“New drug prices are Astronomical, Unsustainable and Immoral” – Anatomy of Unique Protests

Yes. The quoted sentiment captured in the headline was reportedly voiced recently by many cancer specialists, including researchers and that too in the heartland of pharmaceutical innovation of the world– the United States of America.

These specialist doctors argued:

“High prices of a medicine to keep someone alive is profiteering, akin to jacking up prices of essential goods after a natural disaster”

Thus, not just in India, high prices of new drugs have started prompting large-scale protests in various types and forms across the world. This time the above unique protest assumed an extra-ordinary dimension, with the eye of the storm being in America.

The news item highlighted quite a different type of public protest by the top doctors, originated at a major cancer center located in New York and actively supported by over 120 influential cancer specialists from more than 15 countries spanning across five continents. These crusaders, though reportedly are working in favor of a healthy pharmaceutical industry, do think, especially the cancer drug prices are beyond the reach of many.

About 30 of these doctors hail from the United States and work closely, as mentioned earlier, with pharmaceutical companies engaged in R&D, including clinical trials.

As the cost of many life saving cancer drugs are now exceeding US$ 100,00 per year, all these doctors and researchers involved in the patients’ fights against cancer, are now playing a pivotal role in resisting such high drug prices vigorously.

Examples of astonishingly high drug prices:

In the area of treating rare diseases, the situation in every sense is mind-boggling. When a drug to treat such ailments comes with a price tag of over US$ 400,000 just for a year’s treatment, it is indeed astonishingly high by any standard. Some protestors even described the cost of these drugs as ‘obvious highway robbery’ in the guise of high R&D cost, while some others would continue to wonder as to why is not there a regulatory intervention for the same?

Here below are the top 10 most expensive drugs of the world…and just hold your breath:

World’s Most Expensive Medicines

No. Name Disease

Price US$ /Year

1. ACTH Infantile spasm

13,800,00

2. Elaprase Hunter Syndrome

657,000

3. Soliris Paroxysmal nocturnal hemoglobinuria

409,500

4. Nagalazyme Maroteaux-Lamy Syndrome

375,000

5. Folotyn T-Cell Lymphoma

360,000

6. Cinryze Hereditary Angioedema

350,000

7. Myozyme Pompe

300,000

8. Arcalyst Cold Auto-Inflammatory Syndrome

250,000

9. Ceredase / Cerezyme Gaucher Disease

200,000

10. Fabrazyme Fabry Disease

200,000

(Source: Medical Billing & Coding, February 6, 2012)

The good news is protests against such ‘immoral pricing’ have started mounting.

Protests against high drug prices for rare diseases:

Probably due to this reason, drugs used for the treatment of rare diseases are being reported as ‘hot properties for drug manufacturers’, all over the world.

The above report highlighted a changing and evolving scenario in this area.

In 2013, the Dutch Government had cut the prices of new enzyme-replacement therapies, which costs as high as US$ 909,000. Similarly, Ireland has reduced significantly the cost of a cystic fibrosis drug, and the U.K. rejected a recommendation to expand the use of a drug for blood disorders due to high costs.

Soon, the United States is also expected to join the initiative to reduce high prices of orphan drugs as both the government and private insurers increasingly come under the cost containment pressure.

Yet another protest prompted cancer drug price reduction by half:

Another report highlights that last year physicians at the Memorial Sloan-Kettering Cancer Center in New York refused to use a new colon cancer drug ‘as it was twice as expensive as another drug without being better’.

After this protest, in an unusual move, the manufacturer of this colon cancer drug had cut its price by half.

Even developed countries with low out of pocket expenditure can’t sustain such high prices:

With over one million new cancer cases reportedly coming up every year in India, there is an urgent need for the intervention of the Government in this area, especially for poor and the middleclass population of the country.

Further, it is worth noting that in countries like India, where out of pocket expenditure towards healthcare is very high, as public health system is grossly inadequate, such ‘astronomical prices’ will perhaps mentally knock-down many patients directly, well before they actually die.

That said, even in those countries where out-of-pocket expenditure towards healthcare is nil or very low, respective health systems, by and large, be it public or run by other payors, will still require paying for these high cost drugs, making the systems unsustainable.

Moreover, patients on assistance program of the pharmaceutical companies, reportedly also complain that these ‘Patient Access Programs’ are always not quite user friendly.

Protests spreading beyond cancer and rare disease treatment:

The concern for high drug prices is now spreading across many other serious disease areas, much beyond cancer. It has been reported that the issue of drug prices for various other disease areas was discussed in October 2012 at the Cowen Therapeutic Conference in New York. Many doctors in this conference felt that the drugs with no significant benefit over the existing therapy should not be included in the hospital formulary.

Pressure on diabetic and cardiac drug prices:

Various Governments within the European Union (EU) are now reportedly exerting similar pressures to reduce the costs of drugs used for the treatment of diabetes and cardiac disorders. These measures are now reportedly ‘putting the brakes on an US$ 86 billion sector of the pharmaceutical industry that’s been expanding twice as fast as the market as a whole’.

It is worth noting that each nation within EU is responsible for deciding the price of a new drug, though the European Commission approves drugs for all 27 members of the EU.

Flip side of the story – Commendable initiatives of some global companies:

There is another side of the story too. To address such situation some global companies reportedly are increasing drug donations, reinvesting profits in developing countries and adopting to a more flexible approach to intellectual property related issues. However, as per media reports, there does not seem to be any unanimity within the global companies on country-specific new drug pricing issue, at least not just yet.

To encourage pharmaceutical companies to improve access to affordable drugs for a vast majority of population across the world, an independent initiative known as Access to medicine index ranks 20 largest companies of the world. This ranking is based on the efforts of these companies to improve access to medicine in developing countries.

As indicated by the World Health Organization (WHO), this Index covers 20 companies, 103 countries, and a broad range of drugs, including vaccines, diagnostic tests and other health-related technologies required for preventing, diagnosing and treating disease.

The index covers 33 diseases, including maternal conditions and neonatal infections. The top 10 companies in ‘Access to Medicine Index’ ranking for 2012 are as follows:

No. Company

Index

1. GlaxoSmithKline plc 3.8
2. Johnson & Johnson 3.6
3. Sanofi 3.2
4. Merck & Co. Inc. 3.1
5. Gilead Sciences 3.0
6. Novo Nordisk A/S 3.0
7. Novartis AG 2.9
8. Merck KGaA 2.5
9. Bayer AG 2.4
10. Roche Holding Ltd. 2.3

Source: http;//www.accesstomedicineindex.org/ranking

How high is really the high R&D cost?

A recent article published this month raises some interesting points on this subject, which I am quoting below:

  • No direct and transparent details are available from the industry for public scrutiny on the total cost of innovation.
  • What one does have access to are studies on the issue funded by pharmaceutical MNCs themselves.
  • For most NCEs, public-funded programs in the U.S largely invest in drug discovery.
  • In industry sponsored studies there is lack of transparency on the real costs of drug research and development.
  • Various tax benefits allowed under U.S. law are also ignored by industry studies.
  • Researching new drugs gives one Tax breaks to the extent of 50 per cent in the U.S. If one researches and markets an orphan drug for rare diseases, again, tax breaks are available to the tune of half the expenditure.

Further, a 2011 study by Donald W. Light and Rebecca Warburton published by the London School of Economics and Political Science indicates, “based on independent sources and reasonable arguments, one can conclude that R&D costs companies a median of US$ 43.4 million per new drug.”

It is interesting to note, the above cost estimate is a fraction of what is available from the industry source (over US$ 1.2 billion).

An interesting pricing model prescribed:

Another article recently published in the Harvard Business Review (HBR) commented, while pharmaceutical companies reportedly spend billions on research, the actual cost of manufacturing a treatment (such as a pill) is minimal. This cost structure enables pricing flexibility.

The author suggests:

  • Adopt a smarter pricing model, where a company can charge the highest price that each customer is willing to pay.
  • To implement smarter pricing that saves more lives, and brings in more revenue, the pharmaceutical industry should create a straightforward grid that specifies the annual maximum a patient should pay out of pocket on drug expenses.
  • Key variables that determine this maximum include income, family size, and their other drug costs. Patients can submit this data to a third party agency to avail discounts based on these criteria.

However, implementability of this model, especially in the Indian scenario, seems to be challenging.

Conclusion:

Despite this gloom and doom, as ‘Access to Medicine Index 2012′ indicates, some pharmaceutical companies do want to become an integral part in finding out a solution to the access problem in general. Though, there are still many more miles to cover, some companies, though small in number, are demonstrably trying to improve access to health care in the developing countries of the world.

Rising prices of new drugs in general and for dreaded disease like cancer and other rare disorders in particular have now started reaching a crescendo, not just India, but in many other countries across the world and in various forms. Probably due to this reason, currently in Europe, regulators tend to be depending more and more in the concept of cost to efficacy ratios for new drugs.

It is interesting to note, the world is witnessing for the first time and that too in the developed world that a large number of specialist doctors are protesting against this trend, unitedly and with strong words.

The anatomy of initial phase of this groundswell, many would tend to believe, signals ushering in a new era of checks and balances to set right ‘astronomical, unsustainable and immoral new drug prices’ in the patients’ fights especially against dreaded diseases, the world over.

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.

 

 

 

To Curb Pharma Marketing Malpractices in India Who Bells the Cat?

Bribing doctors by the pharmaceutical companies directly or indirectly, as reported frequently by the media all over the world, including India, to prescribe their respective brand of drugs has now reached an alarming proportion, jeopardizing patients’ interest, seriously more than ever before.

In this context July 4, 2012, edition of  The Guardian reported an astonishing story. Since quite some time many pharmaceutical giants are being reportedly investigated and fined, including out of court settlements, for bribery charges related to the physicians.

In another very recent article titled “Dollars for Docs Mints a Millionaire” the author stated as follows:

“The companies in Dollars for Docs accounted for about 47 percent of U.S. prescription drug sales in 2011. It’s unclear what percentage of total industry spending on doctors they represent, because dozens of companies do not publicize what they pay individual doctors. Most companies in Dollars for Docs are required to report under legal settlements with the federal government.”

In India, deep anguish of the stakeholders over this issue is also being increasingly reverberated day by day. It has also drawn the attention of the patients’ groups, NGOs, media, Government and even the Parliament. An article titled, “Healthcare industry is a rip-off” published in a leading business daily of India states as follows:

“Unethical drug promotion is an emerging threat for society. The Government provides few checks and balances on drug promotion.”

Unfortunately, nothing substantive has been done in India just yet to address such malpractices across the industry in a comprehensive way, despite indictment by the Parliament, to effectively protect patients’ interest in the country.

Countries started taking steps with disclosure norms:

It is interesting to note that many countries have already started acting, even through implementation of various regulatory disclosure norms, to curb such undesirable activities effectively. Some examples are as follows:

USA

The justice department of the U.S has reportedly wrung huge settlements from many large companies over such nexus between the doctors and the pharmaceutical players.

To address this issue meaningfully, on February 1, 2013 the Department of Health and Human Services (HHS) of the United States of America released the final rules of implementation of the ‘Patient Protection and Affordable Care Act (PPACA)’, which is commonly known as the “Physician Payment Sunshine Act” or just the “Sunshine Act”.

This Act has been a part of President Obama’s healthcare reform requiring transparency in direct or indirect financial transactions between the American pharmaceutical industry and the doctors and was passed in 2010 by the US Congress as part of the PPACA.

The Sunshine Act requires public disclosure of all financial transactions and transfers of value between manufacturers of pharmaceutical / biologic products or medical devices and physicians, hospitals and covered recipients. The Act also requires disclosure on research fees and doctors’ investment interests.

The companies have been directed by the American Government to commence capturing the required data by August 1, 2013, which they will require to submit in their first federal reports by March 31, 2014.The first such disclosure report will be available on a public database effective September 30th, 2014.

France:

On December 2011, France adopted a legislation, which is quite similar to the ‘Sunshine Act’. This Act requires the health product companies like, pharmaceutical, medical device and medical supply manufacturers, among others to mandatorily disclose any contract entered with entities like, health care professionals, hospitals, patient associations, medical students, nonprofit associations, companies with media services or companies providing advice regarding health products.

Netherlands:

On January 1, 2012, Netherlands enforced the ‘Code of Conduct on Transparency of Financial Relations’. This requires the pharmaceutical companies to disclose specified payments made to health care professionals or institutions in excess of € 500 in total through a centralized “transparency register” within three months after the end of every calendar year.

UK:

According to Deloitte Consulting, pharmaceutical companies in the UK are planning voluntary disclosures of such payments. One can expect that such laws will be enforced in the entire European Union, sooner than later.

Australia and Slovakia:

Similar requirements also exist in Australia and Slovakia.

Japan:

In Japan, the Japan Pharmaceutical Manufacturers Association (JPMA) reportedly requires their member companies to disclose certain payments to health care professionals and medical institutions on their websites, starting from 2013.

India still remains far behind:

This issue has no longer remained a global concern. Frequent reports by Indian media have already triggered a raging debate in the country on the subject. It has been reported that a related case is now pending before the Supreme Court against a Public Interest Litigation (PIL) for hearing, in not too distant future.

It is worth noting that in 2010, ‘The Parliamentary Standing Committee on Health’ expressed its deep concern stating, the “evil practice” of inducement of doctors by the pharma companies is continuing unabated as the revised guidelines of the Medical Council of India (MCI) have no jurisdiction over the pharma industry.

It was widely reported that the letter of the Congress Member of Parliament, Dr. Jyoti Mirdha to the Prime Minister Dr. Manmohan Singh, attaching a bunch of photocopies of the air tickets to claim that ‘doctors and their families were beating the scorching Indian summer with a trip to England and Scotland, courtesy a pharmaceutical company’, compelled the Prime Minister’s Office (PMO) to initiate inquiry on the subject.

The letter had claimed that as many as 30 family members of 11 doctors from all over India enjoyed the hospitality of the pharmaceutical company on the pretext of ‘Continuing Medical Education (CME)’.

In addition Dr. Mirdha reportedly reiterated to the PMO, “The malpractice did not come to an end because while medical profession (recipients of incentives) is subjected to a mandatory code, there is no corresponding obligation on the part of the healthcare industry (givers of incentives). Result: Ingenious methods have been found to flout the code.”

The report also indicated at that time that the Department of Pharmaceuticals (DoP) is trying to involve the Department of Revenue under the Ministry of Finance to explore the possibilities in devising methods to link the money trails of offending companies and deny the tax incentives on such expenses.

Incidences of such alleged malpractices are unfolding much faster today and are getting increasingly dragged into the public debate where government can no longer play the role of a mere bystander.

Indian Parliamentary indictment for not having a ‘Marketing Code’:

Thereafter, the Department Related Parliamentary Standing Committee on Health and Family Welfare presented its 58th Report on the action taken by the Government on the recommendations / observations contained in the 45th report to both the Lower and the Upper houses of the Parliament on May 08, 2012.

The committee with a strong indictment to the Department of Pharmaceuticals (DoP), also observed that the DoP should take decisive action, without any further delay, in making the ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’ mandatory so that effective checks could be ensured on ‘huge promotional costs and the resultant add-on impact on medicine prices’.

Unfortunately nothing substantive has happened on the ground regarding this issue as on date.

Ministry of Finance fires the first salvo:

Firing the first salvo closer to this direction, Central Board of Direct Taxes (CBDT), which is a part of Department of Revenue in the Ministry of Finance, has now decided to disallow expenses on all ‘freebies’ to Doctors by the Pharmaceutical Companies in India.

An internal circular dated August 1, 2012, of the CBDT addressed to its tax assessment officers categorically stated that the any expenses incurred by the pharmaceutical companies on gifts and other ‘freebies’ given to the doctors, which do not conform to the revised MCI guidelines, will no longer be allowed as business expenses.

The High Court upheld the CBDT order:

As expected, the above CBDT circular was challenged in the court of law by an aggrieved party.

However, on December 26, 2012, in a significant judgment on the this CBDT circular related to promotional expenses, the High Court of Himachal Pradesh, ordered as follows:

“Therefore, if the assesse satisfies the assessing authority that the expenditure is not in violation of the regulations framed by the Medical Council of India (MCI), then it may legitimately claim a deduction, but it is for the assesse to satisfy the assessing officer that the expense is not in violation of MCI regulations as mentioned above. We, therefore, find no merit in the in the petition, which is accordingly rejected, No costs.”

Unless this High Court order is challenged in the Supreme Court and reversed subsequently, the CBDT circular related to pharmaceutical promotional expenses has assumed a legal status all the way.

Current situation in America post ‘Sunshine Act’:

After enactment of the ‘Sunshine Act’ one gets a mixed response as follows, though these are still very early days of implementation of this new Law in America.

Low awareness level of the ‘Sunshine Act’:

Though this Act was passed in the U.S in 2010, the awareness level is still very low. More than half of the 1,025 physicians interviewed in a recent survey said, they didn’t know that the law requires pharmaceutical and medical device companies to track any payments or “transfers of value” to physicians and teaching hospitals as of August 1, 2013.

The ground reality:

Despite all such measures, current situation in the United States on this issue is still not very encouraging.

The same 2013 survey highlights that many physicians in the United States continue to have some sort of financial relationship with the industry, as follows:

  • Receiving samples (54%)
  • Receiving food and beverage in their workplace (57%),
  • Participating in an “industry-funded program” (48%),
  • Participating in speakers bureau programs (11%)
  • Advisory board programs (10%).

Spin-off benefits of the Law:

It has been reported that the ‘Sunshine Act’ will also provide enormous data on how much the pharmaceutical companies and each of their competitors spend to make the doctors prescribe their drugs from the public data that will be available from September 2014. This will help these companies tracking which type of marketing tools and processes have a linear relationship to generate increased number of prescriptions.

Thus the above report concludes that pharmaceutical players ‘will not stop wooing doctors. They may simply get better at it’, making their marketing expenditure increasingly productive.

However, despite all these, another recent report indicated that after the ‘Sunshine Act,’ some pharma companies have really started cutting back on their payments to doctors and many others have stepped up their efforts in this direction. This augurs a good beginning, if fructifies on a larger scale.

Such Laws could be more impactful in India:

A law like ‘Sunshine Act’ of America, if implemented well in India is expected to have much greater and positive impact. This is mainly due to existence of an effective pharmaceutical pricing ‘watchdog’ in the country in form of the ‘National Pharmaceutical Pricing Authority (NPPA)’ .

When pharmaceutical-marketing expenditures of individual pharma companies, through such public disclosures, will be found to contributing disproportionately to the total expenses of any player, pressure from the regulators and the civil society will keep mounting to bring down the prices of medicines.

An interesting survey in India:

A survey report of Ernst and Young titled, “Pharmaceutical marketing: ethical and responsible conduct”, carried out in September 2011 on the UCMP and MCI guidelines, highlighted the following:

  • Two-third of the respondents felt that the implementation of the UCPMP would change the manner in which pharma products are currently marketed in India.
  • More than 50% of the respondents are of the opinion that the UCPMP may lead to manipulation in recording of actual sampling activity.
  • Over 50% of the respondents indicated that the effectiveness of the code would be very low in the absence of legislative support provided to the UCPMP committee.
  • 90% of the respondents felt that pharma companies in India should focus on building a robust internal controls system to ensure compliance with the UCPMP.
  • 72% of the respondents felt that the MCI was not stringently enforcing its medical ethics guidelines.
  • 36% of the respondents felt that the MCI’s guidelines would have an impact on the overall sales of pharma companies.

The Planning Commission of India expresses its anguish: 

Recently even the Planning Commission of India has reportedly recommended strong measures against pharmaceutical marketing malpractices as follows:

“Pharmaceutical marketing and aggressive promotion also contributes to irrational use. There is a need for a mandatory code for identifying and penalizing unethical promotion on the part of pharma companies. Mandated disclosure by Pharmaceutical companies of the expenditure incurred on drug promotion, ghost writing in promotion of pharma products to attract disqualification of the author and penalty on the company, and vetting of drug related material in Continuing Medical Education would be considered.”

The Ministry of Health may now intervene: 

It was reported by the media just last week that the Ministry of Health (MoH) strongly feels that unethical practices and aggressive promotion of drugs by the pharmaceutical companies through the doctors in lieu of gifts, hospitality, trips to exotic foreign and domestic destinations are adding up to cost of medicines significantly in India. Thus, the MoH is expected to suggest to the Department of Pharmaceuticals for 
mandatory implementation of the ‘Uniform Code of Pharmaceutical Practices (UCPMP)’ by the industry soon.

Conclusion:

Statistics of compliance to UCPMP are important to know, but demonstrable qualitative changes in the ethics and value standards of an organization in this regard should always be the most important goal to drive any pharmaceutical business corporation in India.

The need to announce and implement the UCPMP by the Department of Pharmaceutical, without further delay, assumes critical importance in today’s allegedly chaotic pharmaceutical marketing scenario.

Very unfortunately, the status quo remains unbroken even today. The juggernaut of marketing malpractices keeps moving on unabated. The ‘Cat and Mouse’ game continues as ever. The moot question still remains, who bells the cat? …For patients sake.

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.