Tag Archives: Partnership

TPP: Discord Within A Strange Mélange And Impact On Access To Medicines

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On May 19, 2015, Bloomberg reported that a sizable number of President Barack Obama’s own party colleagues, besides teachers, seniors, Internet freedom groups and nuns, have joined the push to defeat the proposed Trans-Pacific Partnership (TPP) treaty.

Before I delve into the TPP, solely from the Indian pharmaceutical industry perspective, it is worth acknowledging upfront India’s firm assertion, repeatedly, to continue with its well-thought out and robust Patents Act 2005.

Even the final draft of the National IPR policy, which is now being circulated for inter-ministerial consultations and will soon be taken up by the Cabinet, reasserted that the country’s IPR policy is fully compliant with the Trade Related aspects of IPR (TRIPS) agreement of the World Trade Organization (WTO).

In this process, global demonstration of India’s firm resolve against dilution of the country’s Intellectual Property (IP) regime, coming under any form of intense external pressure, seems to have become a model to follow for the emerging economies of the world, in general.

This trend now gets reflected from some constituents even within the United States, besides several members of the 12-nation TPP, which is a proposed regional regulatory and investment treaty, aimed at strengthening relationship on economic policies and regulatory issues between the member nations.

Publicly articulated key objectives of the pact are to significantly reduce tariffs between the member nations and open up trade, boosting investment flows between its signatories, to accelerate economic growth.

The member countries of TPP have also agreed to work together on issues such as customs procedures, labor practices, intellectual property and competition policies.

Through its comprehensive coverage of issues and binding regulations, TPP is expected to set new benchmark for international trade. It is expected to eventually mature into a regional trade agreement covering the entire Asia-Pacific region.

Uneasy secrecy:

However, the uneasy secrecy surrounding the negotiations of the agreement makes its critics seriously apprehensive about its impact on the developing nations of the world. This is because; the concerned delegates of the negotiating team always remain tight lipped about the progress made in coming to an agreement on the scope of the pact. This information is critical for assessment of direct and indirect global impact of TPP on the trade, economy and society, in general.

According to reports, TPP members, such as, Brunei, Malaysia, Singapore and Vietnam are negotiating hard to get incorporated somewhat similar to Indian IP rules in the TPP agreement.

Besides the above countries, other members of TPP are United States, Australia, Japan, New Zealand, Canada, Chile, Mexico and Peru.

Large Asian economies are not a part:

Interestingly, large Asian economies, especially, four important members of the G20, namely, China, India, South Korea and Indonesia, are not a part of the TPP, just yet.

It is worth noting, TPP is being led by the world’s largest economy and the biggest trading nation – the United States, the country that sees Asia-Pacific as key to its future growth.

Noting all these, many experts in this field, across the world, have already raised a flag saying that the US may be trying to use TPP as a means to undermine China’s growing economic might in the region.

Many gaps still to bridge:

The real negotiations for this treaty started only in 2010 and are still continuing. However, the details of negotiations is so much shrouded under water tight secrecy, even to the lawmakers of the United States, it is indeed challenging for anyone to predict the timeframe of its coming to fruition.

Reuters reported on May 21, 2015, “Chief negotiators from the 12 TPP countries are trying to bridge gaps for a deal at a meeting in Guam that will run through to May 28, 2015. But ministers would need to meet to clinch an accord,”

In this article, I shall only focus on the possible impact of this pact on the access to medicines, especially in the developing world.

Leaked drafts of TPP negotiations:

As the progress of negotiations of this pact continue to remain under uneasy secrecy, on November 13, 2013, WikiLeaks released the secretly negotiated draft text for the entire IPR Chapter of the TPP.

30,000-word IP chapter of the leaked documents, besides others, reportedly contains proposals to increase the term of drug patents beyond 20 years, and lower global standards for patentability.

TPP and patents:

When it comes to the issue of access to affordable medicines for a vast majority of the global population, the overall patent ecosystem of a nation and how evergreening of patents with monopolistic high pricing are addressed, automatically enter into the broader framework of intense public and stakeholders’ discourse.

Article 8.1 of the draft agreement sets-forth the availability of patents, and provides that “patents shall be available for any new forms, uses, or methods of using a known product; and these may satisfy the criteria for patentability, even if such invention does not result in the enhancement of the known efficacy of the product.”

Interestingly, TRIPS agreement, on the other hand, specifies that patents are available “provided that the invention is new, involves an inventive step and is capable of industrial application.”

In that sense, the above provision in the Article. 8.1 is quite inconsistent with the patent laws of many TPP member countries, and especially India.

Consequently, experts have raised serious concerns about the impact of TPP on the IP laws of a country, in general, as it may extend the scope of drug patents, preventing free distribution of cheaper generic drugs to the needy patients.

Impact on access to medicines:

As stated earlier, there have been serious apprehensions that TPP would adversely impact the access to medicines.

According to widely reported leaked drafts of TPP negotiations, the US is demanding aggressive IP provisions in the agreement. It is believed, if accepted, these would directly undermine public health safeguards available in international law, making it harder for TPP member countries to gain access to cheaper generic drugs.

Many experts in this field reportedly construe, these stringent IP provisions that the US is demanding may be categorized as ‘TRIPS-plus’ and have the following serious impact adversely impacting access to medicines :

  • Make it impossible to challenge the validity of a patent before it is granted
  • Lower the requirements for patentability, so that minor alterations of existing medicines can be 
given additional protected monopoly status, even if the alteration offers no therapeutic benefit
  • Require the patenting of diagnostic, therapeutic and surgical methods
  • Lengthen patent monopolies for pharmaceutical firms so that they keep generics out and inflate drug prices for longer periods of time
  • Make it harder for generic manufacturers to obtain regulatory approval for their drugs
  • Create additional monopolies based on clinical data
  • Impose new forms of IP enforcement that give customs officials excessive powers to impound legitimate generic medicines
  • Impose higher prices on national pharmaceutical reimbursement programs
  • Allow pharmaceutical companies to sue governments and limit governments’ abilities to effectively set prices for medicines and legislate in the interest of public health.

Discord within key TPP member countries:

Though Australia is one of the key signatories of TPP, in February 2015, the Medical Journal of Australia also commented that the leaked draft of the agreement includes patenting standards that would delay cheaper drugs.

Quoting the Medical Journal of Australia, ‘The Guardian’ too reiterated: “The most recently leaked draft of the international trade deal includes provisions proposed by the US that would further protect the monopoly pharmaceutical companies hold over drugs, and delay cheaper versions from entering the market. The draft agreement sets in stone low patenting standards, which allow drug companies to practice ‘evergreening’ – when a pharmaceutical company tries to maintain its market monopoly on a drug for longer by applying for extra patents. This prevents other companies entering the market with cheaper versions of the same medicine and imposes large and unnecessary costs on the health system and consumers.”

Similarly, across Canada, people are speaking out about the TPP. They are rallying against the secrecy of the 12-country negotiations and the corporate agenda behind the deal.

On February 12, 2015 legislators in seven of the 12 TPP countries issued the following joint statement about the negotiations:

“We, the undersigned legislators from countries involved in the negotiation of the Trans-Pacific Partnership Agreement, call on the Parties to the negotiation to publish the draft text of the Agreement before any final agreement is signed with sufficient time to enable effective legislative scrutiny and public debate.”

In Canada, the federal NDP and the Green Party of Canada endorsed the above statement. It is the simplest of demands for democracy on a “trade” deal that threatens to undermine the very notion of the public good, by giving corporations more power to undermine public policy.

As stated above, Brunei, Malaysia, Singapore and Vietnam are also negotiating hard to get incorporated somewhat similar to Indian IP rules in the TPP agreement.

Though not in the areas of access to medicines, Japan too expressed its concerns on TPP impacting its agriculture sector. Protests are forthcoming in the copyrights area, as well.

Apprehensions catching-up in the US too:

May 19, 2015 Bloomberg report also indicates, specifically from the pharmaceutical industry perspective, some key stakeholders are worried about the effects of more open markets on drug pricing that could increase their costs and “Foreign corporations or subsidiaries will be able to challenge a number of public health programs.”

In a letter of May 12, 2015 to the House and Senate, the Alliance for Retired Americans has reportedly underscored the possibility of this grave danger to them, if TPP comes into effect.

On May 21, 2015, Reuters reported, just 13 out of 44 Democrats (of President Obama’s own Party) backed the legislation in the Senate’s second procedural vote on last Thursday.

Earlier, a group of over 30 legal academics reportedly sent a letter to the US Trade Representative, expressing “profound concern and disappointment at the lack of public participation, transparency and open government processes in the negotiation of the intellectual property chapter of the TPP”.

Other important areas of criticism: 

Other key areas of criticism of TPP are as follows:

  • Excessive emphasis on trade issues that have remained unresolved or unaddressed at the WTO due to differences between developed and emerging markets.
  • Adopting a negotiating style reflecting the US regulatory approach to international trade
  • Allowing companies to sue foreign governments, which would allow them to dodge health and environmental standards.
  • Giving shape to a geo-political road map of the US that supports its strategic rebalancing towards Asia.

A strange mélange:

An article published in the April 9, 2015 edition of Forbes, titled “TPP Is A Mistake”, very appropriately describes TPP as a strange mélange of 12 members countries that includes five from the Americas (Canada, Chile, Mexico, Peru and the US), five from Asia (Brunei, Japan, Malaysia, Singapore and Vietnam), along with Australia and New Zealand.

In terms of populations, the total American contingent which stands at 535 million, more than half the total population of the Americas (947 million), is significantly larger than the Asian population figures which amount to no more than 256.6 million (285 if one adds Australia and New Zealand), compared to Asia’s total population of 4.3 billion: almost half of the Asian contingent is accounted for by one member – Japan, the articles states.

In this article, former Malaysian Prime Minister Tun Dr Mahathir Mohamad, the architect of Malaysia’s impressive economic growth and development during his tenure from 1981 to 2003, was quoted saying:

“The strongest campaigner of TPP is America … which seeks … to contain China and to safeguard its own economic interests by exploiting all resources from small but growing independent nations such as Malaysia”.

He further adds, “TPP is not a fair or free trade partnership, but an agreement to tie down nations with rules and regulations that would only benefit American conglomerates”.

Is TPP more than just a trade agreement?

Many experts feel, that TPP is basically a geopolitical tool to contain China with ‘trade’ as its façade.

The votaries of TPP argue that it aims to achieve a very high standard trade agreement and thus the reason of keeping China out of it is not geopolitical. Other Asian nations, including China, can apply and qualify for membership once they commit to meeting these high standards, they reiterate.

The above argument does not seem to be a robust one, as that would mean, a sizable proportion of its smaller current members, such as, Vietnam, already conform to so called ‘high standards’, as required for the TPP agreement.

Besides geopolitical issue, many are also questioning whether TPP is what the developing countries need, especially, at this stage of their development.

Conclusion:

One may quite pertinently ask, in what way TPP is relevant to India?

TPP is relevant to India in the sense that it is expected to eventually mature into a regional trade agreement covering the entire Asia-Pacific region.

Be that as it may, if I restrict myself only to the drug patent related area of the proposed pact, it appears, unless the damaging provisions in the concerned chapters are removed through negotiations before the agreement is finalized, the TPP would possibly turn out to be the most harmful trade pact ever, especially from the perspective of access to medicines in the developing countries of the worlds.

May 2015 issue of ‘amfAR’ – The Foundation for AIDS Research based in Washington DC of the United States captured the essence of possible healthcare related issues with TPP – the pact of a strange mélange of 12 member countries, with the following words:

“By providing avenues for pharmaceutical companies to extend IP protection beyond what is required by current international standards, the TPP could greatly delay the entrance of generic competition for much-needed medicines and keep prices high. Doing so would continue an unacceptable and dangerous trend of irrevocable expansion of IP protections at the expense of access to medicines and would serve as a justification for even more aggressive measures in future FTAs.”

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.

 

Is Drug Innovation As Critical As Access To Medicines For All? [Augmented By A Video]

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To make important medicines available to all in a sustainable way, the renowned philosopher Thomas Pogge in this very interesting video clipping titled “Medicines For The 99 Percent” suggested the following three simple, yet critical, steps to effectively run the healthcare system of any nation with a cost-effective and patient-centric approach:

  • Access to important medicines for all
  • A robust drug innovation model to meet the unmet needs of patients
  • Transparent and efficient systems to make medicines affordable to all, eliminating wastage of all kinds

To translate this process into reality Pogge proposed an out-of-box model, not just to incentivize companies for drug innovation, but also to produce those drugs in a cost-effective way . In his submission, Pogge recommended a US$ 6 billion ‘Health Impact Fund’ to revolutionize the way medicines are developed and sold. He strongly argued that the value of an innovative drug should always be ascertained by its differential “Health Impact” on patients over the equivalent available generics in the respective disease areas.

As you will see in the video, the model is interesting and deserves wholehearted support from all stakeholders, despite possible resistance from some powerful quarters prompted by vested interests.

Drug innovation and access to medicines:

As the good old saying goes, “Health is Wealth”. When a person falls sick, regaining health is all-important. Medicines play a very critical role there, for all. In the ongoing battle against various types of diseases, addressing unmet needs of the patients is also equally important. For this reason, drug innovation plays just as critical a role.

However, it is now a well-known fact that medicines, as such, are not very expensive to manufacture on a relative yardstick. Abundant availability of cheaper generic medicines, post-patent expiry, with as much as  90 percent price erosion over the concerned patented drug price, would vindicate this point.

Current R&D model:

Astronomical mark-ups on the cost of goods for the innovative-patented drugs coming out of the current R&D model, restrict access to these medicines mostly to rich people of both poor and rich countries of the world, depriving majority of the have-nots. Although in an ideal situation, all these medications should be accessible to those who need them the most.

Is the model sustainable?

Innovator companies attribute ‘astronomical’ high prices of patented drugs to hefty R&D expenditure, which probably includes high cost of failures too. Unfortunately, despite ongoing raging debates, R&D expense details are still held very close to the chest by the innovator companies, with almost total lack of transparency. Many experts, therefore, believe that this opaque, skewed and unsustainable drug R&D model of the global pharma majors needs a radical makeover now, as you would yourself see by clicking on the ‘video clipping’, as mentioned above

To ensure full access to important drugs for all, there are other R&D or innovation models too. Unfortunately, none of those appears to be financially as lucrative to the innovator companies as the one that they are currently following, thus creating a challenging logjam in the inclusive process of drug innovation.

Are Pharmaceutical R&D expenses overstated?

Some experts in this area argue that pharmaceutical R&D expenses are overstated, as the real costs are much less.

An article titled “Demythologizing the high costs of pharmaceutical research”, published by the London School of Economics and Political Science in 2011 indicated that the total cost from the discovery and development stages of a new drug to its market launch was around US$ 802 million in the year 2000. This was worked out in 2003 by the ‘Tuft Center for the Study of Drug Development’ in Boston, USA.

However, in 2006 this figure increased by 64 per cent to US$ 1.32 billion, as reported by a large pharmaceutical industry association of the United States, though with dubious credibility as considered by many.

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

▪   Tax exemptions that the companies avail for investing in R&D

▪   Tax write-offs that amount to taxpayers’ contributing almost 40 percent of the R&D cost

▪   Cost of basic research should not have been included as those are mostly undertaken       by public funded universities or laboratories

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

“High R&D costs have been the industry’s excuses for charging high prices”:

In line with this deliberation, in the same article the authors reinforce the above point, as follows:

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

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

Should Pharmaceutical R&D move away from the traditional model?

Echoing philosopher Thomas Pogge’s submission, another critical point to ponder today is:

Should the pharmaceutical R&D now move away from its traditional comfort zone of expensive one company initiative to a much less charted frontier of sharing drug discovery involving many players?

If this overall collaborative approach gains broad acceptance and then momentum sooner, with active participation of all concerned, it could lead to substantial increase in R&D productivity at a much lesser expenditure, eliminating wastage by reducing the cost of failures significantly, thus benefiting the patients community at large.

Choosing the right pathway in this direction is more important today than ever before, as the R&D productivity of the global pharmaceutical industry, in general, keeps going south and that too at a faster pace.

Making drug innovation sustainable: 

Besides Thomas Pogge’s model with ‘Health Impact Fund’ as stated above, there are other interesting drug R&D models too. In this article, I shall focus on two examples:

Example I:

A July 2010 study of Frost & Sullivan reports: “Open source innovation increasingly being used to promote innovation in the drug discovery process and boost bottom-line”.

The concept underscores the urgent need for the global pharmaceutical companies to respond to the challenges of high cost and low productivity in their respective R&D initiatives, in general.

The ‘Open Innovation’ model assumes even greater importance today, as we have noted above, to avoid huge costs of R&D failures, which are eventually passed on to the patients again through the drug pricing mechanism.

‘Open Innovation’ model, as they proposed, will be most appropriate to even promote highly innovative approaches in the drug discovery process bringing many brilliant scientific minds together from across the world.

The key objective of ‘Open Innovation’ in pharmaceuticals is, therefore, to encourage drug discovery initiatives at a much lesser cost, especially for non-infectious chronic diseases or the dreaded ailments like Cancer, Parkinson’s, Alzheimer, Multiple Sclerosis, including many neglected diseases of the developing countries, making innovative drugs affordable even to the marginalized section of the society.

Android smart phones with huge commercial success are excellent examples of ‘Open Source Innovation’. So, why not replicate the same successful model of inclusive innovation in the pharmaceutical industry too?

Example II - “Accelerating Medicines Partnership (AMP)” initiative:

This laudable initiative has come to the fore recently in he arena of collaborative R&D, where 10 big global pharma majors reportedly decided in February 2014 to team up with the National Institutes of Health (NIH) of the United States in a ‘game changing’ initiative to identify disease-related molecules and biological processes that could lead to future medicines.

This Public Private Partnership (PPP) for a five-year period has been named as “Accelerating Medicines Partnership (AMP)”. According to the report, this US federal government-backed initiative would hasten the discovery of new drugs in cost effective manner focusing first on Alzheimer’s disease, Type 2 diabetes, and two autoimmune disorders: rheumatoid arthritis and lupus. The group considered these four disease areas among the largest public-health threats, although the span of the project would gradually expand to other diseases depending on the initial outcome of this project.

“A Social Brain Is a Smarter Brain”: 

As if to reinforce the concept, a recent HBR Article titled “A Social Brain Is a Smarter Brain” also highlighted, “Open innovation projects (where organizations facing tricky problems invite outsiders to take a crack at solving them) always present cognitive challenges, of course. But they also force new, boundary-spanning human interactions and fresh perspective taking. They require people to reach out to other people, and thus foster social interaction.” This articulation further reinforces the relevance of a new, contemporary and inclusive drug innovation model for greater patient access.

Conclusion:

Taking these points into perspective, I reckon, there is a dire need to make the process of offering innovative drugs at affordable prices to all patients absolutely robust and sustainable as we move on.

Philosopher Thomas Pogge, in his above video clipping, has also enunciated very clearly that all concerned must ensure that medications get to those who need them the most. He has also shown a win-win pathway in form of creation of a “Health Impact Fund’ to effectively address this issue. There are other inclusive, sustainable and cost effective R&D models too, such as Open Innovation and Accelerating Medicines Partnership (AMP), to choose from.

That said, a paradigm shift in the drug innovation model can materialize only when there will be a desire to step into the uncharted frontier, coming out of the comfort zone of much familiar independent money spinning silos of drug innovation. Dove tailing business excellence with the health interest of all patients, dispassionately, would then be the name of the game.

Bringing this transformation sooner is extremely important, as drug innovation would continue to remain as critical as access to important medicines for all, in perpetuity.

However, to maintain proper checks and balances between drug innovation and access to medicines for all, the value of an innovative drug should always be ascertained by its differential ‘Health Impact’ on patients over equivalent available generics in that disease area and NOT by how much money, including the cost of R&D failures, goes behind bringing such drugs to the market, solely driven by commercial considerations.

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.

 

 

For Affordable Healthcare: Synergize Resources Through PPP Models

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According to a 2012 study of IMS Consulting, the key factor of significantly high ‘Out of Pocket (OOP)’ expenditure on healthcare in India is that people are pushed into seeking costlier private care services due to imbalanced infrastructure of healthcare workers, medicines and facilities.

Currently, 74 percent of patients in ‘Out-Patient (OP)’ care and 65 percent in ‘in-Patient (IP)’ care seek healthcare in the private channels. In private inpatient care, the average cost of treatment exceeds the average monthly household income at 121 percent for the affording population and 217 percent for the poor population, forcing many families to borrow money or sell assets.

Thus, the affordability challenges for healthcare of the country, as manifested by high OOP spend, is mostly a consequence of a large patient population using the private healthcare channel due to still inadequate availability of public healthcare services.

The situation is looking up:

According to IMS study 2012, currently, on an average about 54 percent of the patients are receiving free medicines from the Government hospitals. In progressive states like, Tamil Nadu, Andhra Pradesh, Maharashtra and Karnataka this number goes up to 85 percent. At the same time, in rural India, which constitutes around 70 percent of the total 1.2 billion populations of India, usage of Government facilities for OP care has increased from 22 percent in 2004 to 29 percent in 2012, mainly due to the impact of National Rural Health Mission (NRHM).

Consequently, this increase will also have significant impact in reducing OOP healthcare expenses of the rural poor.

Medicines constitute highest component of OOP:

Medicines still constitute the highest component of OOP expenses in OP care, though its percentage share has decreased from 71 percent in 2004 to 63 percent in 2012.  Similarly for IP care, the share of medicines in total OOP has also decreased from 46 percent in 2004 to 43 percent in 2012.

However, still 46 percent of the patients seeking healthcare in public channels had to purchase medicines from private channels. Recently announced drug procurement system through Central Medical Services Society (CMSS) after hard price negotiation and distribution of those drugs free of cost from Government hospitals and health centers, could address this issue effectively.

Further scope to reduce OOP:

The study highlights that OOP spend could be lowered by 22 percent with:

  • Improved availability of healthcare facilities at public hospitals and health centers, which can be achieved through effective implementation of “National Health Mission” with higher budgetary allocation.
  • Improved availability of medicine at the public channels, which is feasible through effective implementation of already announced “Free Medicine” scheme of the Government across the country.

A total reduction of ~40% in overall OOP spend appears to be possible, the study reiterates, when more people would get confidence that public healthcare can meet all their needs.

The roadmap to achieve the goal:

Fundamentally there are five ways to deal with the affordability issue:

1. Reduction in demand: Creating a better health environment,

2. Reduction in costs: Through price control, increased competition, group purchasing power

3. Increase in financial support from government

4. Increased penetration of health insurance programs

5. Increase per-capita income of households

All these five areas, I reckon, would not be difficult to address through well-structured and strategic Public Private Partnership (PPP) initiatives.

It is increasingly recognized that there are many other healthcare challenges, which do not fall exclusively under either the public or the private sectors. These challenges need to be addressed with combined efforts… with well structured Public Private Partnership (PPP) models.

Private sector should play its role:

The private sector is already a major provider of health services in India. Hence, it has the wherewithal to support implementation of Government’s flagship healthcare programs, especially in the area of service delivery, to enhance their overall effectiveness.

As the Universal Health Care (UHC) proposal made by the High Level Experts Group (HLEG) to the Planning Commission of India highlighted, the government would provide the budget, while the private sector would take the responsibility for delivery of healthcare services.

Accountability for PPP should not fall through the systemic cracks:

The above study indicates, the private parties could include individual physicians, commercial contractors, large private and corporate super-specialty hospitals, not-for-profit agencies (NGOs), pharmaceuticals and device manufacturers. Expertise of all these stakeholders should be appropriately leveraged.

It is absolutely essential to make sure that the accountability of the PPP initiatives does not fall through the cracks now existing in the system.

To control costs and ensure required standards are met, all contractual agreements for PPPs, as recommended, must have adequate built-in monitoring and supervision mechanisms of the highest order, assigning clear roles and responsibilities for each party.

Similarly, NGOs need to be given a larger role of monitoring the activities or services rendered at such facilities to make sure the designated institutions are fulfilling their obligations to the public.

Conclusion:

To make healthcare affordable in India, well-strategized PPP initiatives would have critical roles to play.

Thus, instead of resorting to blame games with Government accusing the private sector to be exploitative and the private sector continuously moaning for ‘unfriendly’ business policies of the government, there is a fundamental need for both the constituents working closely together.

As a result, patients will have greater access to quality healthcare at an affordable price, the industry will grow faster in a sustainable way and the government will have its public healthcare obligations fulfilled to a reasonable extent.

Some of the major sectors in India where PPP has been quite successful are infrastructure, telecom, irrigation, power and airports. So, why should it not work for the healthcare sector of the country, as well?

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.

Vaccines Development: Is it Just a Business Based on Fear?

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‘Vaccination – A Business based on fear’, is the title of a book written by Dr. Gerhard Buchwald M.D, a German medical doctor and a vaccination critic. This book talks about:

“The damage and the deaths caused by vaccination are written off as ‘pure coincidence’, as something which would have occurred anyway, even without vaccination. Often damage is trivialized by claiming that vaccine damage occurs only very, very rarely, or the damage is covered up by naming as the cause, the most unlikely syndromes which can only be found in special literature.”

However, his critics and pro-vaccination experts do opine that this book “is a pathetic presentation of vaccination, from a self-proclaimed anti-vaccination lobbyist. It is full of half-truths, blatant lies and misrepresented statistics”.

Vaccination – one of the most important development in medicines: 

Quite in contrary to what Dr. Gerhard Buchwald wrote, vaccination was voted as one of the four most important developments in medicine of the past 150 years, alongside sanitation, antibiotics and anesthesia by readers of the ‘British Medical Journal’ in 2007. No wonder, Vaccines are one of the most successful and cost-effective public health interventions, which help preventing over 3 million deaths every year throughout the world topping the list in terms of lives saved.

Vaccines that are being developed and marketed today, though provide high level of protection against increasing number of diseases with reduction of associated morbidity and mortality, there is still a crying need for greater encouragement, more resource deployment and sharper focus towards newer vaccines development for many more dreaded and difficult diseases.

In tandem, concerted efforts need to be made by both the industry and the government to improve affordable access to all these vaccines for a larger section of the population, especially in the developing world.

Rejuvenating trend:

However, from the business perspective, the vaccine market, though initially considered to be a low-profit initiative, now has started being under rejuvenated focus keeping pace with improved understanding of the human immune system. The future scope of vaccines is immense, as the management of several potentially preventable diseases remains still unaddressed.

Consequently, the focus of the global vaccine industry is getting expanded from prophylactic vaccination for communicable disease (e.g. DTP vaccine) to therapeutic vaccines (e.g. Anti-cancer vaccines) and then possibly non-communicable disease vaccines (e.g. vaccines for coronary artery disease).

Shifting focus on vaccines types:

As per the ‘National Institute of Health (NIH)’ of USA, following are some types of vaccines that researchers usually work on:

  • Live, attenuated vaccines
  • Inactivated vaccines
  • Subunit vaccines
  • Toxoid vaccines
  • Conjugate vaccines
  • DNA vaccines
  • Recombinant vector vaccines

Among all these segments, sub-unit vaccine is the largest revenue generator, though synthetic vaccines, recombinant vector vaccines, and DNA vaccines are emerging as the fastest-growing segments.

The first vaccine of the world:

In 1796, Edward Anthony Jenner not only discovered the process of vaccination, alongside developed the first vaccine of the world for mankind – smallpox vaccine. To develop this vaccine Jenner acted upon the observation that milkmaids who caught the cowpox virus did not catch smallpox.

As per published data prior to his discovery the mortality rate for smallpox was as high as up to 35%. Thus, Jenner is very often referred to as the “Father of Immunology”, whose pioneering work has “saved more lives than the work of any other person.”

Later on in 1901 Emil Von Behring received the first Nobel Prize (ever) for discovering Diphtheria serum therapy.

R&D costs for vaccines:

According to a paper published by the US National Library of Medicine and National Institute of Health (NIH):

“A vaccine candidate entering pre-clinical development in 2011 would be expected to achieve licensure in 2022; all costs are reported in 2022 Canadian dollars (CAD). After applying a 9% cost of capital, the capitalized total R&D expenditure amounts to $ 474.88 million CAD.”

Issues and challenges:

To produce a safe and effective marketable vaccine, besides R&D costs, it takes reportedly around 12 to 15 years of painstaking research and development process.

Moreover, one will need to realize that the actual cost of vaccines will always go much beyond their R&D expenses. This is mainly because of dedicated and highly specialized manufacturing facilities required for mass-scale production of vaccines and then for the distribution of the same mostly using cold-chains.

Around 60% of the production costs for vaccines are fixed in nature (National Health Policy Forum. 25. January 2006:14). Thus such products will need to have a decent market size to be profitable.

Unlike many other medications for chronic ailments, which need to be taken for a long duration, vaccines are administered for a limited number of times, restricting their business potential.

Thus, the long lead time required for the ‘mind to market’ process for vaccine development together with high cost involved in their clinical trials/marketing approval process, special bulk/institutional purchase price and limited demand through retail outlets, restrict the research and development initiatives for vaccines, unlike many other pharmaceutical products.

Besides, even the newer vaccines will mostly be required for the diseases of the poor, like Malaria, Tuberculosis, HIV and ‘Non Communicable Diseases (NCDs)’ in the developing countries, which may not necessarily guarantee a decent return on investments for vaccines, unlike many other newer drugs. As a result, the key issue for developing a right type of newer vaccine will continue to be a matter of pure economics.

A great initiative called GAVI: 

Around 23 million children of the developing countries are still denied of important and life-saving vaccines, which otherwise come rather easily to the children of the developed nations of the world.

To resolve this inequity, in January 2000, the Global Alliance for Vaccines and Immunization (GAVI) was formed. This initiative was mainly aimed at generating sufficient fund to ensure availability of vaccines for children living in the 70 poorest countries of the world.

The GAVI Alliance has been instrumental in improving access to six common infant vaccines, including those for hepatitis B and yellow fever. GAVI is also working to introduce pneumococcal, rotavirus, human papilloma virus, meningococcal, rubella and typhoid vaccines in not too distant future.

In August 2013, GAVI has reportedly launched a campaign in Kenya to fight the world’s leading killer of children under five with a new Pneumococcal Vaccine for prevention from pneumonia, meningitis and sepsis, which kill more than half a million people a year.

GAVI hopes to avert 700,000 deaths by 2015 through the immunization of 90 million children with pneumococcal vaccines.

Global pharma majors Pfizer and GlaxoSmithKline (GSK) are producing the vaccines as a part of a deal part-funded by Britain, Italy, Canada, Russia, Norway and the Bill Melinda Gates Foundation.

Current trend in newer vaccine development:

Malaria Vaccine:

According to the National Institute of Health (NIH) of the United States, the results of an early-stage clinical trial published in August 8, 2013 in the ‘Journal Science’ for an investigational malaria vaccine has been found to be safe to generate an immune system response and to offer protection against malaria infection in healthy adults.

The scientists at Sanaria Inc., of Rockville, Md. Research Center developed this vaccine known as PfSPZ. The researchers reportedly found that injecting patients with live-but-weakened malaria causing parasites appeared to create a protective effect.

Earlier, Reuters on December 20, 2011 reported that the British scientists have developed an experimental malaria vaccine, which has the potential to neutralize all strains of the most deadly species of malaria parasite.

In October 2011, the data published for a large clinical trial conducted in Africa by GlaxoSmithKline on their experimental malaria vaccine revealed that the risk of children getting malaria had halved with this vaccine. Reuters also reported that other teams of researchers around the world are now working on different approaches to develop a malaria vaccine.

Tuberculosis vaccines:

The Lancet reported in March 2013, as BCG vaccination provides incomplete protection against tuberculosis in infants, a new vaccine, modified Vaccinia Ankara virus expressing antigen 85A (MVA85A), has been designed to enhance the protective efficacy of BCG. MVA85A was found well-tolerated and induced modest cell-mediated immune responses. However, the reasons for the absence of MVA85A efficacy against tuberculosis or M tuberculosis infection in infants would need exploration.

Universal Cancer vaccines:

In a breakthrough development, the Israeli company Vaxil BioTherapeutics has reportedly formulated a therapeutic cancer vaccine, now in clinical trials at Hadassah University Medical Center in Jerusalem.

If everything falls in place, the vaccine could be available about six years down the road, to administer on a regular basis not only to help treating cancer but also to keep the disease from recurring.

Though the vaccine is being tested against a type of blood cancer called multiple myeloma, if it works as the initial results indicate, its platform technology VaxHit could be applied to 90 percent of all known cancers, including prostate and breast cancer, solid and non-solid tumors.

HIV Vaccine:

A recent effort to find a vaccine for HIV is reportedly beginning in 2013 at laboratories in a London hospital and two centers in Africa. The work will be split equally between London, the Rwandan capital Kigali and Nairobi in Kenya.

It has been reported that scientists are recruiting 64 healthy adult volunteers for the trial, which is expected to take up to two years.

Vaccines requirements of the developing world: 

Developing countries of the world are now demanding more of those vaccines, which no longer feature in the immunization schedules of the developed nations. Thus to supply these vaccines at low cost will be a challenge, especially for the global vaccine manufacturers, unless the low margins get well compensated by high institutional demand.

India needs a vibrant vaccine business sector:

For greater focus on all important disease prevention initiatives, there is a need to build a vibrant vaccine business sector in India. To achieve this objective the government should create an enabling ecosystem for the vaccine manufacturers and the academics to work in unison. At the same time, the state funded vaccine R&D centers should be encouraged to concentrate more on the relevant vaccine development projects ensuring a decent return on their investments, for longer-term economic sustainability.

More often than not, these stakeholders find it difficult to deploy sufficient fund to take their vaccines projects successfully through various stages of clinical development in order to obtain marketing approval from the drug regulator, while registering a decent return on investments. This critical issue needs to be appropriately and urgently addressed by the Government to make the disease prevention initiatives in the country sustainable.

Changing market dynamics: 

Even in a couple of decades back, ‘Vaccines Market’ in India did not use to be considered as a focus area by many pharmaceutical companies. Commoditization of this market with low profit margin and unpredictable interest of the government/the doctors towards immunization were the main reasons. Large global players like Glaxo exited the vaccine market at that time by withdrawing products like, Tetanus Toxoid, Triple Antigen and other vaccines from the market.

Currently, the above scenario is fast changing. The vaccine market, as stated above, is getting rejuvenated not only with the National Immunization Program (NIP) of the country, but also with the emergence of newer domestic vaccines players and introduction of novel vaccines by the global players, which we shall discuss below.

In addition, the ‘Indian Academy of Pediatrics (IAP) Committee on Immunization’ now recommends the ‘best individual practices schedule’ for the children in consultation with their respective parents. Such schedule may not conform to NIP and include newer vaccines, broadening the scope of use of vaccines in general.

Global Market:

According to GBI Research Report, overall global vaccines market was valued at US$ 28 billion in 2010 and is expected to reach US$ 56.7 billion by 2017 with a CAGR of 11.5%. The key growth driver of this segment will be introduction of newer vaccines, which are currently either in the regulatory filing stage or in the late stages of clinical development.

The important international players in the vaccines market are GlaxoSmithKline, Sanofi, Pfizer, Novartis AG, Merck and SP-MSD. Together they represent around 88% of the total vaccine segment globally, the report highlights.

Indian Market:

McKinsey in its report titled, “India Pharma 2020: Propelling access and acceptance, realizing true potential“ stated that at 2% penetration, the vaccines market of India is significantly under-penetrated with an estimated turnover of around US$ 250 million, where the private segment accounts for two-thirds of the total. McKinsey expects the market to grow to US$ 1.7 billion by 2020.

India is one of largest markets for all types of vaccines in the world. The new generation and combination vaccines, like DPT with Hepatitis B, Hepatitis A and Injectable polio vaccine, are driving the growth. The demand for veterinary vaccines is also showing ascending trend. Pediatric vaccines contribute to around 60% of the total vaccines market in India.

Domestic Indian players like, Serum Institute, Shantha Biotecnics, Bharat Biotech and Panacea Biotech are poised to take greater strides in this direction. Bharat Biotech is incidentally the largest Hepatitis B vaccine producer in the world. Likewise, Serum Institute is reportedly one of the largest suppliers of vaccines to over 130 countries and claim that ’1 out of every 2 children immunized worldwide gets at least one vaccine produced by Serum Institute.’

The first new vaccine developed in India:

Indian scientists from Bharat Biotech Ltd in Hyderabad have reportedly developed a new oral vaccine against the Rotavirus induced diarrhea, where both vomiting and loose motion can severely dehydrate children very quickly. This is the first new vaccine developed in India, establishing itself as the first developing country to achieve this unique distinction.

Two recent vaccine JV and Partnership agreements in India:

British drug major GlaxoSmithKline (GSK) has reportedly agreed to form a 50-50 venture with the domestic Indian vaccine manufacturer Biological E Limited in January 2013 to develop a product that would combine GSK’s injectable polio shot with a vaccine produced by Biological E to protect against five diseases including diphtheria and tetanus.

In addition, MSD pharma of the United States and Indian drug major Lupin have announced a partnership agreement to market, promote and distribute, MSD’s 23-valent Pneumococcal Polysaccharide Vaccines under a different brand name in India for prevention of Pneumococcal disease, pneumonia being its most common form affecting adults.

A possible threat: 

As per reports most Indian vaccines manufacturers get a major chunk of their sales revenue from exports to UN agencies, charitable organizations like, the Bill & Melinda Gates Foundation and GAVI, and other country-specific immunization programs.

The report predicts, the virtual monopoly that Indian vaccines manufacturers have enjoyed in these areas, will now be challenged by China, as for the first time, in 2012, the Chinese national regulatory authority received World Health Organization’s (WHO) ‘pre-qualification’ certification that allows it to approve locally manufactured vaccines to compete for UN tenders. 

Action areas to drive growth:

McKinsey in its above report ‘India Pharma 2020’ indicated that the action in the following 4 areas by the vaccine players would drive the vaccine market growth in India:

  • Companies need to go for local production of vaccines or leverage supply partnerships. MSD and GlaxoSmithKline’s local partnership in India and for the HiB vaccine with Bio-manguinhos in Brazil may be cited as examples.
  • Companies will need to conduct studies on the economic impact of vaccination and establish vaccine safety and performance standards.
  • Extension of vaccine coverage beyond pediatricians and inclusion of general practitioners, consulting physicians and gynecologists will be essential.
  • Companies will need to enhance supply chain reliability and reduce costs.

Conclusion: 

On January 7, 2012, while requesting the ‘Overseas Indian Medical Professionals’ to partner with the institutions in India, the Health Minister, in his address, announced that the Ministry of Health has already introduced the second dose of measles vaccine and Hepatitis-B vaccination across the country. Moreover, from December 2011 a ‘Pentavalent Vaccine’ has been introduced, initially in 2 States, covering 1.5 million children of India.

All these augur quite well for the country. However, keeping in view of the humongous disease burden of India, immunization program with various types of vaccines should receive active encouragement from the government as disease prevention initiatives, keeping the future generation in mind.

If vaccine related pragmatic policy measures, with equal focus on their effective implementation, are initiated in the country, without delay, the domestic vaccine market, in turn, will receive much awaited further growth momentum. Such initiatives together with newer foreign players and modern imported vaccines coming in, would help the country addressing effectively a prime healthcare concern of the country in a holistic way.

It is about time to aggressively garner adequate resources to develop more modern vaccines in the country, promote and implement vaccine awareness campaigns in the nation’s endeavor for disease prevention before they strike hard and at times fatally.

That said, taking available real world facts into account, doesn’t Dr. Gerhard Buchwald’s and today’s anti-vaccination lobbyists’ postulation, ‘Vaccination – A Business based on fear’, appear to be emanating from a self created world of doom and gloom, defying public health interest for effective disease prevention?

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.

 

Innovative Public Private Partnership (PPP) in Healthcare Financing is the way forward to improve ‘Affordability’ and ‘Access’ to Healthcare’ in India

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Despite various measures taken by the Government of India (GoI), around 65% of the population do not have access to modern medicines in the country. Such medicines do not include treatment just for ‘Tropical Diseases’ like, Malaria, Tuberculosis, Filariasis or Leishmaniasis or even anaemia in women. These medicines, in fact, cover much wider spectrum of the primary healthcare needs of the country and include antibiotics, anti-hypertensive, anti-diabetics, anti-arthritic, anti-ulcerants, cardiovascular, oncology. anti-retroviral etc. Many stakeholders in the country, including the policy makers feel that the reason for poor access to medicines to a vast majority of Indian population is intimately linked to the affordability of medicines.

A bold public measure to achieve the dual objectives:                           To make medicines affordable to the common man and at the same time to create a robust domestic pharmaceutical industry in the country, the Government took a bold step in early 1970 by passing a law to abolish product patent in India.

The changed paradigm, encouraged domestic pharmaceutical companies to manufacture and market even those latest drugs, which were protected by patents in many countries of the world, at that time. This policy decision of the GoI enabled the domestic players to specialize in ‘reverse engineering’ and launch the generic versions of most of the New Chemical Entities (NCEs) at a fraction of the innovators price, in India.
Simultaneously other low cost ‘essential medicines’ continued to be produced and marketed in the country.

‘Reverse Engineering’ – a huge commercial success in India:
From 1972 to 2005 domestic Indian pharmaceutical companies were replicating most, if not all the blockbuster drugs of the world, to their low price generic substitutes, just within a year or two from the date of their first launch in the developed markets of the world. These innovative drugs include quinolones. H2 Receptor anatagonists, proton pump inhibitors, calcium channel blockers, ace inhibitors, Cox2 inhibitors, statins, anti-coagulants, anti-asthmatic, anti-cancer, anti-HIV and many more.

In 1970, the Market share of the Indian domestic companies, as a percentage of turnover of the total pharmaceutical industry of India, was around 20%. During the era of ‘reverse engineering’, coupled with many top class manufacturing and marketing strategies, domestic Indian pharmaceutical companies wheezed past their multinational (MNCs) counterparts in the race of market share, exactly reversing the situation in 2010.

‘Reverse engineering’ was indeed one of the key growth drivers of domestic pharmaceutical industry. In its absence, during this period, the growth rate of branded generic industry may not be as spectacular.

India – now the ‘Eldorado’ of the pharmaceutical world:
This shift in the Paradigm in 1970, catapulted the Indian domestic pharmaceutical industry to a newer height of success. India in that process, over a period of time, could establish itself as a major force to reckon with in the generic pharmaceutical market of the world. Currently, the domestic pharmaceutical industry in India caters to around one third of the global requirement of generic pharmaceuticals and is a net foreign exchange earner for the country.

Currently, within top ten pharmaceutical companies of India, eight are domestic companies. All those global pharmaceutical companies who had left the shores of India and many more, have returned to the country after India signed the WTO agreement in January 1995 with great expectations.

Government feels quite confident and exudes a sense of accomplishment with its pharmaceutical policies:
The government therefore believes that a combination of these policy measures resulting in the stellar success of the domestic pharmaceutical companies since last four decades has helped the country earning the global recognition as one of the most attractive emerging pharmaceutical markets of the world, with commensurate and sustainable ascending growth trend.

Has stringent Price Control/Monitoring of Medicines worked in India?
Be that as it may, from 1970 to 2005, India could produce and offer even the latest NCEs at a fraction of their international price, to the Indian population. There are as many as 40 to over 60 Indian branded generic versions for each successful blockbuster drug of the world. Competition has been intense and cut-throat, which keeps the average price well within the reach of common man. Average price of medicines in India is even lower than that of Pakistan, Bangladesh and Sri Lanka. Thus the combination of price control, price monitoring, fear of price control and cut throat competition within branded generics have been able to drive down the prices of medicines in India.

Has the focus mostly on ‘Price’ been able to resolve the issue of poor access to modern medicines by the common man?                       Although the GoI should be complemented for the above measures and putting in place the Product Patents Act in India effective January 1, 2005, the issue of access to modern medicines to the common man has still remained unanswered in the country. Why then access to medicines in India is confined to just to 35% of the population even after 62 years of Independence of the country? Comparable figures of access for Africa and China are 53% and 85%, respectively. This is indeed an abysmal failure on the part of the government to achieve the core healthcare objective of the nation.

Strategy adopted to address the core issue of ‘affordability’ and ‘access’ to healthcare and medicines are grossly inadequate:
Despite the stellar success of the pharmaceutical industry in India thus far, there is a pressing need for the government to address this vexing problem without further delay. The situation demands from the policy makers to put in place a robust healthcare financing model in tandem with significant ‘capacity building’ exercise, initially in our primary and then in the secondary and tertiary healthcare value chain.

Towards this direction, the Federation of Indian Chambers of Commerce and Industry (FICCI) has suggested to the Government for an investment of around US$ 80 billion to create over 2 million hospital beds.

Government changing its role from ‘Healthcare Provider’ to ‘Healthcare Facilitator’:
Frugal budget allocation (0.9%) by the GoI towards healthcare as % of GDP of the country and its other healthcare related policy statements suggest that government is changing its role in this area from a healthcare provider to a healthcare facilitator for the private sectors to develop the healthcare space of the country adequately.

In such a scenario, it is indeed imperative for the government to realize that the lack of even basic healthcare financing model and primary healthcare infrastructure in many places across the country, leave aside other fiscal incentives, will impede the penetration of private sectors into semi-urban and rural areas. Innovative PPP model should be worked out to address such issues, effectively.

Laudable projects like NRHM and ‘Jan Aushadhi’ must deliver:
Over 70% of Indian population are located in rural India. A relatively recent study indicates that despite some major projects undertaken by the Governments, like National Rural Health Mission (NRHM), about 80% of doctors, 75% dispensaries and 60% of hospitals are located in urban India.

Another recent initiative taken by the Department of Pharmaceuticals (DoP) called ‘Jan Aushadhi’ is also orientated towards urban and semi-urban India. Unfortunately even in those areas the scheme has failed to deliver against the objectives set by the department of pharmaceuticals (DoP) themselves.
The net result of such a lack of firm intent to deliver by all concerned denies 65% of Indian population from having access to modern medicines and other basic healthcare services within the country.

Address the issue of ‘Affordability’ and ‘Access’ to medicines and healthcare with a robust ‘Health Insurance’ model for all:
While trying to find out a solution to these critical issues, by restricting the focus only on the ‘prices of medicines’ for several decades from now, the Government is doing a great disservice to the common man.
Let me hasten to add that I am in no way suggesting that the prices of medicines have no bearing on their ‘Affordability’. All I am suggesting here is that the issue of ‘Affordability’ and ‘Access’ to modern medicines could be better and more effectively addressed with a robust ‘Health Insurance’ model for all, in the country.

Sporadic initiatives towards this direction:

We find some sporadic initiatives in this direction for population below the poverty line (BPL) with Rashtriya Swasthya Bima Yojana (RSBY) and other health insurance schemes through micro health insurance units, especially in rural India. It has been reported that currently around 40 such schemes are active in the country. Most of the existing micro health insurance units run their own independent insurance schemes.

Some initiatives by the State Governments:

Following initiatives, though quite limited, are being taken by the state governments:

1. The Government of Andhra Pradesh has planned to offer health insurance cover under ‘Arogya Sri Health Insurance Scheme’ to 18 million families who are below the poverty line (BPL).

2. The Government of Karnataka has partnered with the private sector to provide low cost health insurance coverage to the farmers who previously had no access to insurance, under “Yeshaswini Insurance scheme”. This scheme covers insurance cover towards major surgery, including pre-existing conditions.

3. Some other state governments have also started offering public health insurance facilities to the rural poor, but not in a very organized manner. In fact, some private health insurers like Reliance General Insurance and ICICI Lombard General Insurance have been reported to have won some projects on health insurance from various state governments.
Covering domiciliary treatment through health insurance is important:

Currently health insurance schemes mostly cover expenses towards hospitalization. However, medical insurance schemes should also cover domiciliary treatment costs and loss of income, along with hospitalization costs.

Government policy reforms towards health insurance are essential:
Currently Indian health insurance segment is growing over 50% and according to PHD Chamber of Commerce and Industries the segment is estimated to grow to US$ 5.75 billion by 2010. Even this number appears to be much less than adequate for a country like India.

It is high time that the Government creates a conducive environment for increased penetration of health insurance within the country through innovative policy measures. One such measure could be by making health insurance cover mandatory for all employers, who provide provident fund facilities to their employees.

Conclusion:
It is a pity that the concept of health insurance has not properly taken off in our country, as yet, though shows immense growth potential in the years to come. Innovative policies of the government towards this direction along with increasing the cap on Foreign Direct Investment (FDI) for health insurance will encourage many competent and successful global players to enter into this market.

With the entry of efficient and successful global players in health insurance segment, one can expect to see many innovative insurance products to satisfy the needs of a large section of Indian population. Such an environment will also help increasing the retail distribution network of health insurance with a wider geographic reach, significantly improving the affordability and access to healthcare in general and medicines in particular, of a large number of population of the country.

By Tapan Ray

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

Dire need of quality ‘Cold Chain’ infrastructure for pharmaceuticals in India and its efficient management through Public Private Partnership initiatives.

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Why Cold Chain for pharmaceuticals?Drugs are complex entities and many of these are temperature sensitive in nature. This entails them requiring precise and continuous temperature conditions in transit in order to retain their potency and resultant efficacy.Many life saving drugs including biotech products and vaccines fall under such category. Any break in the cold chain process for such drugs can lead to immediate denaturing or deterioration in their quality parameters. It is imperative that a careful consideration is given by all concerned including government agencies mainly at the seaports and airports while providing storage space at their warehouses for such drugs.

Current bottlenecks and lack of proper cold chain infrastructure:

Currently in India there are bottlenecks at the Airports and Seaports that include authorities not being able to assure cold room space despite getting advance notices from the pharmaceutical companies about the possible unloading of large consignments of temperature sensitive products.

Some of the other gaps include improper training and refresher courses for the handling staff who handle such products at the ports. Storage of Pharmaceutical products along with meat and food products is against the GMP norms.

Cold Chain medicines require different and special temperature control:

Cold Chain Medicines require special temperature controlled Cold storage. There are two commonly recommended temperatures specified on labels of cold chain products:

1. Products requiring temperature between 2 to 8 degree centigrade

2. Products requiring temperature around -10 to -20 degree centigrade

Cold Chain should be an uninterrupted series of storage and distribution activities which will maintain required temperature range of 2 to 8 degree centigrade or -10 to -20 degree centigrade as per products requirements.

Proper Cold Chain Management system is essential to ensure right product quality:

Proper Cold Chain Management of pharmaceuticals will ensure that the right quality of such products is maintained not only during storage but during transportation also to meet regulatory specifications. There is a greater focus and stringent regulatory guidelines/standards are in place today in the developed markets around the world for strict adherence to right storage and transportation process for cold chain sensitive pharmaceuticals.

It should be kept in mind always that Cold Chain products are mostly sensitive biological substances that can become less effective or lose potency if not properly stored.

Some examples:

Products requiring 2 to 8 degree storage will not be effective if:

i. They are frozen or stored below 2 degree centigrade
ii. Exposed to temperatures above 8 degree centigrade
iii. Exposed to direct sunlight or fluorescent light

The loss of potency is cumulative and irreversible. If products are exposed to conditions outside the established range, the quality may be adversely affected, reducing their assigned shelf life, diminishing their effectiveness or making them ineffective. The exposed product may look just as the same – the loss of potency may not be visible.

World class SOPs for Cold Chain storage and handling facilities are essential :

Quality of storage and handling of Cold Chain Pharmaceutical products at Airports and Seaports in the course of export from or import into India requires special care and attention. Since multiple products are stored and handled at Seaports/ Airports, personnel may not be able to appreciate the special need for Cold Chain pharmaceuticals’ storage & handling. Thus, there should be Standard Operating Procedures (SOPs) for storage and handling of pharmaceuticals laid down by the Port Management authorities, so that the personnel handling pharmaceuticals strictly adhere to the pre-set norms.

Pharmaceutical products requiring cold chain facilities are rapidly growing in numbers:

Pharmaceutical Products for which efficient Cold Chain facilities are required are rapidly growing in numbers. In their movement across the supply chain from the manufacturers to the patients, the medicines are handled and stored by various stakeholders like transporters, Airports, Seaports, Distributors, Stockists, Retailers etc. Since the storage and handling of Cold Chain Pharmaceuticals Products are unique, an uninterrupted Cold Chain is to be maintained in the entire supply chain network without any discontinuity, even for a short while. This will ensure that medicinal products of high quality reach the patients, always. it is, therefore, very important for all concerned stakeholders to ensure maintenance of proper Cold Chain facilities.

Government plan of “Pharma Zones” in India:

The Drugs Controller General of India (DCGI) has planned a separate dedicated controlled environment – ‘Pharma Zone’, within the cargo premises at Airports and Seaports for proper storage of Pharmaceutical products in line with Good Manufacturing Practices and Good Distribution Practices so as to assure right quality, safety and efficacy of Pharmaceutical products, which are to be either imported or exported.

Currently no ‘Pharma Zones’ in India:

At present there are no ‘Pharma Zones’ in India. However, Mumbai International Airport Private Limited (MIAL) has created 4 new cold rooms for pharmaceuticals. It has been reported that the new Cargo Terminal of Delhi International Airports Limited (DIAL), which is expected to be commissioned later in the year, will have around 4000 square metres of additional cold room capacity compared to the current cold room capacity of 400 square metres. Similarly, MIAL is also planning for a dedicated Cold Room facility for Pharmaceutical Products in their new set–up.

Need for outsourcing Cold Chain services:

In the developed markets of the world there are private cold chain storage and third party logistics providers to offer contract logistics and storage services especially to cater to the growing demands of the Biopharmaceutical segment, which is now the fastest growing manufacturing sector within global pharmaceutical industry.

It is expected that spend of the Biopharmaceutical companies towards outsourcing of cold chain facilities will grow by over 10% to 15% for the next three to five years in the developed markets. India being the second largest producers of Biopharmaceuticals after China, similar opportunities exist in the country.

In India some renowned international courier companies like DHL and World Courier have been reported to have developed an efficient cold-chain management process, especially for the pharmaceutical companies to properly maintain the cold chain in their logistics network.

Conclusion:

A world class cold chain infrastructure and its efficient management within the country will help immensely to Indian domestic pharmaceutical companies, as well, as they are exploring more and more opportunities to export Biopharmaceuticals in the global market. To achieve this objective modern cold chain warehouses and their efficient management as per regulatory guidelines will play a key role in ensuring right product quality standard that India will export.

Over a period of time cold-chain management practices of global standards will be required to achieve this goal. Currently for both import and export of cold-chain sensitive pharmaceuticals, as indicated above, the available infrastructural facilities pose to be one of the key challenges encountered by the industry to maintain high product quality during shipment and warehousing at the ports. Individual pharmaceutical companies like Eli Lilly, India have their own vehicles equipped with cold-chain management systems for transportation of their cold chain sensitive products.

Greater initiative by the DCGI in particular in this area, in collaboration with the Indian pharmaceutical industry, sooner, is absolutely essential. For the patients’ sake.

By Tapan Ray

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

Improving ‘Access to Modern Medicines’ in India –Public Private Partnership (PPP) is the way forward.

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Despite various measures being taken by the Government of India (GoI) from time to time, around 65% of Indian population are not having access to modern medicines. It appears, GoI is of the view that the reason for poor ‘access to modern medicines’ to a vast majority of our population is intimately linked to the issue of ‘affordability of medicines’.To make medicines affordable to the common man, the Government took a radical step in 1972 by passing a law to abolish products patent in India. The change in paradigm at that time, encouraged domestic pharmaceutical players to manufacture and market even those latest and innovative drugs, which were protected by patents, n many countries of the world. The new ball game enabled the domestic players to highly specialize in ‘reverse engineering’ and launch generic versions of most of the New Chemical Entities (NCEs)at a fraction of the innovators price, in India.This shift in Paradigm in 1972, catapulted the Indian domestic pharmaceutical industry to a newer orbit of success. India in that process, over a period of time, established itself as a major force to reckon with, in the generic pharmaceutical markets of the world. Currently, the domestic pharmaceutical industry in India caters to around one third of the global requirement of generic pharmaceuticals.

From 1972 to 2005 domestic Indian pharmaceutical companies focused on replicating all most all blockbuster drugs, like for example, major Cox2 inhibitors (Merck and Pfizer), Viagra and Lipitor (Pfizer) etc, to low price generic substitutes and that too just within a year or two from the date of first launch of these products in the developed markets of the world.

In 1972, the Market share of the Indian domestic companies, as a percentage to turnovers of the total pharmaceutical industry of India, was around 20%. During the era of ‘reverse engineering’, coupled with many top class manufacturing and marketing strategies, domestic Indian pharmaceutical players wheezed past their multinational (MNCs) counterparts in the race of market share, exactly reversing the situation in 2009.

‘Reverse engineering’ was one of the key growth drivers of domestic pharmaceutical industry during this period. In its absence, during post IPR regime, the growth rate of branded generic industry is not expected to be as spectacular. However, the low cost ‘essential medicines’ will continue to be produced and marketed in India in future, as well.

Be that as it may, from 1972 to 2005, India could produce and offer even the latest NCEs, at a fraction of their international price, to the Indian population. There were as many as 40 to over 60 generic versions of each successful blockbuster drug of the world, in India. Cut-throat competition was intense and still it is, which keeps the average price of such medicines well under control. To further tighten its grip over pharmaceutical products pricing, GoI imposed stringent price control and price monitoring mechanism simultaneously, which are in place even today. Despite competitive pricing pressure coupled with Government price control, over nearly four decades, with a key policy focus on ‘affordability of medicines’, why then ‘access to modern medicine’ remained abysmal for a vast majority of the population of India?

To address this vexing problem, Industry Associations reported to have suggested a policy shift towards public-private-partnership (PPP) model to the Ministry of Chemicals and fertilizers in 2006-07. At that time, the Associations seem to have offered that the Pharmaceutical Industry will supply to the GoI the essential medicines at 50% of their Maximum Retail Price (MRP), to cater to the need of the common man, especially those who are below the poverty line (BPL).

However, to make this proposal effective there is a fundamental need for the Government to quickly initiate significant ‘capacity building’ exercise, initially in our primary and then in the secondary healthcare value chain. Towards this direction, the Federation of Indian Chambers of Commerce and Industry (FICCI) reported to have suggested to the Government for an investment of around US$ 80 billion to create over 2 million hospital beds.

Frugal budget allocation (1.12%) of the GoI towards healthcare as % of GDP of the country, suggests that Government is gradually shifting its role in this very important area, primarily from healthcare provider to healthcare facilitator for the private sectors to develop it further. In such a scenario, it is imperative for the government to realize that the lack of even basic primary healthcare infrastructure, leave aside other incentives, impede effective penetration of private sectors into semi-urban and rural areas. PPP model should be worked out to address such issues, effectively.

I have highlighted the remedial measures to be taken to address this situation in my article, which can be read by clicking on the following link:

http://www.tapanray.in/profiles/blogs/65-of-indians-do-not-have

Over 70 percent of our population are located in rural India. A relatively recent study indicates that despite some major projects undertaken by the Governments, like National Rural Health Mission (NRHM), about 80 percent of doctors, 75 percent dispensaries and 60 percent of hospitals are located in urban India. Another recent initiative taken by the Department of Pharmaceuticals (DoP) called ‘Jan Aushadhi’ is also orientated towards urban and semi-urban India.

I had deliberated upon the ways to increase penetration of ‘Jan Aushadhi’ in rural India, in another article, which can be read by clicking on the following link:

http://www.tapanray.in/profiles/blogs/jan-aushadhi-medicines-for

The net result of such policy initiatives, denies over 65 percent of Indian rural population from having access to quality healthcare services. Such lack of focus on rural areas, perhaps will explain the reason why only 35 percent of Indian population is having access to modern medicines.

Instead of trying to find a solution for this alarming ‘access to medicines’ problem, by limiting focus mainly on the issue of ‘affordability’ of medicines, for several decades, the Government is doing a great disservice to the common man, mainly located in the rural and semi-urban India. It is now high time that the GoI analyzes the available data to address the root cause of poor healthcare delivery, infrastructure and almost total lack of healthcare financing for all strata of Indian society.

Let me hasten to add that in no way I am trying to say that ‘affordability of medicines’ is no issue in India. All I am saying is that an integrated approach towards the root causes will quite effectively take care of ‘affordability’ issue and NOT the vice versa.

Even a problem of such magnitude can be converted into an opportunity. India can certainly be made a global hub for quality and affordable healthcare services, flashes of which we see in medical tourism initiatives.

Therefore, to address the acute problem of ‘access to modern medicines’ to a vast majority of the Indian population, GOI should reach all out to attract significant private and even foreign direct investments (FDI) through innovative Private Public Partnership initiatives. A strong will to have an ‘out of box’ solution to this critical problem is the crying need of the hour.

By Tapan Ray

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

An integrated approach towards Public Private Partnership (PPP) initiatives to improve access to healthcare in India is the way forward.

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Despite so much of stringent government control, debate and activism on the affordability of modern medicines in India, on the one hand, and the success of the government to make medicines available in the country at a price, which is cheaper than even Pakistan, Bangladesh and Sri Lanka, on the other, the fact still remains, about 65% of Indian population do not have access to affordable modern medicines, compared to 15% in China and 22% in Africa.The moot question therefore is, despite all these stringent price regulation measures by the government and prolonged public debates over nearly four decades or so to ensure better ‘affordability of medicines’, why then the situation on ‘access to modern medicines’has remained so abysmal to a vast majority of the population, in India?This, in my view, is mainly because; no single minister or ministry can now be held accountable by the civil society for such a dismal performance in the access to healthcare, in India.

Poor healthcare infrastructure:

As per the Government’s own estimate, India records:

1. A shortage of 4803 Primary Health Centres (PHC)

2. A shortage of 2653 Community Health Centres (CHC)

3. No large Public Hospitals in rural areas where over 70% of the populations live

4. Density of doctors in India is just 0.6 per 1000 population against 1.4 and 0.8 per 1000 population in China and Pakistan respectively, as reported by WHO.

The Government spending in India towards healthcare is just 1.1% of GDP, against 2% by China and 1.6% by Sri Lanka, as reported by the WHO.

Some good but sporadic public healthcare initiatives:

The government allocation of around US$ 2.3 billion for the National Rural Health Mission (NRHM), is a good initiative to bring about uniformity in quality of preventive and curative healthcare in rural areas across the country.
While hoping for the success of NRHM, inadequacy of the current rural healthcare infrastructure with about 80 percent of doctors, 75 percent dispensaries and 60 percent of hospitals located only in the urban India, may encourage skepticism.

Addressing the issue of improving access to healthcare:

While addressing the issue of improving access of healthcare, following three important ‘Public Private Partnership (PPP)’ initiatives would be most appropriate.

1. PPP to improve affordability:

To address this vexing problem, industry associations had jointly suggested a policy shift towards public-private-partnership (PPP) model to the government in 2006-07, instead of a stringent price control mechanism, which has not worked thus far to improve access of modern medicines, in India. Instead, the associations seemed to have suggested that the pharmaceutical industry will supply to the government the essential medicines at 50% of their Maximum Retail Price (MRP), to cater to the need of below the poverty line (BPL) families.

It is worth mentioning, many OPPI member companies like, Novartis, GSK, Pfizer, Sanofi-Aventis etc. have their own access to medicines programs in India.

Although the government did not respond to this proposal, to make it effective the ministry of health will require to quickly initiate significant ‘capacity building’ exercises, both in the primary and also in the secondary public healthcare facilities in the country. FICCI is reported to have suggested to the Government for an investment of around US$ 80 billion to create over 2 million hospital beds, for such capacity building exercises .

Frugal budget allocation by the government towards healthcare of the country, suggests that Government is gradually shifting its role in this very important area, primarily from healthcare provider to healthcare facilitator for the private sectors to develop it further. If it is so, it is imperative for the government to realize that the lack of even basic primary healthcare infrastructure, leave aside other incentives, impede effective penetration of private sectors into semi-urban and rural areas. Effective PPP model should be worked out to address such issues, without further delay.

2. PPP to leverage the strength of Information Technology (IT) to considerably neutralize the system weaknesses:

Excellence in ‘Information Technology’ (IT) is one of the well recognized strengths that India currently possesses. This strengths needs to be adequately leveraged through PPP to neutralize the above weaknesses. Harnessing IT strengths, especially in the areas of drug procurement and delivery processes, especially in remote places, could hone the healthcare delivery mechanism, immensely.

Another IT enabled technology that India can widely use across the nation to address rural healthcare issues is ‘‘Telemedicine’ for distant diagnosis and treatment of ailments. Required medicines for treatment could be made available to the patients through ‘Jan Aushadhi’ initiative of the Department of Pharmaceuticals (DoP), by utilising the Government controlled distribution outlets like, public distribution system (ration shops) and post offices, which are located even in far flung and remote villages of India.

3. PPP in healthcare financing for all:

Unlike many other countries, even as compared to China, over 72 percent of Indian population pay out of pocket to meet their healthcare expenses.

Out of a population of 1.3 billion in China, 250 million are covered by insurance; another 250 million are partially covered by insurance and balance 800 million are not covered by any insurance. Converse to this scenario, in India total number of population who may have some sort of healthcare financing coverage will be around 200 million with penetration of health insurance at just around 3.5% of the population. India is fast losing grounds to China mainly due to better response to healthcare infrastructure.

Even after leveraging IT for ‘Telemedicine’ and improving healthcare delivery processes, together with availability of low priced quality medicines from ‘Jan Aushadhi’ outlets, a robust healthcare financing model for all strata of society to make healthcare products/services affordable to a vast majority of the population, will remain an essential requirement for the country to address the issue of improving access to healthcare to all.

According to a survey done by National Sample Survey Organisation (NSSO), 40% of the people hospitalised in India borrow money or sell assets to cover their medical expenses. A large number of populations cannot afford to pay for the required treatment, at all.

Conclusion:

In my view an integrated approach for creating effective healthcare infrastructure throughout the country, leveraging IT in the entire healthcare space, appropriately structured ‘Health Insurance’ schemes for all strata of society ably supported by well spread out ‘Jan Aushadhi’ outlets even in far flung rural areas, deserve careful consideration by the Government.

A PPP model in all these three areas needs to be worked out in detail to address the pressing issue of improving ‘Access to Affordable Integrated Healthcare to ALL’.

By Tapan Ray

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