Authorities.

This recommendation of the PSC is based on the premises that the ‘Brand Building’ exercise of the generic drugs includes a very high sales and marketing expenditure.

The Committee felt that by putting in place a well structured policy such ‘avoidable’ expenditures can easily be eliminated making generic medicines available to the common man at much cheaper prices. ‘Jan Aushadhi’ scheme of the Government is often cited as an example to drive home this point.

The scheme is new for India, but other countries have already taken similar steps:

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

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

Product quality of generic/ generics and branded generics:

Drugs and Cosmetics Act of India requires all generic/generic and branded generic drugs to have the same quality and performance standards. Thus when a generic/generic medicine is approved by the drug regulator, one should logically expect that it has met with the required standards set for the identity, strength, quality, purity and potency of the chemical substance.

It is not uncommon that there could be some variability taking place during their manufacturing process and all formulations of both the categories produced by different manufacturers may not also contain exactly the same inactive ingredients.

In any case, both generic/generic and branded generic drugs must be shown to be bio-equivalent to the reference drugs with similar blood levels to the respective reference products. Regulators even in the USA believe that if blood levels are the same, the therapeutic effect will also be the same.

A recent study:

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

Generic drugs are prescribed more, even in America:

As per published reports, generic medicines account for around 78% of the total prescriptions dispensed by retail chemists and long-term care facilities in the US. For example, in 2010 generic prescriptions were four percentage points more than what these were in 2009 and came up from 63% as recorded in 2006.

Capacity constraints could hold back full implementation of the Indian initiative:

Huge shortages in the number doctors, nurses, paramedics and hospital beds per 10,000 population in India will pose a tough challenge for speedier implementation of ‘Free medicines for all’ project in the country. India should respond to its healthcare infrastructure developmental needs much faster now than ever before to achieve its objective of providing ‘healthcare to all’, sooner.

Overall impact of the scheme:

I reckon, this new scheme will hasten the overall growth of the pharmaceutical industry, as poor patients who could not afford will now have access to essential medicines. On the other hand, rapidly growing middle class population will continue to favor branded generic drugs prescribed by the doctors at the private hospitals and clinics.

However, in my view, it could well be a win-win situation for all types of players in the industry, where both the generic/generic and branded generic businesses will continue to grow simultaneously, because of the reasons as mentioned above.

That said procedural delays and drug quality issues while procuring cheaper generics may pose to be a great challenge for the Government to ensure speedier implementation of this project. Drug regulatory and law enforcing authorities will require to be extremely vigilant to ensure that while sourcing cheaper generic drugs, “Public health and safety” due to quality issues do not get compromised in any way.

How long will it take?

Full implementation of ‘Universal healthcare’ projects takes considerable time in any country. China has taken a long time for its roll-out covering even a larger population than India. Even Mexico has reportedly taken more than seven years for implementation of similar public healthcare initiative.

Thus, I guess, though it is quite possible for India to offer ‘Free Essential Medicines’ to its 1.13 billion people, it may take a decade long efforts for the country to reach out to the entire population.

Are generic/generic drugs really cheaper than their branded generic equivalents?

The recommendation of the ‘Parliamentary Standing Committee for Health and Family Welfare’ on this issue, as stated above, makes sense for India. However, the moot question, which is the basis of choosing generic/generic drugs over their branded generic equivalents, still remains as follows:

“Are the generic/generic drugs really cheaper than their branded generic equivalents in India?”

From the MRPs, as printed on the packs of both branded generic and the generic/generic formulations, it appears that this basic assumption may not hold good universally across the country.

Following examples will vindicate this point:

Molecule		Product	Company	Batch No.	Price Per Tab.
Telmisartan 40 mg	Branded Generic	Telmiline 40 mg	John SmithKline	M111622	14/-
Telmisartan 40 mg	Generic/Generic	Generic	Unichem	BTL(11/11001)	30/-

Molecule		Brand/ Generic	Company	Batch No.	Price Per Tab.
Rosuvastatin 10 mg	Branded Generic	Rosufine	Morpen	P20472	13.20
Rosuvastatin 10 mg	Generic/Generic	Generic	Sharon Bio-Medicines	AC-2159	16/-

Molecule		Brand/ Generic	Company	Batch No.	Price Per Tab.
Cetirizine HCL 10 mg	Branded Generic	Cetfast	Elder	CO81810	2.50
Cetirizine HCL 10 mg	Generic/Generic	Generic	Ra Biotech	CT 016B	3/-

Molecule		Brand/ Generic	Company	Batch No.	Price Per Tab.
Nimesulide 100 mg	Branded Generic	NICIP	Cipla	-	2.53
Nimesulide 100 mg	Generic/Generic	Generic	Themis	-	3/-

Molecule		Brand/ Generic	Company	Batch No.	Price Per Tab.
Amlodipine 5 mg	Branded Generic	Aginal 5	Alkem	-	2.48
Amlodipine 5 mg	Generic/Generic	Generic	Sandoz	-	2.70

Molecule		Brand/ Generic	Company	Batch No.	Price Per Tab.
Ampicillin 500	Branded Generic	Ampisyn	Cipla	-	6.40
Ampicillin 500	Generic/Generic	Generic	SGS	-	7.50

As on July 6, 2012

Let me hasten to add, it is quite possible to present another set of examples, which may show that the MRPs of generic/generic drugs are lesser than the comparable branded generics.

However, the bottom-line is, it will not be fair to comment that MRPs of generic/generic drugs, which do not include any expenditure towards ‘brand-building’, are always significantly lesser than their branded generic counterparts as shown above.

Why are MRPs of generic/generics and branded generics not much different?

It is a general perception, as stated above, that ‘Brand Building’ exercise for generic drugs in India includes a very high component of ‘sales and marketing expenditures’ which are built into the price, making MRPs of the branded generic formulations significantly higher than their generic/generic equivalents.

However, it will not be realistic to accept that generic/generic drugs are not promoted at all, in any form, by the concerned manufacturers. The fact is, in case of generic/generic medicines almost the same amount that is spent on ‘sales and marketing’ for branded generic drugs, is passed on to the retail chemists by their manufacturers as huge incentives for promotion and substitution of such drugs by the respective pharmacies.

Thus, in a large number of cases the patients do not get any significant pricing benefit for buying generic/generic drugs against doctors’ prescriptions instead of branded generics from the retail outlets.

Conclusion:

In the prevailing scenario, the decision of the Government to procure and distribute only the generic/generic essential medicines through public hospitals/dispensaries simply on pricing ground, keeping the branded generics at bay, is indeed intriguing.

From the data presented above, it will be quite reasonable to believe that MRPs being similar, the ‘sales and marketing’ costs for branded generics are quite comparable to hefty discounts being passed on to the wholesalers and retail chemists by the manufacturers of generic/generic drugs.

Hence, in the balance of probability, a branded generic product can well compete with its genuine generic/generic equivalent, even on pricing ground, in the government procurement process.

Thus, to be fair to the pharmaceutical companies, across the board, the government should invite all generic manufacturers selling their products with or without brand names to participate in the public procurement process and thereafter make the final purchase decisions based on well laid out and transparent criteria, which can stand scrutiny of the strictest audit.

That said, I fully recognize that the participation in the public procurement process of essential medicines, will indeed be the business decision of individual companies. If it makes commercial sense, there is no reason why large companies, including the multinationals, will not participate in this laudable project of the Government.

The record of the Government in the implementation of various social sector projects, thus far, may not be brilliant by any measure. Despite that, it does make enough sense for all of us to be rather optimistic about this well hyped ‘Free Essential Medicines for all’ project of India, considering the immense benefits that the common man will derive out of it.

For the effective implementation of the project, the government should now get adequately prepared with required wherewithal, put in place world class skill-sets by partnering with private domain experts wherever required and chart the pathway of success with clearly assigned accountability to each individual responsible for translating this grand ‘Public Healthcare’ initiative of India into reality .

By: Tapan J Ray

Chasing the “Holy Grail”: Reasonably affordable healthcare for all

Posted on April 23, 2012 by Tapan Ray

The Healthcare industry of the world as a whole with a size of several trillion US$ is growing at a fast pace in many countries for various reasons. The industry can be broadly divided into six categories as follows:

Managed Health Care, like the US and many other OECD countries providing ‘Universal Health Coverage’
Medical Equipment and Devices
Pharmaceuticals
Bio-pharmaceuticals
Health Insurance
Health Support Services

Though BRIC countries and other emerging markets are showing promising growth potential, United States of America (USA) still remains the largest entity within the global healthcare industry, followed by European Union (EU) and Japan.

Success requirements:

The most important success requirements for the Global healthcare industry may be listed as follows:

Proficiency in early capturing of the key market trends
Leveraging technology in all areas of business
Continuous product and service innovation
Meeting customer needs even before they feel for the same
Cutting-edge, well-differentiated and well-executed market and marketing strategies
Always in touch with customers with win-win business objectives
Outpacing competition with continuous proactive moves

India:

The success factors for excellence in the healthcare sector of India are no different from other emerging markets. However, some key components of this sectoral space, like optimal infrastructure and efficient delivery mechanisms, especially in the hinterland and rural areas of the country, are still in ‘Work In Progress (WIP)’ stages of development.

Healthcare growth drivers in India:

According to the Investment Commission of India, the healthcare sector of the country has registered a robust CAGR of over 12 percent during the last four years and the trend is expected to be ascending further.

Quite in tandem, other important areas of the healthcare sector have also recorded impressive performance as follows:

Areas	Growth %
Hospitals/Nursing Homes	20
Medical Equipment	15
Clinical Lab Diagnostics	30
Imaging Diagnostics	30
Other Services (includes Training & Education; Aesthetics & Weight loss; Retail Pharmacy, etc.)	40

In addition, from the allocation made for health (2.5 percent of the GDP) in the 12^th Five Year Plan Document of India, it appears that the country will clock a mid to high-teen growth in its healthcare spending during this period, mainly due to the following reasons:

Economy to turn stronger
Massive public healthcare expansion through projects like Universal Health Coverage (UHC), expanded National Rural Health Mission (NRHM), new National Urban Health Mission (NUHM)
Expanded Rashtriya Swasthya Bima Yojojana (RSBY) for Below Poverty Line (BPL) population
Growing middle income households both in the urban and rural areas
Increasing life-style related health issues
Improving penetration of Health Insurance

Key Challenges:

The path ahead will not really be strewn with the beds of roses. The rural healthcare infrastructure will continue to pose a key challenge, at least in the near term, some of the facts being as follows:

A. Status of Rural Healthcare Infrastructure in India:

Infrastructure and Services	Villages [%]
Connected with Roads	73.9
Having any Health Provider	95.3
Having trained birth attendant	37.5
Having ‘Anganwadi’ Worker (Child Care Center in rural areas)	74.5
Having a doctor	43.5

(Source: Ministry of Health and Family Welfare)

B. Hospital Beds per 1000 of population:

Country	Hospital Beds Per 1000 Population
India	> 0.7 [Urban: 2.2 and Rural 0.1]
Russia	9.7
Brazil	2.6
China	2.2
World Average	3.96

(Source: Kshema)

Needs more innovative business models:

Being supported by the monetary and other fiscal incentives of the Government, Tier II and III cities of India will continue to attract more investors for their future growth potential. At the same time, anticipated lower profit margins from these areas, predominantly due to relatively lower affordability threshold of the local population and inadequate health insurance penetration in these areas, is expected to make these healthcare providers to plan for no-frill innovative business models, like much talked about ‘the hub-and-spoke model’, as practiced in many other industries.

Some of the key players of the healthcare industry of India like, Apollo and Fortis have already started expanding into tier-II and tier-III cities of the country, prompted by increasing demand for high-quality specialty healthcare services at reasonably affordable prices in the smaller towns of the country.

Meanwhile, Frontier Lifeline Hospital is reportedly in the process of setting up India’s first Special Economic Zone (SEZ) for healthcare, ‘Frontier Mediville’ at Elavoor, near Chennai.

Areas of caution:

While looking at the big picture, the following factors should also be taken note of:

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 healthcare sector in general.
The market 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 medical devices / equipment and other related areas, as well.

India is taking strides:

I. According to the Rural Health Survey Report 2009 of the Ministry of Health and Family

Welfare, in rural India during the last five years:

The number of primary health centers has increased by 84 per cent to 20,107.
Around 15,000 health sub-centers and 28,000 nurses and midwives have been added.

II According to RNCOS December, 2010 report:

Indian health insurance market is currently not only the fastest growing, but also second largest non-life insurance segment in the country.
The health insurance premium in India is expected to grow at a CAGR of over 25 per cent from 2009-10 to 2013-14.
By end 2013 India is expected to curve out a share over 3 per cent in the global medical tourism industry with a CAGR in the number of medical tourists to over 19 per cent, during 2011-2013 period.

III. According to PwC, the medical technology industry of India is expected to grow from US$

2.7 billion in 2008 to US$ 14 billion by 2020.

IV. Leveraging cutting edge technology, digital bio-surveillance projects are being initiated to

generate data on the prevalence of various diseases and to create actionable databases on healthcare needs in rural India by several private players like, Narayana Hrudayalaya and the Mazumdar Shaw Cancer Centre.

V. Major healthcare players of India like, Manipal Group, Max Healthcare and Apollo are now

reportedly venturing into new segments such as primary care and medical diagnostics.

Job creation  in healthcare sector:

The trend of new job creation in the healthcare sector of India is also quite encouraging, as supported by the following details:

The Healthcare sectors in India recorded a maximum post recession recruitment to a total employee base of 33,66,000 with a new job creation of 2,95,000, according to ‘Ma Foi Employment Trends Survey 2010’.
Despite slowdown in other industries, in the healthcare sector the new job creation continues at a faster pace.
With many new hospital beds added and increasing access to primary, secondary and tertiary / specialty healthcare, among others, the ascending trend in job creation is expected to continue in the healthcare sector of India in the years ahead.

Pharmaceutical Industry:

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.

Currently India:

Ranks 4th 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)

Conclusion:

Despite all these, the healthcare Industry of India is still confronted with many challenges while striking a right balance between public health interest and expectations for a high margin ‘free market’ business policies by a large section of players in the healthcare sector of India, across its sub-sectors, both global and local, quite unlike many other emerging sectors, like telecom and IT.

Moreover, pharmaceuticals come under the ‘Essential Commodities Act’ of the country, where government administered pricing is common.

That said, without further delay, all stakeholders, along with the Government, should now join hands, to collectively resolve 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 issues, instead of adhering to the age-old blame game in perpetuity, as it were, without conceding each other’s ground even by an inch.

Now is the high time for India, I reckon, to reap a rich harvest from the emerging lucrative opportunities, coming both from India and across the world in its healthcare space. This, in turn, will help the country to effectively align itself with the key global healthcare need of providing reasonably affordable healthcare to all.

In pursuit of this ‘Holy Grail’, the nation has all the success ingredients in its armory, as mentioned above, to play a key role in the global healthcare space, not just as a facilitator to help achieving reasonable corporate business objectives of the healthcare players, but more importantly to alleviate sufferings of a vast majority of the ailing population, living even beyond the shores of India.

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.

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.

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

The New Drug Policy is languishing in a labyrinth

Posted on April 2, 2012 by Tapan Ray

Drug Price Control has remained the key feature of all Drug Policies of India, since their inception in early 70’s. Most of these policies continued to remain behind their times consistently, without any exception.

That said, the Drug Policy 1994 and the consequent Drug Price Control Order 1995 (DPCO ’95) have now become the largest ‘Dinosaur’ of all Drug Policies. However, the most intriguing point though, both these have still been kept operational by the government and the very concept of a new and a more contemporary one is languishing in a labyrinth since over a decade, for reasons of anybody’s guess.

Drug Price Control system in India:

It appears that the drug price control system in India is here to stay, at least in the short to medium term and that too in a seemingly best case scenario.

The key reasons:

As we know, the key reasons of price control for pharmaceuticals in India are the following:

To contain cost of medicines, particularly the essential ones, at a reasonably affordable level, which is a very important part of the total healthcare expenditure of the common man.
To provide greater access to medicines to all, especially in view of very high ‘out of pocket expenditure’ for health for a vast majority of population in the country.

The economic factors:

Some of the economic factors, which may cause impediments in achieving these objectives are the following:

Sub optimal public healthcare infrastructure, leaky delivery system and high cost of private healthcare services
This is fueled by, as stated above, unabated increase in ‘out-of-pocket expenses’ on healthcare in general and medicines in particular at 78 per cent, as compared to 61 per cent in China, 53 per cent in Sri Lanka, 31 percent in Thailand, 29 per cent in Bhutan and 14 per cent in Maldives (Source: The Lancet)
High expenses on drugs for outpatient care

Though very important, drug cost alone, however, does not determine quality of access to healthcare.

Global scenario for drug price control:

As per published reports, all 34 developed nations of the world have ‘Universal Health Coverage’ mechanism in place in various different forms, including mandatory medical insurance requirements, to effectively address the issue of high access to healthcare including pharmaceuticals in their respective countries, significantly reducing ‘out of pocket expenses’ towards health.

All these 34 countries belong to ‘Organization for Economic Co-operation and Development (OECD)’, the governments of which, in some way or the other control and regulate drug prices.

The Governments/payors of most of these countries implement the price control measures by playing the role of a dominant market force directly, while negotiating a favorable price from the manufacturers, which are much lower than their equivalent free market prices.

Many other OECD governments set the drug reimbursement prices right at the time of introduction of new drugs through hard negotiation, which are also well below free market prices and acts as the bench mark market prices, in many ways.

In addition to all these mechanisms, the governments in many OECD countries periodically reduce the prices of already marketed drugs quite significantly.

A contrarian view on Drug Price Control:

Some industry experts feel that there is a hidden consequence for the ‘Drug Price Control System’, especially with the cost based one.

The cost based price control as is currently practiced by the government in India compels the pharmaceutical manufacturers to restrict to:

Minimum acceptable quality standard rather than maximum possible quality standards for the patients
Does not encourage innovation in formulation development like novel galenic formulations for better patient acceptance and compliance
Indirectly discourage innovation in product packaging
Ceiling Price mechanism does not encourage advanced anti-counterfeit measures for patients’ safety

These experts also feel that adverse consequences of price control will have a significant negative impact on the pharmaceutical players to plough back fund towards R&D projects to meet the unmet needs of the patients and thereby reducing the range of treatments that could be made available to the patients in the years ahead.

What is China doing?

On March 28, 2011 Reuters reported that China had cut the maximum retail price for more than 1,200 types of antibiotics and the drugs for the circulatory system by an average of 21 percent.

It has also been reported that the Chinese Government has put a cap on the prices of about 300 drugs featuring in their ‘National List of Essential Medicines (NLEM).’

Supreme Court directive on ‘Price Control’ of ‘Essential Medicines’:

It is worth noting in this context that in 2003, the Supreme Court of India, while setting aside the Drug Policy 2002 directed the government to work out effective mechanism to bring all essential and life-saving medicines under price control.

HLEG recommends ‘Price Control’ of ‘Essential Medicines’:

Even in its report the ‘High Level Expert Group (HLEG)’ on ‘Universal Health Coverage (UHC)’ in India, set up by the Planning Commission of India under the chairmanship of the well-known medical professional Prof. K. Srinath Reddy, under recommendation no. 3.5.1, postulated price control and price regulation on essential drugs, which is quite in line with the draft National Pharmaceutical Pricing Policy 2011 (NPPP 2011).

The HLEG report says:

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

Types of drug price regulations in India:

Cost based price control: e.g. as specified in the Drug Price Control Order 1995 (DPCO 95)
Marked based price control: e.g. as was suggested by ‘The Pronab Sen Committee’ in 2005
Price Monitoring with a cap on annual price increase: e.g. as is currently followed by the National Pharmaceutical Pricing Authority (NPPA) for all products which are outside DPCO ’95

The weaknesses of cost based pricing mechanism:

The key criticism of cost based pricing mechanism flows from the following arguments:

This system is not followed by any developed or developing countries worth mentioning, which follow drug price control mechanism in any form
A Complex, intrusive and inefficient system of pricing medicines
Does not consider important variations in the level of GMP standards and the quality of input costs
The conversion cost and packing norms are determined through a sample survey of less than one per cent of pharmaceutical manufacturing units

Pronab Sen Committee report – the basis of price control in the draft NPPP 2011:

The draft NPPP 2011 is based on the ‘Recommendations of the Task Force constituted under the Chairmanship of Dr. Pronab Sen to explore issues beyond Price Control to make available Life-saving Drugs at reasonable prices’ to all.

‘Pronab Sen Committee’ suggested the following principles of Price regulation to achieve part of the above objective:

1. The National List of Essential Medicines (NLEM) should form the basis of drugs to be considered for intensive price monitoring, ceiling prices and for imposition of price controls, if necessary.

2. The government should announce the ceiling price of the drugs contained in the NLEM (other than the drugs procured by hospitals directly and which an individual does not have to purchase from the market) on the basis of the weighted average prices of the top three brands by value of single ingredient formulations prevailing in the market as on 01.04.2005. In cases where there are less than three brands, the weighted average of all the existing brands would be taken. The Org–IMS data set can be used for this purpose initially with a 20 per cent retail margin provided. There is, however, a need to improve the available data coverage, which should be taken up with ORG-IMS or any other data provider.

3. For drugs which are not reflected in ORG-IMS data, the NPPA should prepare the necessary information based on market data collection.

4. During the transition period (i.e. till the time ceiling prices are fixed and notified) prices of all essential drugs may be frozen.

5. The Government should specify the reference product in terms of strength and pack size for each product which would form the basis for price determination. The price ceiling would be specified on a per dosage basis, such as per tablet/per capsule or standard volume of injection. Where syrups and liquids are sold in bottles the ceiling price may be fixed on individual pack size.

6. Price relaxations may be permitted for non-standard delivery systems, packaging and pack sizes through applications to the negotiations committee, which should become applicable for all similar cases.

7. In the case of formulations which involve a combination of more than one drug in the NLEM, the ceiling price would be the weighted average of the applicable ceiling prices of its constituents.

8. For formulations containing a combination of a drug in the NLEM and any other drug, the ceiling price applicable to the essential drug would be made applicable. However, the company would be free to approach the price negotiations committee for a relaxation of the price on the basis of evidence proving superior therapeutic effectiveness for particular disease conditions.

9. In order to determine the reasonableness of the ceiling prices fixed as above, the prices quoted in bulk procurement by Government and other designated agencies may be examined for use, provided that the system of bulk procurement meets certain minimum prescribed standards. Recognizing that retail distribution has costs not reflected in bulk procurement, a markup of 100 per cent over this reference price is recommended.

10. NPPA should set up a computer based system which would scan the price data provided by companies against the ceiling prices determined as above and identify formulations which breach the relevant price ceiling. The company manufacturing or marketing such a product would be required to reduce its price or to face penal action.

11. Companies should be permitted to represent for any price increase on valid grounds, which should then become applicable to the entire class of products.

12. The NLEM should be revised periodically, say every 5 years, in order to reflect new drugs and significant changes in pattern of drug sales within the therapeutic categories. However till the time the new list is finalized the existing list will continue to be valid for the purpose of price control.

13. In the case of drugs not contained in the NLEM, intensive monitoring should be carried out of all drugs falling into a pre-specified list of therapeutic categories. Any significant variation in the prices (say above 10 per cent) would be identified for negotiation.

The stakeholders’ comments on NPPP 2011:

About 60 stakeholders have commented by now on the draft NPPP 2011. The views are quite divergent though. It is interesting to note that the new draft pricing policy, in its current form, has been rejected by all key stakeholders, like the Industry, Ministry of Health, Expert Groups, WHO, NGOs and reportedly even by the Economic Advisory Council of the Prime Minister, on quite different grounds.

As widely reported in the media, the pharmaceutical industry, though in favor of the marked based pricing mechanism, feels that the draft NPPP 2011 will increase the span of drug price control to over 60 per cent of the Indian Pharmaceutical Market (IPM). This means over eight times increase in the span of price control from its current level, making the task unwieldy for even the NPPA.

Majority of other stakeholders including the Ministry of Health, on the contrary, are arguing in favor of cost based price control. They commented that the price control system of the draft policy would give legitimacy to high drug prices in India, leading to increase in the overall prices of medicines. This group feels that the top three brands in majority of cases will be the most expensive ones.

Two interesting observations by the World Health Organization (WHO) on ‘Trade Margin’:

The WHO in their observations on the draft NPPP 2011 has made the following interesting comments:

“The new price regulation uses a margin of16% to calculate the retail prices. This is a lower margin than currently – based on the market data 1.1 and 3.3 I calculated a current retail margin of 22%. So the new price regulation implies a margin reduction of 6%, alternatively the CP might be set at a 6% lower price than currently is the case.”

If the WHO observation is correct, there is a scope to reduce the price of essential medicines by 6 per cent only through proper regulation of the trade margin.

WHO also comments that IMS data, the basis of all such calculations by the NPPA, has severe limitations as “Their data does not take into account the discounts, rebates and bundling deals and when the data is collected at the level of the wholesaler they estimate the retailer and patient prices”.

If such is the case, what could possibly be the basis of all calculations as captured in the draft NPPP 2011?

Observation of a distinguished Parliamentarian:

Dr. Jyoti Mirdha , a Member of the Lower House of the Parliament (Lok Sabha) commented as follows:

“Under this policy the weighted average of three top selling brands will be the ceiling price. There is no logic in restricting the formula to just three brands. Why not five? Why not 10 to arrive at a more representative and reasonable figure? Besides why base on sales figures? In any pricing policy the parameter should be the price. Why not weighted average of 10 least priced brands?”

This could well be a pertinent question.

How to break the logjam now?

Taking on from Dr. Mirdha’s argument , WHO observations and Pronab Sen Committee report, one could possibly try to resolve this logjam by exploring various other available alternatives like for example, the following broad points, to ascertain whether a win-win situation can be created for all through the new drug policy:

What happens if ‘Weighted Average Price’ is calculated based on all brands, instead of top three or bottom three with some exclusion criteria, if required?
When inclusion criteria for price control in the new draft NPPP 2011 is ‘essentiality’ of drugs, it sounds logical that price control should be restricted to National List of Essential Medicines 2011 (NLEM 2011). Only possible extension could perhaps be taking the entire molecule, instead of specified strengths of the same molecule.
Enough non-price control checks and balances to be put in place to ensure proper availability of NLEM 2011 drugs to the common man and avoidance of any possible situation of shortages for such drugs.
As commented by WHO, trade margin should be rationalized, the MRP needs to be reduced accordingly and the consequential benefits to be passed on to the patients.

Conclusion:

The issue of the new National Pharmaceutical Pricing Policy should be resolved sooner than later and that too by conforming to the directive given by the Supreme Court on essential medicines. At the same time, all the stakeholders must feel comfortable with the new drug policy.

The four points, as mentioned above, are just an illustration for choosing an alternative solution. If it works, let us move on. If it does not, let us search for the pathfinder who can break the decade old labyrinth rather quickly, without losing the way yet again.

However, the bottom-line remains that the solution should be a win-win one, both for the patients and the industry alike, benefiting the healthcare space of the country in the years ahead.

By: Tapan J Ray

Are Preventive Medicines always cost effective to be an area of focus in healthcare management?

Posted on March 19, 2012 by Tapan Ray

American Board of Preventive Medicine defines ‘Preventive Medicine’ as follows:

“Preventive Medicine is the specialty of medical practice that focuses on the health of individuals, communities, and defined populations. Its goal is to protect, promote, and maintain health and well-being and to prevent disease, disability and death.”

The most basic examples of preventive medicines are known to be hand washing, breast feeding and immunization.

Simple preventive measures, such as, increasing awareness against tobacco smoking, misuse of alcohol or unprotected sex, especially in an emerging economy like India, will go a long way to prevent and control such habit related diseases, help saving significant expenditure of the nation towards healthcare.

The purpose:

The primary purpose of preventive medicines could well have dual objectives as follows:

Disease prevention of a large section of the population
Reduce the healthcare expenses

Primary, secondary and tertiary prevention:

As stated above, primary disease prevention usually would include vaccination against specific disease types, whereas secondary and tertiary prevention are usually done through early detection process and screening of the target population.

Relevance to chronic diseases:

A World Health Organization (WHO) report, titled, “Preventing Chronic diseases – a vital investment” argues that globally of the 58 million deaths in 2005, approximately 35 million were due to chronic diseases, which were expected to increase by 17% in the next 10 years thereafter.

It points out that 80% of all premature heart disease, stroke and diabetes are preventable. This assumes greater significance as 80% deaths due to chronic disease occur in low and middle income nations where most of the world population lives, against only 20% of the same in the high income countries.

The report, therefore, articulates that it is absolutely necessary for the countries to review and implement a comprehensive and integrated preventive public health strategy.

Regular preventive measures:

Experts recommend following regular preventive measures, which are very relevant to India:

Counseling on hygienic life style
Routine primary vaccinations
Counseling on quitting smoking, alcohol misuse, protected sex, losing weight, eating healthy food, treating depression etc.
Regular general health check-up
Cancer screenings like mammograms and colonoscopies

Immense potential in India:

In a country like India, with high prevalence of many preventable diseases involving a large section of the nation’s population, preventive medicine promises immense potential to reduce the healthcare expenditure of the country significantly and at the same time would promise a much better quality of life to its population.

A counter point:

Another school of thought, primarily US based, advocates that preventive medicines, on the contrary, would raise the healthcare expenditure.

Preventive Medicine increases healthcare cost:

In support of this contrarian view, a paper published in ‘The New England Journal of Medicine (NEJM)’ on February 14, 2008 based on 599 studies between 2000 and 2005 infers that though disease prevention in some cases may reduce the cost of healthcare, more preventive medicines in many cases could, in fact, increase the overall healthcare expenditure.

Screening cost is more than savings:

It says that screening cost of a disease for a large section of the population may far exceed the savings from treatment avoidance in those cases where only a small part of the population would have become ill in the absence of preventive measures.

Treatment with medicine offers greater value:

The article also points out that:

“The drugs used to treat high cholesterol yield much greater value for the money, if the targeted population is at high risk for coronary heart disease, and the efficiency of cancer screening can depend heavily on both the frequency of the screening and the level of cancer risk in the screened population.”

Preventive medicine more expensive:

The authors argue that preventive medicine will be more expensive where to make a small populations free from a particular disease, preventive measures are taken involving a large population, most of whom even otherwise would not have suffered from that illness.

Conclusion:

Coming back to the WHO report which categorically says, contrary to the belief of some section of the society, especially in the USA that measures for control and prevention of chronic diseases are really not too expensive for any nation, not even for the low and middle income countries.

In reality, even chronic diseases can be prevented and effectively controlled to reduce the disease burden of any country very significantly. The WHO article also says that expensive patented medicines are no longer required for prevention of, for example, even cardiac ailments. The cheaper generic drugs, if used along with counseling on life style changes, will be quite affordable to a vast majority of population even in the middle and low income countries.

Weighing all pros and cons, WHO aims to reduce the death rates from all chronic diseases by 2% per year through preventive medicines, which would mean prevention of 36 million deaths due to chronic disease by 2015, mostly in the low and middle income countries.

These statistics will more than vindicate the argument that preventive measures and medicines are cost effective, in the long run for any nation, particularly for a country like India.

By: Tapan J Ray

PILMAN

A Tapan Ray Website

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