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‘Repurposing’ Older Drugs: Has The Process Started Rolling?

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On October 22, 2015, BBC News reported, “The world’s largest clinical trial to examine whether aspirin can prevent cancers returning has begun in the United Kingdom (UK).”

About 11,000 people, who have had early bowel, breast, prostate, stomach and esophageal cancer will be involved in this study with one tablet a day dosage for five years. This trial is being funded by ‘The Charity Cancer Research, UK’ and ‘The National Institute for Health Research (NIHR).’

The scientists feel, if it works, this ‘repurposing’ of an older and much-known drug would be a “game-changing” one. It would then be able to provide a cheap and effective alternative to prevent recurrence of cancer to a large number of cancer survivals. Interestingly, no global pharma players are involved in this cancer prevention research, as yet. 

Aspirin was developed by Bayer way back in 1897 for pain and inflammation. Thereafter, the scientists found a ‘repurpose’ in its use as an anti-platelet drug for treating and preventing heart attacks and strokes.

Similarly, the anti-inflammatory drug Ibuprofen, which was developed by Boots in the 1960s for the treatment of rheumatoid arthritis, is now showing promises that it can help protect against Parkinson’s disease.

Again, a number of studies claim that statins, a cholesterol-reducing drug, can help prevent Alzheimer’s Disease, resulting in low levels of beta-amyloid. Further research needs to be done in this area, as this finding has not been universally accepted, just yet.

All such commendable initiatives, throw open a relevant question for debate: ‘Can the existing drugs be re-examined in a systematic manner to discover their other possible radically new usages at a much lesser treatment costs to patients?’

In my view, available data emphatically prompts the answer ‘Yes’ and I shall deliberate on on that in this article.

‘Repurposing’ older drugs:

The Oxford Dictionary meaning of ‘repurpose’ is: ‘Adapt for use in a different purpose.’

Accordingly, the process of discovering new usages of older drugs is often called by many scientists as ‘repurposing’.   

Currently, we come across various articles reporting a number of such new initiatives. This process is safer, much less expensive and takes much lesser time.

These laudable R&D initiatives needs encouragement from all stakeholders, especially from the Government. Given proper focus and attractive financial and other incentives, more and more players are expected to get attracted to a different genre of innovation. It is a whole new ball game of discovering new purposes of old and cheaper drugs with known and well-documented long term safety profile.

Some old drugs with ‘new purpose’: 

The following table gives an example of some well known older drugs, for which fresh R&D initiatives discovered their new purpose of treatment, at a much cheaper cost: 

Drug Old Indication New purpose
Amantadine Influenza Parkinson’s Disease
Amphotericin Antifungal Leishmaniasis
Aspirin Inflammation, pain Antiplatelet
Bromocriptine Parkinson’s disease Diabetes mellitus
Bupropion Depression Smoking cessation
Colchicine Gout Recurrent pericarditis
Methotrexate Cancer Psoriasis, rheumatoid arthritis

(Source: Indian Journal of Applied Research, Volume: 4, Issue: 8, August 2014)  

A clarion call to join this movement:

The well-known researcher, Dr. Francis S. Collins, the Director of the National Institutes of Health (NIH) in a TED talk (video) strongly argued in favor of ‘translational research’ to produce better drugs, faster. To make this process to work successfully Francis Collins hopes to encourage global pharmaceutical companies to open up their stashes of drugs that have already passed safety tests, but that failed to successfully treat their targeted disease. 

He wants to study, how drugs approved for one disease could successfully treat another or more ailments and also gave examples of the following drugs, which I am quoting below, as such:

  • Raloxifene: The FDA approved Raloxifene to reduce the risk of invasive breast cancer in postmenopausal women in 2007. It was initially developed to treat osteoporosis.
    .
  • Thalidomide: This drug started out as a sedative in the late fifties, and soon doctors were infamously prescribing it to prevent nausea in pregnant women. It later caused thousands of severe birth defects, most notably phocomelia, which results in malformed arms and legs. In 1998, thalidomide found a new use as a treatment for leprosy and in 2006 it was approved for multiple myeloma, a bone marrow cancer.
    .
  • Tamoxifen: This hormone therapy treats metastatic breast cancers, or those that have spread to other parts of the body, in both women and men, and it was originally approved in 1977. Thirty years later, researchers discovered that it also helps people with bipolar disorder by blocking the enzyme PKC, which goes into overdrive during the manic phase of the disorder.
    .
  • Rapamycin: This antibiotic, also called sirolimus, was first discovered in bacteria-laced soil from Easter Island in the seventies, and the FDA approved it in 1999 to prevent organ transplant rejection. Since then, researchers have found it effective in treating not one but two diseases: Autoimmune Lymphoproliferative Syndrome (ALPS), in which the body produces too many immune cells called lymphocytes, and lymphangioleiomyomatosis, a rare lung disease.
    .
  • Lomitapide: Intended to lower cholesterol and triglycerides, the FDA approved this drug to treat a rare genetic disorder that causes severe cholesterol problems called homozygous familial hypercholesterolemia last December.
    .
  • Pentostatin: This drug was created as a chemotherapy for specific types of leukemia. It was tested first in T-cell-related leukemias, which didn’t respond to the drug. But later NIH’s National Cancer Institute discovered that the drug was successful in treating a rare leukemia that is B-cell related, called Hairy Cell Leukemia.
    .
  • Sodium nitrite: This salt was first developed as an antidote to cyanide poisoning and, unrelated to medicine, it’s also used to cure meat. The National Heart, Lung, and Blood Institute is currently recruiting participants for a sodium nitrite clinical trial, in which the drug will be tested as a treatment for the chronic leg ulcers associated with sickle cell and other blood disorders.
  • Zidovudine (AZT): The first antiviral approved for HIV/AIDS in 1987.
  • Farnesyltransferase inhibitor (FTI): This was used to successfully treat children with the rapid-aging disease Progeria in a 2012 clinical trial.

“None of these drugs could have been developed without collaborations between drug developers and researchers with new ideas about applications, based on molecular insights about disease,” Dr. Collins said.

The examples that I have given, so far, on ‘repurposing’ older drugs are not exhaustive, in any way, there are more such examples coming up almost regularly.

The key benefits: 

The key benefits of ‘repurposing’ older drugs may be summarized as follows:

  • Ready availability of the starting compound
  • Previously generated relevant R&D data may be used for submission to drug regulators
  • Makes clinical research more time-efficient and cost-effective
  • Possibility of much quicker market launch

Slowly gaining steam: 

On November 27, 2012, ‘The Guardian’ reported that a number of university-based spin-outs and small biotech companies are being set up in the United States to find new purpose for old drugs. They express interest especially, on those drugs, which were shelved as they did not match the desired efficacy requirements, though showed a good overall safety profile.

Such organizations, take advantage of the declining cost of screening, with some compound libraries, such as, the Johns Hopkins library, which includes 3,500 drugs, available for screening at a small charge, the report highlighted.

Quoting a specialist, the report stated, “Existing drugs have been shown to be safe in patients, so if these drugs could be found to work for other diseases, then this would drastically reduce drug development costs and risks. Of 30,000 drugs in the world, 25,000 are ex-patent – it’s a free-for-all.”

‘Repurposing’ may not attract many pharma players, Government should step in:

Notwithstanding the clarion call of Dr. Francis Collins to global pharma players for their active participation in such projects, I reckon, the positive response may not be too many, because of various reasons.

Although, ‘repurposed’ drugs offer similar or even greater value to patients than any comparable ‘me-too’ New Chemical/Molecular Entity (NCE/NME), there may not possibly be any scope here for ‘Obscene Pricing’, such as ‘Sovaldi’ and many others, as some experts feel. And that’s the reality.

Moreover, new usages of the same old molecule, in all probability, may not get any fresh Intellectual Property (IP) protection in India, either.

Hence, considering the health interest of patients, in general, the Government should assume the role of ‘prime mover’, primarily to set the ball of ‘repurposing of older drugs’ rolling in India. This has already started happening in some of the developed countries of the world, which I shall dwell upon here.

Funding clinical development for ‘repurposing’:

Let me give a couple of examples of funding such admirable initiatives in two different countries.

I have already mentioned above that the clinical development for ‘repurposing’ Aspirin in the prevention of cancer, is being funded by the charity Cancer Research UK and the National Institute for Health Research (NIHR).

In a similar initiative, National Institutes for Health (NIH) of the United States, launched the ‘National Center for Advancing Transnational Sciences (NCATS), in May 2012.

New Therapeutic Uses program of NCATS helps to identify new uses for drugs that have undergone significant research and development by the pharma industry, including safety testing in humans. NIH claims that ‘using drugs that already have cleared several key steps in the development process gives scientists nationwide a strong starting point to contribute their unique expertise and accelerate the pace of therapeutics development.’

By pairing researchers with a selection of specific drugs, NCATS program tests ideas for new therapeutic uses, ultimately identifying promising new treatments for patients. Funding for this purpose is done by NCATS through NIH. For example, In July 2015, NCATS planned a funding of around US$3 million to support four academic research groups to test a selection of drugs for new therapeutic uses, as follows:

  • Type 2 diabetes
  • Glioblastoma (one of the most aggressive brain tumors in adults)
  • Acute myeloid leukemia (an aggressive blood cancer)
  • Chagas disease (a neglected tropical disease that causes heart, digestive and neurological problems)

According to NIH, each award recipient will test a selected drug for its effectiveness against a previously unexplored disease or condition. The industry partners for these projects are AstraZeneca and Sanofi.

Can it be done in India?

Of course yes, provided the Government considers health care as one its priority focus areas with commensurate resource deployment of all kinds for the same.

As things stand today, India still remains beyond any visibility to give a tangible shape to this specific concept of ‘repurposing’ of older drugs. There does not seem to be any other valid reason why similar model of funding can’t be followed locally too, for this purpose.

The nodal agency to spearhead such initiatives, and to create appropriate groundswell to help gain a critical mass, may well be the ‘Council of Scientific & Industrial Research (CSIR)’ or any other body that the Government decides in consultation with domain experts, together with reasonable financial incentives for commercialization of new usages at an affordable cost.

Conclusion:

As we all know, many people, across the world, are currently going through the pain of seeing their loved ones suffer, and even die, from serious ailments, the treatments of which either do not exist or when exist, the therapy costs may be out of reach of a vast majority of patients. In tandem, the R&D pipeline of the global pharma industry is gradually drying up.

In a situation like this, drug ‘repurposing’ that is directed towards meeting unmet medical needs of patients of all types irrespective of financial status, needs to be increasingly encouraged and pursued as a critical solution to this growing problem.

The good news is that some global pharma majors, though very few in number, have now expressed their intention to salvage their failed molecules and are open to help explore whether such drugs may work in other disease conditions.

India seems to be still miles away from this space, and a bit directionless too. That said, the country is scientifically quite capable of making up the lost ground in this area, provided the Government decides so, garnering requisite wherewithal.

Thus, in my view, the process of ‘repurposing’ older drugs has already started rolling in some major countries of the world, in a well structured manner with requisite funding in place. Tangible outcomes are already noticeable today, with some examples quoted in this article.

As Dr. Francis Collins said, collaborations between drug developers and researchers with new ideas about applications, based on molecular insights about disease are critical in the way forward to achieve this cherished goal in a sustainable manner.

By: Tapan J. Ray

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

Is Drug Price Control The Key Growth Barrier For Indian Pharma Industry?

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The corollary of the above headline could well be: “Are drug price hikes the key growth driver for the Indian Pharmaceutical Market (IPM)?”

Whenever the first question, as appears in the headline of this article: “Is drug price control a key barrier to growth of the IPM?”, is asked to the pharma players, irrespective of whether they are domestic companies or multinationals (MNCs), the answer in unison would quite expectedly be a full-throated ‘yes’. Various articles published in the media, including some editorials too, also seem to be on the same page, with this specific view. 

Likewise, if the corollary of the above question: “Are drug price hikes the key growth driver for the IPM?”, is put before this same target audience, most of them, if not all, would expectedly reply that ‘in the drug price control regime, this question does not arise at all, as IPM has been primarily a volume driven growth story.’ This answer gives a feel that the the entire or a major part of the IPM is under Government ‘price control’, which in fact is far from reality

Recently, a pharma industry association sponsored ‘Research Study’, conducted by an international market research organization also became quite vocal with similar conclusion on drug price control in India. This study, released on July 2015, categorically highlights ‘price control is neither an effective nor sustainable strategy for improving access to medicines for Indian patients’. The report also underscores: “The consumption of price-controlled drugs in rural areas has decreased by 7 percent over the past two years, while that of non-price controlled products has risen by 5 percent.”

I argued on the fragility of the above report in this Blog on September 7, 2015, in an article titled, “Drug Price Control in India: A Fresh Advocacy With Blunt Edges”.

Nonetheless, in this article, going beyond the above study, I shall try to put across my own perspective on both the questions raised above, primarily based on the last 12 months retail data of well-respected AIOCD Pharmasofttech AWACS Pvt. Ltd. 

Pharma product categories from ‘Price Control’ perspective:

To put this discussion in right perspective, following AIOCD-AWACS’ monthly pharma retail audit reports, I shall divide the pharma products in India into three broad categories, as follows:

  • Products included under Drug Price Control Order  2013 (DPCO 2013), which are featuring in the National List of Essential Medicines 2011 (NLEM 2011) 
  • Products not featuring in NLEM 2011, but included in Price Control under Para 19 of DPCO 2013
  • Products outside the ambit of any drug price control and can be priced by the respective drug manufacturers, whatever they deem appropriate

The span of price controlled medicines would currently be around 18 percent of the IPM. Consequently, the drugs falling under free-pricing category would be the balance 82 percent of the total market. Hence, the maximum chunk of the IPM constitutes of those drugs for which there is virtually no price control existing in India.

According to the following table, since, at least the last one-year period, the common key growth driver for all category of drugs, irrespective of whether these are under ‘price control’ or ‘outside price control, is price increase in varying percentages: 

Value vs Volume Growth (October 2014 to September 2015):

Month DPCO Product      Gr% Non-DPCO Products Gr% Non-NLEM Para 19 Gr% IPM
2015 Value Volume Value Volume Value Volume Value Volume
September 2.8 1.2 10.9 1.1 11.5 9.0 9.9 1.4
August 3.3 (2.7) 14.5 2.4 15.2 13.7 13.0 1.6
July 5.1 (0.6) 14.2 4.1 11.8 9.9 12.9 3.3
June 5.6 (0.1) 16.2 6.2 14.6 11.7 14.8 5.0
May 5.3 (0.3) 12.1 3.4 7.2 4.3 11.0 2.6
April 11.1 5.3 18.4 9.6 11.9 9.6 17.2 8.7
March 17.6 9.5 21.7 13.0 15.6 13.2 20.9 12.2
Feb 13.9 7.6 20.0 10.1 14.4 9.9 18.9 9.6
Jan 6.9 1.8 14.0 3.7 NA NA 12.7 3.3
2014    
December 8.0 0.7 14.8 3.2 NA NA 13.6 2.7
November 3.1 (3.4) 12.6 0.3 NA NA 10.9 (0.4)
October (2.4) (5.7) 6.8 (1.7) NA NA 5.2 (2.6) 

Source: Monthly Retail Audit of AIOCD Pharmasofttech AWACS Pvt. Ltd 

Does ‘free drug-pricing’ help improving consumption?

I would not reckon so, though the pharma industry association sponsored above study virtually suggests that ‘free pricing’ of drugs would help improve medicine consumption in India, leading to high volume growth.

As stated earlier, the above report of IMS Health highlights, “The consumption of price-controlled drugs in rural areas has decreased by 7 percent over the past two years, while that of non-price controlled products has risen by 5 percent.”

On this finding, very humbly, I would raise a counter question. If only free pricing of drugs could help increasing volume growth through higher consumption, why would then the ‘price-controlled non-NLEM drugs under para 19’, as shown in the above table, have generally recorded higher volume growth than even those drugs, which are outside any ‘price control’? Or in other words, why is the consumption of these types of ‘price controlled’ drugs increasing so significantly, outstripping the same even for drugs with free pricing?

The right answers to these questions lie somewhere else, which I would touch upon now.

Are many NLEM 2011 drugs no longer in supply?

DPCO 2013 came into effect from from May 15, 2013. Much before that, NLEM 2011 was put in place with a promise that all the drugs featuring in that list would come under ‘price control’, as directed earlier by the Supreme Court of India.  Even at that time, it was widely reported by the media that most of the drugs featuring in the NLEM 2011 are either old or may not be in supply when DPCO 2013 would be made effective. The reports also explained its reasons. 

To give an example, a November 6, 2013 media report stated: “While the government is still in the process of fully implementing the new prices fixed for 348 essential medicines, it has realized that most of these are no longer in supply. This is because companies have already started manufacturing many of these drugs with either special delivery mechanism (an improved and fast acting version of the basic formulation) or in combination with other ingredients, circumventing price control.”

Just to give a feel of these changes, the current NLEM 2011 does not cover many Fixed-Dose Combinations (FDC) of drugs. This is important, as close to 60 percent of the total IPM constitutes of FDCs. Currently, FDCs of lots of drugs for tuberculosis, diabetes and hypertension and many other chronic and acute disease conditions, which are not featuring in the NLEM 201, are very frequently being prescribed in the country. Thus, the decision of keeping most of the popular FDCs outside the ambit of NLEM 2011 is rather strange.

Moreover, a 500 mg paracetamol tablet is under price control being in the NLEM 2011, but its 650 mg strength is not. There are many such examples.

These glaring loopholes in the NLEM 2011 pave the way for switching over to non-NLEM formulations of the same molecules, evading DPCO 2013. Many experts articulated, this process began just after the announcement of NLEM 2011 and a lot of ground was covered in this direction before DPCO 2013 was made effective.

Intense sales promotion and marketing of the same molecule/molecules in different Avatars, in a planned manner, have already started making NLEM 2011 much less effective than what was contemplated earlier. 

Some examples:

As I said before, there would be umpteen number of instances of pharmaceutical companies planning to dodge the DPCO 2013 well in advance, commencing immediately after NLEM 2011 was announced. Nevertheless, I would give the following two examples as was reported by media, quoting FDA, Maharashtra:

1. GlaxoSmithKline (GSK) Consumer Healthcare having launched its new ‘Crocin Advance’ 500 mg with a higher price of Rs 30 for a strip of 15 tablets, planned to gradually withdraw its conventional price controlled Crocin 500 mg brand costing around Rs 14 for a strip of 15 tablets to patients. GSK Consumer Healthcare claimed that Crocin Advance is a new drug and therefore should be outside price control.

According to IMS Health data, ‘Crocin Advance’ achieved the fifth largest brand status among top Paracetamol branded generics, clocking a sales turnover of Rs 10.3 Crore during the last 12 months from its launch ending in February 2014. The issue was reportedly resolved at a later date with assertive intervention of National Pharmaceutical Pricing Authority (NPPA).

2. Some pharmaceutical companies reportedly started selling the anti-lipid drug Atorvastatin in dosage forms of 20 mg and 40 mg, which are outside price control, instead of its price controlled 10 mg dosage form.

Why DPCO 2013 drugs showing low volume growth?

From the above examples, if I put two and two together, the reason for DPCO 2013 drugs showing low volume growth becomes much clearer.

Such alleged manipulations are grossly illegal, as specified in the DPCO 2013 itself. Thus, resorting to illegal acts of making similar drugs available to patients at a much higher price by tweaking formulations, should just not attract specified punitive measures, but may also be construed as acting against health interest of Indian patients…findings of the above ‘research report’, notwithstanding, even if it is accepted on its face value.

In my view, because of such alleged manipulations, and many NLEM 2011 drugs being either old or not in supply, we find in the above table that the volume growth of ‘Price Controlled NLEM drugs’ is much less than ‘Price Controlled non-NLEM Para 19’ drugs. Interestingly, even ‘Out of Price Control’ drugs show lesser volume growth than ‘Price Controlled non-NLEM Para 19 drugs’.

Government decides to revise NLEM 2011:

The wave of general concerns expressed on the relevance of NLEM 2011 reached the law makers of the country too. Questions were also asked in the Parliament on this subject.

Driven by the stark reality and the hard facts, the Union Government decided to revise NLEM 2011. 

For this purpose, a ‘Core Committee of Experts’ under the Chairmanship of Dr. V.M Katoch, Secretary, Department of Health Research & Director General, Indian Council of Medical Research (ICMR), was formed in May 2014.

The minutes of the first and second meetings of the ‘Core Committee of Experts’, held on June 24, 2014 and July 2, 2014, respectively, were also made public. 

On May 5, 2015, the Union Minister for Chemicals and Fertilizers Ananth Kumar said in a written reply to the ‘Lok Sabha’ that “The revised NLEM would form the basis of number of medicines which would come under price control.” This revision is taking place in the context of contemporary knowledge of use of therapeutic products, the Minister added.

Would pharma sector grow faster sans ‘price control’?

If ‘drug price control’ is abolished in India, would pharma companies grow at a much faster rate in volume with commensurate increase in consumption, than what they have recorded during ‘limited price control’ regime in the country? This, in my view, is a matter of conjecture and could be a subject of wide speculation. I am saying this primarily due to the fact that India has emerged as one of the fastest growing global pharmaceutical market during uninterrupted ‘drug price control regime’ spanning over the last 45 years.

Nevertheless, going by the retail audit data from the above table, it may not be necessarily so. The data shows that volume growth of ‘out of price control’ drugs is not the highest, by any measure. On the contrary, it is much less than ‘price controlled drugs under para 19 of DPCO 2013′, which are mainly prescribed for non-infectious chronic diseases on a large scale.

I am referring to AIOCD-AWACS data for just the last 12 months, because of space constraint, but have gone through the same for the entire DPCO 2015 period, till September’15. The reason for my zeroing in on DPCO 2015 is for the three simple reasons:

- The span of price control in this regime is the least, even lesser than DPCO 1995, which was 20 percent. 

- It is much more liberal in its methodology of ‘Ceiling Price (CP)’ calculation, over any other previous DPCOs

- It has also a provision, for the first time ever, of automatic price increases every year for price controlled drugs, based on WPI.

A safeguard for patients?

Medicines enjoy the legal status of ‘essential commodities’ in India. Thus, many believe that ‘drug price control’ is a ‘pricing safeguard’ for Indian patients, especially for essential medicines and ‘out of expenses’ for drugs being as high as over 60 percent.

In the prevailing health care environment of India, the situation otherwise could even be possibly nightmarish. The key reason for the same has been attributed to ‘market failure’ by the Government, for most of the pharmaceutical products, where competition does not work. I discussed this issue in my article titled, “Does ‘Free-Market Economy’ Work For Branded Generic Drugs In India?” of April 27, 2015, in this Blog.

In India, ‘drug price control’ has successfully passed the intense scrutiny of the Supreme Court, along with its endorsement and approval. Any attempt of its retraction by any Government, without facing a tough challenge before the Apex Court, seems near impossible.

Conclusion: 

The fundamental reasons for overall low volume growth, or in other words, price-increase driven value growth of the IPM, I reckon, lie somewhere else, which could be a subject matter of a different debate altogether.

As I said in the past, IPM grew at an impressive speed consistently for decades, despite ‘drug price control’, and grumbling of the industry for the same. This high growth came from volume increase, price increase and new product introductions, the volume growth being the highest.

Most of the top 10 Indian pharma players, came into existence and grew so fast during the ‘drug price control’ regime. The  home-grown promoter of the numero-uno of the IPM league table, is now the second richest person of India. These are all generic pharma companies.

Generally speaking, Indian pharma shares even today attract more investors consistently than any other sector for such a long time. Granted that these companies are drug exporters too, but they all gained their critical mass in partly ‘price controlled’ Indian market. The criticality of the need for consistent growth in the domestic market, by the way, still remains absolutely relevant to all the pharma players in India, even today, despite…whatever.

Growth oriented overall Indian pharma scenario remaining quite the same, ‘drug price control’ with a current span of just around 18 percent of the IPM, can’t possibly be a growth barrier. Otherwise, how does one explain the highest volume growth of ‘price controlled non-NLEM drugs’, which is even more than ‘out of price-control drugs’?

Be that as it may, in my view, implementation of public funded ‘Universal Health Care (UHC)’ by the Indian Government, in any form or calling it by any other name, can possibly replace DPCO. Similar measures have been adopted by all the member countries of the ‘Organization for Economic Co-operation and Development (OECD)’ in this area, though following different paths, but nevertheless to attain the same goal.

Lamentably enough, the incumbent Government too has not ‘walked the talk’ on its number of assurances related to this core issue of health care in India.

Still, the hope lingers!

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.

 

Just 16% Of Indian Population Has Access To Free Or Partially-Free Health Care?

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Is health care currently a low priority area for the Government of India? Probably yes, and thus it is worth trying to fathom it out.

Besides planned frugal spending on overall public health in 2015-16, even as compared to the past trend, two other health related budgetary decisions of the Government are indeed baffling, at the very least.

As many of you, I too know that the incumbent Government in its first full-year budget of 2015-16 has sharply reduced the budgetary allocation on many important health related other projects, such as:

- Union budget allocation for the National Rural Drinking Water Program (NRDWP) that aims at providing safe drinking water to 20,000 villages and hamlets across India, has been drastically reduced this year. Curiously, this decision has been taken at a time, when India loses 200 million person days and Rs 36,600 crore every year due to water-related diseases.

- The Integrated Child Development Services (ICDS) scheme, which provides food, preschool education, and primary health care to children under 6 years of age and their mothers, has also been hit by a 54.19 percent budget cut this year. This decision too of cutting public expenditure on food, nutrition and health care for children to more than half, defies any logic, especially when 40 percent of growth stunted children in the world are reportedly from India, exceeding the number of even sub-Saharan Africa.

I hasten to add that the Union budget 2015-16 has indicated, as the states’ share in the net proceeds of the union tax revenues has increased, as per recommendations of the 14th Finance Commission, these central Government programs will now be run with a changed funding pattern between the Union and states. However, according to financial experts in these areas, regardless of devolution, the total money available to run these critical projects is sharply decreasing.

That said, on the other pages of the same Union Budget, public funding in the current fiscal year for bridges and roads has more than doubled. The budgetary allocation for these two areas now stands more than even education.

I deliberated on similar subject of access to health care in my blog of March 16, 2015, titled, “With Frugal Public Resource Allocation Quo Vadis Healthcare in India?”

Health care sector is important for job creation too:

According to the World Health Organization (WHO), health care sector is one of the largest job creators, not just in India, but globally. Thus, Indian health care industry being one of the fastest growing industrial turf in the country with a reasonable base, deserves a sharper focus of the Government.

Additionally, the socio-economic benefits that this sector provides in creating a sustainable, healthy and highly productive work force, has been well documented and can’t just be wished away, in any case.

The neglect is intriguing:

Currently, total healthcare spend of India is no more than 4.2 percent of the GDP with public spending being just 1.2 percent of it. Other BRICS nations are way ahead of India, in this area too. To set a direction on country’s public healthcare spend, breaking the jinx of a long period of time, the draft National Health Policy 2015 of the Government aimed at initial increase in health expenditure to 2 percent of the GDP.

As a result of the legacy of neglect over a long period of time, which continues albeit more blatantly even today, only 16 percent of the Indian population declares today that they have access to free or partially-free health care. I shall dwell on this area subsequently in this article.

Keeping these in perspective, it was intriguing, when the union budgetary allocation for health care in 2015-16 was kept at Rs. 297 billion or U$4.81 billion for its main health department, almost the same outlay as in the previous budget.

When compared against public fund allocations, such as, US$ 93 billion for highway projects or US$ 7.53 billion for 100 smart cities in the country, one will get a realistic perspective of this meager health budget allocation, in terms of effectively addressing the health care needs of around 1.25 billion people of India. Over 70 percent of this population live in the hinterland.

Agreed that the Government focus on these ‘infrastructure projects’ are not unimportant by any means. Nevertheless, the above comparison only highlights how much priority the Government assigns to the health care sector of India and for the health of its citizens. This issue assumes even greater significance in combating several challenging health situations, such as, ongoing fight against increasing incidence of life-long chronic ailments and deadly life-threatening diseases like, cancer, fueling already high rate of morbidity and mortality in the high country.

A quick glimpse on a few outcomes of neglect:

The Working Paper No. 1184 dated January 8, 2015, titled “Improving Health Outcomes And Health Care In India” of the Organization for Economic Co-operation and Development (OECD), highlights some interesting points, as follows:

  • Chronic diseases are the biggest causes of death and disability accounting for 50 percent of deaths, with cardiovascular diseases and diabetes, respiratory conditions and cancers figuring most prominently.
  • Preventive interventions such as improving access to a clean water supply, reducing the spread of HIV/AIDS through better sexual education, and vaccination campaigns for other diseases will each deliver more significant returns in life years.
  • Vaccination rates for diphtheria, tetanus and pertussis, for measles and for hepatitis B are all much lower than in OECD and peer countries.
  • Minimal access to free or partially-free health care.

It is an irony that ‘life expectancy’ in India still remains well below the countries at a similar level of development.

Abysmal overall hygienic conditions:

The OECD survey brings to the fore  abysmal hygienic conditions still prevailing in India. It can only be improved through active intervention of the Government with necessary budgetary allocations, sans photo ops for some celebrities and most politicians. Sincere support and participation of the civil society and intelligentsia, in general, are also equally important.

The paper underscores, among others, the following extremely unhygienic conditions still prevailing both in urban and rural India:

  • Most households in rural India do not defecate in a toilet or latrine, which leads to infant and child diseases (such as diarrhea) and can account for much of the variation in average child height. Even today the sight of poor children defecating openly in the streets, that too in a city like Mumbai, is also not very uncommon.
  • The burning of solid fuels in particular (undertaken by more than 80 percent of the population in cooking) is a major risk factor behind ischemic heart disease, lower-respiratory tract infections and chronic obstructive pulmonary diseases and could also increase cataracts and stroke.
  • Exposure to air pollution is a significant problem.
  • Many of the poor continue to smoke heavily.
  • 11 of the lowest income quintile did not undertake sufficient physical activity, compared with 16 percent in the highest income quintile.

India provides minimal access to free or partially-free health care:

As I mentioned above, India provides minimal access to free or partially-free healthcare to its citizens, as compared to all the BRICS nations, many other countries in South East Asia and even in Africa.

The above OECD paper states that with poor health intertwined with poverty, the greatest gains lie with policies that address the social conditions which enable combating communicable and non-communicable diseases.

Among BRICS countries, India provides least access to ‘Free or Partially-Free Health Care’ Services to its general population. This is despite being the largest democracy in the world, which is now striving hard to emerge as an economic and military superpowers.

The following study shows that only 16 percent of the Indian population declares having access to free or partially-free health care from the government:

BRICS Countries % surveyed said ‘Yes’ to the question: “Does your household have access to free or partially free health care from the State”
India 16
Brazil 24
China 73
Russia 96
South Africa 62

Source: Credit Suisse Research Institute, Emerging Consumer Survey Databook 2014.

As the OECD paper states, in this study approximately 1500 respondents were surveyed in each country, with India and China both having larger sample size of 2500. The male-to-female split between respondents was roughly 50:50 in all cases with rural-to-urban split varying by country.

Poor satisfaction level with existing health care services:

This is very important; as public facilities are the predominant source of qualified health professionals in rural areas where much of the Indian poor reside. In addition, significant population growth is occurring in urban slums, where urban public health care facilities are struggling to provide basic services. In a situation like this, slum dwellers face challenging economic barriers to accessing expensive private health care services (MoHFW, 2012).

The OECD survey indicates that 41 percent of those in rural areas and 45 percent in urban areas were not satisfied with treatment by their doctors or facility.

The reason attributed to this dissatisfaction are as follows:

  • Distance was cited by 21 percent of people in rural areas and 14 percent in urban areas.
  • Public health care centers remain closed more than half the time and lack basic medical supplies, such as stethoscopes and blood pressure scales.
  • Non-availability of required services was cited by 30 percent of people in rural areas and 26 percent in urban areas.

This is quite credible, as according to the Government’s own estimates:

- 10 percent of primary health care centers are without a doctor

- 37 percent are without a laboratory technician

- 25 percent without a pharmacist (MoHFW, 2012)

The above picture is quite consistent with large scale surveys in poor communities of India, by OECD.

Health care business for up market is booming:

Growing inequitable distribution of healthcare products and services is now wide open and blatant, more than ever before. There is no signal yet that the Government would soon consider health care sector as its one of the key focus areas, along with education, just as infrastructure, such as, building roads, highways, e-highways, flyovers, bridges and smart cities.

For up-market patients, the private sector is creating world class facilities in India. We can see today a good number of ‘five-star’ hospitals, with more number of newer ones coming up offering jaw-dropping facilities, quite akin to, may be even surpassing what are being offered for patients’ luxurious comfort in the developed world. Although these facilities cost a fortune, one would usually need to be in a queue to get admitted there for any medical or surgical treatment.

Most of these hospitals are now in high demand for ‘medical tourism’. According to available reports India currently caters to health care needs of over 200,000 foreign patients. ‘Medical tourism’ business reportedly fetched around US$ 2 billion to India in 2012.

On the flip side of it, as we all read in the recent media reports, some of these hospitals in Delhi refused admission even to seriously ill dengue patients, as they can’t afford such facilities. A few of these patients ultimately succumbed to the disease and the parents of one such poor child, who died without any hospital treatment in that process, committed suicide unable to withstand the irreparable and tragic loss.

Giving ‘Infrastructure Status’ to health care sector:

When creating basic infrastructure is the priority area of the present Government for financial resource allocation, why not give ‘infrastructure status’ to the health care sector now? This is not just for the heck of it, but purely based on merit and earlier detail evaluation by a Government Committee of experts.

To address the critical health care needs for the vast Indian population with appropriate infrastructure, quality products, services and manpower, providing ‘infrastructure status’ to the health care sector could facilitate the whole process. Additionally, it can transform the Indian healthcare sector as one of the biggest job-generating industry too.

This has been a key demand of the industry until recently, though not so much being talked about it today. A few years back, the previous Government was reportedly mulling to assign full fledged infrastructure status to the healthcare sector, as it merits inclusion in the category of ‘infrastructure’, satisfying all the nine criteria set by the erstwhile Rangarajan Committee.

I find in my archive, the Confederation of Indian Industry (CII) also demanded ‘infrastructure status’ for the health care sector in its pre-union budget memorandum for 2010-11. In that proposal CII had estimated that health care industry in India requires an investment of around US$80 billion, whereas in the current fiscal year the public expenditure on health still languishes at U$4.81 billion.

This specific issue seems to have taken a back seat today, for reasons not known to me. However, it is interesting to note that not just the Government apathy, no such demand is being made today by the large multi-industry trade associations of India, as vociferously as we witness, for example, in the case of ‘The Goods and Service Tax (GST) Bill’.

Health care debate is not to the fore today:

Critical health care issues of the country don’t seem to be in the fore front today for comprehensive debates even for the Indian main stream media, to influence the government.

We have been experiencing for quite while that Indian media, including social media, in general, usually goes ballistic 24×7 mostly with selective sensational topics. These may include, among others…glitzy events on Government’s high profile advocacy initiatives to attract more Foreign Direct Investment (FDI) from large overseas companies…Or back home some unfortunate and tragic Dengue fever related deaths due to negligence just in Delhi, though the same and equally grave incidences taking place in the other states of India, are hardly getting any coverage…Or on some high profile alleged murder pot-boilers announcing media verdict conclusively, even before completion of police investigation and charge-sheet being filed in a court of law.

These are probably neither bad, nor unimportant, nor avoidable, nor can come within the ambit of any media criticism. I am also not trying to do that, either.

As the saying goes, variety is the spice of life. We, therefore, generally want to get a feel of it everyday early in the morning, mostly glancing through the newspaper headlines, or in the late evening watching impatient anchor with strong personal opinion trying hard to dominate over all other participants in high-decibel ‘TV debates’, as these are called by the respective channels.

In an era of sensationalized and eye-ball grabbing ‘Breaking News’ of all kinds, flashing everywhere almost every now and then, critical health care issues seem to have become a mundane subject to the newsmakers for any meaningful debate to influence the Government. Serious debates on critical health care issues presumably would not generate all important Television Rating Points (TRPs) to the TV channel owners. Though I have no idea, the TRP of such debates  probably has been estimated to be even lesser as compared to the cacophony aired by the TV channels on the cost to exchequer for the MPs subsidized meals in the Indian Parliament…with intermittent high pitch ‘war cry’ of the dominating anchor… ‘the nation wants to know this’.

Conclusion:

Be that as it may, health care environment impacts all of us, quite appreciably. There is not even an iota of doubt on it. However, we can feel it mostly when the reality hits us or our families hard…very hard, as serious and cruel ailments strike suddenly, or as we face avoidable disease related deaths of our near and dear ones, or when illness makes a loving one virtually incapacitated, even after facing financial bankruptcy.

Health care is a serious matter for all of us, just as it is a serious and critical business for every nation and every Government. This criticality factor is independent of whatever level of economic development the country is aspiring for. Thus, the indifference of the Indian Government, if I may say so, despite promising so much on health care earlier this year, is intriguing, and more so, when just 16 percent of the total population has access to free or partially-free health care in our India of the 21st century.

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.

India’s China Dependence On API: A Time To Think ‘Outside The Box’

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The Department of Pharmaceuticals (DoP) has declared the Year 2015 as the Year of ‘Active Pharmaceutical Ingredient (API)’. Following it up on February 25, 2015, the Union Minister of Chemicals & Fertilizers Ananth Kumar assured the Pharmaceutical Industry that appropriate decisions will be taken soon to make India self-sufficient in Bulk Drugs (APIs).

The Minister also confirmed having received the recommendations of high level ‘Katoch Committee’ that was set up by the Government on October 8, 2013 to look into various issues concerning the API. This would be implemented expeditiously after taking the Union Cabinet’s approval, as the Bulk Drugs constitute the backbone of the Pharma Industry and the sector needs to be incentivized to take on the challenges from cheaper imports.

According to a recent report, in June 2015, the Ministry of Chemicals and Fertilizer has floated a draft cabinet note with the recommendations of the ‘Katoch Committee’. Quoting a senior official of the DoP the report mentioned that the cabinet note also proposes formation of a separate bulk drug authority, which will look into the implementation of such schemes.

The DoP Secretary Dr. V.K. Subburaj has lately reiterated that there is an urgent need to bring about self-sufficiency in the field of API.

In this article, I shall restrict my discussion only to those APIs, which are required for manufacturing the essential medicines in India.

Significant dependence on China:

For a large number of essential medicines, India heavily depends on API imports from China.

On December 12, 2014, the Minister of Commerce and Industry informed the Indian Parliament that in case of 12 essential drugs namely: Paracetamol, Metformin, Ranitidine, Amoxicillin, Ciprofloxacin, Cefixime, Acetyl salicylic acid, Ascorbic acid, Ofloxacin, Ibuprofen, Metronidazole and Ampicillin, there is significant dependence on imports. Approximately 80-90 percent of these imports are from China. He mentioned that the decision to import, and the country of origin for such imports, are based on economic considerations.

The Minister also informed the Parliament that a Committee of Secretaries, under the Chairmanship of the Secretary, Department of Health Research was set up on October 8, 2013 to study and identify the APIs of critical importance and to work out a package of interventions/concessions required to build domestic production capabilities, and examine the cost implication.

Interestingly, rapid and consistent increase in API import from China has been reported as follows:

Year API import from China (Rs. Crore)
April-September in 2014-15 6,521
2013-14 11,865
2012-13 11,000
2011-12 8,798

Ironically, though India manufactures over 30 percent of global generic drug consumption, more than 80 percent of APIs required to produce these medicines come from China.

In ‘RIS Policy Brief’ February 2015, Dr. Y. K. Hamied, Chairman of CIPLA was also quoted sounding an alarm bell, as follows:

“If China decided one bright day to stop export to India, we would be finished. The pharma industry is zero, both domestic and export, and we are looking at that danger objectively”.

Even, the National Security Adviser of India has reportedly expressed similar concern and urged to create adequate infrastructural facilities to make India self-reliant, at least, on the essential medicines, without further delay.

Another recent industry report:

A July 2014 report of ASSOCHAM, titled “Pharmaceuticals Sector in India: Challenges Faced & Suggested Way Forward” also underscores, since a very significant volume of India’s drug imports are concentrated in China, this lack of self–sufficiency in APIs poses significant risk to the drug security of the country. Any deterioration in relationships with China can potentially cause severe domestic shortages in the supply of essential drugs. 

Additionally, China could easily increase prices of some of these drugs where it enjoys virtual monopoly, noted the ASSOCHAM study.

The report further points out that this risk extends beyond the domestic market to export markets, as Chinese pharmaceutical companies, that have traditionally focused on large-volume intermediates and unregulated markets are beginning to “forward integrate”, with increasing focus on exports to regulated markets.

This emerging trend is supported by the recent improvements in local Chinese cGMP and product quality standards, increase in the number of manufacturing sites approved by the USFDA, and current filings of Abbreviated New Drug Applications (ANDAs) by the local companies of China. Given their overall dominance in intermediates and API manufacturing, Chinese players can pose a serious competitive threat to their Indian counterparts, much beyond the APIs for essential drugs, the above study noted.

‘Katoch Committee’ recommendations:

The recommendations of the ‘Katoch Committee’, as revealed by the the Minister to the law makers of India, appears to me a long list of ‘Things to Do’ without addressing the intricacies involved with the complicated core issue.

On May 8, 2015, the Minister of State of the Ministry of Chemicals and Fertilizers informed the Rajya Sabha of the Indian Parliament that in its report on API manufacturing in India, the Katoch Committee has inter-alia recommended:

  • Establishment of Mega Parks for APIs with common facilities such as common Effluent Treatment Plants (ETPs), Testing facilities, Captive Power Plants/assured power supply by state systems, Common Utilities/Services such as storage, testing laboratories, IPR management, designing, etc., maintained by a separate Special Purpose Vehicles (SPV)
  • A scheme for extending financial assistance to states to acquire land and also for setting up common facilities
  • Revival of public sector units for starting the manufacturing of selected and very essential critical drugs (e.g., penicillins, paracetamol etc.)
  • Financial investment from the Government for development of clusters which may be in the form of a professionally managed dedicated equity fund for the promotion of manufacture of APIs
  • Extending fiscal benefits to creation of the entire community cluster infrastructure and individual unit infrastructure
  • Extension of fiscal and financial benefits to promote the bulk drugs sector
  • Promoting stronger industry-academia interaction
  • Synergizing R&D promotion efforts by various government agencies
  • Incentivizing scientists
  • Duty exemptions for capital goods imports

On the face of it, the recommendations appear to be good. However, are these not too simplistic, based on just what is visible on the surface, without going into the complexity of the issue?

I shall now briefly dwell upon some of these areas, from my own perspective of the core issue and the key challenges involved.

Major challenges:

Profitability is undoubtedly a major reason why the indigenous production of important APIs, required to formulate widely used essential medicines, has paved the way for low priced Chinese equivalents. This has been acknowledged by all concerned and has happened more with APIs involving fermentation technology.

Besides other factors, API profitability and commensurate return on capital employed (RoCE) are primarily driven by the product design, process technology in use together with its associated requirements, cost of capital goods and utilities, working capital requirement, quality of sustainable demand generated and achievement of ‘economies of scale’. The last one is so important, as it signifies that proportionate saving in costs is gained by an increased level of production. Simply speaking, the greater the yield and the quantity of a API produced, the lower will be the per-unit fixed cost, as these costs are shared over a larger number of goods.

Additionally, ‘any time cGMP-audit preparedness’ for the big customers, make the running of the operation really unenviable.

Highly competitive generic API market, with larger number of manufacturers, is driven by its customers’ requirement of the lowest possibly cost for any quality product. With this ascending trend, global API manufacturing business has started slowly shifting from the long time much preferred big-name players of the western world, to the upcoming ones in India and China. Unfortunately, now even India has started importing APIs in significant volume from China. APIs of Chinese origin for Indian essential drugs are not just cheaper, but are also available almost on the shelf.

This fiercely competitive scenario has compelled a sizeable number of bulk drug manufacturers to shut shops in India. Many other ‘API only’ Indian manufacturers are now venturing into production and marketing of higher margin formulations, moving up the pharma value chain.

Some API producers have also entered into contract manufacturing of formulations in large quantities. A few others have already entered or are trying to enter into their API based formulation manufacturing agreements with large pharma MNCs for the regulated markets, and by filing DMFs and ANDAs.

To sum up, the challenges before the API sector, in my view, are predominantly as follows:

  • Intense price competition
  • Requirement of attaining ‘economies of scale’ for business sustainability, at times leading to overcapacity
  • Low profitability and RoCE
  • ‘Any time technical audit’ preparedness for high-end customers
  • Capital intensive business
  • High inventory carrying cost both for intermediates and finished goods
  • Long credit demand
  • High working capital requirement
  • Undifferentiated capabilities
  • Product obsolescence with changing disease profile or newer off-patent molecules coming in the same therapy area

Need to think ‘outside the box’:

I do not have access to the complete report of the Katoch Committee, just yet. However, going by what the Government has reported to the Indian Parliament on this subject, it appears that overall recommendations made by the Committee of Secretaries on the subject, are steps in the right direction.

If all the suggestions are implemented, the cost of manufacturing infrastructure and utilities are expected to come down. However, I am not quite sure, whether just these steps would be good enough making India self-reliant on APIs required to manufacture the essential medicines.

Nevertheless, to achieve the desired goal, some critical questions would still need to be answered with high clarity, such as:

  • Despite lowering cost of manufacturing, would it still be enough to neutralize Chinese competition?
  • Stakes being very high for China, if it feels threatened of loosing the booming API generic business from India, won’t the Chinese Government not find out ways and means to retain its ground? If so, are there proactive measures ready to negate the possible counter-move by China?
  • Would this cost reduction help most of the Indian API manufacturers achieving ‘economies of scale’ for reasonable sustainability, with cost competitiveness in the business?
  • Most of the essential drugs are low cost products. Thus, what happens, if Indian API manufacturers in clusters, thus created, decide to produce and sell only higher margin APIs and intermediates, including for the global innovator companies, without getting engaged in APIs for essential medicines?

Since this crucial problem is multi-faceted one, the recommendations should address all possible ‘what if’ scenarios, thinking ‘outside the box’. Mere creation of infrastructural and financial support base, may not help addressing all the key challenges, effectively. After all, it’s an open market competition, and Chinese players are tough nuts to crack, as they have been demonstrating time and again in various fields of activities.

Conclusion:

Having achieved dominance in the Indian generic API market, Chinese bulk drug manufacturers are now concentrating on continuous improvement in process technology to drive down the cost further. According to available reports, they are achieving it too, with great success, focusing on multiple critical areas starting from product and reactor design to much wider use of catalysis.

To effectively compete with Chinese APIs, especially for essential drugs, Indian API manufacturers in the clusters would require to start, at least, from where China is today in this area, and take off from there. This is possible, though quite challenging too.

Moreover, manufacturing overcapacity for generic APIs is already existing in China. If it gets further aggravated with overcapacity created in India for the same molecule, the overall scenario may lead to a desperate sales and marketing situation of survival for the fittest.

No doubt, over-dependence on Chinese APIs for the essential medicines may pose a threat to the drug security of India, as many have already opined, including the National Security Advisor of the country. Nonetheless, the situation could possibly turn even worse, without imposition of artificial tariff barrier, if India decides to rely on a simplistic solution for a multi-factorial complex problem.

‘Katoch Committee’ report is a good initiative for the domestic API business, in general. Nonetheless, to significantly reduce over-dependence on imported Chinese bulk drugs and be self reliant on  high quality and competitively priced APIs for essential medicines, India would need to think ‘outside the box’, undoubtedly.

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.

Biosimilar Drugs: Why Prescriptions Aren’t Still Enough?

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On September 3, 2015, in a Press Release, Novartis announced, “Zarxio(TM) (filgrastim-sndz) is now available in the United States. Zarxio is the first biosimilar approved by the US Food and Drug Administration (FDA) and the first to launch in the US.” Zarxio is being marketed by the generic drug unit of Novartis – Sandoz.

The company highlighted: “With the launch of Zarxio, we look forward to increasing patient, prescriber and payor access to filgrastim in the US by offering a high-quality, more affordable version of this important oncology medicine.” This statement may be interpreted as an acknowledged of a research based global pharma major that high-priced biologics create a notable access barrier to a large number of patients, even in a rich country such as the United States. It also underscores the increasing prescription opportunities for cheaper biosimilar drugs.

Zarxio will initially be available with a 15 percent discount. This needs to be viewed against usual price drop of around 20-30 percent for biosimilar drugs in Europe, as compared to the original molecules. It is expected that price differences between biosimilar drugs and the original ones, would vary widely from as low as 10 percent to a hefty 60 percent, in the global markets.

Prior to Novartis’s Press Release, USFDA announced Zarxio’s approval in a separate ‘FDA News Release on March 6, 2015, indicating that it can be prescribed by a health care professional for:

  • patients with cancer receiving myelosuppressive chemotherapy
  • patients with acute myeloid leukemia receiving induction or consolidation chemotherapy
  • patients with cancer undergoing bone marrow transplantation
  • patients undergoing autologous peripheral blood progenitor cell collection and therapy a
  • patients with severe chronic neutropenia.

Though such types of drugs are available in the important markets such as, Europe, Australia and India, the launch of Zarxio heralds the dawn of a new era of biosimilar drugs in the United States – the numero uno of the global pharma market.

Incidentally, USFDA’s approval of biosimilar drugs is an outcome of a relatively recent healthcare reform in the United States, when President Obama signed into law the ‘Affordable Care Act’ on March 23, 2010.

The key benefit:

In its above ‘Press Release’, Novartis captured well the key benefits of biosimilar drugs , as follows:

“While biologics have had a significant impact on how diseases are treated, their cost and co-pays are difficult for many patients and the healthcare budget in general.  Biosimilars can help to fill an unmet need by providing expanded options, greater affordability and increased patient access to life-saving therapies.”

Major growth drivers:

According to July 2015 report of ‘MarketsandMarkets (M&M)’ the global biosimilars market is expected to grow to US$6.22 Billion by 2020 from US$2.29 Billion in 2015, growing at a CAGR of 22.1 percent from 2015 to 2020.

The major growth drivers of the global biosimilars market are expected to be:

  • Growing pressure to curtail healthcare expenditure
  • Growing demand for biosimilar drugs due to their cost-effectiveness
  • Rising incidences of various life-threatening diseases
  • Increasing number of off-patented biologics
  • Positive outcome in the ongoing clinical trials
  • Rising demand for biosimilars in different therapeutic applications such as rheumatoid arthritis and blood disorders.

European Union (EU) had a head start of 5 to 7 years to put its regulatory pathway for biosimilar drug development and approval process. Thus, at present practically most the entire value sales of biosimilar drugs take place in the EU.

As, cheaper biosimilars would continue to hit the US market, insurance companies are expected to encourage the use of such drugs instead of highly expensive original ones.

According to Express Scripts report released in December 2014, the US healthcare system could clock savings in drug costs around US$250 billion in the first decade of availability of biosimilars drugs and the approval of Zarxio would help patients saving more than US$5 billion in the the world’s largest market for biologics.

By 2020, several blockbuster biological products with global sales of more than US $67 billion would go or are going off-patent, creating great opportunities for biosimilar drugs the world over. Some of these drugs are Avastin (Roche), Humira (AbbVie), Synagis (AstraZeneca), Aranesp (Amgen) and Enbrel (Amgen, Pfizer).

However, the crux of its success, to a great extent, would lie on physicians’ confidence to prescribe large molecule biosimilar drugs, as these are new and not exact replicas of the original biologic molecules, unlike the small molecule generic drugs.

Possible growth barriers:

The success requirements of large molecule biosimilar drugs would not mimic the same for small molecule generics, anywhere in the world.

In my view, there are two types of critical barriers to success with biosimilars, both tangible and intangible in nature.

The same M&M report lists the following factors as possible tangible barriers to fast growth of biosimilar drugs:

  • High manufacturing complexities and costs
  • Stringent regulatory requirements in countries
  • Innovative strategies by biologic drug manufacturers to restrict the entry of new players

I would very briefly touch upon each one of these, hereunder:

I. High manufacturing complexities and costs:

This is primarily because, the therapeutic characteristics of biosimilar drugs are significantly influenced by their manufacturing methods. For example, it is quite possible that based on the manufacturing system that is adopted, the same starter ingredients may give substantially different results.

II. Stringent regulatory requirements:

Among many other stringent regulatory requirements, I would highlight in this article just the following two:

A. The labeling:

It is noteworthy that USFDA has named Zarxio with the placeholder nonproprietary name “filgrastim-sndz” and not as ‘filgrastim’, the nonproprietary name for Amgen’s, Neupogen, for which Zarxio has been approved as a biosimilar.

To quickly recapitulate its background, in July 2014, the World Health Organization (WHO), which oversees the system of International Nonproprietary Names (INN), recommended that biosimilar drugs would receive the same nonproprietary name, but with a four-letter code at the end.

This is primarily because, innovator biologic drug companies and also some doctors’ groups argue that molecular structures of biosimilar drugs are similar, but not exact replicas of the original ones. Hence, there is a need to differentiate them, while assigning INN.

They reiterate that giving biosimilars the same INN as the original biologic molecule may cause confusion among both the doctors and the patients. It could also make the tracking of adverse reactions, as and when these will be reported, more challenging.

Consequently, it has now been accepted by the regulators that biosimilars would receive the same nonproprietary name but with a four-letter code at the end to differentiate such drugs from the original biologics.

B. Interchangeability:

The above labelling issue, in turn, creates a barrier to possible interchangeability or automatic substitution of expensive original biologics with much cheaper equivalent of biosimilar drugs. I reckon, this could pose a critical obstacle in the initial take-off of the later.

According to a July 4, 2015 article, titled “Fate of cost-saving biosimilar drugs may hinge on naming policy”, published in ‘Modern Healthcare’, the USFDA has the following two pathways for licensing of biosimilar drugs:

  • For being designated as “similar” in efficacy and safety to an original biologic.
  • For being approved as being “interchangeable,” which requires a much higher review standard and could take years and millions of dollars to obtain the needed clinical trial data.

According to this article, none of the biosimilar products currently under USFDA review are in the interchangeable pathway.

III.  Innovative strategies to restrict entry of new players:

All the above innovative strategic moves and arguments, where biologic drug manufacturers are allegedly involved, may seriously restrict not just the entry of newer biosimilars, but also their faster prescription throughput.

Safety concern (immunogenicity):

Additionally, a critical safety concern on biosimilar drugs is being raised by the manufacturers of original biologics. This concern involves immunogenicity, which means the way a biosimilar drug provokes an immune response in the body. Original biologic drug manufacturers contend, since biosimilar molecules are not exactly the same as originals and their long term safety, related to immunogenicity, has not been tested, these drugs cannot be construed as having the same safety profile as the innovators’ biologics.

Besides, ‘Free-Trade-Agreements (FTAs)’ are also likely to be cleverly used by the original biologic drug manufacturers through their respective Governments, to the extent possible, for safeguarding the beachhead from the marketing onslaught of biosimilar drugs.

A perception barrier too:

Here comes an important perception-based intangible barrier to desirable prescription growth for biosimilar drugs.

Probably gauging it, post Zarxio launch, none other than the CEO of Novartis – Joe Jimenez, reportedly said: “He’s not expecting too much of a splash before 2020.”

This is understandable, as the doctors’ favorable disposition towards biosimilar drugs would be a crucial factor for prescription growth of these medicines.

A recent doctor community survey from QuantiaMD primarily captures the doctors’ thoughts and feelings on biosimilar drugs. This study was done with 300 specialists and primary care physicians.

Some of the notable findings of the report are as follows:

  • While 78 percent of the doctors polled said they were familiar with the term “biosimilar,” only 38 percent could name a biosimilar that’s under consideration for USFDA approval and would be relevant to their patient population.
  • Only 33 percent could name a biosimilar at all.

Researchers then narrowed down the original 300 physicians polled into a group of 120 “prescribing specialists.” This group of 120 doctors are currently prescribing biologics and most likely to prescribe biosimilar drugs in the years ahead. The study reported:

  • Only 17 percent of that segment said they are “very likely” to prescribe biosimilars.
  • And 70 percent said they either aren’t sure or are “somewhat likely’” to prescribe a biosimilar.
  • Only 12 percent of prescribing specialists are “very confident” that biosimilars are as safe as the original biologic version of the drug.

That said, 12-year ‘Data Exclusivity’ period for biologics in the United States, is one additional barrier to early introduction of cheaper biosimilar drugs, as considered by many.

On this issue GPhA – the generic drug makers’ group in America reportedly issued a statement, criticizing a paper of Biotechnology Industry Organization (BIO), saying:

“Market exclusivity acts as an absolute shield to their weak patents. Thus, from a practical perspective, extending market exclusivity beyond the Hatch-Waxman period would block the introduction of generic competition for almost 20 years, derailing any potential cost savings by Americans.”

The challenges ahead:

Considering all these together, the challenges ahead for quick acceptance of biosimilar drugs are indeed mind-boggling. The situation necessitates enough innovative and painstaking work by all concerned to gain the doctors’ confidence on biosimilar medicines. It goes without saying that success in generation of enough prescriptions for these drugs is the fundamental requirement to benefit the patients, which, in turn, would lead to significant savings in health care cost, as estimated above.

As more innovator companies start joining the biosimilar bandwagon, the physicians’ perception on these medicines, hopefully, would change sooner.

The status in India:

Although it appears strange, but a fact nonetheless. Biosimilar drugs approved in India till August 2012, followed the requirements of the regulators as provided mostly in the Drugs and Cosmetics Act for small molecule drugs, which are incidentally quite a different kettle of fish.

According to GaBI-online, the first locally produced biosimilar drug was approved and marketed in the year 2000. India announced implementation of its ‘Guidelines’ for ‘Similar Biologics’ much later, on September 15, 2012.

Indian ‘Guidelines’ for ‘Similar Biologics’ were jointly developed by the Department of Biotechnology (DoB) and the Central Drugs Standard Control Organization (CDSCO). The ‘Guidelines’ outline requirements for pre-clinical evaluation of biological products, claiming ‘similar to already approved biologics’. Thus, Indian regulators will partly rely on data from the already approved products to ensure safety, purity, potency and effectiveness of these drugs.

A wide variety:

A wide variety of biosimilar drugs have been approved and marketed in India, since then.

According to International Journal of Applied Basic Medical Research (2014 Jul-Dec; 4.2: 63–66), biosimilars in India consist primarily of vaccine, monoclonal antibodies, recombinant proteins and diagnostics, insulin, erythropoietin, hepatitis B vaccine, granulocyte colony stimulating factor, streptokinase, interferon alpha-2B and epidermal growth factor receptor.

The above article states that there are about 100 biopharmaceutical companies actively involved in research and development, manufacturing and marketing of biosimilar therapeutic products in India. Only 14 therapeutic drugs (similar biologics) were available in 50 brands in 2005. This number had grown to 20 therapeutic drugs in 250 brands in 2011.

The status of similar biologics approved and marketed in India is elaborated in this Table 1.

Some of the key Indian players of biosimilar drugs are Dr. Reddy’s Laboratory (DRL), Lupin, Zydus Cadila, Serum Institute of India, Biocon, Reliance Life Sciences, Wockhardt, Zenotech Laboratories and Intas.

I wrote on a related subject in this blog dated December 15, 2014 titled, “A Great News! But…Would This ‘Golden Goose’ Lay Golden Eggs?”

Conclusion:

Opportunities for biosimilar drugs are expected to expand significantly all over the world, basically driven by the need for affordable biologics and healthcare cost containment pressure in many countries.

As I had articulated before, unlike small molecule generics, unlocking the true potential of large molecule biosimilar drugs in a sustainable way would demand innovative, clear, razor sharp and highly focused business strategies across the value chain.

For faster growth in prescriptions, biosimilars would call for a hybrid marketing model of small molecule (branded) generics and large molecule original biologics. Ability to craft impactful value proposition and ensuring its effective delivery for each stakeholder, smart and innovative use of interactive and participative digital tools both for doctors’ and patients’ engagement, of course sans complexities, would decide the ultimate commercial fate for each of these types of products.

To effectively reap rich harvest from the new space thus being created, the challenges are also too many. The concerns expressed on biosimilars may also be genuine, but the regulators should take care of those before granting marketing approval to benefit the patients, in a meaningful way.

Overall key drivers and barriers for success with biosimilar drugs would remain almost the same, both for global and local players. However, carving out and thereafter expanding share in this market, sizably, won’t be a piece of cake for any company, understandably.

Quite naturally, the innovator companies for biologics would go all out to retain their turf as much as possible, despite the entry of cheaper biosimilars. This is expected to continue by reinforcing the belief of the physicians and the patients that biosimilars are not quite the same as the original biologic molecules.

Effective proactive measures need to be initiated, soon, by the regulators and all other stakeholders to spread the right message, protecting the patients’ interest. Otherwise, apprehension of the doctors on biosimilars in general, regarding safety, efficacy, substitution and interchangeability may persist for some time to come, negatively impacting faster and desirable prescription growth of these drugs all over the world, including India.

By: Tapan J. Ray

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

 

Digital Marketing: Is Pharma Still A Laggard?

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‘Brand Marketing’ in the pharmaceutical industry, across the world, has mostly remained tradition bound, despite its rapid embracement of modern state of the art tools and technology in most other areas of the business.

Many other industries have been demonstrating over a period of time, how innovative usage of ‘Digital Marketing’ can provide cutting edge advantages to attain business excellence.

Expanded reach:

Today, ‘Digital Marketing’ has expanded its reach much beyond just business. This is currently being adopted even by the political parties and quite successfully. Besides promoting political candidates to win elections, imaginative deployment of high-tech tools is helping these parties to create game-changing favorable ground-swell, across the world.

Now, Indians have started witnessing it, even in the hinterland. It all started with associated glamor and grandeur, to a large extent, from the last general election of the country. Extensive utilization and usage of digital platforms, ranging from social media to high tech 3-D speeches of the political power seekers, have helped heralding the dawn of a new genre of political marketing in India. It helps creating favorable public opinion, capturing a much larger pie of the voters’ mindshare much quicker than the traditional form of marketing campaigns, without even an iota of doubt.

The ‘T-Factor’ changing the operating environment:

Though pharma marketing fundamentals would mostly remain the same, the overall environment in which the industry operates is continuously evolving, at a fairly rapid pace. The ‘T- factor’ or the ‘Technology Factor’ is hastening this process of continuous change.

We are experiencing how pivotal role the mobile or smart phones and tablets are playing at this juncture, when people spend more time with these devices than PCs. Simultaneously, general engagements and interactions are growingly becoming more digital than physical.

All these are setting new trends related to doctors’ and patients’ engagement initiatives, including, seeking, managing and communicating information to achieve desired goals.

Pharma industry is slow in adopting ‘Digital Marketing’:

As I see it, some global pharma companies have started experimenting with ‘Digital Marketing’. However, that is no more than just a very small component of their overall brand or corporate marketing strategy, driven mainly by:

  • High operational cost and lower commensurate returns of traditional pharma marketing.
  • And, The ‘Zing Factor’ – sheer energy, enthusiasm and liveliness of it, as an in-thing.

This is vindicated by the fact, while the global digital spending by pharma industry is expected to be around US$2.2 Billion in this year, the total sales and marketing expenditure of just one global pharma major – Novartis was US$ 14.6 Billion in 2013, according to a BBC News report of November 6, 2014.

Digital space cannot be ignored:

While giving example of powerful impact of digital media on brand marketing process,

I would cite the instance of recent ban in the country of ‘Maggi Noodles’ manufactured by Nestle, as ordered by the Indian Government authorities.

The first complaint on the product quality of ‘Maggi Noodles’ was reported from Uttar Pradesh (UP).

There, a product testing laboratory allegedly detected ‘lead and MSG’ much above the permissible level in ‘Maggi’, which is mostly consumed by children. It created an immediate mass furor in the social media. The impact of public outrage in the digital space, based on this just one incident, was so intense in just 24 hours that it influenced many with the same intensity of negative emotion, almost in no time.

Absence could be very costly: 

All-time active presence of a company in the digital space is important. Absence of it, at times, could invite disastrous consequences.

In the above case, Nestle management, as I understand, was rather quiet on the social media during the critical period of public fury. Consequently, the inevitable happened, as usually transpires under the fierce pressure of social media.

‘Maggi Noodle’ was immediately banned in the country, without probably following the due process of law, as the Bombay High Court ruling says. The brand image suffered a huge immediate blow. Revenue of billions of dollars vanished in the thin year, almost overnight.

What would have happened with Nestle management being alert with proactive skillful communication in the digital space during this critical time of social media outrage? Probably, the damage inflicted on ‘Maggi Noodles’ brand could have been minimized. Who knows?

That’s the power of the digital space as we experience today. Thus, it needs to be optimally leveraged by the pharma industry, without further delay, with creative ‘Digital Marketing’ engagements.

‘Digital Marketing’ in pharma – a quick look:

For the benefits of all readers let us recapitulate what does this process really entail? ‘Digital Marketing’ in pharma is construed as a targeted, measurable and interactive marketing process of brands or disease related services using digital technology. It ensures immense flexibility and offers a broad spectrum of variety, for patients’ engagements of various types, and reaching out to doctors for increasing prescription generation.

Engagements and interactions with doctors, patients and other relevant stakeholders through digital channels, such as, social media, smart phones/tablets, health applications, e-mails and e-detailing are of immense importance today, as a sizable number of them are looking for more and more instant information, which could be product, disease or any other service related and important to them for a better quality of life.

Its relevance:

‘Digital Marketing’ would soon assume high priority for all round pharma business in India, just as it has already happened in many other industries. The speed of its becoming a critical center piece in the pharma marketing strategy formulation exercise is directly linked with the increasing speed of Internet and smart phone usage by people of all ages with enquiring minds.

On the other hand, rapid change in market dynamics and extremely busy schedules of the important doctors, triggering fast decline in the productivity of traditional product detailing, would hasten this process of change.

The key advantages:

The key objectives of both ‘Traditional or Physical’ and ‘Digital Marketing’ in the pharma industry are basically the same, such as, building brand perception and brand preferences, giving rise to excellence in business performance.

According to a paper of April 16, 2014, published by Salford Business School, Manchester, UK,

The key advantages of ‘Digital Marketing’ over ‘Traditional Physical Marketing’ are as follows, where the ‘Digital Marketing’:

  • Helps businesses to develop a wider customer base as it does not rely on physical presence or interaction.
  • Encourages customers to interact directly with businesses.
  • Is not limited by conventional opening times – customers can interact at a time and place convenient for them

Calibrated increase in usage of ‘digital media’:

Both traditional and digital forms of marketing are currently important in the pharma industry, though in varying degree. Each pharma player has to carefully evaluate one’s current and future product-mix and customer base as they would decide either to initiate or scale up marketing operations in the digital space.

Well calibrated increase in the usage of contemporary ‘Digital Marketing’, keeping in mind rapidly changing aspirational mindset of young Indians, including doctors and patients, with smart phones being a key enabler, would help the Indian pharma industry, significantly, as we move on.

Starting with selective approach:

Initially a company may be selective in its ‘Digital Marketing’ approach, which could be based on digital penetration in the geographical regions or areas and its demographic configuration.

For example, if a particular region shows high smart phone usage for community or group chat within the general population, a pharma company may explore the possibility of creatively designing a smart phone based ‘digital patient chat group’ as a part of its patient engagement initiative,

In this ‘digital patient chat group’, the members suffering from chronic or even serious ailments can discuss with each other the issues for which one is seeking a solution, where even the pharma companies can intervene, wherever they can add value and is legally permissible.

A few examples:

To add a perspective to this discussion, I would give below just a few examples, at random, of various ‘Digital Marketing’ initiatives of global pharma players:

  • Merck (MSD) uses cervical cancer vaccine Gardasil ’s Facebook fan pages to drive awareness and traffic to their cervical cancer site.
  • Pharma brand Cephalon promotes pain relief by creating an interactive website.
  • Boehringer Ingelheim worked with Doctors.net.uk to run a 12-month campaign to raise awareness and sales for its Asasantin Retard, an antithrombotic agent which helps prevent the formation of blood clots.
  • AstraZeneca’s online campaign for Nexium aimed to educate the patients and build their brand preference. The tactics included coupon downloads, driving qualified potential customers to the site and encouraging them to talk with their doctor about Nexium.
  • Novartis set up a patient focused website targeting all four major organ transplants drugs.
  • UCB Pharma partnered with social media platform patientslikeme.com to bring an Epilepsy community to its site.
  • GSK developed a promotional website aimed at HIV specialists. The site, at www.sciencexchange.co.uk, offers HIV specialists a one-stop-shop for exchanging information on HIV and its management.
  • Sanofi uses YouTube with a number of product messages

Conclusion:

Today in India, we witness even various political parties, which used to be very traditional in their approaches, have started using a wide variety of digital marketing tools successfully by deploying astute domain experts, to achieve whatever they want to.

On the other hand, despite spectacular evolution and progress of digital technology in many verticals of the pharma industry, its marketing models, by and large, still don’t seem to find these highly productive tools much useful, as compared to a large number of different industries.

Currently, digital information and communication channels are catching growing number of eyeballs of even the doctors and patients. Despite this shifting paradigm, with large to very large field sales forces trying to reach the increasingly busy doctors, pharma industry is still relying heavily on traditional and physical marketing models, including promotion through medical journals and even the direct mailers.

Intriguingly, barring a limited number of global players, pharma industry in general, and Indian pharma companies in particular, seem to be far lagging behind in creative digital marketing initiatives.

As the pressure would keep mounting for more returns from every rupee spent on sales and marketing, pharma marketers would require to reassess the differential value addition potential of digital marketing media. While doing so, they would first feel the need to augment their traditional marketing models with selective and synergistic digital interventions and thereafter to spearhead the core communication of brand values together with customer engagement and interaction initiatives with the help of digital media.

The effectiveness in working out a game changing crafty blend of both brand and patient-centric communication package with digital tools would separate men from the boys. It would demand top quality cerebral inputs from the pharma marketers – a requirement that is not so easily available in the current space of pharmaceutical marketing, dominated by a wide variety of freebies.

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.

‘Fake Drugs Kill More People Each Year Than Terrorism In The Last 40 years’

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In this article, I shall deliberate on ‘fake medicines’ that we may at times land up into buying, without any inkling that instead of curing or managing the ailments, these products can push us into serious health hazards, quite contrary to what we and our doctors hope for.

One may term these substances as ‘Counterfeit’, ‘Fake’, ‘Spurious’ or ‘Sub-standard’ drugs, or in whatever other names one may wish to. The bottom-line is that such products in the guise of drugs could precipitate very serious and life-threatening health crisis for patients. This mindless game has already become both a global and local health menace, though in varying degrees and parameters in different countries.

According to INTERPOL, large sums of money are involved with these transnational criminal enterprises. Fake drug makers, who run this deadly trade undercover, use sophisticated tools and technologies and are well equipped to operate stealthily.

Deploying requisite wherewithal, this growing threat to public health and safety needs to be addressed expeditiously by all concerned and in tandem. Curbing this menace would call for great concerted focus in approach and execution of a fool-proof strategy with military precision.

At this stage, I reckon, we should not clutter the subject by mixing it up with other commercial considerations, such as Intellectual Property (IP) related matter, for which appropriate laws and mechanisms are already in place.

CBI underscores veracity of the problem:

Under the above backdrop, a Central Bureau of Investigation (CBI) Press Release dated June 24, 2015 announced that the First Indo-French Workshop on “Combating Counterfeit Medicine” for Police Officers, Investigators and other officers was held on 23 and 24 June 2015 in New Delhi.

The event was organized in collaboration with the French Embassy; Institute of Research Against Counterfeit Medicines, France; Central Office Against Environmental & Public Health Violations, France and Central Fight Against Harm to the Environment And Public Health (OCLAESP) and was hosted by the CBI. Mr. Anil Sinha, Director, CBI inaugurated the workshop.

‘Fake Drugs Kill More People Each Year than Terrorism’:

In his inaugural address, Mr. Sinha made a startling revelation, when he said, according to an estimate of INTERPOL; fake medicines kill more people in a year than those who have died in the past 40 years as a result of terrorism.

Just a few years ago, INTERPOL reportedly estimated that while more than 65,000 people were killed in over 40 years in transnational terrorist incidents, the estimates of deaths caused by fake medicines range from tens of thousands to hundreds of thousands annually.

Quoting Ronald Noble, the erstwhile Secretary General of INTERPOL another report says, “40 years of terrorism has killed about 65,000 people, while 200,000 people died from the use of counterfeit drugs last year alone, and that’s just in China.”

Both crime and big money are involved in this life-threatening menace. Citing an example the CBI Director said, ‘One illicit online pharmacy network, which was dismantled by US authorities in 2011, managed to earn USD 55 million during two years of operations’.

In India, we have already read about the raids conducted by Mumbai FDA in April 2015 on similar unauthorized online pharmacies in the country. Following this development, the Drug Controller General of India has announced his yet another good intent to look into this issue with the help of a trade organization.

I shall also discuss, very briefly though, about problems associated with online pharmacies related to fake drugs, the world over.

More problems in the developing nations:

The CBI Director also articulated in his address, “Though the ramification of this menace is worldwide, it is more pronounced in developing and under developed nations.”

Sometime back in 2006, a study published by the then International Medical Products Anti-Counterfeiting Task Force (IMPACT) indicated that in countries like, the USA, EU, Japan, Australia, Canada and New Zealand, the problem is less than 1 percent. On the other hand, in the developing nations like parts of Asia, Latin America and Africa more than 30 percent of the medicines are counterfeits.

The above ‘Task Force’ also reported as follows:

“Indian pharmaceutical companies have suggested that in India’s major cities, one in five strips of medicines sold is a fake. They claim a loss in revenue of between 4 percent and 5 percent annually. The industry also estimates that spurious drugs have grown from 10 percent to 20 percent of the total market.”

‘Fake Drugs’ are more in countries with weak regulatory enforcement:

It has been observed that the issue of fake drugs is more common in those countries, where the regulatory enforcement mechanism is weak. India, I reckon, is one such country.

Interestingly, the Ministry of Health in India does not even recognize that fake Drugs are a growing menace in the country. This is vindicated by its latest report of 2009 on this subject.

The above report titled, “Report on Countrywide Survey for Spurious Drugs”, published by CDSCO on behalf of Directorate General of Health Services, Ministry of Health & Family Welfare, Government of India in 2009, concluded as follows:

“In view of above observations and data obtained from the manufacturers, after physical verification of all the drug samples and subsequent chemical analysis report on the representative of samples taken at random, it may be concluded that:

(i)             The extent of spurious drug in retail pharmacy is much below the projections made by various media, WHO, SEARO, and other studies i.e. only 0.046 % (11 samples out of 24,136 samples).

(ii)           Extents of substandard drugs among the branded items are only 0.1 % {Out of two thousand nine hundred seventy six (2976) unsuspected samples, 03 samples do not conform to claim with respect to Assay on chemical analysis}”

It is an irony that the drug regulators in India mostly keep demonstrating an ‘Ostrich Syndrome’ – refusing to acknowledge this menace that is blatantly obvious. They apparently believe that no health hazards due to prevalence of fake drugs exist in the country.

On the other side – many worrying reports:

Though the Government of India tends to wash its hands off on the very existence of this menace with the survey reports as above, following are just a few examples from other reports raising concerns on this critical issue in India:

  • A July 2014 ASSOCHAM report titled, “Fake and Counterfeit Drugs In India –Booming Biz” states that fake drugs constitute US$ 4.25 billion of the total US$ 14-17 billion of domestic pharmaceutical market. If the fake drugs market grows at the current rate of 25 percent, it will cross US$ 10 billion mark by 2017.
  • A May 2012 study published in ‘The Lancet’ reported that over one in three anti-malarial drugs sold in southeast Asia are fake while a third of samples in sub-Saharan Africa failed chemical testing for containing too much or too little of the active ingredient, potentially encouraging drug resistance. Around 7 percent of the drugs tested in India was found to be of poor quality with many being fake. India reportedly records 1.5 million cases of malaria every year.
  • A February 2012 report of ‘The National Initiative against Piracy and Counterfeiting’ of FICCI highlighted that the share of fake/counterfeit medicines is estimated at 15- 20 percent of the total Indian pharmaceutical market.
  • A 2011/12 report of the US Customs and Border Protection highlighted: “India and Pakistan both made it to top 10 source countries this year due to seizures of counterfeit pharmaceuticals. Pharma seizures accounted for 86 percent of the value of IPR seizures from India and 85 percent of the value of IPR seizures from Pakistan.”

DCGI intends to justify his moot point yet again:

In view of all these worrying reports and amid concerns around the quality of medicines being manufactured in India, in January 2015, the Drug Controller General of India (DCGI) proposed carrying out a nation-wide survey using methodology prepared by the Indian Statistical Institute, Hyderabad to assess the prevalence of fake and substandard drugs.

In the 2015 survey, around 42,000 locally made drug samples would be drawn from across the country throughout the rest of this year, which would include 15 therapeutic categories of drugs featuring in the National List of Essential Medicines (NLEM), 2011.

As I mentioned before, according to the DCGI this survey would “tell the world that our drugs are of quality”.

I discussed a similar issue titled, ‘Are We Taking Safe And Effective Medicines‘ in this Blog on November 13, 2013.

‘Fake Drugs’ and Online drug sales:

Before I touch upon this point and at the very outset, let me submit that in this article I shall not discuss on the merits or demerits of online pharmacies and the need of such e-outlets in India.

That said, it is now widely believed, backed by hard data that the Internet is increasingly assuming an attractive niche in the global diffusion of ‘fake drugs’.

Unlike India, some countries already support the business of legal online pharmacies by charting a transparent regulatory mechanism in place. For example in the United States all Internet pharmacies have to be licensed in the country. All their States require this. The general rule is, if an Internet pharmacy is offering to ship drugs into a particular state, they have to be licensed (but not necessarily located) there.

However, if an Internet pharmacy is shipping prescription drugs to individuals in the US from outside the US, that is absolutely illegal.

Some institutions in the US developed an accreditation system for Internet pharmacies. The official seals of these institutions, require to be posted on pharmacies’ website as a warrantee.

It is important to note that these institutions operate only at the national level and due to differences in domestic laws in different countries, it is difficult for any of them to provide customers with reliable information concerning the quality of pharmaceuticals, in general, available online.

Status of online pharmacies in India:

Although online sales of pharmaceuticals are totally illegal in India till date, there seems to be several such pharmacies still operating in the country.

It is generally believed that the impact of the Internet on ‘fake drugs’ business models is real. Thus, enforcement strategies need to be very stringent.

It is precisely for this reason, on April 17, 2015, Maharashtra’s Food and Drugs Administration (FDA) reportedly raided the premises of e-commerce major Snapdeal.com for allegedly selling medicines, including prescription drugs.

Immediately thereafter, the company announced that it has delisted the drugs on its portal and is assisting the FDA in the investigation.

Taking note of the prevailing scenario of illegal online sales of prescription drugs through e-commerce sites in India, DCGI office has reportedly started studying the existing regulations internationally to come out with a set of rules for online pharmacies. Meanwhile, DCGI has reportedly appointed the Federation of Indian Chambers of Commerce and Industry (FICCI) as the nodal agency for consolidating the guidelines.

Be that as it may, experts believe that online sale of drugs should be permitted in India only with strict and well thought out norms, which are enforceable hundred percent, anywhere within the country. Stringent guidance should be formulated in the amendment bill, 2015 of Drugs & Cosmetics Act & Rules, accordingly.

Conclusion:

Keeping this emerging scary scenario in perspective on the menace of fake drugs, the message of the CBI Director in this regard must be noted by the Government with all seriousness…continuing ‘all is well’ signals from the DCGI, not withstanding.

All stakeholders of the pharmaceutical industry must be made aware, on a continuous basis, of the health hazards posed by fake medicines in India.

As the penetration of Internet keeps increasing at a galloping speed in the country, unregulated online sales of ‘fake drugs’ in the guise of ‘licensed medicines’, pose a very real threat to public health and safety. If and when online sales of medicines are legalized, enforcement of all rules and laws in this regards need to be very stringent with exemplary punitive actions prescribed, for even slightest violations.

In tandem, the DCGI and other regulatory and enforcement agencies in the states, healthcare professionals, patients, all pharmaceutical manufacturers, drug distributors, wholesalers and retailers should join hands to play a proactive role in curbing the menace of ‘fake medicines’ that victimize the innocent patients.

No Wolf in sheep’s clothing must be allowed coming anywhere in the near vicinity…at all.

By: Tapan J. Ray

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

 

Utility Model: Would It Work In India For Pharma?

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The revised draft of India’s IPR Policy penned by the Government constituted ‘Think-Tank’ in 2014, suggests enactment of new laws, such as for ‘Utility Models’ and Trade Secrets, to fill some gaps in the country’s IPR ecosystem .

However, media reports of May 21, 2015 indicate, the Department of Industrial Policy and Promotion (DIPP) is not in favor of changing the country’s ‘Patents Law’ framework to allow grant of utility patents, as suggested by the ‘Think-Tank’.

Though comments from the other Ministries and Departments on the revised draft IPR Policy is still awaited, DIPP reportedly feels, ‘Utility Models’ being less-stringent form of intellectual Property (IP) protection, could ultimately lead to ‘ever-greening’ of patents.

A volte-face?

This development is indeed interesting because on May 13, 2011 the same DIPP uploaded in its website a Discussion Paper on “Utility Models”. Many believed at that time, it as a precursor of a new policy initiative of DIPP on Intellectual Property Rights (IPR) to encourage innovation in the country, without diluting the prevailing strict criteria for patentability. The above Discussion Paper highlighted, among others:

“…minor technical inventions which frugally use local resources in a sustainable manner need to be encouraged by providing a legal framework for their protection and commercial exploitation. Such useful, low cost and relatively simple innovations which create new mechanical devices or contribute to the optimal functioning of existing ones may have commercial value only for a limited time period, before they are replaced by other products or rendered redundant by change of technology.”

In that paper DIPP also highlighted that many countries of the world, for example; Australia, China, Japan, Germany, France, Korea and Netherlands still find the ‘Utility Model’ as an extensively used tool to foster innovation within the local industries.

We shall also touch upon this point below.

The Discussion Paper did trigger a healthy national debate on this subject at that time, though Government did not make known to the public the outcome of this public discourse.

The definition:

The World Intellectual Property Organization (WIPO) defines ‘Utility Model’ as follows:

“Utility Model is an exclusive right granted for an invention, which allows the right holder to prevent others from commercially using the protected invention, without his authorization, for a limited period of time. In its basic definition, which may vary from one country (where such protection is available) to another, a utility model is similar to a patent. In fact, utility models are sometimes referred to as petty patents or innovation patents.”

Or in other words “A utility model is similar to a patent in that it provides a monopoly right for an invention.”

However, utility models are much cheaper to obtain, the requirements for grant of a ‘Utility Model’ are usually less stringent and the term is shorter – mostly between 7 and 10 years, as against up to 20 years term of protection for a patent. 

Major differences between Utility Models and Patents:

According to WIPO, the main differences between ‘Utility Models’ and patents can be summarized as follows:

  • The requirements for acquiring a ‘Utility Model’ are less stringent than for patents. While the requirement of “novelty” is always to be met, that of “inventive step” or “non-obviousness” may be much lower or absent altogether.  In practice, protection for ‘Utility Models’ is often sought for innovations of rather incremental in character, which may not meet the patentability criteria.
  • The term of protection for ‘Utility Models’ is shorter than for patents and varies from country to country (usually between 7 and 10 years without the possibility of extension or renewal).
  • In most countries where ‘Utility Model’ protection is available, patent offices do not examine applications as to substance prior to registration. This means that the registration process is often significantly simpler and faster, taking on an average about six months.
  • ‘Utility Models’ are much cheaper to obtain and to maintain.
  • In some countries, ‘Utility Model’ protection can only be obtained for certain fields of technology and only for products but not for processes.

Countries providing ‘Utility Model’ protection:

Many countries do not grant ‘Utility Models’. However, the major countries granting ‘Utility Models’, as stated above, include: Australia, China, Japan, Germany, France, Spain and Italy.

According to WIPO, currently the countries and regions that provide ‘Utility Models’ are as follows:

Albania, Angola, Argentina, ARIPO, Armenia, Aruba, Australia, Austria, Azerbaijan, Belarus, Belize, Brazil, Bolivia, Bulgaria, Chile, China (including Hong Kong and Macau), Colombia, Costa Rica, Czech Republic, Denmark, Ecuador, Estonia, Ethiopia, Finland, France, Georgia, Germany, Greece, Guatemala, Honduras, Hungary, Indonesia, Ireland, Italy, Japan, Kazakhstan, Kuwait, Kyrgyzstan, Laos, Malaysia, Mexico, OAPI, Peru, Philippines, Poland, Portugal, Republic of Korea, Republic of Moldova, Russian Federation, Slovakia, Spain, Taiwan, Tajikistan, Trinidad & Tobago, Turkey, Ukraine, Uruguay and Uzbekistan.

Interestingly, ‘Utility Models are not available in the United Kingdom or the United States.

A recent allegation of ‘Utility Model’ infringement against a global pharma: 

Quite recently, in November 2014, Copenhagen headquartered Forward Pharma A/S reportedly filed a lawsuit against Biogen Idec GmbH, Biogen Idec Internaional GmbH and Biogen Idec Ltd. in the Regional Court in Dusseldorf, alleging infringement of its German ‘Utility Model’ DE 20 2005 022 112 due to Biogen Idec’s marketing of Tecfidera® in Germany.

Tecfidera® – a product containing dimethyl fumarate (DMF) as the active ingredient, is used for the treatment of Myasthenia Gravis (MS).

Forward Pharma asserted that its above ‘Utility Model’ precludes anyone from selling in Germany, without the Company’s consent, drugs with DMF as the sole active pharmaceutical ingredient for the treatment of MS at a daily dose of 480 mg.

With this lawsuit Forward Pharma did not seek to stop sales of Tecfidera® to MS patients, but rather sought damages for what the Company believes are Biogen Idec’s unlawful sales of Tecfidera® in Germany.

Although ‘Utility Models’ are registered without substantive examination, the Company reiterated its belief in the validity and enforceability of the said ‘Utility Model.’

Subsequently, on April 14, 2015 Forward Pharma A/S announced that an interference was declared by the Patent Trial and Appeal Board (PTAB) on April 13, 2015 between the Company’s patent application 11/576,871 (the “’871 patent application”) and Biogen’s issued patent 8,399,514 (the “’514 patent”).

The PTAB reportedly designated Forward Pharma A/S as the “Senior Party” in the interference based on the Company’s earlier patent application filing date.

Would ‘Utility Model’ be useful in pharma?

Utility Models (UM) are considered particularly suited for SMEs that make “minor” improvements to, and adaptations of, existing products. It is worth noting that UMs are primarily used for mechanical innovations.

However, in India, the ‘Utility Model’ concept in pharma would be directly conflicting with the intent and spirit of the section 3(d) of the Patents Act 2005 of the country, which clearly stipulates that mere discovery of a new form of a known substance which does not result in the enhancement of the known ‘clinical’ efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant, is not patentable.

Therefore, section 3(d) of the Indian Patents Act 2005, is considered as one of the most important safeguards against “evergreening” of patents, usually done through alleged “molecular manipulation or tweaking”, that delays entry of affordable generic equivalents, adversely impacting the public health interest.

In that sense, enactment of a new law granting protection to pharma ‘Utility Models’ in India could seriously jeopardize both short and long term health interests of the patients, in general.

This is primarily because, being denied of a 20 year product patent under section 3(d), the same company would then be eligible to apply and may also probably get a monopoly status for that molecule, though for a shorter term with ‘Utility Models’.It would obviously happen at the cost of quicker entry of equivalent affordable generics.

Conclusion: 

Considering all these, and having witnessed a serious allegation of a ‘Utility Model’ (which goes through no more than a liberal regulatory scrutiny) infringement, against a major patented pharma product that passed through the acid test of stringent and cost intensive regulatory requirements, it appears that ‘Utility Models’ need to be excluded, especially for pharmaceuticals in India.

This is purely for the sake of patients’ interest, at least on the following two counts:

  • All new/novel drugs, without any compromise whatsoever, should pass through the stringent acid test of the drug regulatory requirements for requisite efficacy, safety and quality standards.
  • ‘Evergreening’ of patents, under any garb, delaying entry of affordable equivalent cheaper generics, should not be encouraged in the country.

Thus, in my view, Indian Government should continue to remain firm with its bold stance on the relevance of section 3(d) of the Indian Patents Act. Any possibility of its dilution by a grant of market monopoly, though for a much shorter period, covering incremental innovations that do not conform to the country’s IP laws, must be openly discouraged with robust reasons.

In that sense, the flag raised by the DIPP on the intriguing recommendation of the IPR Policy ‘Think Tank’ for enacting new laws in India for ‘Utility Model’, appears to be pragmatic and far sighted, specifically in the context of pharmaceuticals.

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.