Tag Archives: pharmaceutical

Would e-Marketing Replace Medical Representatives?

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Many people within the pharmaceutical industry cannot simply visualize a drug marketing environment without Medical Representatives (MRs) detailing their products to doctors for ever increasing prescription support. This much traditional sales force, for face to face interaction and transaction with the customers, is considered virtually indispensable and has formed the backbone for organic growth of the global pharma industry since decades.

It has emerged this way because, pharmaceutical industry sells drugs predominantly through doctors’ prescriptions, where MRs play a pivotal role to influence them directly or indirectly in various ways.

Therefore, for greater success through effective increase in customer focus, as compared to competition, pharma companies are engaged in expanding the size of their respective field-forces on an ongoing basis, though in varying numbers. However, over a period of time, this process has become very expensive, costing on an average around 17 to 20 percent, if not more, of the total expenditure of a company.

As a result, many companies have now started experiencing that their business return on ever increasing number of MRs is not commensurate to investments made on them, mainly in terms of productivity growth per headcount.

This overall scenario has now prompted many pharma players, across the world, to take a hard look at the evolving drug marketing scenario and expeditiously address the consequent issues, as I shall deliberate in this article.

MRs historical role:

Most of the pharma players use their MRs to implement predominantly the following time-tested strategic game plans to generate more and more prescriptions for their respective brands:

  • Detailing product features and benefits
  • Distributing free samples and gifts
  • Developing Key Opinion Leaders (KOL) for identified products
  • Arranging product oriented seminars, conferences and Continuing Medical Education (CME) programs
  • Monitoring doctors prescriptions and incentivizing them in various company specific ways
  • Giving necessary feedbacks to their respective companies

Productive ‘doctor calls’ becoming increasingly difficult:

According to an article titled “Are Sales Reps Necessary?” published in ‘The Pharma Marketing News’, the following details, besides others, were captured in the United States:

  • MRs’ average only 2 quality details per day (quality details include discussion of features, benefits, and data).
  • Only 43 percent of MRs ever gets past the receptionist
  • Only 7 percent of pharma rep visits last more than 2 minutes
  • Only 6 percent of physicians think representatives are very fair balanced
  • The physician remembers only 8 percent of MR calls

Optimal MR productivity – the key issues:

The issue of desired MR productivity is thus becoming a cause of great concern globally for the pharma players. This is mainly because, while the number of patients is fast increasing, the doctors are trying to see all these patients within their limited available time. As a result, each patient is getting lesser doctors’ time, even though the doctors are trying to provide optimal patient care in each patient visit.

In tandem, other obligations of various kinds, personal or otherwise, also overcrowd physicians’ time. In a situation like this, increasing number of MRs, which has almost doubled in the past decade, is now fiercely competing with each other to get a share of lesser and lesser available time of the doctors. Added to this, inflow of new doctors not being in line with the increasing inflow of patients, is making the situation even worse.

According to another study of CMI Communication Media Research, about half of physicians restrict visits from MRs in one-way or another. It reported, about half of cancer specialists (oncologists) are now saying that they would interact only on new products with MRs, while 47 percent of them indicated email as a preference to MR calls.

Surveys found that the oncologists are the most restrictive specialists, with only 19 percent allowing MRs without restrictions. Moreover, 20 percent of them would not see MRs at all and another 40 percent either require prior appointments or limit visits to particular hours of the day/week.

Downsizing sales force with e-marketing:

A paper published in the WSJ titled, “Drug Makers Replace Reps With Digital Tools” states that pharmaceutical companies in the United States are downsizing their sales force with increasing usage of iPad apps and other digital tools for interacting with doctors.

Such widespread layoffs do signal to many that digital tools and technology have started replacing the MRs, at least in the United States, may be in a limited way to begin with.

Building relationship:

However, other group of industry watchers believe that eliminating MRs from the pharma marketing process could lead to a serious set back in the doctor-pharma company face to face relationship that is very important for success While rebutting this point, the pro e-marketing proponents  raise a counter question: Does such relationship now exist with most MRs so far as the high value target doctors are concerned?

e-marketing gradually taking roots:

Many fascinating experiments with e-marketing have now started in several places of the world with considerable success, in tandem with germination of even bolder and brighter ideas in this area. However, the above report mentioned the following:

  • AstraZeneca tracks what doctors view on the website and uses that information to tailor marketing content for the doctor during subsequent interactions. The company had reportedly said in 2010, that it plans to eliminate 10,400 jobs by 2014, including thousands of sales positions in Western markets amounting to around 16 percent of its work force. This step was to help the company saving around US$1.9 billion a year by 2014.
  • When German drug maker Boehringer Ingelheim GmbH launched the cardiovascular drug Pradaxa in the US, it reportedly put together a digital-marketing package to target doctors, including organizing webcasts for leading physicians to speak to other physicians about the drug, with considerable success.
  • Novo Nordisk in 2010 launched a website and iPad/iPhone application called ‘Coags Uncomplicated’, which offers tools to help doctors diagnose bleeding disorders. The site and app include a plug for Novo Nordisk’s drug NovoSeven, which helps stop bleeding related to acquired hemophilia. It has several other applications available on iTunes, including one that helps doctors calculating blood-sugar levels.
  • Some other companies offering iPhone and iPad based apps for doctors include among others, Sanofi, Merck, Pfizer, GlaxoSmithKline, Novartis and Eli Lilly.

Advantages of e-marketing:

As I had indicated earlier in my blog post, ‘e-marketing’ would help creating customized, more impressive, self-guided by doctors and more focused presentations with significant reduction in the detailing cost/ product with improved productivity.

Moreover, ‘e-marketing’ would:

  • Make expensive printed promotional aids redundant
  • Eliminate time required and cost involved to deliver such material
  • Have the flexibility of change at any time
  • Ordering of just required samples online would help eliminating wastage

Fast increasingly number of doctors using Internet enabled computers/tablets and smart phones for professional purposes, especially in the urban areas, would facilitate this process.

Conclusion:

Keeping in mind this changing scenario, mindset and behavior of the doctors, as lesser and lesser time is available with the high value target customers for interaction with the MRs, the pharma players would require to take afresh a hard look at their own strategic marketing vision and principles to zero-in on the most effective mix. This approach, I reckon, is applicable more to the domestic players in India.

For high value target customers a combo-strategy would probably be more effective now. In this strategic game plan, MRs would continue to remain as the basic fabric of a drug marketing process, though in reduced numbers and augmented by increasing focus on new technologies/applications through iPad, smart phones, various Internet enabled tools, social networking sites and real time analytics. Formidable differential marketing thrust that would be created through skillful execution of this combo-strategy, is expected to be more effective in making both top and bottom line performance of a pharma player sustainably impressive to the stakeholders.

The name of the game is, therefore, impactfully delivering the core tangible and intangible product values to the doctors for desired outcome in their prescriptions decision making process, keeping in pace with the changing demand of time with a long-term ability to innovate.

That said, would e-marketing then replace MRs to a considerable extent in the years ahead?

By: Tapan J. Ray

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

Is The New ‘Market Based Pricing’ Model Fundamentally Flawed?

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After a long wait of close to two decades, when the Drug Price Control Order 2013 (DPCO 2013) followed the National Pharmaceutical Pricing Policy 2012 (NPPP 2012) last year, it appeared that the new pharma price control regime is more acceptable to the industry than the previous, resulting in better over all implementation and compliance.

However, just within a year, the reality seems to be quite different. Not only the Ceiling Price (CP) calculation process of the National Pharmaceutical Pricing Authority (NPPA) based on DPCO 2013 appears to be fundamentally flawed, its misuse and abuse by some pharma players have also been the subject of great concern and consumer aghast.

The eternal ‘Cat and Mouse’ game continues:

Probably there would be many instances of pharmaceutical companies dodging the DPCO 2013. However, FDA, Maharashtra, has unearthed the following two instances, so far:

1. Favorable consumer expectations with well-hyped DPCO 2013 received a body blow for the first time, when the general public came to know through media reports, that too after almost a year, that 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, has planned to gradually withdraw its conventional price controlled Crocin 500 mg brand costing around Rs 14 for a strip of 15 tablets to the patients . GSK Consumer Healthcare claims that Crocin Advance is a new drug and therefore should be outside price control.

According to IMS Health data, ‘Crocin Advance’ is currently the fifth largest brand among top Paracetamol branded generics, clocking a sales turnover of Rs 10.3 Crore during the last 12 months ending in February 2014.

2. The second instance of evading DPCO 2013 has also been reported by the media. In this case some other pharmaceutical companies have 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. Quoting the Maharashtra FDA, the report states: “Atorvastatin may face a similar kind of action from the state FDA as other overpriced brands of drugs as this drug has been overpriced five to 10 times more than the DPCO price. This kind of overcharging is a subject for investigation. Atorvastatin of 40 mg dosage is generally recommended for senior citizens.”

Tip of an Iceberg?

All these seem to be just the tip of an iceberg related to evasion of DPCO 2013 by some pharma black ships, raising costs of essential medicines for the patients. Ironically, what is happening now is an exact replica of the same old strategy that many pharma players got involved into to avoid price control under earlier DPCO 1995. Continuation of the same act of deceit with DPCO 2013 confirms that the ‘cat and mouse game’ to avoid price control is eternal in India, in the absence of any strong and exemplary deterrent.

Better late than never:

When Maharashtra FDA brought it to the notice of National Pharmaceutical Pricing Authority (NPPA), the later asked GSK to immediately reduce the market price of ‘Crocin Advance’, as there is no proven additional therapeutic efficacy for the product. The price regulator also sought confirmation of the action taken by the company in this regard. Additionally, GSK Consumer Healthcare now faces consequential punitive measures from the NPPA for price overcharging. This action on the part of NPPA, in all probability, would get lost in the quagmire of litigation, as usually happens in India.

Be that as it may, I expect NPPA taking similar action for Atorvastatin too and increasing its vigil for such scant respect on patient-centric laws and policies of the country.

A brief recapitulation:

Just to recapitulate, DPCO 2013 has been fundamentally different from its ‘predecessor’ DPCO 1995, mainly on the following two counts:

1. Methodology of Price Control:

This has changed from earlier ‘Cost Based Pricing (CBP)’ to ‘Market Based Pricing (MBP)’ based on simple average of all products having 1 percent or more market share.

2. Span of Price Control:

In DPCO 1995, all formulations of 74 bulk drugs, selected based on specified criteria, were under cost based price control, covering over 1700 formulations. Whereas, in DPCO 2013 all essential drugs as mentioned in the National List of Essential Medicines 2011 (NLEM 2011) come under price control applying the above new methodology of MBP. DPCO 2013 brings around 652 formulations of 348 drugs under 27 therapeutic segments of the NLEM 2011, under price control.

Significant benefits of DPCO 2013 to the industry:

DPCO 2013 offers following three key advantages to the industry, both in the short and longer term:

  • MBP methodology in DPCO 2013 is considered by the industry as more transparent and less ‘intrusive’ than CBP methodology.
  • Span of price control with DPCO 2013 came down to 18 percent of the total pharmaceutical market covering around 610 formulations, as against 20 percent in DPCO 1995 covering over 1700 formulations.
  • Opportunity for automatic annual price increase for controlled formulations based on WPI, which was not there in DPCO 1995, is now available to the industry. Thus, in keeping with the relevant provision of DPCO 2013, NPPA has recently allowed the drug companies to increase the Maximum Retail Price (MRP) of the price controlled medicines, contributing 18 percent of the total market, by 6.32 percent effective April 1, 2014, while prices of balance 82 percent of drugs, that are outside price control, can go up by 10 percent every year.

Check on essential drugs going out of market:

Interestingly, DPCO 2013 has tried to prevent any possibility of an essential drug going out of the market without the knowledge of NPPA by incorporating the following provision in the order:

“Any manufacturer of scheduled formulation, intending to discontinue any scheduled formulation from the market shall issue a public notice and also intimate the Government in Form-IV of schedule-II of this order in this regard at least six month prior to the intended date of discontinuation and the Government may, in public interest, direct the manufacturer of the scheduled formulation to continue with required level of production or import for a period not exceeding one year, from the intended date of such discontinuation within a period of sixty days of receipt of such intimation.”

However, it is still not clear, whether or not GSK Consumer Healthcare had followed this stipulated provision for price controlled conventional Crocin formulations. At least, I do not remember having come across any such public notice, as yet.

Key concerns expressed with DPCO 2013:

The MBP methodology seems to be unique to India as CBP is more common in countries that follow drug price control. Hence the following concerns were expressed with DPCO 2013.

  • Reduction in drug prices with market-based pricing methodology is significantly less than the cost based ones. Hence, consumers will be much less benefitted with the new system.
  • Earlier cost based pricing system was not more transparent only because a large section from the industry reportedly did not co-operate with the NPPA in providing cost details, as required by them.
  • Serious apprehensions have been expressed about the quality of outsourced market data lacking adequate confidence level across the board, which now forms the basis of CP calculations.
  • Additionally, outsourced data would provide details only of around 480 out of 652 NLEM formulations. How will the data for remaining products be obtained and with what level of accuracy?

It is, therefore, believed now by many that DPCO 2013 is more of an outcome of a successful lobbying efforts of the pharmaceutical industry in India, rather than a robust pricing policy supported by a flawless methodology for CP calculations.

DPCO 2013 faces challenge in the Supreme Court:

As a result of the above apprehensions, a Public Interest Litigation (PIL) is now pending before the Supreme Court for hearing challenging DPCO 2013.

Ground Zero of the quality of outsourced market data:

While assessing from the ‘Ground Zero’, keeping aside instances of hoodwinking DPCO 2013 with tweaked formulations, the core issue of the quality of outsourced market data forming the bedrock of CP calculation by the NPPA, undoubtedly becomes more fundamental, creating huge discomfort for many pharma players .

Unlike DPCO 1995, where NPPA used to calculate the CP based on its own audits, data provided by the concerned companies and from many other reliable market sources, the calculations to arrive at the CP for DPCO 2013 products are based predominantly on data outsourced from IMS Health, if not solely.

IMS data does not always capture correct brand prices:

As stated above, many leading pharmaceutical companies are now reportedly pointing out repeatedly that the CP fixation by the NPPA is not accurate, as the IMS Health data does not represent the real prices in many cases.

This is not a new issue either. I have been hearing similar complaints since ages in different forum, wearing different hats and also from various other reliable industry sources. Moreover, NPPA and the Department of Pharmaceuticals (DoP) have indicated several times in the past that IMS data do not capture the requisite details as needed for over 100 products featured in NLEM 2011.

According to Pharmabiz of April 2, 2014, some of the companies expressing the above apprehensions are Sun Pharma, Unichem Labs, Panacea Biotec, Win-Medicare, Albert David, Baxter (India), Indi Pharma and Gland Pharma.

Responding to such widespread complaints, the DoP has directed NPPA to revalidate the IMS data, now being used for CP calculations, for all notified medicines. Accordingly, NPPA has sought the relevant details from respective companies. However, till such data validation takes place, pharma players must comply with all CPs, as notified by the NPPA from time to time.

Difficulty in data validation:

In my view, it would not be easy for the NPPA to revalidate the IMS data due to the following reasons:

  • Those companies, whose prices are showing higher than the current ones in the IMS Health data, may not report to NPPA, as that could ultimately affect them adversely.
  • Pharma companies’ response, in general, to requests from NPPA for furnishing cost and price related information has traditionally been much less than encouraging.

The logjam to continue:

With this evolving scenario, I reckon, till the Supreme Court intervenes responding to the PIL on DPCO 2013 related issues, the dissatisfaction of the industry and the constraints of the NPPA would continue, patients being the primary sufferers.

Conclusion:

Despite the reported concern expressed in the 2014 National Trade Estimate (NTE) Report on Foreign Trade Barriers over the Indian drug price control mechanisms as a deterrent to foreign investments, government price control for essential medicines in India is here to stay for a long haul, to uphold the patients’ health interest.

That said, the final verdict of the Supreme Court related to the PIL on the NPPP 2012, based on which DPCO 2013 has been worked out, is yet to come. Any unfavorable decision of the Honorable Court on the subject may push both the NPPP 2012 and DPCO 2013 back to square one, yet again.

In this backdrop, considering the key fundamental flaw in the CP calculation process of DPCO 2013 with associated loud hiccups as evidenced by the GSK Consumer Healthcare episode and others, would a well-considered verdict of the Supreme Court on the subject be more desirable for greater access to more affordable essential drugs by the patients in 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.

 

 

Playing Hardball, Riding the Horse of ‘Innovation’

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Media reports are now abuzz with various stories related to intense pressure being created by Big Pharma on the United States Government to declare India as a ‘Priority Foreign Country’ for initiating ‘Trade Sanctions’.

As we know, ‘Priority Foreign Country’ is the worst classification given by the United States to “foreign countries” that deny “adequate and effective” protection of Intellectual Property Rights (IPR) or “fair and equitable market access” to the US.

One of the key factors that infuriated Big Pharma is the ‘patentability’ criterion of the Indian Patents Act 2005 captured in its section 3(d).  This denies grant of patent to those inventions, which are mere “discovery” of a “new form” of a “known substance” and do not result in increased efficacy, offering no significant treatment advantages over already existing drugs.

A brief perspective:

The sole requirement for any company to enjoy market monopoly with a medicine, for a specific period, with its associated commercial advantages, is obtaining a valid patent for that new drug substance from a competent authority of the concerned country. Marketing approval process and other requirements for the same of the drug regulators do not come in the way of the market monopoly status granted to patented products.

This is mainly because the drug regulators do not require to be convinced that a new drug is an improvement or more effective than the existing ones. As a consequence of which, there has been no compulsion for the Big Pharma to bring to the market only those New Molecular Entities (NMEs) that would significantly improve efficacy of a disease treatment benefitting the patients.

Choosing the easier path:

Developing any NME that is a breakthrough in the treatment of a disease is not just difficult and time consuming, it is very risky too. For this reason, once a new innovative drug gets well established in the market, many companies decide to produce their own versions of the same and obtain patent rights for the new ‘tweaked’ molecules, as is generally believed by many.

This approach of bringing ‘me-too’ types of so called ‘innovative’ drugs into the market is considered much less risky, takes lot lesser time in the R&D process, not as expensive and most importantly, enjoys all the commercial benefits that a break through NME would otherwise derive out of its invention, especially the market monopoly with free pricing.

In his well-known book titled ‘Bad Pharma’, Ben Goldacre stated that, as very often these ‘me-too’ drugs do not offer any significant therapeutic benefits, many people regard them as wasteful, an unnecessary use of product development money, potentially exposing trial participants to unnecessary harm for individual companies commercial gain, rather than any medical advancement.

‘Innovation’ of ‘me-too’ molecules:

Examples of some of the ‘me-too’ molecules are as follows:

  • Cemetidine – Ranitidine – Famotidine – Nizatidine – Roxatidine (to treat Acid-peptic disease)
  • Simvastatin – Pravastatin – Lovastatin – Pitavastatin – Atorvastatin – Fluvastatin – Rosuvastatin (to treat blood lipid disorder)
  • Captopril – Enalepril – Lisinopril – Fosinopril – Benzapril – Perindopril – Ramipiril – Quinalapril – Zofenopril (Anti-hypertensives)

Goldacre further highlighted in his book that despite this fact, pharma market does not behave accordingly. Unlike usual expectations that multiple competing drugs in the same disease area would bring the prices down, a Swedish data showed that the drugs considered by the US-FDA as showing no advantages over the existing ones, enter the market at the same or even at higher prices than the original ones. Consequently, the outcome of such innovations adversely impacts the patients and the payor including the government, as Big Pharma takes full advantage of market monopoly and free pricing for such drugs in the garb of innovation.

‘Innovation’ of ‘me-gain’ molecules:

Unlike the above ‘me-too’ drugs, which are new molecules, though work in a similar way to the original ones, another kind of patented drugs have now come-up in a dime a dozen.

Goldacre defined those drugs as ‘me-again’ drugs. These are the same molecule re-launched in the same market at the same price with a different patented ‘enantiomer’. Each of a pair of such molecules is a mirror image of each other e.g. esomeprazole (Nexium) is the left-handed version of the omeprazole molecule (Prilosec), which is a mixture of both left and right handed forms.

There is no dramatic difference between omeprazole and esomeprazole in any respect. Moreover, it is worth noting that concerned constituents of Big Pharma come out with ‘me-again’ drugs only at the end of the patent lives of the original ones. What then could be the reason?

Some examples of ‘me-again’ drugs are as follows:

Enantiomer/Brand Medical Condition Original Drug/Brand
Levocetirizine (Vozet) Allergies Cetirizine (Zyrtec)
Escitalopram (Lexapro) Depression Citalopram (Celexa)
Esomeprazole (Nexium) Acid reflux Omeprazole (Prilosec)
Desloratadine (Clarinex) Allergies Loratadine (Claritan)
Pregabalin (Lyrica) Seizures Gabapentin (Neurotonin)

Why do the doctors prescribe such drugs?

That is indeed a good question, why do the doctors prescribe such costly, avoidable and so called ‘innovative’ drugs? Well, don’t we know that already?

Section (3d) plugs the loophole:

To discourage market entry of high priced and avoidable ‘me-too’ and ‘me-again’ types of drugs that are also an outcome of so called pharma ‘innovations’, the Indian law makers very wisely introduced the section (3d), while amending the Indian Patents Act in 2005. This section, as indicated above, categorically states that inventions that are mere “discovery” of a “new form” of a “known substance” and do not result in increased efficacy of that substance are not patentable. This law has also passed the scrutiny of the Supreme Court of India in the Glivec case of Novartis.

With this Act, India has unambiguously reiterated that it does not support the grant of patents for inventions that are minor modifications of the original ones, effectively blocking the usual path of patents grant as followed by Big Pharma across the world to enjoy monopolistic commercial advantages of ‘frivolous’ innovations, as called by many experts in this area.

Consequent ire of Big Pharma:

This above action of Indian law makers has raised the ire of Big Pharma, as it has a huge commercial interest to protect ‘me-too’ and ‘me-again’ types of innovations in India, even if that comes at the cost of patients’ health interest.

Section (3d) of the Indian Patents Act, therefore, became a major hindrance in meeting the commercial goals of its constituents in India, as such molecules constitute a large majority of the total number of NMEs innovated globally.

As intense power-packed advocacy campaigns of the global pharma companies with the Government of India did not yield any meaningful result to get the section 3(d) amended, it unleashed the might of its well funded lobby groups having free access to the corridors of political power to play hardball with India, riding the horse of innovation and pooh-poohing patients’ interests.

Playing hardball:

The question therefore arises, would India tactfully reciprocate playing hardball or give in to the pressure of trade sanctions under ‘Priority Foreign Country’ categorization of the United States?

I reckon India would not give in. To state more emphatically, India just cannot give in now, under any circumstances.

Come May 16, 2014, the new Union Government of India would almost be ready take its position on the saddle. Thereafter, even if it prefers to give in to intense US political pressure just to avoid trade sanctions, in all practicality that would virtually be a non-starter. This is because, the new Government would unlikely to be in a position to garner enough votes in the Parliament to amend the section (3d), ignoring the general sentiment on this important public health related issue and political compulsions of many of its constituents on the subject.

Would America go to WTO?

Would the United States of America ultimately complain against India in the multilateral forum of the World Trade Organization (WTO) for alleged violation of the TRIPS Agreement? That is exactly the question that many people are asking today.

In this context it is worth noting, India has reiterated time and again that Indian Patents Act 2005 is in full compliance of the TRIPS Agreement and the Doha Declaration of 2001.

Since, no country has complained to WTO against India on this issue, as yet, despite so much of posturing and the noise generated the world over, it appears improbable that the US would now do so, though Big Pharma would continue playing hardball raising the same old bogey of protection of ‘innovation’ in a much higher pitch, cleverly camouflaging its hardcore vested commercial interests.

What happens, if WTO decides in favor of India?

In the multilateral forum, if the WTO decides in favor of India, there is much to loose for Big Pharma.

In that scenario, the Indian example would encourage a large number of countries to enact similar model of Patents Act fully complying with the TRIPS agreement, as vetted by the WTO.

Some has termed it as a refreshingly fresh “Alternative Model of Patent Law’, going away from the dominant IP model as is being propagated by the US.

As I had indicated in the past, countries like the Philippines, Brazil and South Africa have either emulated or strongly favoring this alternative model that favors protection of Intellectual Property (IP) and at the same time promotes access to new inventions to a large majority of the global population.

Conclusion:

I reckon, Big Pharma’s playing hardball with India, riding the horse of ‘innovation’, could ultimately boomerang.

The Government of India, irrespective of any political color, lineage or creed, is unlikely to be bullied by Big Pharma constituents any time soon.

More importantly, even in a worse case scenario, the Government would be incapable of getting the section (3d) amended by the Indian Parliament garnering majority of the lawmakers’ support and going against strong political and public voices on this issue.

Nevertheless, Big pharma would continue to wish it to happen… and that drags me to the good old saying:

“If wishes were horses, beggars would ride.”

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.

Global New Product Launches: Recent Success Trend Unflattering?

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New products are the lifeblood for any company, including the pharmaceutical players. Business performance and sustainable growth of the pharmaceutical industry, as a whole depend on quality of R&D output in terms of ‘New Molecules’, followed by successful development and launch of those new products by the global pharmaceutical innovators.

Post-patent expiry, robust development and ‘just in time’ launch of cheaper generic versions of those innovative products, in a mega scale, usually drive the growth of the generic pharmaceutical industry, globally.

It is worth noting that for the last several years, ‘Patent Cliff’ coupled with progressively drying up R&D pipelines and mostly unflattering new product launches, are taking heavy tolls on the business performance of the global pharmaceutical majors.

The changing dynamics need to be considered:

Echoing this development, a March 2014 report of McKinsey & Company states: “About two-thirds of drug launches don’t meet sales expectations. Improving that record requires pharmaceutical companies to recognize the world has changed and adjust their marketing accordingly.”

To analyze the situation now in perspective, let us start tracking the launches from 2006 and 2007.

10 Big Pharma Sales in 2012 from NMEs approved since 2007 – A comparison

According to a June 2013 report of the ‘FirstWord Pharma’, in 2012 the combined sales of 10 top Big Pharma constituents, as named in the tables below, from the New Molecular Entities (NMEs) approved by the US-FDA since 2007, were US$ 14.8 billion i.e. 4.9 percent of the total revenue of these 10 companies in that year from the patented drugs.

Individual performance of these 10 companies are as follows:

No. Company Sales US$ Million Sales from NMEs US$ Million As % of 2012 Sales
1. Novartis 32153 3445 10.7
2. J&J 25351 2593 10.3
3. BMS 17621 1495 8.5
4. GSK 28518 1282 4.5
5. Merck 35945 1515 4.2
6. Sanofi 30879 1265 4.1
7. Roche 37578 1238 3.3
8. Eli Lilly 20566 457 2.2
9. Pfizer 47496 1040 2.2
10 AstraZeneca 27925 449 1.6

(Source: FirstWord, June 2013)

The success rate: With 2007 as the base year for NMEs

This table shows that Novartis and Johnson & Johnson were the two most successful companies with the launch of such NMEs in 2012, as they generated 10.7 percent and 10.3 percent, respectively, of their total patented drugs sales from these NMEs, as against an average of 4.9 percent, as mentioned above, during that year.

If we now try to analyze the new product launch success rates of the 10 Big Pharma constituents, based on the contribution of these new products (launched since 2007) to their respective total sales in 2012, the following picture emerges:

  • Good:  More than 10 percent - 2 Companies (20 percent)
  • Average: Between 5 and 10 percent - 1 Company (10 percent)
  • Poor: Less than 5 percent - 7 Companies (70 percent)

The success rate: With 2006 as the base year for NMEs

It is interesting to note from this report that by extending the ‘review period’ to NMEs approved by the US-FDA between 2006 and 2012 (i.e. one additional year), revenues generated by these new drugs in 2012 double to US$ 29 billion – or approximately 10 percent (instead of earlier 4.9 percent) of the total combined branded drug sales of the same 10 Big Pharma constituents in the same year, as follows:

No. Company Sales US$ Million Sales from NMEs US$ Million As % of 2012 Sales
1. Merck 35945 7518 20.9
2. Novartis 32153 5843 18.2
3. J&J 25351 3939 15.5
4. BMS 17621 2514 14.3
5. Roche 37578 2818 7.5
6. Pfizer 47496 2946 6.2
7. GSK 28518 1282 4.5
8. Sanofi 30879 1265 4.1
9. Eli Lilly 20566 457 2.2
10 AstraZeneca 27925 449 1.6

(Source: FirstWord, June 2013)

No significant overall qualitative change:

Here also, though some numbers related to the new product launch success rates of the same 10 Big Pharma constituents, based on the contribution of the NMEs launched since 2006 to their respective total sales in 2012 do change, poor to average performance with the new products still remains quite high, as follows:

  • Good: More than 10 percent - 4 Companies (40 percent)
  • Average: Between 5 and 10 percent - 2 Company (20 percent)
  • Poor: Less than 5 percent - 4 Companies (40 percent)

However, at a company level, the broad success trend with new products does not change very significantly. Just two new products approved by the US-FDA in 2006 were off to flying starts. These were:

  • Januvia of Merck: Generated sales of US$ 5.7 billion in 2012
  • Lucentis of Novartis and Roche: Generated combined sales of US$ 4 billion in 2012

Is it practically ‘The End’ of blockbuster drugs era?

While considering the larger picture on the subject, does it mean that Januvia and Lucentis would mark the end of the golden era of global blockbuster drugs…at least for now?

This picture may get clearer with the following table, prompting possibly an affirmative answer:

Best selling NMEs launched since 2006:

No. Product Company Approval Year 2012 Sales in US$ Million
1. Januvia Merck 2006 5745
2. Lucentis Novartis 2006 2398
3. Lucentis Roche 2006 1580
4. Isentress Merck 2007 1515
5. Invega J&J 2006 1346
6. Sutent Pfizer 2006 1236
7. Gilenya Novartis 2010 1195
8. Stelara J&J 2009 1025
9. Sprycel BMS 2006 1019
10 Tasigna Novartis 2007  998

(Source: FirstWord, June 2013)

Successfully launched most recent product is also on a shaky ground:

The new game-changing hepatitis C drug of Gilead Sciences – Sovaldi, has generated a turnover of around US$ 140 million in less than a month’s time from its market launch. Analysts expect an annual turnover of around US$7 billion from this brand.

However, sustaining the current sales momentum for Sovaldi in the years ahead could indeed be challenging for Gilead, as Bristol-Myers Squibb is preparing to obtain FDA approval for its own hepatitis C treatment daclatasvir, which has already been cleared in Europe. In addition, AbbVie is also progressing fast with its novel three-drug fixed dose combination in the same therapy area.

Moreover, Sovaldi’s unusually high price has reportedly created a furore in the western market. It costs US$ 1,000 a pill, raising huge concern among insurers and state funded healthcare providers in the United States. The report states that three Democratic members of the House Energy and Commerce Committee have already demanded that Gilead Sciences must justify the price of Sovaldi.

Categorization of new drugs:

Analyzing the current situation the above McKinsey report categorizes the types of new products that are now being launched, as follows:

  • Roughly one in four launches involves drugs that are strongly differentiated from competing products.
  • More than half of upcoming launches are of moderately differentiated products in well-established disease areas, and the priority is to find a way to stand out from the crowd. This requires innovative approaches to unveil insights into stakeholder needs and behaviors that competitors do not have.
  • For roughly 15 percent of launches, the priority will be to establish unmet needs effectively to ensure access to a well-differentiated treatment for a targeted population. McKinsey call these launches “category creators.” Gardasil, launched in the un-established human papilloma virus market, is an example.
  • 8 percent of launches face the substantial challenge of launching an undifferentiated product in an un-established disease area.

Broad strategic steps prescribed:

To address this challenge effectively the above report underscores the need for a systematic approach for the pharma players as follows:

  • Establish unmet needs in a disease area,
  • Develop deep customer insight as a basis for a truly differentiated positioning
  • Land the products safely in the market
  • Maximize launch uptake
  • Use early experiences in the market to fine-tune ongoing launch activities

Conclusion:

Considering the prevailing scenario of ‘Patent Cliff’, coupled with progressively drying up R&D pipelines and mostly unflattering success with the new product launches, how would a company work out its new product launch strategy, is becoming increasingly a critical question to answer on priority.

To appropriately tune a new product in its long-term sales and profit growth trajectory, it is imperative to ensure that the product exhibits its winning trends as soon as it is fired from its launch pad.

This is absolutely essential, as it appears from the above study, around one in three launches has been good in meeting the planned expectations. This makes about two-thirds of new product launches falling well short of target.  It is noteworthy that 78 percent of those new products that fell short in their first year target, lagged in their second-year forecasts too. Further, 70 percent of those laggards did not measure up to the organizational expectations even during their third year in the market.

Thus, any inadvertent mistakes in this area could make the grand finale of intense product development and strategizing efforts over a number of years together with expenses of millions of dollars, unflattering, if not catastrophic, both in terms of top and bottom line score-card of the organization, as is happening more frequently during the last several years.

This trend needs to be reversed with the application of innovative minds and charting the uncharted frontiers, sooner the better, for a healthier global pharmaceutical industry, as we move on.

By: Tapan J. Ray

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

Loss of Ranbaxy, Gain of Big Pharma…And Two Intriguing Coincidences

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In March 2014, the largest pharma player of India by market capitalization, Sun Pharma, became the latest of the large Indian pharma exporters facing the US-FDA ‘Import Ban’ for drugs manufactured at its Gujarat-based plant. This news came as a shocking surprise to many, including the stock market, as the home grown company has now attained an international stature being governed by a professional management team and steered by a Board that is chaired by a well-regarded non-Indian with decades of experience in the global pharmaceutical industry.

Just before that in January 2014, being slapped with the US-FDA drug ‘Import Ban’ of Active Pharmaceutical Ingredients (API) manufactured in its Toansa Plant of Punjab, the pharmaceutical business of Ranbaxy in the United States, with the products manufactured in its approved manufacturing facilities in India, came to a screeching halt.

It is worth noting that similar ‘Import Bans’ are already in place for the same company’s Dewas, Paonta Sahib, and Mohali production facilities. The combined impact of these bans now makes Ohm Laboratories plant of Ranbaxy, located in New Jersey, its sole generic drug manufacturing facility for the US market.

Considering that the US sales of Ranbaxy reportedly used to be around 57 percent of its total global turnover even in 2012, these import bans are undoubtedly a huge blow to the company, both financially as well as in terms of its business reputation.

Thus, the top priority of Ranbaxy under this situation is effectively addressing all the issues as raised by the US-FDA, especially in the area of documentation, as in the buyers’ market sellers cannot be the choosers.

A ‘Double Whammy’:

Meanwhile, prompted by theses ‘Import Bans’ on product quality ground and adding further woes to the company, the Supreme Court of India on March 15, 2014 reportedly issued notices to both the Central Government and Ranbaxy on a Public Interest Litigation (PIL) seeking not just cancellation of the manufacturing licenses of the company, but also a probe by the Central Bureau of Investigation (CBI) on the allegation of supplying adulterated drugs in the country.

Thus, it is a double whammy for Ranbaxy. The company would now require convincing the top court of the country that it manufactures and sells quality medicines for consumption of the patients in India.

However, Ranbaxy reportedly insisted that the drugs sold by it in the Indian market are safe and effective and that the company complies with all regulations of the country.

Could the situation now get even murkier?

During the process of judicial scrutiny, if the Supreme Court gets convinced with the above reply of Ranbaxy on this issue, the question that could possibly emerge is, how come the same company produces high quality drugs for the patients in India and allegedly substandard quality drugs for the patients of the United States? This could make the subject more complicated, if not murkier, internationally.

Two intriguing coincidences:

In the midst of all these, while connecting various similar looking and important dots, emerged during the last few years, a couple of clear coincidences comes to the fore, as follows:

1. Is the drug quality issue in India for exports limited only to US-FDA?

This brings us to the first interesting coincidence of drug ‘Import Bans’, involving large Indian drug exporters, coming mostly, if not only, from the US-FDA, although there are so   many other drug importing countries, including rest of the developed world.

Moreover, none of the Indian domestic companies had ever faced similar number of USFDA ‘Import Bans’ in the past, though they have been exporting to the United States from their FDA approved and inspected plants since quite a while. Therefore, it is worth figuring out why has it started happening now, that too repeatedly, and involving some of the largest global generic drug manufacturers from India.

Ranbaxy too is a large global player for generic pharmaceutical products. Besides India and the United States, the company markets its products both in East and West Europe, Latin America, Africa, Middle East, South Asia, South-East Asia and Asia-Pacific regions. Interestingly, though its saga related to US-FDA cGMP conformance in the four plants, culminating into drug ‘Import Bans’ in the United States, commenced as early as 2008, the company does not seem to have any issue with any other drug regulator anywhere in the world, not just yet.

According to the media report, UK and Australian drug regulators had commented that they are assessing the impact of the US action on Ranbaxy products sold in their countries. However, as on date Ranbaxy’s drug export to all those countries continue to remain as normal as before.

If over a period of time, it is proved that other foreign drug regulators do not have any similar quality related issues with Ranbaxy manufactured products, a serious joint evaluation of the entire chain of events related to Ranbaxy and others by the global regulatory experts would perhaps be warranted to provide a lasting solution on the subject.

2. Missed opportunities for ‘first to launch’ generic versions of blockbuster drugs:

The second coincidence is related to a series of missed opportunities, especially for Ranbaxy, related to ‘first to launch’ generic versions of several patent expired blockbuster drugs in the United States.

When the emerging dots associated with such lost opportunities for drugs like, Lipitor (Pfizer), Diovan (Novartis) and Nexium (AstraZeneca) are connected, a clear pattern emerges favoring Big Pharma and obviously adversely affecting companies like Ranbaxy.

Saga started with uncertainty over Lipitor generic Launch:

Like many other large Indian players, ‘first to launch’ strategy with new generic drugs has been the key focus of Ranbaxy since long, much before its serious trouble with the US-FDA begun in 2008. ‘Import Bans’ on two of its manufacturing facilities by the US regulator in that year created huge uncertainty in its launch of a generic version of Pfizer’s anti-lipid blockbuster drug Lipitor in 2011. On time launch of a generic version of Lipitor was estimated to have generated a turnover of around US $ 600 million for Ranbaxy in the first six months.

Despite its neck deep trouble with the US-FDA at that time, Ranbaxy ultimately did manage to launch generic Lipitor, after partnering with Teva Pharmaceutical of Israel.

The story continued with indefinite delay of Diovan generic launch:

Lipitor story was just the beginning of Ranbaxy’s trouble of not being able to translate its ‘first to launch’ advantage of patent-expired blockbuster drugs into commercial success, thus allowing the Big Pharma constituents to enjoy the market monopoly with their respective blockbuster drugs even after patent expiry.

Despite Ranbaxy holding the exclusive rights to market the first generic valsartan (Diovan of Novartis and Actos of Takeda) for 180 days, much to its dismay, even after valsartan patent expiry in September 2012, a generic version of the blockbuster antihypertensive is yet to see the light of the day. However, Mylan Inc. has, now launched a generic combination formulation of valsartan with hydrochlorothiazide.

US-FDA drug ‘Import Ban’ from the concerned manufacturing facility of Ranbaxy gave rise to this hurdle favoring the Big Pharma, as discussed above.

As a result, Novartis in July 2013 reportedly raised its guidance announcing that the company now expects full-year sales to grow at a low single-digit rate, where it had earlier predicted net sales to turn up flat. It also guided for core earnings to decline in the low single digits, revising guidance for a mid-single-digit drop.

Would it also delay the launch Nexium generic?

Ranbaxy had earlier created for itself yet another opportunity to become the first to launch a generic version of the blockbuster anti-peptic ulcerant drug of AstraZeneca – Nexium in the United States, as the drug goes off patent on May 27, 2014. However, due to another recent US-FDA import ban from the concerned plant of Ranbaxy, it now seems to be a distant reality.

That said, it has now been reported that Ranbaxy is in talks with at least two companies on sourcing ingredients for the generic version of Nexium to be able to launch its generic formulations in the United States immediately after the patent expiry.

In this context, any delay in the launch of generic Nexium, which incidentally is the second-biggest seller of AstraZeneca, would have a big impact on the company’s profit.

With the global sales of Nexium at US$ 3.87 billion and US sales at US$ 2.12 billion in 2013, retaining its monopoly status in the all-important US market beyond the end of May would not only limit a forecast decline in AstraZeneca’s 2014 earnings, but would also protect bonuses for top management of the British pharma giant, the above report says.

No Machiavellian Hypothesis:

By highlighting these coincidences, I have no intention to even attempting to postulate something like a ‘Machiavellian Hypothesis’. I just want to establish that intriguing coincidences do exist whatever may be the reasons.

Probably an in-depth study by independent experts in this field would be able to ferret out the real reasons behind these coincidences, including, why are the cGMP issues repeatedly arising only with the US-FDA?

Conclusion:

Be that as it may, delayed generic launches of Nexium (AstraZeneca) with US sales of US$ 2.12 billion, together with the same for Actos (Takeda) and Diovan (Novartis) recording a combined sales for US$ 8.55 billion, have indeed created almost a wind-fall gain for the respective ‘Big Pharma’ constituents and consequent huge losses for Ranbaxy. The first-to-file bonus on Actos alone was estimated to be more than US$ 200 million.

Though the US-FDA Commissioner Margaret Hamburg has reportedly clarified that the United States is ‘not targeting’ Indian pharma companies but just following a strict quality control regime for all products being imported into America, the following critical questions still float at the top of mind:

- Are all these missed opportunities of Ranbaxy, which favored Big Pharma immensely, just sheer coincidences of clash in timings between USFDA ‘Import Bans’ from four of its manufacturing facilities and the respective launch dates in the United States for the first generic versions of the three blockbuster drugs?

- When Indian generic drug manufacturers continue to export across the world without any problem thus far, why is a series of unprecedented ‘Import Bans’ on quality grounds now coming from the US-FDA in a quick succession decimating the image of Indian generic drug manufacturers?

At the end of the narrative, some wise men could well say that I am trying to connect the dots that do not exist at all. These are all imaginary or at best, sheer coincidences. It could well be just that, who knows? But…

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.

Indian Pharmaceutical Market in February 2014 – A Snap Shot

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According to the Retail Audit dated March 2014 of well reputed AIOCD Pharmasofttech AWACS Pvt. Ltd, in the month of February 2014, the Indian Pharmaceutical Market (IPM) registered a turnover of 5902 Crore (around US$ 980 million) growing at 4.5 percent against Rs. 6,227 Crore (around US$1 billion) in January 2014 with a growth of 8.5 percent.

The growth break-up for the month is as follows:

  • -0.2 percent from existing products
  • 3.2 percent from new launches
  • 1.5 percent from price increases

However, the volume growth of 2.6 percent during Dec’13 to Feb’14 quarter has been better than the same for the corresponding period of the previous year, which was 0.2 percent.

February 2014: Impact of DPCO 2013:

  • The products covered under DPCO 2013 de-grew by (-13.6) percent, whereas rest of the products grew by 7.4 percent resulting an overall growth of 4.5 percent for the month
  • The DPCO 2013 portfolio for GSK de-grew by (-30.7) percent and the same for Ranbaxy registered a negative growth of (-25.2) percent, whereas Sun Pharma had the least impact with its DPCO 2013 portfolio de-growing at -6.8 percent.

Top performers in growth within ‘Top 10 Companies’: 

  • Sun Pharma at 18.1 percent
  • Lupin at 9.3 percent
  • Alkem at 6.7 percent

 Monthly growth of Indian Companies against MNCs:

  • Indian companies at 6.9 percent
  • MNCs at (- 1.7) percent

Top growing MNCs for the month:

  • MSD at 17.3 percent
  • AstraZeneca at 15.3 percent
  • Merck Serono at 5.1 percent

Top 5 growing therapy areas for the month:

  • Anti-diabetic at 13.3 percent
  • Dermatological at 12.5 percent
  • Respiratory at 6.2 percent
  • Cardiological at 5.9 percent
  • Gastrointestinal at 5.1 percent

It is worth noting that Anti-infective market de-grew by 0.9 percent during the month.

Top growing brands:

  • Lantus (Sanofi) at 25 percent
  • Monocef (Aristo) at 23 percent (despite de-growth of the therapy area)
  • Glycomet-GP (USV) at 23 percent
  • Skinlite (Zydus Cadila) at 19 percent
  • Aciloc (Cadila Pharmaceuticals) at 15 percent

New Launches:

Total 107 Brands (generic formulations) were launched in February 2014, which justifies why new launches contributed 3.2 percent of the total growth of 4.5 percent for the month.

By: Tapan J. Ray

Kind Courtesy: AIOCD Pharmasofttech AWACS Pvt. Ltd.

 

Is Credibility Erosion of Pharma Accelerating?

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‘Big Pharma’ now seems to be desperately trying to gain the long lost high moral ground by pushing  hard its gigantic image makeover juggernaut, maintaining a strong pitch on the relevance of stringent Intellectual Property Rights (IPR) in the lives of the patients. However, even more alert media, by reporting a number of unethical and fraudulent activities of some of its constituents on the ground, is taking much of the steam out of it. As a result, the pace of erosion of all important pharma credibility is fast accelerating.

Innovation – A critical need for any science-based business:

Innovation, which eventually leads to the issue of IPR, is generally regarded as extremely important to meet the unmet needs of patients in the battle against diseases of all types, especially the dreaded ones. Thus, it has always been considered as the bedrock of the global pharmaceutical industry. As we all know, even the cheaper generic drugs originate from off-patent innovative medicines.

At the same time, it is equally important to realize that just as the pharmaceutical or life-science businesses, innovation is critical for any other science based businesses too, such as IT, Automobile, Aviation, besides many others. Since many centuries, even when there were no ‘Patents Act’ anywhere in the world, leave aside robust ones, pharmaceutical industry has been predominantly growing through innovation and will keep becoming larger and larger through the same process, acrimonious debate over stringent IPR regime not withstanding.

India has also amply demonstrated its belief that innovation needs to be encouraged and protected with a well-balanced Intellectual Property regime in the country, when it became a member of the World Trade Organization and a part of the TRIPS Agreement, as I had discussed in my earlier blog post.

Simultaneously, a recent research report is worth noting, as well. The study reveals, though the pharmaceutical companies in the United States, since mid 2000, have spent around US$ 50 billion every year to discover new drugs, they have very rarely been able to invent something, which can be called significant improvement over already existing ones. This is indeed a matter of great concern, just as a very ‘stringent IP regime’ prompts ‘evergreening’ of patents, adversely impacting the patients’ health interest.

Though innovation is much needed, obscene pricing of many patented drugs is limiting their access to majority of the world population. On top of that, business malpractices net of fines, wherever caught, are adding to the cost of medicines significantly.

Key reasons for acceleration of credibility erosion:

I reckon, following are the three main factors accelerating credibility erosion of pharma in general and Big Pharma in particular:

  1. Large scale reported business malpractices affecting patients’ health interest
  2. Very high prices of patented medicines in general, adversely impacting patients’ access and cost of treatment
  3. Attempts to influence IP laws of many countries for vested interests

1. Accelerating credibility erosion due to business malpractices:

In the pharmaceutical sector across the world, including India, the Marketing and Clinical Trial (CT) practices have still remained very contentious issues, despite many attempts of so called ‘self-regulation’ by the industry associations. Incessant complaints as reported by the media, judicial fines and settlements for fraudulent practices of some important pharma players leave no breather to anyone.

To illustrate the point, let me quote below a few recent examples:

Global:

  • In March 2014, the antitrust regulator of Italy reportedly fined two Swiss drug majors, Novartis and Roche 182.5 million euros (U$ 251 million) for allegedly blocking distribution of Roche’s Avastin cancer drug in favor of a more expensive drug Lucentis that the two companies market jointly for an eye disorder. According to the Italian regulator Avastin costs up to 81 euros, against around 900 euros for Lucentis. Out of the total amount, Novartis would require to pay 92 million euros and Roche 90.5 million euros. Roche’s Genentech unit and Novartis had developed Lucentis. Roche markets the drug in the United States, while Novartis sells it in the rest of the world. Quoting the Italian regulator, the report says that the said practices cost Italy’s health system more than 45 million euros in 2012 alone, with possible future costs of more than 600 million euros a year.
  • Just before this, in the same month of March 2014, it was reported that a German court had fined 28 million euro (US$ 39 million) to the French pharma major Sanofi and convicted two of its former employees on bribery charges. An investigation of those former employees of Sanofi unearthed that they had made illicit payments to get more orders from pharma dealer.
  • In November 2013, Teva Pharmaceutical reportedly said that an internal investigation turned up suspect practices in countries ranging from Latin America to Russia.
  • In May 2013, Sanofi was reportedly fined US$ 52.8 Million by the French competition regulator for trying to limit sales of generic versions of the company’s Plavix.
  • In August 2012, Pfizer Inc. was reportedly fined US$ 60.2 million by the US Securities and Exchange Commission to settle a federal investigation on alleged bribing overseas doctors and other health officials to prescribe medicines.
  • In July 2012, GlaxoSmithKline was reportedly fined US$ 3 bn in the United States after admitting to bribing doctors and encouraging the prescription of unsuitable antidepressants to children. According to the report, the company encouraged sales reps in the US to ‘mis-sell’ three drugs to doctors and lavished hospitality and kickbacks on those who agreed to write extra prescriptions, including trips to resorts in Bermuda, Jamaica and California.
  • In April 2012, a judge in Arkansas, US, reportedly fined Johnson & Johnson and a subsidiary more than US$1.2 billion after a jury found that the companies had minimized or concealed the dangers associated with an antipsychotic drug.
  • Not so long ago, after regulatory authorities in China cracked down on GlaxoSmithKline for allegedly bribing of US$490 million to Chinese doctors through travel agencies, whistleblower accusations reverberated spanning across several pharma MNCs, including Sanofi. The company reportedly paid ¥1.7 million (US$277,000) in bribes to 503 doctors around the country, forking over ¥80 to doctors each time a patient bought its products.

All these are not new phenomena. For example, In the area of Clinical Trial, an investigation by the German magazine Der Spiegel reportedly uncovered in May, 2013 that erstwhile international conglomerates such as Bayer, Hoechst (now belongs to Sanofi), Roche, Schering (now belongs to Bayer) and Sandoz (now belongs to Novartis) carried out more than 600 tests on over 50,000 patients, mostly without their knowledge, at hospitals and clinics in the former Communist state. The companies were said to have paid the regime the equivalent of €400,000 per test.

India:

Compared to the actions now being taken by the law enforcers overseas, India has shown a rather lackadaisical attitude in these areas, as on date. It is astonishing that unlike even China, no pharmaceutical company has been investigated thoroughly and hauled up by the government for alleged bribery and other serious allegations of corrupt practices.

However, frequent reporting by Indian media has now triggered a debate in the country on the subject. It has been reported that a related Public Interest Litigation (PIL) is now pending before the Supreme Court for hearing in the near future. It is worth noting that in 2010, ‘The Parliamentary Standing Committee on Health’ also had expressed its deep concern by stating that the “evil practice” of inducement of doctors by the pharma companies is continuing unabated as the revised guidelines of the Medical Council of India (MCI) have no jurisdiction over the pharma industry. The Government, so far, has shown no active interest in this area, either.

In an article titled, “Healthcare industry is a rip-off”, published in a leading business daily of India, states as follows:

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

In the drug manufacturing quality area, USFDA and MHRA (UK) has recently announced a number of ‘Import Bans’ for drugs manufactured in some facilities of Ranbaxy and Wockhardt, as those medicines could compromise with the drug safety concerns of the patients in the US and UK. Even as recent as in late March 2014, the USFDA has reportedly issued a warning letter to another domestic drug maker USV Ltd on data integrity-related violations in good manufacturing practices occurred at the company’s Mumbai facility. This is indeed a cause of added concern.

Similarly, in the Clinical Trial area of India, responding to a PIL, the Supreme Court of the country and separately the Parliamentary Standing Committee also had indicted the drug regulator. The Committee in its report had even mentioned about a nexus existing between the drug regulator and the industry in this area.

2. Accelerating credibility erosion due to high patented drugs pricing:

On this subject, another March 2014 report brings to the fore the problems associated with access to affordable newer medicines, which goes far beyond India, covering even the wealthiest economies of the world.

The report re-emphasizes that the monthly costs of many cancer drugs now exceed US$ 10,000 to even US$ 30,000. Recently Gilead Sciences fixed the price of a breakthrough drug for hepatitis C at US$ 84,000 for a 12- week treatment, inviting the wrath of many, across the world.

Why is the drug price so important?

The issue of pricing of patented drugs is now a cause of concern even in the developed countries of the world, though the subject is more critical in India. According to a 2012 study of IMS Consulting Group, drugs are the biggest component of expenditure in the total Out Of Pocket (OOP) spend on healthcare, as follows:

Items Outpatient/Outside Hospital (%) Inpatient/Hospitalization (%)
Medicines 63 43
Consultation/Surgery - 23
Diagnostics 17 16
Minor surgeries 01 -
Private Consultation 14 -
Room Charge - 14
Others 05 04

Probably for the same reason, recently German legislators have reportedly voted to continue until the end of 2017 the price freeze on reimbursed drugs, which was introduced in August 2010 and originally set to expire at end of 2013.

However in India, only some sporadic measures, like the Drug Price Control Order (DPCO 2013) for essential drugs featuring in the National List of Essential Medicines (NLEM 2011), that covers just around 18 percent of the total domestic pharmaceutical market, have been taken. On top of this, unlike many other countries, there is no negotiation on price fixation for high cost patented drugs.

If caught, insignificant fine as compared to total profit accrued, has no impact:

Many stakeholders, therefore, question the business practices of especially those players who get exposed, as they are caught and fined by the judiciary and the regulatory authorities.

Do such companies prioritize high profits ahead of patients’ lives, creating a situation for only those with deep pockets or a good health insurance cover to have access to the patented medicines, and the rest of the world goes without?

It is also no surprise that highly secretive and well hyped so called “Patient Access Programs” of many of these companies, are considered by many no more than a sham and a façade to justify the high prices.

3. Accelerating credibility erosion due to unreasonable IP related demands:

Despite some well-justified measures taken by countries like, India in the IP area, the US and to a great extent extent Europe and Japan, continuously pressured by the powerful pharma lobby groups, are still pushing hard to broaden the IP protections around the globe through various Free Trade Agreements (FTAs). At the same time, Big Pharma lobbyists are reportedly trying to compel various governments to enact IP laws, which would suit their business interest at the cost of patients.

Fortunately, many stakeholders, including media, have started raising their voices against such strong-arm tactics, further fueling the credibility erosion of Big Pharma.

Conclusion:

In the midst of all these, patients are indeed caught in a precarious situation, sandwiched between unethical practices of many large pharma players and very high prices of the available life saving patented medicines, beyond the reach of majority of the global population.

That said, accelerating credibility erosion of pharma in general and the Big Pharma in particular could possibly lead to a stage, where it will indeed be challenging for them to win hearts and minds of the stakeholders without vulgar display or surreptitious use of the money power.

To avoid all these, saner voices that are now being heard within the Big Pharma constituents should hopefully prevail, creating a win-win situation for all, not by using fear of sanctions as the key in various interactions, not even raising the so called ‘trump card of innovation’ at the drop of a hat and definitely by jettisoning long nurtured repulsive arrogance together with much reported skulduggery, for patients’ sake.

By: Tapan J. Ray

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

A Snap Shot of Indian Pharmaceutical Market in January 2014

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According to the retail audit dated February 2014 of well reputed AIOCD Pharmasofttech AWACS Pvt. Ltd, in January 2014 the Indian Pharmaceutical Market (IPM) registered a turnover of Rs. 6,227 Crore (around US$1 billion) with a growth of 8.5 percent. The growth break-up is as follows:

-       3.5 percent from existing products or volume (Volume growth was 1.6 percent in January 2013)

-       3.4 percent from new launches

-       1.6 percent from price increases

Number of new products (brands) launched in the month:

- 83

Top performers in growth within ‘Top 10 Companies’: 

-       Emcure at 20.9 percent

-       Sun Pharma at 20.1 percent

-       Lupin at 15.4 percent

 Monthly growth of Indian Companies against MNCs:

-       Indian companies at 11.4 percent

-       MNCs at 1.0 percent

Top growing MNCs for the month:

-       Allergan at 35.7 percent

-       MSD at 17.0 percent

-       Merck Serono at 15.0 percent

Top 5 growing therapy areas for the month:

-       Opthalmologicals/Otologicals at 18.0 percent

-       Anti-diabetic at 17.5 percent

-       Dermatologicals at 16.0 percent

-       Gastrointestinal at 10.0 percent

-       Respiratory at 9.8 percent

Top growing brands (branded generics): 

-       Skinlite at 40 percent

-       Telma at 32 percent

-       Glycomet-GP at 31 percent

-       Phensedyl at 25 percent

-       Dexorange at 14 percent

Conclusion:

It appears that the revival of IPM post Drug Price Control Order 2013 has commenced.