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Draft Pharma Policy 2017 And Branded Generics

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In its first reading, the 18-page draft Pharma Policy, 2017 gives me a sense that the Government has followed the much-desired principle of ‘walk the talk’, especially in some key areas. One such space is what Prime Minister Modi distinctly hinted on April 17, 2017, during the inauguration function of a charitable hospital in Surat. He clearly signaled that prescriptions in generic names be made a must in India, and reiterated without any ambiguity whatsoever that, to facilitate this process, his government may bring in a legal framework under which doctors will have to prescribe generic medicines.

Immediately following its wide coverage by both the national and international media, many eyebrows were raised regarding the feasibility of the intent of the Indian Prime Minister, especially by the pharma industry and its business associates, for the reasons known to many. A somewhat muted echo of the same could be sensed from some business dailies too, a few expressed through editorials, and the rest quoting the views on the likely ‘health disaster’ that may follow, if ‘branded generics’ are not prescribed by the medical profession. Obviously, the main apprehension was centered around the ‘shoddy quality parameters’ of unbranded generic drugs in India. It’s a different matter though, that none can possibly either confirm or pooh-pooh it, backed by irrefutable data with statistical significance.

Be that as it may, making high quality generic drugs accessible to most patients at affordable prices, avoiding any possible nexus between the doctors and pharma companies, which could jeopardize the patients’ economic interest, deserves general appreciation, shrill voices of some vested interests notwithstanding.  Nonetheless, if the related proposals in the new pharma policy come to fruition as such, it would be a watershed decision of the government, leaving a long-lasting impact both on the patients, as well as the industry, though in different ways, altogether.

I raised this issue in my article titled, “Is Department of Pharmaceuticals On The same Page As The Prime Minister?”, published in this blog on May 15, 2017. However, in today’s discussion, I shall focus only on how has the draft pharma policy 2017 proposed to address this issue, taking well into consideration the quality concerns expressed on unbranded generics, deftly.

Before I do that, let me give a brief perspective on ‘brand name drugs’, ‘generic drugs’, ‘branded generics’ and ‘unbranded generic drugs’. This would basically serve as a preamble to arrive at the relevance of ‘branded generic’ prescriptions, along with the genesis of safety concern about the use of un-branded generic drugs.

No definition in Indian drug laws:

Although, Drugs and Cosmetics Act of India 1940 defines a drug under section 3 (b), it does not provide any legal definition of ‘brand name drugs’, ‘generic drugs’, ‘branded generic drugs’ or ‘un-branded generics’.  Hence, a quick landscaping of the same, as follows, I reckon, will be important to understand the pertinence of the ongoing debate on ‘branded generic’ prescriptions in India, from the patients’ health and safety perspectives:

‘Brand name’ drugs:

Globally, ‘brand name drugs’ are known as those, which are covered by a product patent, and are usually innovative New Chemical Entity (NCE) or a New Molecular Entity (NME). Respective innovator pharma companies hold exclusive legal rights to manufacture and market the ‘brand name drugs’, without any competition till the patents expire.

Generic drugs:

Post patent expiry of, any pharma player, located anywhere in the world, is legally permitted, as defined in the Intellectual Property Rights (IPR) regulations, to manufacture, market and sell the generic equivalents of ‘brand name drugs’. However, it’s a global norm that the concerned generic manufacturer will require proving to the competent drug regulatory authorities where these will be marketed, that the generic versions are stable in all parameters, and bioequivalent to the respective original molecules. According to US-FDA, a ‘generic drug’ will require to be the same as the original ‘brand-name drug’ in dosage, safety, strength, quality, purity, the way it works, the way it is taken and the way it should be used.

‘Branded generic’ drugs:

Branded generics are generic molecules marketed and prescribed by their respective brand names. Around 90 percent of generic formulations are branded generics in India, involving heavy sales and marketing expenditure in various forms, which has become a contentious issue today in India. The reason being, although branded generics cost significantly more than unbranded generics, the former variety of generic drugs are most preferred by the medical profession, as a group, in India. Interestingly, there is no difference whatsoever in the marketing approval process between the ‘branded generics’ and other generic varieties without any brand names.

Unbranded generic drugs:

Unbranded generic drugs are those, which are sold only in the generic names, sans any brand name. I reiterate, once again, that there is no difference in the marketing approval process between the ‘branded generics’ and ‘unbranded generic medicines’.

The core issue:

The whole debate or concern related to both efficacy and safety on the use of unbranded generic drugs in India stems from a single regulatory issue, which is widely construed as scientifically improper, and totally avoidable. If this subject is addressed in a holistic way and implemented satisfactorily in the country, by and large, there should not be any worthwhile concern in prescribing or consuming single ingredient unbranded generic drugs in India, which generally cost much less than their branded generic equivalents.

This core issue is primarily related to establishing bioequivalence (BE) with the original molecules for all generic formulations, regardless of whether these are branded or unbranded generic drugs. Thus, positive results in bioequivalence studies, should be a fundamental requirement for the grant of marketing approval of any generics in India, as is required by the regulators of most countries, across the world.

This has been lucidly articulated also in the publication of the National Institute of Health (NIH), USA, underscoring the critical importance of generic drugs in healthcare is unquestionable. The article says: “it is imperative that the pharmaceutical quality and ‘in vivo’ performance of generic drugs be reliably assessed. Because generic drugs would be interchanged with innovator products in the market place, it must be demonstrated that the safety and efficacy of generics are comparable to the safety and efficacy of the corresponding innovator drugs. Assessment of ‘interchangeability’ between the generic and the innovator product is carried out by a study of ‘in vivo’ equivalence or ‘bioequivalence’ (BE).”

The paper further highlights, “the concept of BE has, therefore, been accepted worldwide by the pharmaceutical industry and national regulatory authorities for over 20 years and is applied to new as well as generic products. As a result, thousands of high-quality generic drugs at reduced costs have become available in every corner of the globe.”

Why is BE not mandatory for marketing approval of all generic drugs in India?

It is intriguing, why is this basic scientific and medical requirement of proving BE is not mandatory for granting marketing approval of all generic drugs at all time, without any exception – covering both branded generics and their unbranded equivalents, in India.

As I have already deliberated on this subject in my article titled “Generic Drug Quality: Cacophony Masks An Important Note, Creates A Pariah ”, published in this blog on May 08, 2017, I shall now proceed further to relate this critical issue with the Draft Pharma Policy 2017.

Brand, branding and branded generics:

Nevertheless, before I focus on the draft pharma policy 2017, let me skim through the definitions of a ‘brand’ and the ‘branding process’, in general, for better understanding of the subject.

American Marketing Association defines a brand as: ‘A name, term, design, symbol, or any other feature that identifies one seller’s goods or services as distinct from other sellers.’ Whereas, ‘The Branding Journal’ articulates: ‘A brand provides consumers with a decision-making-shortcut when feeling indecisive about the same product from different companies.’

Business Dictionary describes the ‘branding process’ as: ‘Creating a unique name and image for a product in the consumers’ mind, mainly through advertising campaigns with a consistent theme. Branding aims to establish a significant and differentiated presence in the market that attracts and retains loyal customers.’

How does it benefit the branded generic consumers?

One thing that comes out clearly from the above definitions that brands, and for that matter the branding process is directed to the consumers. Applying the branding process for generic drugs, the moot question that surfaces is, how does it benefit the pharma consumers, significantly?

Besides, the branding process being so very expensive, adds significant cost to a generic drug, making its price exorbitant to most patients, quite disproportionate to incremental value, if any, that a branded generic offers over its unbranded equivalents. Thus, the relevance of the branding process for a generic drug, continues to remain a contentious issue for many, especially where the out of pocket expenditure for medicines is so high, as in India.

Marketing experts’ view on the branding process for drugs:

An interesting article titled ‘From Managing Pills to Managing Brands’, authored by the Unilever Chaired Professor of Marketing and a research fellow at INSEAD, published in the Harvard Business Review made the following observations on brands and the branding process for drugs:

“…It takes a huge investment to build a successful brand, consumer goods manufacturers try to make their brands last as long as possible. Some consumer products—notably, Coca-Cola, Nescafé, and Persil (a European laundry detergent) -  have stayed at the top for decades. That’s not to say the products don’t evolve, but the changes are presented as improvements and refinements rather than as breakthroughs.”

“In the pharmaceutical business, by contrast, a new product is always given a new name. Drug companies believe that only by introducing a new name can you signal to the market that the product itself is new. Unfortunately, this approach throws out the company’s previous marketing investment entirely; it has to build a new brand with each new product. That may not have mattered when pharmaceutical companies could rely on a large, high-margin market for each drug they wheeled out. But in a crowded market with tightening margins, the new-product, new-brand strategy is becoming less and less feasible.”

The above observations when applied to expensive ‘branded generics’, which are nothing but exact ‘me too’ varieties among tens other similar formulations of the same generic molecule, do not add any additional value to the patients, in a well-functioning drug regulatory environment.

Hence, to reduce the out of pocket drug cost significantly, Prime Minister Modi hinted at bringing an appropriate legal framework to address this critical issue, which gets well-reflected in the draft pharma policy 2017, as I read it.

Six key features of the draft pharma policy related to ‘branded generics’:

Following are the six key features enshrined in the draft pharma policy 2017 to translate into reality what the Prime Minister spoke about on this subject in Surat on April 17, 2017.

1. Bio-availability and Bio-equivalence tests mandatory for all drug manufacturing permissions:

For quality control of generic drugs, Bio-availability and Bio-equivalence tests (BA/BE Tests) will be made mandatory for all drug manufacturing permissions accorded by the State Drug Regulator or by the Central Drug Regulator. This will be made compulsory even for the future renewals of manufacturing licenses for all.

2. WHO GMP/GLP mandatory for all drug units:

The government shall ensure to get the World Health Organization’s Good Manufacturing Practices (GMP) and Good Laboratory Practices (GLP) adopted by all manufacturing units.

3. No branded generics for single ingredient off-patent molecules:

The government will pursue the policy of sale of single ingredient drugs by their pharmacopeial name/salt name. To keep the identity of the manufacturer, the manufacturer would be allowed to stamp its name on the drug package. For patented drugs and Fixed Dose Combination (FDCs) drugs the brand names may be used.

4. ‘One company – one drug – one brand name – one price’:

The principle of ‘one company – one drug – one brand name – one price’ would be implemented for all drugs.

5. Aid and assistance to prescribe in generic names:

To aid and assist the registered medical practitioners in prescribing medicines in the generic names, e-prescription will be put into operation whereby the prescriptions will be computerized and the medicine name will be picked up from a drop-down menu of salt names.

6. UCPMP to be made mandatory:

The marketing practices of several pharmaceutical companies create an unfair advantage. To provide a level playing field, the regulation for marketing practices which is at present voluntary will be made mandatory. Penalty will be levied for violations and an agency for implementation would also be assigned.

Conclusion:

I have focused in this article only on those specific intents of the government, as captured in the draft pharma policy 2017, to reduce the out of pocket expenses on drugs for the Indian patients, which is currently one of the highest in the world. This area assumes greater importance to many, keeping in mind what Prime Minister Modi hinted at in this regard on April 17, 2017. If implemented exactly as detailed in the policy draft, this specific area would have a watershed impact both on the patients, as well as, the pharma companies, including their related business associates, lasting over a long period time.

Far reaching consequential fall outs are expected to loom large on the way pharma players’ strategic business processes generally revolve round ‘branded generics’ in India. I hope, the Plan B of many predominantly branded generic players is also receiving final touches on the drawing board by now, as this aspect of the draft policy proposal can in no way be construed as a bolt from the blue, catching the industry totally off-guard. That said, would the same changes as proposed in the draft pharma policy 2017, if and when implemented, be a ‘wow’ moment for patients?

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 The Global Generic Drug Market Slowing Down?

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Driven by a strong environmental headwind, both within and outside the country, several pharma companies in India have recently started raising a red flag on their future earning guidance for the stock market, though citing quite different reasons altogether. Quoting the following two recent examples, I shall illustrate this point:

“For decades, the generic drug business has followed a simple model for growth: wait for a chemical medicine to go off patent, then copy it. But 2018 promises to be one of the industry’s last big bumper crops, with $27.8 billion worth of therapies losing protection. The following year’s haul drops by almost two thirds, and the year after it shrinks even further” – reported the May 27, 2017 article in Bloomberg titled, ‘Pharma Heir Seeks a New Holy Grail as Generic Drugs Run Dry,” quoting the promoter of Glenmark.

Another May 27, 2017 article by Reuters also quoted similar business sentiment, though for a much different reason, of the world’s fifth-largest generic drug maker – Sun Pharma, following similar concerns of Dr. Reddy’s Laboratories Ltd and Lupin Ltd. Here, the promoter of Sun Pharma said, “We may even have a single digit decline in consolidated revenue for full-year 2018 versus full-year 2017.”

These red flags, though signal different reasons, prompt some fundamental questions: Is the global generic drug market, especially the US, slowing down? If so, what then is the real reason of the anticipated business slow-down of large Indian pharma players? Is it due to lesser number of patented products going off-patent in the future years, or is it due to pricing pressure in various countries, including the US, or a combination of several other factors alongside? In this article, I shall deliberate on this emerging concern.

Global generic drug market – the past trend:

Several favorable environmental factors have been fueling the growth of generic drug prescriptions across the world, and the trend continues going north. Currently, the growth of generic drug prescriptions is outpacing the same for the patented ones. According to the April 2017 research study titled “Generic Drugs Market: Global Industry Trends, Manufacturing Process, Share, Size, Growth, Opportunity and Forecast 2017-2022”, published by IMARC, the global generic drug market was valued at around US$ 228.8 Billion in 2016, growing at a CAGR of around 9 percent during 2010-2016.

This trend has been well captured in numbers, from various different angles, in the September 2016 report of Evaluate Pharma, as follows:

Global trend of prescription generic drug sales (2008-2015) 

Year 2008 2009 2010 2011 2012 2013 2014 2015
Global Rx Drug Sales (2008-15) (US$ Billion) 650 663 687 729 717 724 749 742
Growth per Year (%) +2.0 +3.5 +6.1 (1.6) +0.9 +3.5 (1.0)
Rx Generics Drug Sales (US $Billion) 53 53 59 65 66 69 74 73
Generics as % of Total Rx Drugs 8.2 8.0 8.6 9.0 9.2 9.5 9.9 9.9
% Market at risk to patent expiry or available for new generic drugs entry 3.0 4.0 4.0 5.0 7.0 4.0 5.0 6.0

(Table 1: Adapted from the report ‘World Preview 2016, Outlook to 2022’ of EvaluatePharma, September 2016)

The Table 1 shows, while the overall global sales growth of prescription drugs faltered during 2012-15 period, mainly due to after effects of patent expiry of several blockbuster drugs, the general trend of generic drug sales continued to ascend. As we shall see below, the projected trend in the succeeding years is not much different, either.

Global generic drug market – present, and projected future trend:

The global generic drug market is currently growing at a faster pace than the patented drugs, and this overall trend is likely to remain so in future too, as we shall find below.

Globally, North America, and particularly the US, is the largest market for generic drugs. According to the QuintilesIMS 2016 report, generic drugs saved patients and the US health care system US$227 billion in 2015. Although around 89 percent of the total prescriptions in the US are for generic drugs, these constitute just 27 percent of total spending for medicines. In other words, the share of patented drugs, though, just around 11 percent of total prescriptions, contribute 73 percent of the total prescription drug costs.

Backed by the support of Governments for similar reasons, Europe is, and will continue to register impressive growth in this area. Similarly, in Latin America, Brazil is the largest market for generic drugs, contributing 23 percent and 25 percent of the country’s pharma sector by value and by volume, respectively, in 2015.

Major growth drivers to remain the same:

The following major factors would continue to drive the growth of the global generic drug market:

  • Patent expiration of innovative drugs
  • Increasing aging population
  • Healthcare cost containment pressure, including out of pocket drug expenditure
  • Government initiatives for the use of low cost generic drugs to treat chronic diseases
  • Despite high price competition more leading companies are taking interest in generic drugs especially in emerging markets

India – a major global player for generic drugs:

India and China dominated the generic drug market in the Asia pacific region. India is the largest exporter of the generic drug formulations. A large number of drug manufacturing plants belonging to several Indian players have obtained regulatory approval from the overseas regulators, such as, US-FDA, MHRA-UK, TGA-Australia and MCC-South Africa. Consequently, around 50 percent of the total annual turnover of many large domestic Indian drug manufacturers comes from exports.  The top global players in the generic drug market include Teva Pharmaceuticals, Novartis AG, Mylan, Abbott, Actavis Pharma and India’s own Sun Pharma.

No significant change in the future market trend is envisaged:

When I compare the same factors that fueled the growth of global prescription generic drug market in the past years (2008-2015) with the following year (2016), and the research-based projections from 2017-2022, no significant change in the market trend is visible.

Global trend of prescription generic drug sales (2015 – 2022)

Year 2015 2016 2017 2018 2019 2020 2021 2022
Global Rx Drug Sales (2015-22) (US$ Billion) 742 778 822 873 931 996 1060 1121
Growth per Year (%) (-1.0) +4.8 +5.7 +6.2 +6.6 +7.0 +6.5 +5.7
Rx Generics Drug Sales (US $Billion) 73 80 86 92 97 103 109 115
Generics as % of Total Rx Drugs 9.9 10.3 10.5 10.5 10.4 10.4 10.3 10.3
% Market at risk to patent expiry or available for new generic drugs entry 6.0 6.0 4.0 4.0 4.0 2.0 2.0 5.0

(Table 2: Adapted from the report ‘World Preview 2016, Outlook to 2022’ of EvaluatePharma, September 2016)

The Table 2 shows, the overall global sales growth trend of prescription drugs appears a shade better in 2008-15 period, even with the after effects of patent expiry (Table 1), as compared to 2016-22. The scope for entry of new generic drugs goes below 4 percent of the total prescription drug market only in two years – 2020 and 2021. Thus, any serious concern only on this count for a long-term growth impediment of the global generic drug market, post 2018, doesn’t seem to be based on a solid ground, and is a contentious one. Moreover, the sales trend of prescription generic drugs as a percentage of the total value of all prescription drugs, hovers around 10 percent in this statistical projection, which is again a shade better than around 9 percent of the past comparable years.

What triggered the major pricing pressure?

With its over 40 percent of the total pharmaceutical produce, predominantly generic drug formulations, being exported around the world, India has become one of the fastest growing global manufacturing hubs for medicinal products. According to Pharmaceutical Export Promotion Council of India (Pharmexcil), United States (US) is the largest market for the India’s pharma exports, followed by the United Kingdom (UK), South Africa, Russia, Nigeria, Brazil and Germany.

Since long, the largest pharma market in the world – the US, has been the Eldorado of pharma business across the globe, mostly driven by the unfettered freedom of continuously charging a hefty price premium in the country. Thus far, it has been an incredible dream run, all the way, even for many large, medium and small generic drug exporters from India.

However, ongoing activities of many large drug companies, dominated by allegedly blatant self-serving interests, have now given rise to a strong general demand on the Governments in different countries, including the US, to initiate robust remedial measures, soon. The telltale signs of which indicate that this no holds barred pricing freedom may not be available to pharma, even in the US, any longer.

Self-inflicted injury?

The situation where several major Indian generic companies are in today, appears akin to an avoidable self-inflicted injury, basically falling in the following two important areas. Nonetheless, even after the healing process gets over, the scar mark would remain for some more time, till the business becomes as usual. Hopefully, it will happen sooner than expected, provided truly ‘out of box’ corrective measures are taken, and followed up with a military precision.

Huge price hikes:

According to the Reuters report of September 11, 2016, US Department of Justice sent summons to the US arm of Sun Pharma – Taro Pharmaceutical Industries Inc. and its two senior executives seeking information on generic drug prices. In 2010, Sun Pharma acquired a controlling stake in Taro Pharmaceutical Industries.

On September 14, 2016, quoting a September 8, 2016 research done by the brokerage firm IIFL, ‘The Economic Times’ also reported that several large Indian generic drug manufacturers, such as, Sun Pharma, Dr. Reddy’s, Lupin, Aurobindo and Glenmark have hiked the prices of some of their drugs between 150 percent and 800 percent in the US. These apparently avoidable incidents fuel more apprehensions in the prevailing scenario. As I wrote in this Blog on September 12, 2016, the subject of price increases even for generic drugs reverberated during the last Presidential campaign in the US, as well.

Serious compromise with product quality standards:

Apprehensions on dubious quality standards of many drugs manufactured in India have now assumed a gigantic dimension with import bans of many India made generic drugs by foreign drug regulators, such as US-FDA, EMA and MHRA. Today, even smaller countries are questioning the Indian drug quality to protect their patients’ health interest. This critical issue has started gaining momentum since 2013, after Ranbaxy pleaded guilty and paid a hefty fine of US$ 500 million for falsifying clinical data and distributing allegedly ‘adulterated medicines’ in the United States.

Thereafter, it’s a history. The names of who’s who of Indian drug manufacturers started appearing in the US-FDA and other overseas drug regulators’ import ban list, not just for failing to conform to their quality standards, but also for willful non-compliance with major cGMP requirements, besides widely reported incidents of data fudging and falsification of other drug quality related documents.

Global murmurs on generic drug quality among doctors:

There are reported murmurs both among the US and the Indian doctors on the generic drug quality standards, but for different drug types and categories.

According to the Reuters article published on March 18, 2014, titled “Unease grows among US doctors over Indian drug quality”, many US doctors expressed serious concerns about the quality of generic drugs supplied by Indian manufacturers. This followed the ‘import bans’ by the USFDA and a flurry of huge Indian drug recalls there. Such concerns are so serious, as India supplies about 40 percent of generic and over-the-counter drugs used in the United States, making it the second-biggest generic drug supplier after Canada.

While the doctors in the US raise overall quality concerns on the products manufactured by the large Indian branded generic companies, Indian doctors are quite at ease with the branded generics. They generally raise quality concerns only on generic drugs without any brand names.

Thus, a lurking fear keeps lingering, as many feel that Indian drug manufacturing quality related issues may not necessarily be confined only to exports in the developed world, such as, the United States, European Union or Canada. There is no reason to vouch for either, that such gross violations are not taking place with the medicines consumed by patients in India, or in the poorer nations of Africa and other similar markets.

In conclusion:

Sun Pharma has publicly expressed its concern that pricing pressure in the US may adversely impact its business in 2018. There doesn’t seem to be any major surprise on this statement, as many believe it was likely to happen, though for a different reason, since when the global media reported in September 2015: “FDA revokes approval for Sun Pharma’s seizure drug over compliance issues.”

As investors are raising concerns, the following comment by the Co-Chairman and Chief Executive of Dr. Reddy’s Laboratories, reported by ‘Financial Express’ on August 24, 2015, well captures the vulnerability of Indian generic drug business in this area: “The U.S. market is so big that there is no equivalent alternative. We just have to get stronger in the U.S., resolve our issues, build a pipeline and be more innovative to drive growth.”

Inadequate remedial measures could unleash this pressure to reach a dangerous threshold, impacting sustainable performance of the concerned companies. On the other hand, adequate remedial action, both strategic and operational, could lead to significant cost escalation, with no space available for its neutralization through price increases, gradually squeezing the margin. It will be a tight rope walk for many in the coming years.

As research reports indicate, the global generic drug market is not and will not be slowing down in the long term, not even in India. There may be some temporary ups and downs in the market due to pricing pressure, and the number of novel products going off-patent in some years. Nevertheless, the traditional business models being followed by some large companies may retard their respective business growth, considerably.

The pricing pressure is a real one. However, from the Indian perspective, I reckon, it’s primarily a self-inflicted injury, just as the other major one – the drug import bans on the ground of serious compromise with product quality standards. Many Indian generic drug players don’t believe so, and probably would never will, publicly.

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.

Prescriptions in Generic Names Be Made A Must in India?

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Would prescriptions in generic names be made a must in India?

Yes, that’s what Prime Minister Modi distinctly hinted at on April 17, 2017, during the inauguration function of a charitable hospital in Surat. To facilitate this process, his government may bring in a legal framework under which doctors will have to prescribe generic medicines, the PM assured without any ambiguity whatsoever.

“In our country doctors are less, hospitals are less and medicines are expensive. If one person falls ill in a middle-class family, then the financial health of the family gets wrecked. He cannot buy a house, cannot conduct the marriage of a daughter,” he reiterated.

“It is the government’s responsibility that everybody should get health services at a minimal price,” the Prime Minister further reinforced, as he referred to the National Health Policy 2017. His clear assurance on this much-debated issue is indeed music to many ears.

Some eyebrows have already been raised on this decision of the Prime Minister, which primarily include the pharma industry, and its traditional torch bearers. Understandably, a distinct echo of the same one can also be sensed in some English business dailies. Keeping aside these expected naysayers, in this article, after giving a brief backdrop on the subject, I shall argue for the relevance of this critical issue, in today’s perspective.

Anything wrong with generic drugs sans brand names?

At the very outset, let me submit, there aren’t enough credible data to claim so. On the contrary, there are enough reports vindicating that generic drugs without brand names are generally as good as their branded equivalents. For example, a 2017 study on this subject and also in the Indian context reported, ‘93 percent of generic and 87 percent branded drug users believed that their drugs were effective in controlling their ailments.’

Thus, in my view, all generic medicines without any brand names, approved by the drug regulatory authorities can’t be inferred as inferior to equivalent branded generics – formulated with the same molecules, in the same strength and in the same dosage form; and vice versa. Both these varieties have undergone similar efficacy, safety and quality checks, if either of these are not spurious. There isn’t enough evidence either that more of generic drugs sans brand names are spurious.

However, turning the point that generic drugs without brand name cost much less to patients than their branded generic equivalents on its head, an ongoing concerted effort of vested interests is systematically trying to malign the minds of many, projecting that those cheaper drugs are inferior in quality. Many medical practitioners are also not excluded from nurturing this possible spoon-fed and make-believe perception, including a section of the media. This reminds me of the famous quote of Joseph Goebbels – the German politician and Minister of Propaganda of Nazi Germany till 1945: “If you tell a lie big enough and keep repeating it, people will eventually come to believe it.”

The lower prices of generic drugs without brand names are primarily because their manufacturers don’t need to incur huge expenditure towards marketing and sales promotion, including contentious activities, such as, so called ‘Continuing Medical Education (CME)’ for the doctors in exotic locales, and several others of its ilk.

Thus, Prime Minister Modi’s concern, I reckon, is genuine to the core. If any doctor prescribes an expensive branded generic medicine, the concerned patient should have the legal option available to ask the retailer for its substitution with a less expensive generic or even any other branded generic equivalent, which is supposed to work just as well as the prescribed branded generic. For this drug prescriptions in INN is critical.

Provide Unique Identification Code to all drug manufacturers:

When in India, we can have a digitally coded unique identification number, issued by the Government for every individual resident, in the form of ‘Aadhaar’, why can’t each drug manufacturer be also provided with a similar digitally coded number for their easy traceability and also to decipher the trail of manufacturing and sales transactions. If it’s not possible, any other effective digital ‘track and trace’ mechanism for all drugs would help bringing the wrongdoers, including those manufacturing and selling spurious and substandard drugs to justice, sooner. In case a GST system can help ferret out these details, then nothing else in this regard may probably be necessary.

Past initiatives:

In India, ‘Out of Pocket (OoP) expenditure’ as a percentage of total health care expenses being around 70 percent, is one of the highest in the world. A study by the World Bank conducted in May 2001 titled, “India – Raising the Sights: Better Health Systems for India’s Poor” indicates that out-of-pocket medical costs alone may push 2.2 percent of the population below the poverty line in one year. This situation hasn’t improved much even today, as the Prime Minister said.

Although, ‘prescribe drugs by generic names’ initiative was reported in July 2015, in the current context, I shall focus only on the recent past. Just in the last year, several initiatives were taken by the current Government to help patients reduce the OoP expenses on medicines, which constitute over 60 percent of around 70 percent of the total treatment cost. Regrettably, none of these steps have been working effectively. I shall cite hereunder, just three examples:

  • On February 29, 2016, during the Union Budget presentation for the financial year 2016-17 before the Parliament, the Finance Minister announced the launch of ‘Pradhan Mantri Jan-Aushadhi Yojana (PMJAY)’ to open 3,000 Stores under PMJAY during 2016-17.
  • On August 04, 2016, it was widely reported that a new digital initiative of the National Pharmaceutical Pricing Authority (NPPA), named, “Search Medicine Price”, would be launched on August 29, 2016. According to NPPA, “Consumers can use the app before paying for a medicine to ensure that they get the right price.”
  • In October 2016, a circular of the Medical Council of India (MCI), clearly directed the medical practitioners that: “Every physician should prescribe drugs with generic names legibly and preferably in capital letters and he/she shall ensure that there is a rational prescription and use of drugs”

A critical hurdle to overcome:

Besides, stark inefficiency of the MCI to implement its own directive for generic prescriptions, there is a key legal hurdle too, as I see it.

For example, in the current situation, the only way the JAS can sell more of essential generic drugs for greater patient access, is by allowing the store pharmacists substituting high price branded generics with their exact generic equivalents available in the JAS. However, such substitution would be grossly illegal in India, because the section 65 (11) (c) in the Drugs and Cosmetics Rules, 1945 states as follows:

“At the time of dispensing there must be noted on the prescription above the signature of the prescriber the name and address of the seller and the date on which the prescription is dispensed. 20 [(11A) No person dispensing a prescription containing substances specified in 21 [Schedule H or X] may supply any other preparation, whether containing the same substances or not in lieu thereof.]”

A move that faltered:

To address this legal issue, the Ministry of Health reportedly had submitted a proposal to the Drug Technical Advisory Board (DTAB) to the Drug Controller General of India (DCGI), for consideration. In the proposal, the Health Ministry reportedly suggested an amendment of Rule 65 of the Drugs and Cosmetics Rules, 1945 to enable the retail chemists substituting a branded drug formulation with its cheaper equivalent, containing the same generic ingredient, in the same strength and the dosage form, with or without a brand name.

However, in the 71st meeting of the DTAB held on May 13, 2016, its members reportedly turned down that proposal of the ministry. DTAB apparently felt that given the structure of the Indian retail pharmaceutical market, the practical impact of this recommendation may be limited.

The focus should now move beyond affordability:

In my view, the Government focus now should move beyond just drug affordability, because affordability is a highly relative yardstick. What is affordable to an average middle class population may not be affordable to the rest of the population above the poverty line. Similarly, below the poverty line population may not be able to afford perhaps any cost towards medicines or health care, in general.

Moreover, affordability will have no meaning, if one does not have even easy access to medicines. Thus, in my view, there are five key factors, which could ensure smooth access to medicines to the common man, across the country; affordable price being one of these factors:

1. A robust healthcare infrastructure
2. Affordable health care costs, including, doctors’ fees, drugs and diagnostics
3. Rational selection and usage of drugs by all concerned
4. Availability of health care financing system like, health insurance
5. Efficient logistics and supply chain support throughout the country

In this scenario, just putting in place a legal framework for drug prescription in generic names, as the Prime Minister has articulated, may bring some temporary relief, but won’t be a long-term solution for public health care needs. There arises a crying need to put in place an appropriate Universal Health Care (UHC) model in India, soon, as detailed in the National Health Policy 2017.

Brand names aren’t going to disappear:

Prime Minister Modi’s assertion to bring in a legal framework under which doctors will have to prescribe generic medicines, probably will also legally empower the retailers for substitution of high priced branded generics with low priced generic or branded generic equivalents.

This promise of the Prime Minister, when fulfilled, will facilitate making a larger quantum of lower price and high quality generic drugs available to patients, improving overall access to essential medicines. Hopefully, similar substitution will be authorized not just for the JAS outlets, but by all retail drug stores, as well.

Brand names for generic drugs will continue to exist, but with much lesser relevance. the Drugs & Cosmetic Rules of India has already made it mandatory to mention the ‘generic names or INN’ of Drugs on all packing labels in a more conspicuous manner than the trade (brand) name, if any. Hence, if a doctor prescribes in generic names, it will be easier for all retail pharmacists and even the patients, to choose cheaper alternatives from different available price-bands.

Possible changes in the sales and marketing strategies:

If it really happens, the strategic marketing focus should shift – from primarily product-brand marketing and stakeholders’ engagement for the same, to intensive corporate-brand marketing with more intense stakeholder engagement strategies, for better top of mind recall as a patient friendly and caring corporation.

Similarly, the sales promotion strategy for branded generics would possibly shift from – primarily the doctors to also the top retailers. It won’t be unlikely to know that the major retailers are participating in pharma company sponsored ‘Continuing Pharmacy Education (CPE)’ in similar or even more exotic places than the doctor!

There are many more.

International examples:

There are enough international examples on what Prime Minister Modi has since proposed in his speech on this issue. All these are working quite well. To illustrate the point with a few examples, I shall underscore that prescribing in generic name or in other words “International Nonproprietary Name (INN)’ is permitted in two-thirds of OECD countries like the United States, and is mandatory in several other nations, such as, France, Spain, Portugal and Estonia. Similarly, pharmacists can legally substitute brand-name drugs with generic equivalents in most OECD countries, while such substitution has been mandatory in countries, such as, Denmark, Finland, Spain, Sweden, Italy. Further, in several different countries, pharmacists have also the obligation to inform patients about the availability of a cheaper alternative.

However, the naysayers would continue saying: ‘But India is different.’

Impact on the pharma industry:

The March 2017 report of ‘India Brand Equity Foundation (IBEF)’ states that Indian pharmaceutical sector accounts for about 2.4 per cent of the global pharmaceutical industry in value terms, 10 per cent in volume terms and is expected to expand at a Compound Annual Growth Rate (CAGR) of 15.92 per cent to US$ 55 billion by 2020 from US$ 20 billion in 2015. With 70 per cent market share (in terms of value), generic drugs constitute its largest segment. Over the Counter (OTC) medicines and patented drugs constitute the balance 21 percent and 9 percent, respectively. Branded generics constitute around 90 percent of the generic market. In my view, if the above decision of the Prime Minister is implemented the way I deliberated here in this article, we are likely to witness perceptible changes in the market dynamics and individual company’s performance outlook. A few of my top of mind examples are as follows:

  • No long-term overall adverse market impact is envisaged, as ‘the prices of 700 essential medicines have already been capped by the National Pharmaceutical Pricing Authority (NPPA). However, some short-term market adjustments are possible, because of several other factors.
  • There could be a significant impact on the (brand) market shares of various companies. Some will have greater exposure and some lesser, depending on their current sales and marketing models and business outlook.
  • Valuation of those companies, which had acquired mega branded generics, such as Piramal brands by Abbott Healthcare, or Ranbaxy brands by Sun pharma, may undergo considerable changes, unless timely, innovative and proactive measures are taken forthwith, as I had deliberated before in this blog.
  • Together with much awaited implementation of the mandatory Uniform Code of Pharmaceutical Marketing Practices (UCPMP) sooner than later, the sales and marketing expenditure of the branded generic players could come down significantly, improving the bottom-line.
  • Pharma marketing ballgame in this segment would undergo a metamorphosis, with brighter creative minds scoring higher, aided by the cutting-edge strategies, and digital marketing playing a much greater role than what it does today.
  • A significant reduction in the number of field forces is also possible, as the sales promotion focus gets sharper on the retailers and digitally enabled patient engagement initiatives.

The above examples are just illustrative. I hasten to add that at this stage it should not be considered as any more than an educates guess. We all need to wait, and watch how these promises get translated into reality, of course, without underestimating the quiet lobbying power of the powerful pharma industry. That said, the long-term macro picture of the Indian pharma industry continues to remain as bright, if appropriate and timely strategic interventions are put well in place, as I see it.

In conclusion:

It is an irony that despite being the 4th largest producer of pharmaceuticals, and catering to the needs of 20 percent of the global requirements for generic medicines, India is still unable to ensure access to many modern medicines to a large section of its population.

Despite this situation in India, Prime Minister Modi’s encouraging words on this issue have reportedly attracted the wrath of some section of the pharma industry, which, incidentally, he is aware of it, as evident from his speech.

Some have expressed serious concern that it would shift the decision of choosing a specific generic formulation of the same molecule for the patients from doctors to chemists. My counter question is, so what? The drug regulator of the country ensures, and has also repeatedly affirmed that there is no difference in efficacy, safety and quality profile between any approved branded generic and its generic equivalents. Moreover, by implementing an effective track and trace system for all drugs, such misgiving on spurious generic medicines, both with or without brand names, can be more effectively addressed, if not eliminated. Incidentally, reported incidences of USFDA import bans on drug quality parameters and breach of data integrity, include many large Indian branded generic manufacturers. Thus, can anyone really vouch for high drug quality even from the branded generics in India?

Further, the expensive branding exercise of essential medicines, just for commercial gain, and adversely impacting patients’ access to these drugs, has now been questioned without any ambiguity, none else than the Prime Minster of India. The generic drug manufacturers will need to quickly adapt to ‘low margin – high volume’ business models, leveraging economies of scale, and accepting the stark reality, as was expressed in an article published in Forbes – ‘the age of commodity medicines approaches’. Even otherwise, what’s wrong in the term commodity, either, especially when generic medicines have been officially and legally classified as essential commodities in India?

Overall, the clear signal from Prime Minister Modi that ‘prescriptions in generic names be made a must in India ‘, well supported by appropriate legal and regulatory mechanisms – is indeed a good beginning, while paving the way for a new era of Universal Health Care in India. God willing!

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.

Making New Cancer Drugs Cost-effective

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The prices of new cancer drugs are increasingly becoming unsustainable across the world, and more so in India. A sizable number of poor and even middle-income patients, who spend their entire life’s savings for the treatment of this dreaded disease, is pushed towards extreme economic hardship. Their plight in India would continue to remain so, till Universal Health Care (UHC) comes into force, as enunciated in the National Health Policy 2017.

Thus, the delivery of affordable and equitable cancer care poses one of India’s greatest public health challenges. Public expenditure on cancer in India remains below US$ 10 per person, as compared with more than US$ 100 per person in high-income countries. The May 2014 paper, published in ‘The Lancet Oncology’, analyzed this concern in detail.

In this article, after giving a brief backdrop, I shall explore a possible alternative to make cancer treatment with new drugs affordable to many by scaling up this strategic option.

Cancer – the second leading cause of death:

According to the World Health Organization (W.H.O), cancer is the second leading cause of death globally and accounted for 8.8 million deaths in 2015. This works out to nearly 1 in 6 of all global deaths, with US$ 1.16 trillion being the estimated total annual economic cost of cancer in 2010. Lung, prostate, colorectal, stomach and liver cancer are the most common types of cancer in men, while breast, colorectal, lung, cervix and stomach cancer are the most common among women. To reduce significant disability, suffering and deaths caused by cancer worldwide, effective and affordable programs in early diagnosis, screening, treatment, and palliative care are needed. Treatment options may include surgery, medicines and/or radiotherapy – the report reiterates. In many instances, anti-cancer drugs are the mainstay treatment.

For the country, Indian Council of Medical Research (ICMR) reported over 736, 000 people succumbing to the disease in 2016. This figure is expected to shoot up to 880,000 by 2020. ICMR estimated the total number of new cancer cases at around 1.45 million in 2016, and the same is likely to reach 1.73 million by 2020. The situation in this area, therefore, rather grim across the world, including India.

Cancer treatment cost in India is one of the highest in the world:

Anticancer drugs are generally expensive. As stated in a related article, published in the Nature Reviews Clinical Oncology on March 14, 2017, in the United States, a novel anticancer drug routinely costs more than US$ 100,000 per year of treatment. When adjusted for per capita spending power, these lifesaving medicines become most unaffordable in economically developing nations, such as India and China. Not only are their launch prices high and fast rising, but these also often escalate during the respective patent exclusivity period.

That in terms of the ability to pay for drugs, cancer drugs are most affordable in Australia and least affordable in India and China, was established in one of the largest research study presented at the 2016 Annual Meeting of the American Society of Clinical Oncology. Moreover, even in those cases where cancer could be detected early, about half the patients in India are compelled to skip the treatment for high drug cost, highlights another article.

Interestingly, the concerned drug manufacturers seldom, if at all, justify such astronomical drug prices and subsequent price increases well supported by some rational factors, such as, the extent of benefit patients are likely to derive, the novelty of the agents, or detailed spending on research and development, the above paper states.

The increasing trend of price escalation of cancer drugs harms many patients, often directly, through increased out-of-pocket expenses, which reduce levels of patient compliance, or drive thousands of cancer patients skipping the drug treatment, altogether. Consequently, it also harms the society by imposing cumulative price burdens on many patients that are unsustainable.

Despite high cost, annual global spending on anticancer drugs has already exceeded US$100 billion, and is predicted to reach US$150 billion by 2020. In India too, oncology is a leading therapeutic segment, which reached a turnover of Rs. 2,000 Crore (around US$ 320 million) in 2013 and is expected to grow to Rs. 3,831 crore (around US$ 615 million) by the end of 2017, according to a report of Frost and Sullivan.

The reason for high drug price:

The real reason for the high cost of cancer drugs, just as many other life-saving medicines, is quite challenging to fathom. Many attribute its reason to unsustainable R&D models of the global pharma companies, in general.

For example, “the spiraling cost of new drugs mandates a fundamentally different approach to keep lifesaving therapies affordable for cancer patients” – argued an article titled, “How Much Longer Will We Put Up With US$ 100,000 Cancer Drugs?”, published by Elsevier Inc. In the same context, another article titled “Making Cancer Treatment More Affordable”, published in the ‘Rare Disease Report’ on Feb 09, 2017, reiterated that the current R&D model needs to change, as the cost of many such treatments is higher than the cost of an average person’s house in the United States.

Nonetheless, the drug manufacturers answer this difficult question with ease and promptness, citing that the cost of innovation to bring these drugs through a complex research and development (R&D) process to the market, isn’t just very high, but is also increasing at a rapid pace.

Pharma R&D cost:

An analysis by the Tufts Center for the Study of Drug Development, published in the Journal of Health Economics in March, 2016 pegged the average cost to develop and gain marketing approval for a new drug at US$ 2.558 billion. It also said that the total cost of innovation of a new drug and bringing it to market, has increased more than double from US$ 1.22 billion in 2003 to US$ 2.6 billion in 2014. Although these numbers are being vehemently challenged in several credible journals and by the international media, many global pharma majors justify the high new drug prices

by highlighting that developing a new molecule takes an enormous amount of time of 12 to 14 years, lots of financial resources and huge efforts.

On the other hand, an article titled, “Does it really cost US$ 2.6 billion to develop a new drug?”, published in The Washington Post on November 18, 2014 observed that: ‘The never-ending debate about what drugs should cost is in part driven by the fact that no one seems to know what it actually costs to develop one.”

But, why is the decline in the R&D productivity trend?

According to a 2014 review article titled, “Recent Advances in Drug Repositioning for the Discovery of New Anticancer Drugs”, published in the International Journal of Biological Sciences, while the total R&D expenditure for drug discovery worldwide increased 10 times since 1975 (US$ 4 billion) to 2009 (US$ 40 billion), the number of NMEs approved has remained largely flat (26 new drugs approved in 1976 and 27 new drugs approved in 2013). The average time required for drug discovery to market launch has also increased over time in the US and in the EU countries from 9.7 years during 1990s, to 13.9 years from 2000 onwards.

Be that as it may, the bottom-line is regardless of tremendous advancement in biological science, technology and analytics, especially in the new millennium, coupled with increasing investments in pharma R&D, the total number of NMEs that has reached the market hasn’t shown commensurate increase.

One of my articles published in this blog titled, “How Expensive Is Drug Innovation?” found an echo of the same in a globally reputed journal. This study, published by the BMJ on May 2016, titled “Propaganda or the cost of innovation? Challenging the high price of new drugs”, expressed deep concern on the rising prices of new medicines. It reiterated that this trend is set to overwhelm health systems around the world.

Need for an alternative R&D strategy:

The hurdles in discovering and developing new drugs call for alternative approaches, particularly for life threatening diseases, such as cancer. I reckon, it’s about time to scale-up a viable alternative strategy to bring down the R&D cost of new drugs, improve the success rate of clinical development, reduce a decade long ‘mind to market’ timeframe for an innovative drug or a treatment, and of course, the mind blogging cost of the entire process, as asserted in the above report from the Tufts Center.

One such alternative strategy could well be: ‘Drug Repurposing’

Drug Repurposing:

As defined by the National Center for Advancing Translational Sciences, ‘drug repurposing’ “generally refers to studying drugs that are already approved to treat one disease or condition to see if they are safe and effective for treating other diseases”.

As many molecules, with well-documented records on their pharmacology and toxicity profile, have been already formulated and undergone large clinical trials on humans, repurposing those drugs building upon the available documents and experiences for fresh clinical trials in different disease conditions, would hasten the regulatory review process for marketing approval, and at a much lesser cost.

I shall quote here just two such examples of ‘drug repurposing’ from well-known molecules, as follows:

  • Sildenafil (Viagra): The blockbuster drug that was launched by Pfizer in 1998 for the treatment of erectile dysfunctions was originally developed for the treatment of coronary artery disease by the same company in 1980s.
  • Thalidomide: Originally designed and developed by a German pharmaceutical company called Grünenthal in Stolberg as a treatment for morning sickness in 1957, but was withdrawn in 1961 from the market because it caused birth defects. The same molecule was reintroduced in 1998 as a ‘repurposed drug’ to effectively treat patients with erythema nodosum leprosum (ENL) – a complication of leprosy, and multiple myeloma – a type of cancer.

I had given many more examples of ‘drug repurposing’ in one of my earlier articles published in this blog.

Repurposing drugs for cancer:

The above-mentioned review article of International Journal of Biological Sciences 2014 clearly noted: “Drug repositioning has attracted particular attention from the communities engaged in anticancer drug discovery due to the combination of great demand for new anticancer drugs and the availability of a wide variety of cell and target-based screening assays. With the successful clinical introduction of a number of non-cancer drugs for cancer treatment, ‘drug repurposing’ now became a powerful alternative strategy to discover and develop novel anticancer drug candidates from the existing drug space.”

The following are some recent successful examples of ‘drug repurposing’ for anticancer drug discovery from non-cancer drugs, which are mostly under Phase I to II clinical trials:

Drug Original treatment Clinical status for cancer treatment
Itraconazole Fungal infections Phase I and II
Nelfinavir HIV infections Phase I and II
Digoxin Cardiac diseases Phase I and II
Nitroxoline Urinary Tract Infections Preclinical
Riluzole Amyotropic lateral sclerosis Phase I and II
Disulfram Chronic alcoholism Phase I and II

‘Drug repurposing’ market:

A January 2016 report by BCC Research estimates that the global market for drug repurposing will grow from nearly US$ 24.4 billion in 2015 to nearly US$ 31.3 billion by 2020, with a compound annual growth rate (CAGR) of 5.1 percent for the period of 2015-2020.

Expressing concern just not enough:

There are enough examples available across the world regarding stakeholders’ expression of great concern on this issue, with the buzz of such protests getting progressively shriller.

However, in India, high prices of cancer drugs do not seem to be a great issue with the medical profession, just yet, notwithstanding some sporadic steps taken by the National Pharmaceutical Pricing Authority (NPPA) to allay the economic burden of cancer patients to some extent. Encouragingly, the top cancer specialists of the American Society of Clinical Oncology are reportedly working out a framework for rating and selecting cancer drugs not only for their benefits and side effects, but prices as well.

In a 2015 paper, a group of cancer specialists from Mayo Clinic also articulated, that the oft-repeated arguments of price controls stifle innovation are not good enough to justify unusually high prices of cancer drugs. Their solution for this problem includes value-based pricing and NICE like body of the United Kingdom. An interesting video clip from Mayo Clinic justifies the argument.

All this can at best be epitomized as so far so good, and may help increase the public awareness level on this subject. However, the moot point remains: Has anything significantly changed on the ground, on a permanent basis, by mere expression of such concerns?

Conclusion:

This discussion may provoke many to go back to the square number one, making the ongoing raging debate on Innovation, Intellectual Property Rights (IPR) and Public Health Interest to gather more steam, but the core concern continues to remain unresolved.

I hasten to add that all such concerns, including strong protests, may no doubt create some temporary pressure on drug manufacturers, but they are experienced enough to navigate through such issues, as they have been doing, so far. However, for making new cancer drugs cost-effective for a vast population of patients, coming out of the current strategic mold of pharma research and development would be necessary. Grant of Compulsory License (CL), or the expectation of the local drug manufacturers for a Voluntary License (VL) of new cancer drugs, can’t be a routine process either, as it appears unrealistic to me, for various reasons.

I have discussed in this article just one alternative R&D strategy in this area, and that is Drug Repurposing (DR). There could be several others. DR is reportedly gaining increasing focus, as it represents a smart way to exploit new molecular targets of a known non-oncological drug for a new therapeutic applications in oncology. Be that as it may, pharma companies and the academia must agree to sail on the same boat together having a common goal to make new cancer drugs cost-effective for majority of cancer patients struggling hard, for life.

I would conclude this article quoting the President and Chief Science Officer of Illinois-based Cures Within Reach who said: “What I like about drug repurposing is that it can solve two issues: improved health-care impact and reduced health-care cost – That’s a big driver for us.”

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.

Define And Adapt To Reality: Two Pivotal Pharma Leadership Skills For Sustainable Excellence

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Max DePree – a much quoted American businessman and author had once said: “The first responsibility of a leader is to define reality.”

While defining the reality within the drug industry today, it makes many industry leaders to ponder, despite so much of the good work done by the industry in various fields of pharma business, across the world, including India, why is the public perception on the overall leadership of this sector still so negative, and continue going south? Pharma leaders know the reasons too, but they seem to be still searching for the right set of answers without breaking the traditional mold of business.

Around end 2007, being concerned with this trend, the then Chairman of Eli Lilly reportedly expressed publicly what many industry observers have been saying privately for some time. He said: “I think the industry is doomed, if we don’t change”.

On the general apathy of breaking the traditional mold after having defined the business reality, an interesting article titled, “Healthcare Leadership Must Shift From A Cottage Industry To Big Business”, published on June 2, 2014 in Forbes, made some interesting observations, which are as relevant to India, just as many other countries of the world.

The article states that the ‘Healthcare Leadership’ has not kept up with the industry’s evolution to big business over the past 25-30 years – nor does it possess the required change management competencies to effectively lead and rapidly turn around an adaptive health care business model. Thus, unlike many other knowledge industries, pharma sector is still struggling hard to convert the tough environmental challenges into bright business opportunities. This leads to an important question: Being mostly inward looking, are these leaders failing to properly define reality around them, and therefore, not adapting to the critical external business environmental needs, soon enough?

Is current pharma leadership too inward looking?

From the available details, it appears that today, many inward-looking pharma leaders tend to ignore many serious voices demanding access to high quality medicines at affordable prices, especially for life threatening ailments, such as, cancer. Instead of engaging with the stakeholders in search of a win-win solution, global pharma leadership apparently tries to push the ball out its court with a barrage of mundane and arrogant arguments highlighting the importance of ‘drug innovation’ and hyping how expensive it is. Notwithstanding that by now, many people are aware of its frequent use, generally by the global pharma players, mostly as a veil, whenever required. Even then, many pharma leaders, instead of accepting the reality, continue to remain insensitive to the concerns not just of most patients, but other stakeholders and their respective governments also. This mindset further reinforces their inward-looking and self-serving image. This brings to the fore the key issue: Is this high time to pass the baton to a new breed of pharma leaders?

In the above backdrop, this article dwells on some intrinsic issues involved with the leadership puzzle of the industry, as it were. Thereafter, it deliberates on the importance of making some easy self-tests available to the young and especially the millennial pharma professionals, to facilitate them to self-discover themselves in this space, and that too at an early stage of their professional career, as they try to understand and define the business and environmental realities facing the industry.

Leadership skills are difficult to find:

Focusing on the pharma industry, I would say, especially in the pharma sector, leadership skill in all its functional areas though is considered as the most important one, but are equally challenging while identifying the right persons.

The 20th Pharma CEO Survey, March 2017 of PwC, vindicates this point. The survey covered 89 pharma CEOs from 37 countries. Nearly all the Pharma CEOs participating in this survey picked out leadership as the most important for their organization, giving it the top spot, closely followed by problem-solving, creativity and innovation, all bracketed in the second, with collaboration and adaptability occupying the equal third rank, as follows:

Relative importance of skills in pharma industry Skill sets Respondents answering somewhat difficult or very difficult to get each one of these
1. Leadership 79
2. Creativity & Innovation 75
3. Emotional intelligence 72
4. Adaptability 63
5. Problem-solving 55

Over two-thirds of the CEOs face difficulty in recruiting people with the requisite skills that they consider most important to their organization, such as, leadership, problem-solving, and creative skills, the report highlighted. For further deliberation hereunder, I shall pick up the top one – the leadership skill for the pharma industry, as I see it.

The age-old question – ‘Are leaders born or made?’

A critical question that is often asked even today – ‘Are leaders born or made?’ The question keeps coming as some enthusiasts continue to argue that successful leaders are born with visible or apparently invisible leadership traits.

Are leaders born?

To answer this question, let me quote an example. The Management Study Guide (MSG), well-articulated an approach to the study of leadership known as the ‘Great Man Theory’, giving examples of the great leaders of the past, such as, Alexander the Great, Julius Caesar, Napoleon, Queen Elizabeth I, Abraham Lincoln and Mahatma Gandhi. They all seem to differ from ordinary human beings in several aspects, possessing high levels of ambition coupled with clear visions of precisely where they want to go.

Added to these examples are many top business executives, sports personalities, and even contemporary politicians, who often seem to possess an aura that sets them apart from others. These persons are cited as naturally great leaders, born with a set of personal qualities that made them effective leaders. Thus, even today, the belief that truly great leaders are born, is not uncommon. Thus, according to the contemporary theorists, leaders are not like other people. They do not need to be intellectually genius or omniscient prophets to succeed, but they should certainly have the ‘right stuff’, which is not equally present in all people, MSG highlights.

Even today, some continue to believe in the ‘Great Man Theory’, regardless of many well carried out research studies of the behavioral scientists establishing that it is quite possible for individuals becoming leaders through various processes, such as, self-learning, keenly observing or working with some good leaders, following their advices, training, and practicing the experiences thus gained in one’s real life.

Are leaders made?

Just as above, to answer this question, as well, I would cite another important example.

A September 21, 2016 article titled, “What Science Tells Us About Leadership Potential”, published in the ‘Harvard Business Review (HBR)’, while answering the question ‘who becomes a leader’, stated as follows:

“Any observable pattern of human behaviors is the byproduct of genetic and environmental influences, so the answer to this question is ‘both’.  Estimates suggest that leadership is 30%-60% heritable, largely because the character traits that shape leadership - personality and intelligence - are heritable. While this suggests strong biological influences on leadership, it does not imply that nurture is trivial. Even more-heritable traits, such as weight (80%) and height (90%), are affected by environmental factors. Although there is no clear recipe for manipulating the environment in order to boost leadership potential, well-crafted coaching interventions boost critical leadership competencies by about 20%–30%.”

What would a young pharma professional do in this situation?

The current breed of top leaders would continue grooming and promoting mostly those who fit their profile, while in the family owned businesses succession usually takes place from within the family. The situation is no different in the pharma industry. However, various studies indicate that millennial professionals with leadership traits will develop themselves.

Keeping this in mind and, at the same time, going by the above HBR article, I would tend to accept the dictum that, “Any observable pattern of human behaviors is the byproduct of genetic and environmental influences”. Thus, for identifying and then honing leadership skills in the pharma business, just as many other industries, I would prefer the process of dovetailing the heritable leadership traits with various environmental influences.

An ambitious pharma professional with high aspiration to make a difference in the organization that the individual represents, would obviously wonder what the way forward for him to achieve the goals. In my view, an honest self-test is the first and basic move in this direction.

The self-test:

Taking a cue from the article titled “Strategic Leadership: The Essential Skills”, published in the January-February 2013 issue of The Harvard Business Review (HBR), I would suggest that the young professionals may wish to ask themselves the following important questions:

  • Do I have the right networks to help myself see opportunities before competitors do?
  • Am I comfortable challenging my own and others’ assumptions?
  • Can I get a diverse group to buy into a common vision?
  • Do I learn from mistakes?

The answer to each of these ones should be clear and honest, as one doesn’t need to disclose those answers to anyone else. Nonetheless, by following this process, a young professional gets a clear view of where he or she stands in each of these important areas, which cover some of the basic traits of a leader.

The leadership package:

Irrespective of whether an individual has some heritable leadership traits or not, the above self-test would reveal a person’s strengths and weaknesses, help address the deficits and optimize the full portfolio of leadership skills, independently or otherwise.

Nevertheless, it is important to bear in mind, as several research studies have already established, though leadership skills are important and difficult to find, a few other salient skills such as, ability to apply in real life a creative and innovative mindset, supported by high emotional intelligence or emotional quotient (EQ) are also critical. This is because, together these offer the all-important leadership package for an all-round successful leader.

Should pharma leadership be eclectic?

I guess so, as there does not seem to be any better alternative either. Thus, I reckon, traditional pharma leadership needs to be eclectic. It has still got a lot to learn from other industries too. Let me give a relevant example here – to speed up development of electric cars by all manufacturers, the Cofounder and Chief Executive Officer Elon Musk of Tesla Motors has reportedly decided to share its patents under ‘Open Source’ sharing of technologies with all others. Elon Musk further reiterated: “If we clear a path to the creation of compelling electric vehicles, but then lay Intellectual property (IP) landmines behind us to inhibit others, we are acting in a manner contrary to that goal.”

In the important ‘green’ automobile space, this is indeed a radical, gutsy and an exemplary decision to underscore Tesla Motor’s concern about global warming.

Why such type of leadership is so rare in the global pharma world, even today? Besides sanctimonies, as these appear, why the global pharma leaders are not taking similar large scale initiatives for drug innovation, especially in the areas of difficult diseases, such as, Cancer, Alzheimer’s, Multiple Sclerosis and Metabolic disorders, just to name a few? For this purpose, pharma organizations would require mettlesome change agents who can break the traditional mold –new leaders of the millennial generation having a different business outlook altogether, could possibly do so.

Becoming a change agent:

Today, more than ever before, the ultimate goal of pharma leaders requires moving beyond making more money to satisfy the shareholders and stock markets. It also needs to include the requirements of society, in general, more than what mandatory CSR demands. This is palpable today, as many stakeholders vehemently questioning the business game plan of many pharma players. Would this situation change? I don’t know, but it should, which prompts a change in the overall quality of pharma leadership, at all levels. I have had reason to believe that a good number of bright, millennial pharma professionals look for empowerment to discover themselves early. Right at that stage, they also need to chart a road map for self-development, which would facilitate attaining their professional goals, quite in sync with the broad societal expectations, as they move on in life.

New pharma leadership would require greater focus on ethics and engagement:

While pharma industry leaders, in general, have been impressive articulators of all right things that need to happen, ‘Talking the Talk’ and ‘Walking the Walk’ in the frontiers of business ethics, values and shared goals are found wanting in many of them. These articulations are probably used to run expensive global ‘Public Relations (PR)’ campaigns, lobbying and advocacy initiatives in the corridors of power.

What else then could possibly be the reason for such perception gap that this great industry has allowed to increase, over a long period of time? Could it be that many pharma leaders have not been able to adequately adapt themselves to the demands of the changing healthcare environment and the needs of various stakeholders in this sector? Is the leadership, therefore, too archaic and it’s a time for a change?

Thus, unlike the current pharma leadership, the new age leadership needs to be ethically grounded, and engage all stakeholders effectively in a transparent manner with impeccable processes of governance involving all areas of business. Such leaders may not be know-all individuals in the pharma business, but must possess a clear vision of where they want to lead the company to, and don’t slip back, especially in terms of public image and meeting patients’ expectations.

In conclusion:

Pharma business in modern times faces rapidly changing stakeholder expectations, which are generally difficult to predict well in advance. Thus, today’s pharma leaders require to adapt their strategic approach and the tactical game plans accordingly for business excellence in an inclusive manner, and simultaneously try to shape the environment to the extent possible.

There is a growing expectation from the pharma leaders to do business by imbibing a caring outlook towards the society, where it operates. Spending time and money to transplant the past practices in the changed environment, or continuing with the traditional business approaches, I reckon, is a no-win game today.

Thus, there arises a need to help the young pharma professionals, from the early stages in their professional life, for shaping up as the chief change agent in the organization that they would lead. Even after reaching where they wanted to reach, these leaders should keep studying on a continuous basis, various other successful leadership styles, approaches and visions, to splice them into a more productive strategic approach for the business or functional areas that they lead.

This new breed of leaders would also require defining the reality prevailing in the industry on an ongoing basis, to pave the way for a glorious future for their respective organizations. This effort would call for regular and effective engagement with all the stakeholders through various digital and other platforms. The critical question that the new pharma leadership should never forget to continually ask themselves: “How can my organization provide better access to high quality and effective medicines to most patients along with achieving commercial excellence in business?”

Properly defining and quickly adapting to associated environmental realities with a creative mind, requisite emotional intelligence and ethical business practices, would call for coming out of the zone of comfort with promptness. These, I reckon, would be the two pivotal success factors for new pharma leaders for inclusive and sustainable success in business, as the industry moves on.

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.

Dwindling Drug Innovation: Declining Image: Unchanged Business And Advocacy Models

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A report of ‘The United States International Trade Commission (USITC)’ released on December 22, 2014 suggested, if tariffs and investment restrictions were fully eliminated, and standards of IP protection were made comparable to the U.S and Western European levels, American exports to India would rise by two-thirds.

A year later, on February 01, 2015 an interesting news article highlighted that the flashpoint of this issue “has clearly been pharmaceutical companies and their lobby group Pharmaceutical Research and Manufacturers of America (PhRMA), which have made some of the strongest representations to the US government against India’s IPR regime.” The same report also indicated that many other companies including the aircraft maker Boeing and the generic drug giant Abbott felt that India offered adequate IP protection and that they had not experienced major IP problems in the country.

The above stance of USITC continued echoing right from the beginning of this year. In January 2017, the CEO of US Biotechnology Innovation Organization (BIO) reportedly told our Prime Minister Narendra Modi, ‘if he follows western practices on intellectual property protection, his country would see a “tidal wave” of biotech industry investment.’

On February 08, 2017, when the fifth edition of ‘U.S. Chamber International IP Index’ report was released by the ‘Global Intellectual Property Center (GIPC)’, India featured in the 43rd rank out of 45 countries. With this India remained virtually at the bottom of the IP index for the fourth year on the trot. The GIPC report underscored India’s “anaemic IPR policy”, Section 3.d of the Indian Patents Act, besides several others, as major market access barriers.

On February 14, 2017, another news article reported that America’s pharma sector has asked the US Trade Representative (USTR) to continue to keep India on its Priority Watch List (PWL), which includes countries that are alleged violators of US patent laws, claiming that the environment on the ground remains ‘challenging’ in India. Among the areas of concern for the US pharma companies operating in India, unpredictable IP environment, high tariffs and taxes on medicines, regulatory data protection failure, discriminatory and non-transparent market access policies and unpredictable environment for clinical research were listed among others.

With this backdrop, the key question that haunts many industry watchers, when the World Trade Organization (WTO) has no complaint with the Indian Patents Act 2005, and finds it TRIPS compliant, why are these reports coming from the United States consistently emphasizing that the current IP regime of the country is a key barrier to market access, especially for research-based pharma companies?

Is the core issue of the global pharma industry in India is predominantly not encouraging innovation well enough, or the dearth of inadequate Intellectual Property (IP) protection – or it is something beyond that, and is more fundamental in nature. In this article, I shall dwell in this area, first in the global perspective, and then zeroing-in to India.

A global perspective:

“The past 60 years have seen huge advances in many of the scientific, technological and managerial factors that should tend to raise the efficiency of commercial drug research and development (R&D). Yet the number of new drugs approved per billion US dollars spent on R&D has halved roughly every 9 years since 1950, falling around 80-fold in inflation-adjusted terms.  There have been many proposed solutions to the problem of declining R&D efficiency. However, their apparent lack of impact so far and the contrast between improving inputs and declining output in terms of the number of new drugs make it sensible to ask whether the underlying problems have been correctly diagnosed,” articulated an important article published on March 01, 2012 in the Nature Reviews Drug Discovery.

This trend continues, virtually unchanged. R&D efficiency continues to remain a cause of great concern to the research-based global pharmaceutical companies. Accordingly, a 2016 report of the Deloitte Center for Health Solutions titled, ‘Measuring the return of pharmaceutical innovation’, among other findings, has captured the following:

  • Annual projected pharma R&D return declines to 3.7 percent from 10.1 percent in 2010
  • Peak sales per asset fall 11.4 percent year-on-year since 2010

What then is its basic solution?

When the right solution eludes:             

In this scenario, when the right solution is still eluding, to record growth in corporate profit and earning to meet shareholders’ expectations, keeping the existing business model intact, the global research-based pharma companies have the following two limited options, which they are actively pursuing:

  • Take high price increases for the existing products
  • Launch the limited new products at a very high price

A report published in The First Word Pharma on October 06, 2015 quoting The Wall Street Journal (WSJ) vindicated exercising the first option. It reported that many drug makers have succeeded in increasing revenue on products despite a flat or declining demand by consistently increasing prices. An analysis revealed that revenue for the top 30 products in the United States zoomed by 61 percent over the past five years, three times the increase in the number of prescriptions sold over that period. While another report by Credit Suisse illustrated that 80 percent of the growth in net profit for the top 20 drug makers was attributable to price hikes.

To substantiate application of the second option, I quote from the CBS News, which on April 05, 2016 reported that an investigation into the cost of prescription drugs revealed huge price hikes over the past five years. Several brand name medications more than doubled in price. Again, on  August 24, 2016, it gave a sense of this trend with the following examples, covering the launch price of innovative drug, and price increases of generic drugs:

  • Gilead fixed their new hepatitis C drug Sovaldi’s cost at US$ 900 – 1,000 per pill
  • Mylan Pharmaceuticals’ increased the cost of its anti-allergic drug EpiPen from about US$ 57 in 2007 to more than US$ 500 in 2016
  • Turing Pharmaceuticals increased the price of the anti-malaria drug Daraprim by 5,000 percent last year, charging US$ 750 per pill for a drug that used to cost US$ 13.50 per pill.

PhRMA – the often quoted trade association in America, representing the country’s leading pharma and bio-pharmaceutical research-based companies, reportedly said in a statement: “Focusing solely on the list prices of medicines is misleading because it ignores the significant discounts and rebates negotiated by insurers and pharmacy benefit managers.”

Even if, this argument is accepted as such, the tough impact of regular hefty drug price increases on the consumers is real, unquestionably.

The current business model leaves behind many patients:

The ‘Access to Medicine Index 2016’ report also finds that companies generally do not systematically target populations with the highest needs in their registration, pricing and licensing actions. Although, we continue to make progress toward major public health goals, such as, polio is close to being eradicated, as is guinea worm; more than 45 percent of people living with HIV/AIDS have access to ARVs; important vaccines for malaria and dengue fever are being implemented, still business models for providing healthcare are leaving many people behind. Globally, two billion people cannot access the medicines they need, most of whom live hand to mouth.

Particularly, the big global pharma companies, as the innovators and producers of life-saving medicines, need to act much earlier in the patients’ value chain. Without or inadequate action by these companies, alongside governments, NGOs and others, it will be impossible to bring modern medicine to everyone.

Public outrage over high drug prices:

Many studies indicate that the research-based global pharma and biotech companies, still strive hard to stick to their existing overall business models with a sharp focus on improving both the top and bottom lines of the business, though the R&D projects are becoming lesser and lesser productive. This prompts them resorting to hefty price increases, and introducing new products with high price. Fueled by this self-serving mindset, a simmering public outrage, globally, over high drug prices is fast catching up, further undermining the trust in the industry, as another report says.

No wonder why in the Gallup Poll of August 15, 2016, pharmaceutical industry featured just one above the bottom among the ‘Worst-Rated U.S. Business Sectors’. Moreover, even the Harris Poll released on January 17, 2017 found that 91 percent of U.S. consumers believe pharmaceutical and biotechnology companies put profits over patients.

The industry continues chasing rainbows:

In response to this mounting stakeholders’ criticism, arguably the richest pharma association in the world in its member subscriptions – PhRMA, reportedly launched a new ad campaign costing tens of millions of dollars on January 25, 2017. It aims to highlight innovation and scientific breakthroughs to change the public’s negative perception of the industry. This campaign will span across television, print, digital, and radio, the report elaborates.

Following is an example, as reported, listing three important and interesting comments on this campaign for pharma image revamp from some of those who matter:

  • Lawmaker Peter Welch, who chairs the House Democratic Caucus’ task force on drug pricing, said, “The issue here is not whether drugs have some benefits … The issue is whether pharma is going to be able to kill us with their pricing power or whether we will get transparency and competition.” He added, “The campaign is all about defending their pricing power and pushing their product.”
  • Similarly, another lawmaker Sen. Chuck Grassley (R-Iowa) said, “This is [PhRMA] trying to change the subject and to try and divert people’s attention away from drug pricing. Continuing to ignore drug pricing is probably not going to work.”
  • Ameet Sarpatwari, a drug pricing policy researcher at Harvard University said, “It’s really a matter of being tone deaf in terms of thinking somehow that this is going to change public perception”

Isn’t a great example of chasing rainbows by the industry association, in the number one pharma and biotech market of the world, instead of amending to the root cause of this burning issue?

The situation in India:

In this backdrop, amid a tough global situation, let me assess the related Indian scenario.

The research-based global pharma companies, apparently want to introduce the whole range of their patented products at a high price and in a monopolistic situation in India too, for much higher growth in revenue and profits. Thus, they are consistently pushing hard, with all guns blazing, for major changes in the Indian Patents Act 2005, which would involve jettisoning many patients’ health interest related safeguard conditions enshrined in the Act, such as Section 3.d that restricts ever-greening of patents, and introducing several other tougher IP measures, such as data exclusivity under the garb of imaginary patient safety issues with generic drugs.

They don’t seem to like price control of essential drugs in India, either. While intensely lobbying for it, the lobbyists vehemently argue in favor of the absurd, which is the affordability of medicines does not help to increase drug access to all those who need these most, even when on the ground, the out of pocket expenses for drugs in the country is as high as around 65 percent and universal health care does exist in the country, much to the dismay of many.

It has now been generally established by many global experts, including our own National Pharmaceutical Pricing Authority (NPPA) that market competition does not necessarily bring down drug prices, including for generics, quite unlike many other industries, but various pressure groups, including the media, can catalyze it, and quite effectively. What has happened recently with the cardiac stents price in the country, is just an example.

Is the devil in the traditional pharma business model?

An article titled, “How Pharma Can Fix Its Reputation and Its Business at the Same Time”, published on February 03, 2017 in The Harvard Business Review, emphatically states: “It’s a fact that the current business model of pharma companies is not working efficiently.” It suggests, besides enhancing the current unenviable public image of the industry, expanding access to medicines will help pharma companies enhance shareholder value. The success of a new business model depends on both the willingness and the ability of pharmaceutical companies to fully integrate access to medicine into their business strategies, the article emphasizes.

A July 2015 paper of McKinsey & Company titled, “Pharma’s next challenge”, also reiterates that in the developed economies, market access is chiefly concerned with pricing, and with satisfying local conditions. Whereas, in the emerging markets, to overcome the barriers, pharma players need to shift the focus of their commercial models from marketing and sales to access, and from brand-by-brand access planning to integrated cross-brand planning.

In pursuit of a new model:

Based on the above premises, the search for a new pharma business model, especially for the research-based pharma companies, in my view, may broadly focus on the following areas:

  • Learn from innovation models of the IT industry: Win-Win collaborative innovation models, including ‘Open Source Drug Discovery’, if scaled up, could reduce the cost of innovation significantly and making the new innovative drugs generally affordable. Thus, larger volume sales may adequately offset a voluntary cut in the product margin, creating a multiplier effect.
  • Be a part of the solution and not the problem: Because of fiercely pushing the blatant self-serving agenda, inconveniencing many patients, the core mindset of the pharma industry is considered by many as an integral part of the main problem. While pharma industry, quite rightly, seek more market access, they need to act as a facilitator too, to improve general access to medicines, in various imaginative ways, which is, of course, possible. This will make the pharma industry to be a part of the solution to the national problem, over a period of time.
  • Walk the talk: While pharma industry speaks all right things, in terms of ethical conduct of business, at a time when both national and international media frequently expose their gross wrongdoings. This continues, unabated. Sales and marketing functions are indeed very important, but not at the cost of good corporate governance. I am aware, all compliance rules exist immaculately on paper for many companies, but the senior management officials should demonstrate that they walk the talk, giving exemplary punishment to the wrongdoers, including their peers.
  • Change the current advocacy model: The current advocacy model of the research-based pharma companies is too self-serving. For example, in India it mostly demands, which is bordering obsession, to change the IP laws of a sovereign country, when the World Trade Organization (WTO) has no problem with these, whatsoever. There is a need for them to demonstrate, sans any shade of arrogance, visible respect to any country’s general sentiment on its Patents Act, as it’s their own decision to operate in those countries. An imaginative win-win change in this area, would significantly help to create a strong bond and mutual respect with other important stakeholders.

Are senior citizens in pharma business a barrier to change?

A recent white paper of ‘Eye for Pharma’, says in its conclusion “many of those now running pharma organizations have come through the ‘golden age’ of pharma and so may be reluctant to change”. Does this issue need to be addressed first by the Independent Directors of the respective Boards of the pharma companies?

In conclusion:

Many questions do spring up while addressing this issue. One common belief is that, pharma industry, in general, is reluctant to change its traditional business model, beyond just tweaking, despite declining overall productivity and in its public image.

In advocacy initiatives, while drawing stakeholders’ attention to the core grievance agenda, though they try hard to project their business focus on patients, especially using the buzzwords, such as, ‘patient centric approach’ or ‘patient engagement’, among many others, has anything visibly changed, just yet?

As the business environment is getting tougher and consumer expectations are fast changing, drug innovation is also steadily dwindling, so is the declining industry image. However, pharma business and advocacy models continue to remain mostly unchanged. It remains intriguing, why are the ‘wise guys’ of pharma business still so deeply obsessed with chasing rainbows, with so much of zeal, hectic activity and money, while majority of patients keeps bearing the brunt?

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.

An Emerging Yo-Yo Syndrome With Biosimilar Drugs

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Competition from Biosimilar drugs poses a threat of a combined revenue loss of estimated US$ 110 billion of those pharma players who are still enjoying market monopoly with patented biologic brands. This is expected to surely happen, in the long run, if the signals picked up from the evolving scenario continue to stay on course.

Simply speaking, generic versions of original biologic drugs are termed as Biosimilars. These are large protein molecules, created from living organisms following complex processes. Thus, it is significantly more expensive to develop and market biosimilar drugs, as compared to any small molecule generic chemical ones. 

Hurdle creation and the core intent: 

Despite these complexities, for quite some time, global original biologic drug players had initiated intense campaign to create tough hurdles in the process of regulatory and marketing approval for biosimilar drugs, predominantly raising safety concerns. A simultaneous campaign was also launched among doctors and the payers in the developed countries, stoking the same fear, to forestall the overall acceptance of biosimilar drugs.

When drug regulators of different countries are solely responsible to ensure patient safety of any drug, why are the global pharma companies, and their trade associations are continually shouting from the roof top expressing concerns in this regards? It is often seen that such campaigns become more intense, when it comes primarily to block or delay the entry of biosimilar, many generic drugs and some IP related issues in a country. Umpteen number of such examples are available from India, Europe, United States and many other countries. Many would agree that in such cases, the core intent is as important as the issue.

I discussed on those hurdle creating campaigns in my article in this Blog, on August 25, 2014, titled, “Scandalizing Biosimilar Drugs With Safety Concerns”. Hence won’t dwell on that again here.

The campaign yielded results:

This campaign of global bio-pharma majors to restrict the entry of lower priced biosimilar drugs into the market, immediately after patent expiry, has been successful to a great extent, so far. Let me now give below a recent example, from credible sources, to vindicate this point.

Although, the world’s number 1 drug in sales – Humira (Adalimumab), with a turnover of US$ 15 Billion in 2015 (IMS Health), is going off patent in December 2016, no biosimilar version of Adalimumab is ready, just yet, to compete with this profit churning blockbuster biologic brand, in the United States. More interestingly, according to another report dated July 14, 2016 of the Wall Street Journal (WSJ), even on the verge of its product patent expiration this year, U.S. sales of Humira rose 32 percent to US$ 2.2 billion in the first quarter this year, with over 16 percent jump in its prescription volume.

It is worth noting, Humira was first approved in 2002, and has long been one of the most profitable drugs, globally, contributing around 60 percent of Abbvie’s total revenue even in the last year.

The industry may well argue, in a situation like this, how can a pharma company possibly decide to remain within the ambit of just patent protection, even if it leads to sacrificing other stakeholders’ interest? That’s a ‘business ethics’ issue, and is beyond the scope of this article.

The beginning of a yo-yo syndrome:

At the very outset, let me mention that the term ‘yo-yo syndrome’ has been coined to refer to something that moves up and down quickly, or something that changes repeatedly between one level and another.

Keeping this into perspective, some of the big bio-pharma companies, such as, Amgen, which have been, reportedly, trying hard to block the on-time entry of biosimilar drugs, through litigations and lobbying, could stand as good examples in this area.

For instance, Amgen, on the one hand, seem to be vigorously shielding its over US$10 billion of annual biologic sales from the biosimilar competition through powerful lobbying. Whereas, on the other, it commenced developing its own biosimilar drugs, to reap a rich harvest from the available opportunities.

According to an Associated Press report on July 12, 2016, a panel of Food and Drug Administration advisers of the United States has voted unanimously in favor of Amgen’s version of AbbVie’s Humira. While not binding, the recommendation could help the USFDA approval of the knockoff drug.

According to reports, the companies now working on Humira biosimilars, include Novartis, Mylan and Baxter.

India did it, but a tough road ahead:

On December 9, 2014, international media flashed across the world a great news item from the Indian pharma industry: “The first biosimilar of the world’s top-selling medicine Humira (adalimumab) of AbbVie has been launched in India by Zydus Cadila.” That said, let me hasten to add that Humira does not have a valid product patent protection in India.

Yet another good news is, according to a Press Release of Biocon dated July 15, 2016, its India made Insulin – Glargine was launched in Japan on the same day by its partner FUJIFILM Pharma Co., Ltd. (FFP).

These are excellent developments, and music to many ears. However, on the flip side, intense legal battle on various regulatory grounds against the Indian biosimilar drug players, by the makers of original biologic to protect their own turf of market monopoly, has also commenced with associated acrimony.

Earlier, the Swiss drug major – Roche had objected to Biocon’s referring to Herceptin at an international scientific conference, related to clinical trial results of its own ‘biosimilar’ version Herclon (trastuzumab).

On April 2016, responding to Roche’s complaint, the Delhi High Court ordered changes to the packaging labels of the brands sold by Biocon, and other bio-pharma companies in India, such as, Reliance Life Sciences and Mylan. The court also raised questions about the DCGI’s approval processes for biosimilars, and restrained the companies from using Roche’s data related to the manufacturing process, safety, efficacy and tests.  

More recently, this issue between Roche and Biocon, over breast cancer drug trastuzumab has reportedly taken another acrimonious turn with both the companies approaching the Delhi High Court on charges of contempt of court.

Roche reportedly also alleged contempt over Biocon using the name ‘Herceptin’ in the approval process of its trastuzumab drug in the United States. According to reports, Biocon is currently conducting Phase III clinical trials for marketing approval of its trastuzumab in the U.S.

Thus, to carve out a niche in the biosimilar space of the world, Indian pharma has made some good progress. Alongside, taking note of many contemporary factors and development in this area, a lurking apprehension too did creep in. It raises an awkward and uncomfortable question – do the Indian companies have pockets deep enough to overcome the expensive legal and regulatory challenges thrown by the global biologic drug makers to protect their market monopoly status for expensive drugs, much longer than what they deserve?

Let me keep my fingers crossed.

Critical global speed-bumps for biosimilar entry:

Besides, many other hurdles, as I highlighted in my article of August 25, 2014, the intricate patent shield beyond original patent expiry, is a major speed bump for biosimilar drugs’ smooth global market entry. 

Maintaining the same example of Humira, a well crafted patent-shield strategy was implemented to extend market monopoly of this brand, at least for another decade. Although, the main patent of Humira expires in December 2016, it is reportedly well shielded, at least, with 70 other patents till 2027, as many reports indicate.

This is possible because, according to a January 19 2016 report by Bloomberg, the U.S. patent office in the same month rejected Amgen’s effort to knock out two patents on AbbVie’s anti-inflammatory bestseller Humira. Amgen hoped to get its Humira competitor to market by 2017. This is a bad news for other biosimilar drug makers too.

Nevertheless, the good news is, in May 2016, the Patent Trial And Appeal Board (PTAB) announced that it would embark on a review of Coherus’ challenge of Humira’s ’135 methods patent. Experts believe, even if it the PTAB upturns Humira’s IP shield, AbbVie could appeal, which could take another year or so.

Recent status:

So far, after the biosimilar guidelines were put in place for the first time in the United States, a Novartis version of Amgen’s Neupogen, got USFDA approval in March 2015, only after so many delays and protracted litigations. Novartis is also trying to to do the same for Amgen’s Enbrel. Pfizer too won the U.S drug regulator’s approval in April 2016 for a version of Johnson & Johnson’s Remicade, but the product is still not available for sale.

Currently, some constituents of Big Pharma, such as, Amgen, Novartis and Pfizer have started warming up for manufacturing copycat versions of blockbuster original biologic drugs of other companies.

High quality biosimilars:

These new biosimilars are of top quality. Even USFDA could not find any meaningful differences in the key parameters, such as, efficacy, safety, potency and purity, between the original biologic drugs and their biosimilar versions.

According to a July 12, 2016 Bloomberg report, in several cases USFDA finds the clinical results of biosimilar drugs are robust enough to support ‘extrapolation’. This could support approval of these biosimilar drugs for all indications that the original biologic brands treat, without requirement of separate clinical trials for each, facilitating the approval process and accelerating their market entry.

With these developments, the high voltage lobbying campaigns of the original biologic makers, and their trade associations, both to the drug regulators and doctors, are expected to lose steam, if not ultimately die down altogether. 

However, the protracted and fierce legal battles of the originators, creating various intricate patent shields, to enjoy a brand monopoly for a much longer period, are expected to continue, if not turn fiercer.

The question of price advantage with biosimilars:

Currently the cost advantage provided by the biosimilar drugs over the original biologics, does not come anywhere near to what we see for small molecule generic drugs, post patent expiry. 

For example, Zarexio of Novartis has been priced 15 percent less than the original Neupogen of Amgen. It is generally believed that in the united states this difference would continue to be around 15 to 30 percent, in the near future. Whereas in Europe, the difference is higher, as the governments regulate their prices.

In India too, the difference in the pricing trend is currently, more or less, similar. 

Nonetheless, the above report of Bloomberg had quoted the global CEO of Novartis Joe Jimenez saying that biosimilar drugs would eventually cost 75 percent less than the original biologics. 

Let’s hope so.

Conclusion:

The powerful constituents of Big Pharma who decided to delay, if not stall the entry of biosimilar drugs for vested interest, have now started adopting a dual strategy. They did not have any other choice either, after President Obama’s fulfillment of his election promise with the ‘Affordable Care Act’, which, among others, facilitated charting the regulatory pathway for entry of biosimilar drugs in the United States, for the first time ever. 

Thus, on the one the one hand, these companies continued crafting robust patent-shields to extend market monopolies, even beyond the original patent expiries, through protracted and complicated litigations. While, on the other, started moving with great speed to develop biosimilar versions of the original blockbuster biologic drugs of other players, as they go off patent. This is mainly to cash-in the golden opportunities, which otherwise would go to different players.

India has made an entry into this space, but would still require a lot to do, including winning the expensive legal battles, in order to be recognized as a global force to reckon with, in the biosimilar segment.

To facilitate rapid growth, and universal acceptance of biosimilar drugs, for patients’ interest across the world, it will be interesting to follow the spread of the ‘yo-yo syndrome’ of the original biologic drug makers, as we move on.

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 Drug Safety Concern: “Whistleblower’s Intention Should Be Nationalistic”

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In the recent weeks, three significant developments related to the Pharmaceutical Industry in India, have triggered rejuvenated concerns in the following critical areas: 

A. Overall drug safety standards in the country

B.  Self serving interest, rather than patients’ interest, dominate the prescribing decisions

C. Government assurance to American Trade Organization on ‘Compulsory License (CL)’ in India. 

These important issues fall under three key regulatory areas of India, as follows:

  • The Central Drugs Standard Control Organization (CDSCO)
  • The Medical Council of India (MCI)
  • The Indian Patent Office

It is worth mentioning here that the Department Related Parliamentary Committee on Health and Family Welfare in its 59th Report, placed before both the houses of the Parliament on May 08, 2012, on the functioning of the Central Drug Standards Control Organization (CDSCO), begins with the following observations:

Medicines apart from their critical role in alleviating human suffering and saving lives have very sensitive and typical dimensions for a variety of reasons. They are the only commodity for which the consumers have neither a role to play nor are they able to make any informed choices except to buy and consume whatever is prescribed or dispensed to them, for the following reasons:

  • Drug regulators decide which medicines can be marketed
  • Pharmaceutical companies either produce or import drugs that they can profitably sell
  • Doctors decide which drugs and brands to prescribe
  • Consumers are totally dependent on and at the mercy of external entities to protect their interests.

Most importantly, all these concerns, if not properly clarified and appropriately addressed by the Government, soon enough, have the potential to create an adverse snowballing impact on the uniform access to affordable quality medicines, for all sections of the society in India.

Under this backdrop, I shall discuss in this article briefly, my perspective on each of these critical areas, as they are today, and not just the drug safety concerns.

The headline of this article is expected capture not only the prevailing mood of some key regulators, but also their inertia to address critical healthcare concerns and above all how the core public health related issues are getting lost, and the trivial ones are gradually occupying the center stage.

A. Overall drug quality and safety  standards in India:

A Public Interest Litigation (PIL) suit, filed against the Drugs Consultative Committee and the Central Drugs Standard Control Organization (CDSCO), was listed on the Supreme Court website for hearing on March 11, 2016.

The PIL has been filed by one Dinesh Thakur, requesting the Supreme Court to lay down guidelines by which manufacturers could be made liable for violating drug standards and also give a direction to the government to set up a ‘Drug Approvals Review Committee’ for examining criminality in the manner in which faulty drug approvals were granted. 

Many may recall that the same Dinesh Thakur worked for Ranbaxy from 2003 for two years, and is now the Chief Executive of MedAssure Global Compliance based in Florida, US. Thakur’s Company now advises pharma manufacturers on drug safety and quality standards.

As reported by Reuters, Thakur had earlier exposed how the erstwhile largest drug maker of India, Ranbaxy Laboratories, failed to conduct proper safety and quality tests on drugs and lied to regulators about its procedures. Consequently, USFDA fined Ranbaxy US$500 million for violating federal drug safety laws, and making false statements to the US regulator.

This news report further states: “Indian Parliamentary Committee, thereafter, reportedly demanded an investigation and the drugs regulator committed to one in 2013. Thakur received a statement from the health ministry last year, seen by Reuters, showing no inquiry had begun.”

On the last Friday, however, the Supreme Court of India refused to entertain this PIL of Dinesh Thakur, saying it does not have time to adjudicate academic issues, such as, need for guidelines to regulate quality of medicines.                                                  

The core issue:

The core issue here is not at all the above PIL, not at the very least. The issue is the much reported concern being expressed, over a period of time, regarding the drug safety standards in India. The reasons include breach of of data integrity, and gross violation of the ‘Good Manufacturing Practices’ standards. Such instances are being detected, almost regularly, by the foreign drug regulators, in several manufacturing facilities run by many large and small Indian drug producers.

It is well vindicated by the fact that around 45 Indian drug manufacturing plants have been banned by the USFDA alone, from shipping generic drugs to the United States, as these were considered unsafe for consumption of patients in the US. Some other foreign regulators too had taken similar action, citing similar reasons. The USFDA website specifies the details of gross violations made in each of these cases.

Ironically, all such facilities can manufacture and sell their drugs in India, as they conform to the quality requirements of the Indian drug regulator. Consequently, the Indian patients consume even those medicines, which are considered unsafe by the USFDA for American patients, innocently, as and when prescribed by the doctors.

Arising out of these incidents, when asked about the drug safety standards in India, and the public health-safety, instead of giving credible and action oriented answers for public reassurance, some of the apparently brazen replies of the DCGI are quite stunning for many stakeholders, both within and outside the shores of India.

I would now quote below just a few of those replies, just as examples. 

“…Whistleblower’s Intentions Should Be Nationalistic” -  DCGI:

According to Reuters, it has received the following response from the Drug Controller General of India (DCGI), on the above PIL related to the drug safety standards in India:

“We welcome whistleblowers, we have got great respect, but their intentions should be genuine, should be nationalistic… I don’t have any comment on this guy.”

Thus, many industry watchers feel that in a situation like this, the honorable Supreme Court of India would possibly require to intervene, just as what it did on alleged ‘Clinical Trial’ malpractices in the country or for drug price control, solely for public health interest.

The same attitude continues:

Such brazen response of the Central Drug Regulator, and that too on a serious subject, is indeed bizarre. It becomes increasingly intriguing, as the same attitude continues without any perceptible meaningful intervention from the Ministry of Health.

For example, on February 22, 2014, in the midst of a more intense scenario on a similar issue, instead of taking transparent and stringent measures, the DCGI was quoted by the media commenting:

“We don’t recognize and are not bound by what the US is doing and is inspecting. The FDA may regulate its country, but it can’t regulate India on how India has to behave or how to deliver.”

On February 26, 2014, presumably reacting to the above remarks of the DCGI, the American Enterprise Institute reportedly commented, “Indian drug regulator is seen as corrupt and colliding with pharma companies…”

Such apparently irresponsible and loose comments keep continuing, despite the 2012 report of the Parliamentary Committee of India alleging collusion between some pharmaceutical companies and officials of the CDSCO, which oversees the licensing, marketing and trials of new drugs. The report also commented that the agency is both chronically under-staffed and under-qualified.

Some possible remedial measures:

As the saying goes, “better late than never”, considering all these continuing developments, it is about time to reconsider some of the key recommendations of Dr. R. A. Mashelkar Committee on a similar subject and make amendments in the relevant Act accordingly, soon, to facilitate creation of a robust with high accountability ‘Central Drugs Authority (CDA)’. It would introduce a centralized licensing system for drug manufacturing, along with stringent drug safety standards; besides, sale, export and distribution of drugs. Perhaps, the draft bill on CDA is now lying in the heap of archival documents with the change in Government.

Why does India need CDA?

I believe, the formation of a robust CDA with high accountability, besides meeting with drug safety concerns, would provide the following significant benefits, both to the Industry and also to the Government:

  • Achieving uniform interpretation of the provisions of the Drugs & Cosmetics Act & Rules
  • Standardizing procedures and systems for drug control across the country
  • Enabling coordinated nationwide action against spurious and substandard drugs
  • Upholding uniform quality standards with respect to exports to foreign countries from anywhere in India
  • Implementing uniform enforcement action in case of banned and irrational drugs
  • Creating a Pan-Indian approach to drug control and administration
  • Evolving a single-window system for pharmaceutical manufacturing and research undertaken anywhere in the country.

B.  Self serving interest dominates the prescribing decision: 

That the self serving interest, rather than patient interest, dominate the prescribing decision, was vindicated by a key announcement of the Medical Council of India (MCI) last month.

In February 2016, apparently succumbing to continuous and powerful external pressure, the MCI announced an amendment in a clause of its Code of Ethics Regulations 2002, exempting doctors’ associations from the ambit of its ethics code, as applicable to doctors now across the country. Prior to the amendment, this section used to read as: “code of conduct for doctors and professional association of doctors in their relationship with pharmaceutical and allied health sector industry”.                      

In other words, it means that the professional associations of doctors will no longer come under the ambit of ethics regulations, legitimizing their indulgence in the identified unethical and corrupt practices, by receiving gifts in cash or kind from the pharma or healthcare industry.

A large section of the key stakeholders believes that this amendment would help creating an additional large space for the pharmaceutical marketing malpractices to thrive, unabated, at the cost of patients.

The latest report of the Parliamentary Standing Committee on MCI:

In its 92nd Report, the Department-Related Parliamentary Standing Committee on Health and Family Welfare titled, “The Functioning of Medical Council of India”, presented to the Rajya Sabha and laid on the Table of Lok Sabha on 8th March, 2016, the Committee observed on this amendment as “an action that is ethically impermissible for an individual doctor cannot become permissible, if a group of doctors carry out the same action in the name of an association.”

The report also noted the failure of MCI to instill respect for a professional code of ethics in the medical professionals and take disciplinary action against doctors found violating the code of Ethics, etc.

The Committee called for a complete restructuring of the MCI, since it believes that the Council has failed as a regulator of medical education and the profession. Casting serious aspersions on the functioning of the MCI, the house panel of the Parliament recommended that the Act under which the MCI was set up be scrapped and a new legislation be drafted “at the earliest”. 

The report castigated the health ministry:

The lawmakers castigated the Health Ministry in this report saying, “The committee also finds it intriguing that instead of intervening to thwart attempts of MCI at subverting the system, the ministry meekly surrendered to MCI.”

While summing up, the report states, “the Committee exhorts the Ministry of Health and Family Welfare to implement the recommendations made by it in this report immediately and bring a new Comprehensive Bill in Parliament for this purpose at the earliest.”

How will it pan out now?

I reckon, it will now be immensely interesting now for all concerned to follow, how does the Government deal with this report to curb, among others, the strong interference of mighty and powerful vested interests to continue with the rampant pharma marketing malpractices, at the cost of patients in India.

C. Reported Government assurance on ‘Compulsory License’: 

On March 3, 2016, a media report quoted a submission by the US Chamber of Commerce to the office of the US Trade Representative (USTR) as follows:

“While the Government of India has privately reassured (American) industry that it would not use compulsory licenses for commercial purposes, a public commitment to forgo using (this) would enhance legal certainty for innovative industries.”

This is an interesting development, primarily because there are a number of legal provisions for granting Compulsory Licenses (CL) in the Indian Patents Act 2005, including, when a drug is not widely available, extremely expensive and some other situation. In some these provisions, law should follow its own course and there is no legally permissible scope for Government’s administrative interference. Grant of CL for Nexavar of Bayar is one such example, and incidentally, that’s the sole CL that India has granted, so far, from the date of amendment of the country’s Patents Act in 2005. 

Thus, a blanket assurance of not invoking any of the provisions of the CL, as provided in the Indian Patents Act 2005, if true, would possibly require to pass through intense legal scrutiny, as that would adversely impact the access to key medicines in a necessary situation, for the public health interest.

So far, India has amply demonstrated to all, time and again, that the country does not grant a CL at the drop of a hat. That situation should continue to encourage and protect innovation. 

Nevertheless, “a written public commitment to forgo using the CL provisions for enhancing legal certainty for innovative industries,” as demanded by the US Chamber of Commerce, appears to be unreasonable, goes against the spirit of India’s Patents Act, and perhaps is not legally tenable either, unless the IP Act is amended accordingly in the Parliament.

Conclusion:

All these three areas, as discussed above, are critical from the healthcare perspective of the country.

Ironically, while deliberating on the subject, the capability, credibility and competence of some of the key regulators of the country, are being repeatedly questioned. These doubts emanate not just from Tom, Dick and Harry, but from an illustrious spectrum of constitutional institutions of India, spanning across the lawmaking Parliament, through its various committee reports, to the ultimate legal justice provider – the Supreme Court of India, through is various orders and key observations.

Regrettably, in this specific space, which is primarily related to healthcare, nothing seems to be changing on the ground, since long. The same tradition continues, without any visible sense of urgency, even from the Government.

On the contrary, we now read a new genre of comments, even from a key regulator, on the stakeholder concerns. For example, reacting to concern on drug safety standards, instead of articulating tangible actions to usher in a perceptible change, the chief action taker reportedly specified a totally judgmental and an outlandish requirement: “…Whistleblower’s intentions should be Nationalistic.”

Together with these incidents, the key public healthcare concerns of India too, are now apparently getting drowned in the high decibel ‘Nationalistic’ versus ‘Anti-nationalistic’ cacophony. But, the hope still lingers… for a change…for our nation’s sound health!

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.