Tag Archives: Ray

Scandalizing Biosimilar Drugs With Safety Concerns

Posted on by
Reply

With the patent expiry of exorbitantly priced biologic medicines, introduction of biosimilar drugs are expected to improve their access to millions of patients across the world, saving billions of dollars in healthcare costs in the subsequent years. According to an article published in Forbes, it is estimated that the potential savings in the United States alone from just 11 biosimilar drugs over a period ranging from 2014 to 2024 could easily be U$250 billion.

However, the flip side of this much awaited development would make commensurate dent on the sales performance of original brand name biologics, now being marketed by the global pharma majors armed with patent monopoly rights.

Innovating hurdles to negate the impact:

Facing this stark reality, global innovators of biotech drugs allegedly want to fast germinate a strong apprehension in the minds of all concerned on the safety and replaceability of biosimilar drugs. Consequently, this would severely restrict the usage of this new class of products, sacrificing patients’ health interest.

To translate this grand plan into reality, garnering additional support from ten medical societies and a physicians’ group, the global players, which mostly hold various patents on biologics, reportedly urged the USFDA to require biosimilars to have distinct names from the original biologics, on the pretext that different names would make it easier for prescribers to distinguish between medicines that “may differ slightly” and also track adverse events and side effect reports that appear in patient records.

However, other stakeholders have negated this move, which is predominantly to make sure that no substitution of high priced original biologics takes place with the cheaper versions of equivalent biosimilars to save on drug costs.

Intense lobbying to push the envelope:

Interestingly, this intense lobbying initiative of big pharma to assign a distinct or different name for biosimilar drugs, if accepted by the USFDA, would provide a clear and cutting-edge commercial advantage to the concerned pharma and biotech majors, even much after their respective biologic drugs go off patent.

Thus, the above allegedly concerted move does not surprise many.

Mounting protests against industry move:

Biosimilar drug makers, on the other hand, have suggested to the USFDA to make biosimilars fall under the same International Non-Proprietary Name (INN) system, like all generic prescription drugs.  They believe that new names would create confusion and the physicians and pharmacists may face difficulties in ascertaining whether biosimilar drugs serve the same purpose with similar dosing and regimens.

The protest seems to have a snowballing effect. In July 2014, by a letter to the Commissioner Hamburg of USFDA, different groups representing pharmacy, labor unions, health insurance plans and others, have reportedly urged her not to go for different INNs for the original biologic and a biosimilar drug, for the same reason as cited above. The letter reinforces that the industry move, if accepted by the USFDA could increase the possibility of medication errors, besides adversely affecting the substitution required to bring down overall health care costs for high priced specialized biologics, thereby slowing down the uptake of biosimilars significantly.

Global pharma investors also raising voices in support of biosimilars:

Another similar and major development followed soon. A letter titled, “Investor Statement on Board Oversight of Biosimilar Issues”, written by a group of 19 institutional investors that manages about US$430 billion in assets, to the boards of several big pharma and biotech companies, flagged that some pharma majors have been scandalizing the safety concerns of biosimilar drugs. This is happening despite the fact that this class of drugs already has a well-established track record in Europe.

They emphasize that recent actions taken by some big pharma companies could raise concerns on the overall acceptance of biosimilar drugs, which would forestall any projected savings on that subject. They also reportedly expressed serious concern that shareholder interests could be adversely affected, if the pharma and biotech players pursue those policies that undermine corporate transparency and medical innovation.

The letter underscores, “Companies seeking to downplay the patient safety record of European biosimilars have also challenged the capacity of the FDA to promulgate rules and determine when biosimilars may be substituted for biologics.”

Among other points, the letter reiterates:

  • Though the important role of biologics in treating cancer, rheumatoid arthritis, anemia, multiple sclerosis and many other conditions is well recognized, the costs of these medicines are on an unsustainable trajectory, with some biologics costing as much 22 times more than other drugs. This critical issue seriously impedes patients’ access to biologics, as well as, acceptance by providers and insurance companies.
  • Biosimilars hold the promise of lowering costs of treating conditions for which biologics are indicated. At the same time, the recent adoption of a regulatory pathway to approval of biosimilars in the US market and the continued growth of biosimilars in the European Union, Japan, Canada, Australia and South Korea, pose a formidable business challenge for the companies that market patented biologic medicines.
  • Financial experts project that biosimilars too have the potential for significant market penetration and attractive returns on investments.
  • Assigning different INN would communicate to providers that the biosimilar is less effective, prompting them not to prescribe this class of medicines and making it difficult for the pharmacists to dispense too. Besides, different names could lead to prescribing errors.
  • In short, the boards of directors of the pharma and biotech majors were urged by these investors to use the following principles to guide their decision-making related to biosimilars:

-       Policy and educational information provided on biosimilars should be balanced, accurate and informed by the patient safety experience of biosimilars in the European Union and other biosimilar drug markets.

-       Lobbying expenditures for federal and state activities related to biosimilars should be fully disclosed and the boards should ensure that political activities are aligned with the interests of investors and other stakeholders.

-       Key information about any partnership or business deal related to biosimilars should be fully disclosed to investors, including information about the value, terms and duration of the deal.

The WHO proposal:

In this context it is worth recapitulating, the World Health Organization (WHO) that oversees the global INN system has held a number of meetings to resolve this issue. The WHO proposal suggests that the current system for choosing INNs to remain unchanged, but that a four-letter code would be attached at the end of every drug name. However, individual regulatory agencies in each country could choose whether to adopt such coding or not.

Let us wait to see what really pans out of this flexible WHO proposal on the subject.

Biosimilars go through stringent regulatory review:

It is important to note that the drug regulators carefully review biosimilars before giving marketing approval for any market, as these drugs must prove to be highly similar without any clinically meaningful differences from the original biologic molecules. The interchangeability between biosimilars and the original biologics must also be unquestionably demonstrated to be qualified for being substitutable at the pharmacy level without the need for intervention by a physician.

Thus, there does not seem to be any basis for different INN, other than to severely restrict competition from biosimilars.

12-year data exclusivity period for biologics – another hurdle created earlier:

Another barrier to early introduction of cheaper biosimilar drugs in the United States is the 12-year data exclusivity period for biologics.

On this issue GPhA – the generic drug makers’ group in the United States 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 market potential of biosimilars:

A new report by Allied Market Research estimates that the global biosimilars market would reach US$35 billion by 2020 from the estimated US$1.3 billion in 2013. During the next four years, over 10 blockbuster biologic drugs clocking aggregated annual sales turnover of US $60 billion would go off patent in the United States and in Europe. Humira – a US$10 billion drug of Abbvie that loses patent protection in 2016 is at the top of list.

In tandem, facilitation of regulatory pathways of marketing approval for this class of drugs in many developed markets is expected to drive its growth momentum through greater market penetration and access.

Asia Pacific region is likely to emerge as the leader in the biosimilar drugs market, primarily due to heightened interest and activity of the local players. Collaboration between Mylan and Biocon to commercialize biosimilar version of trastuzumab of Roche in India and the approval of first biosimilar version of monoclonal antibody drug by Hospira in Europe are the encouraging indications.

High growth oncology and autoimmune disease areas are expected to attract more biosimilars developers, as many such biologics would go off patent during 2014 to 2019 period.

Monoclonal antibodies (mAbs) and erythropoietin would possibly be key to the growth drivers. Similarly, follitropins, interferons, and insulin biosimilars would emerge as high potential product segments over a period of time.

As we know, among the developed markets, Europe was the first to draft guidelines for approval of biosimilars in 2006. Consequently, the first biosimilars version of Granulocyte colony-stimulating factor (G-CSF) was introduced in the European Union under the regulatory guidance of European Medical Agency (EMA) in 2008. At present, there are three biosimilar versions of G-CSF available in the European market. Insulin biosimilars also show a good potential for the future.

India:

India is now well poised to encash on this opportunity, which I had deliberated in one of my earlier blog post titled, “Moving Up The Generic Pharma Value Chain”.

Current global usage of biosimilars:

Though regulatory pathways for biosimilar drugs are now in place in the United States, no biosimilar has yet been approved there. However, the US drug regulator has for the first time accepted an application for the approval of a biosimilar version of Neupogen (Filgrastim) of Amgen, which treats patients with low white blood cell counts. Sandoz has already been selling the biosimilar version of this drug in more than 40 countries outside the US.

According to the research organization ‘Pharmaceutical Product Development’, as on March 2013, at least 11 countries and the European Union (EU) approve, regulate and allow clinical trials of biosimilars. As of February 2012, the EU has approved at least 14 biosimilar medicines. The following table shows these countries by region:

Region

Countries
North America Canada
Europe E.U. (including U.K.)
Asia and Pacific China, India, Singapore, South Korea, Taiwan
Central and South America Argentina, Brazil, Mexico
Eastern Europe Russia, Turkey

Source: Pharmaceutical Product Development

Conclusion:

With the opening up of the United States for biosimilar drugs, the entire product class is expected to be catapulted to a high growth trajectory, provided of course no more allegedly concerted attempts are made to create regulatory hurdles on its path, as we move on. This is mainly because around 46 percent of the world biologic market as on 2010 was in the United States.

However, intense lobbying and power play against biosimilar or interchangeable biologics, allegedly sponsored by the big pharma, are acting as a barrier to this much awaited development solely to benefit the patients. Such activities also undermine attractiveness of investing in safer and more affordable interchangeable biologics.

It is indeed intriguing that all these are happening, despite the fact that the regulatory approval standards for biosimilars are very stringent, as each of these drugs:

  • Must be highly similar to the reference product
  • Cannot have clinically meaningful differences from the original ones
  • Must perform the same in any given patient
  • Would have the same risk associated with switching as the reference product

Thus, scandalizing biosimilar drugs by raising self-serving ‘safety concerns’ in an orchestrated manner, just to extend product life cycles of original biologics even beyond patent expiries, is indeed a very unfortunate development. In this process, the vested interests are creating a great commercial uncertainty for this new class of medicines in the global scenario.

Be that as it may, all these seemingly well synchronized moves against biosimilars, solely to protect business interest, pooh-poohing patients’ health interests, have once again caste a dark shadow on not so enviable image of the big pharma…without even an iota of doubt.

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.

 

Patented Drug Pricing: Relevance To R&D Investments

Posted on by
Reply

The costs of most of the new life saving drugs, used in the treatment of dreaded diseases such as cancer, have now started going north at a brisk pace, more than ever before.

From the global pharma industry perspective, the standard answer to this disturbing phenomenon has remained unchanged over a period of time. It continues to argue; with the same old emphasis and much challenged details that the high drug price is due to rapidly escalating R&D expenses.

However, experts have reasons to believe that irrespective of R&D costs, the companies stretch the new drug prices to the farthest edge to maximize profits. Generation of highest possible revenue for the product is the goal. Passing on the benefits of the new drug to a large number of patients does not matter, at all.

How credible is the industry argument?

In this context, let me take the example of Hepatitis C drug – Sovaldi of Gilead. Many now know that for each patient Sovaldi costs US$ 30,000 a month and US$ 84,000 for a treatment course.

According to an article published in Forbes, one health executive estimated that the annual price tag for Sovaldi could reach US$ 300 Billion because so many people have Hepatitis C infection worldwide.  This mindboggling amount is more than all spending on all drugs in the United States, currently.  A more realistic number might be between US$7 Billion and $12 Billion a year.  Even that amount is roughly five times the amount Gilead spends each year on research.

Like Sovaldi, in many other instances too, industry argument of recovering high R&D investment through product pricing would fall flat on its face.

Need to put all the cards on the table:

The distinguished author underscores in his article the expected responsibilities of the experts in this area to ask the global pharma industry to connect the dots for all us between:

  • The societal goals they aim to achieve
  • The costs they incur on R&D
  • The profits they should reasonably be earning.

Public investments in R&D:

Another article titled, “Putting Price On Life”, argues that R&D projects are mainly initiated in the public sphere through tax-funded research. Unfortunately, patients do not derive any benefit of these public investments in terms of reduction in prices for the related drugs. On the contrary, they effectively pay for these new products twice – once through tax-funded research and then paying full purchase price of the same drug.

Additionally, industry corners the praise for the work done by others in tax-funded research, while at the same time making R&D less risky, as public funded research groups carry out most of the initial risk prone and breakthrough innovation.

The article also highlights that global pharma companies receive other tax credits over billions of dollars for their expenditure on R&D. However, the R&D figures that are produced are not adjusted to take into account the tax credits, thereby inflating costs and the prices of drugs.

All these tax credits significantly lower the private costs of doing the R&D in the United States, increasing the private returns. Interestingly, there does not seem to be any public information regarding who gets the tax credit and what the credit is used for, while the government does not retain any rights in the R&D.

Does pharma R&D always create novel drugs?

According to a report, US-FDA approved 667 new drugs from 2000 to 2007. Out of these only 75 (11 percent) were innovative molecules having much superior therapeutic profile than the available drugs. However, more than 80 percent of 667 approved molecules were not found to be better than those, which are already available in the market.

Thus, the question that very often being raised by many is, why so much money is spent on discovery and development of ‘me-too’ drugs, and thereafter on aggressive marketing for their prescription generation? This is important, as the patients pay for the entire cost of such drugs including the profit, after being prescribed by the doctors?

Should Pharma R&D move away from its traditional models?

The critical point to ponder today, should the pharmaceutical R&D now move from its traditional comfort zone of expensive one company initiative to a much less charted frontier of sharing drug discovery involving many players? If this approach gains acceptance sooner, it could lead to significant increase in R&D productivity at a much lesser cost, benefiting the patients at large.

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

Current IPR mechanism failing to deliver:

Current mechanism of Intellectual Property Rights (IPR), especially in the pharmaceutical space, undoubtedly facilitates spiraling high drug prices with no respite to patients and payers, as access to these drugs gets severely restricted to the privileged few, denying ‘right to life’ to many.

Moreover, the current global ‘Pharma Patent System’ does not differentiate between qualities of innovations. The system extends equal incentives for pricing the drugs as high as possible, even if those offer little advantages to patients. Fortunately, this loophole has been plugged in the Indian Patents Act 2005, to a large extent.

That said, there is no well-structured incentive available to develop clinically superior drugs with public funding, even in India, so that prices could be significantly lower with equally lesser risks to the companies too.

Conclusion:

Current pricing system of patented medicines is even more intriguing, as these have no direct or indirect co-relationship with R&D expenditures incurred by the respective players. On the contrary, drug prices allegedly go up due to other avoidable high expenditures, such as, physicians’ gratification oriented marketing, which includes even reported bribing, high profile political lobbying and private jet setting key executives lifestyle with exorbitant compensation packages, besides others.

To effectively address this issue, besides public R&D funding, there has been a number of suggestions for creation of a win-win pathway like, creation of “Health Impact Fund’. There are other inclusive, sustainable and cost effective R&D models too, such as ‘Open Innovation’ and ‘Accelerating Medicines Partnership (AMP)’, to choose from.

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

Be that as it may, ‘Patented Drug Pricing’ does not seem to have any relevance to a company’s investments towards R&D. On the contrary, the companies charge the maximum price that they could possibly handle to maximize profits on these life saving medicines.

In an environment of indifference like this, it is the responsibility of other stakeholders, especially the government, to ensure, by invoking all available measures, that life saving medications for dreaded diseases such as cancer, can get to those who need them the most, come what may.

Is the ever-alert new Government listening?

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.

Hepatitis C: A Silent, Deadly Disease: Treatment Beyond Reach of Most Indians

Posted on by
Reply

Every year, July 28 is remembered as the ‘World Hepatitis Day’. In India, this year too, the day had gone by virtually uneventful, for various reasons. This happened despite increasing trend of the disease in the country.

Though, there are five main hepatitis virus types, namely A, B, C, D and E, of which B and C are the most fatal, in this article, I shall focus mainly on hepatitis C.

According to the World Health Organization (WHO), globally around 150 million people are infected with chronic hepatitis C virus (HCV), which is considered as one of the key factors for liver cirrhosis, fibrosis and hepatocellular carcinoma. At least, 350,000 HCV infected people die annually from these ailments.

A July 2014 study conducted by Metropolis Healthcare reportedly found that 17.97 percent of 78,102 samples studied in major cities of India such as, Mumbai, Delhi and Chennai, were infected with HCV and the patients belonged to the age group of 20 to 30 years. Out of 10,534 the tested sample in the age group of 0 to 10 years, 3,254 samples (30.89 percent) tested positive with HCV.

Institutes of Medicine (IOM) and the Department of Health and Human Services (HHS) of the United States consider hepatitis C infections a “silent epidemic,” as many patients infected with HCV are symptom free, without even leaving any hint to them that they are infected. The infected persons may feel healthy, even when serious liver damage is taking place, sometimes through decades.

All these patients are also potential carriers of HCV, risking rapid spread of the virus, as identification of the infected individuals for remedial measures continue to remain mostly eluding in India.

According to experts, around 80 percent of the HCV patients ultimately develop chronic hepatitis with serious liver damage, causing significant debility. With further progression of the disease, around 20 percent of these patients could develop fatal liver cirrhosis and 5 percent may fall victim of liver cancer.

A situation like this, is indeed a cause of yet another major worry in the healthcare space of India. Deadly hepatitis C crisis would likely to worsen much, if it does not receive healthcare focus of all stakeholders, sooner.

Traditional treatment regime:

There is no vaccine developed for HCV, as yet. HCV usually spreads through sharing of needles, syringes or other equipment to inject drugs, infected blood transfusion and tattooing, among others.

The standard treatment for HCV is interferon-based injections, which could make patients feel ill and give rise to flulike symptoms. Moreover, the treatment with interferon lasts from six months to a year and cures only 40 to 50 of HCV infected patients.

Now, chronic HCV treatment also includes a combination of three drugs – ribavirin (RBV), pegylated interferon (PEG) and a protease inhibitor, such as, simeprevir or boceprevir or telaprevir. These three drug combinations inhibit viral replication for enhancing immune response of the body to hopefully eradicate the virus.

At times, patients with very advanced liver disease may not be able to tolerate this traditional treatment with interferon-based injections, as those could make them feel worse.

The latest development in treatment:

There has been a significant advance in the treatment of HCV patients today with a new drug in the form of tablet that has doubled the viral cure rates from 40 to 50 percent to 90 to 100 percent.

Moreover, the new drug not just enables the physicians switching from injectibles to oral tablet, but at the same time reduces the duration of treatment to just 12 weeks, instead of 6 months to one year, offering a huge advantage to patients suffering from HCV.

This new generation of treatment now includes only Sovaldi (sofosbuvir) of Gilead, which is the first drug approved to treat certain types of hepatitis C infection, without any compelling need to co-administer with interferon.

Some other global pharma majors, such as Bristol-Myers Squibb, Merck & Co, Johnson & Johnson and AbbVie are also developing oral treatment regimens for HCV. All these have shown equally dramatic results in clinical trials, reducing the requirement for debilitating interferon injections.

Allegation of profiteering:

Looking at the high cure rate of more than 90 per cent for much-distressed HCV infected patients, none would possibly dispute that Sovaldi of Gilead signifies a giant leap in the treatment of HCV. But Gilead, according to a ‘Financial Times (FT)’ report, faces strong criticism of alleged ‘profiteering’ for its pricing strategy of this drug.

Sovaldi has been priced by Gilead at Rs 60,000 (US$ 1,000) per tablet with a three-month course costing Rs1.8 Crore (US$ 84,000), when it reportedly costs around U$130 to manufacture a tablet. This treatment cost is being considered very high for many Americans and Europeans too.

“At the US price, Gilead will recoup its Sovaldi development investment  . . . in a single year and then stand to make extraordinary profits off the backs of US consumers, who will subsidize the drug for other patients around the globe”, the FT report states.

This line of argument has been gaining ground on Capitol Hill, as well. This month, two senior members of the US Senate Finance Committee wrote to John Martin, Gilead Chief Executive, asking him to justify Sovaldi’s price, the report mentioned.

Half yearly sales of US$ 5.8 billion came from just 9,000 patients:

Be that as it may, the bottom line is, in the midst of huge global concerns over alleged ‘profiteering’ with this exorbitantly priced HCV drug, Gilead has reportedly registered US$ 5.8 billion in sales for Sovaldi in the first half of 2014.

The company has reportedly noted on its earnings call that it believes 9,000 people have been cured of HCV so far with Sovaldi. This means that the 6-month turnover of Sovaldi of US$ 5.8 billion has come just from 9000 patients. If we take the total number of HCV infected patients at 150 million globally, this new drug has benefited just a minuscule fraction of less than one percent of the total number of patients, despite clocking mind-boggling turnover and profit.

Stakeholders’ pressure building up:

Coming under intense pressure from all possible corners, Gilead has reportedly announced that it has set a minimum threshold price of US$ 300 a bottle, enough for a month. With three months typically required for a full course and taking into account the currently approved combination with interferon, the total cost per patient would be about US$ 900 for a complete treatment against its usual price of US$ 84,000. The company would offer that price to at least 80 countries.

For this special price, Gilead reportedly has targeted mostly the world’s poorest nations, but also included some middle income ones such as Egypt, which has by far the highest prevalence of HCV in the world. In Egypt, about 10 million people remain chronically infected and 100,000 new infections occur each year, according to Egyptian government figures. However, independent surveys  put this number between 200,000 and 300,000. Gilead has already signed an agreement with the Egyptian government in early July 2014 and the drug would be available there in September 2014. This would make Egypt the first to have access to Sovaldi outside the US and the EU.

What about India?

Gilead has reportedly announced, “In line with the company’s past approach to its HIV medicines, the company will also offer to license production of this new drug to a number of rival low-cost Indian generic drug companies. They will be offered manufacturing knowhow and allowed to source and competitively price the product at whatever level they choose.”

This is indeed a welcoming news for the country and needs to be encouraged for expeditious implementation with support and co-operation from all concerned.

Regulatory requirement:

However, despite all good intent, Gilead says, “ Some countries, such as India and China, are not satisfied with the tests conducted in the US and elsewhere for Sovaldi. They want additional clinical trials to be conducted on their own patients as a precondition for authorization, which will add extra costs and delays.”

Patent status:

It is worth noting here that the Indian patent office has not even recognized Sovaldi’s patent for the domestic market.

Local measures to address chronic hepatitis:

On May 22, 2014, the World Health Assembly adopted a resolution to improve prevention, diagnosis and treatment of viral hepatitis, in general. However, as things stand today in India, the surveillance systems for viral hepatitis are grossly inadequate and preventive measures are not universally implemented.

The Union Government of India has now expressed its intent to set up ten regional laboratories through the National Communicable Disease Centre (NCDC) for surveillance of viral hepatitis in the country. The key objective of these laboratories would be to ascertain the burden of viral hepatitis in India by 2017 and to provide lab support for investigating outbreaks.

Government sources indicate, the initial focus would be more on the preventive aspects rather than treatment of viral hepatitis given the limited health resources available. Setting up universal guidelines for immunization along with mass awareness and education have been considered as critical to fight this dreaded disease in the country. Simultaneously introduction of nucleic acid testing (NAT) and standardization of blood bank practices would be undertaken for preventing blood transfusions related viral hepatitis, in general.

Treatment for HCV is not widely available in the country. All types of HCV treatments, especially the newer and innovative ones, must be made available to all infected patients, as these drugs have high cure rates, short duration of treatment and minimal side effects.

Conclusion:

Viral hepatitis in general and hepatitis C in particular are becoming great national health concerns, as these contribute to significant morbidity and mortality, further adding to the national economic burden. India should just not strengthen its prevention strategies; it needs to focus on all the factors that influence speedy diagnosis and treatment of HCV.

As the WHO says, “New drugs have the potential to transform hepatitis C treatment, with safe and simple treatments resulting in cure rates of over 90 per cent”. The raging debate on Sovaldi needs to explore the newer avenues and measures for appropriately pricing the innovative medicines in the days ahead.

Concerned pharma players, the government and other stakeholders must work together and in unison to ensure that all those infected with HCV are diagnosed quickly and have access to life-saving treatments.

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.

Alarming Incidence of Cancer: Fragile Infrastructure: Escalating Drug Prices

Posted on by
Reply

According to the ‘Fact-Sheet 2014′ of the World Health Organization (WHO), cancer cases would rise from 14 million in 2012 to 22 million within the next two decades. It is, therefore, no wonder that cancers figured among the leading causes of over 8.2 million deaths in 2012, worldwide.

A reflection of this scary scenario can also be visualized while analyzing the growth trend of various therapy segments of the global pharmaceutical market.

A recent report of ‘Evaluate Pharma (EP)’ has estimated that the worldwide sales of prescription drugs would reach US$ 1,017 bn by 2020 with a Compounded Annual Growth Rate (CAGR) of 5.1 percent between 2013 and 2020. Interestingly, oncology is set to record the highest sales growth among the major therapy categories with a CAGR of 11.2 percent during this period, accounting for US$ 153.4 bn of the global pharmaceutical sales.

The key growth driver is expected to be an exciting new class of cancer products targeting the programmed death-1 (PD-1) pathway with a collective value of US$ 14 bn in 2020, says the report.

Another recent report from the IMS Institute for Healthcare Informatics also highlights that global oncology spending touched US$ 91 billion in 2013 growing at 5 percent annually.

Consequently, Oncology would emerge as the biggest therapeutic class, more than twice of the anti-diabetic category, which features next to it.

Key global players:

Roche would continue to remain by far the largest player in the oncology market in 2020 with a 5 percent year-on-year growth between 2013 and 2020 with estimated total sales of over US$ 34bn in 2020 against US$ 25bn in 2013.

In 2020, besides Roche, other key players in the oncology segment would, in all probability, be Bristol-Myers Squibb, Celgene, Novartis, Pfizer, Johnson & Johnson, Astellas Pharma, AstraZeneca, Eli Lilly and Merck & Co, the EP report says.

Escalating costs of cancer drugs:

As IMS Health indicates, the overall cost for cancer treatments per month in the United States has now reached to US$10,000 from US$ 5,000 just a year ago. Thus, cancer drugs are fast becoming too expensive even in the developed markets, leave aside India.

The following table would help fathom how exorbitant are the costs per therapy of the common cancer drugs, though these are from the United States:

Generic                               Diagnosis

 Cost/ Dose (US$)

Cost of     Therapy/    28 days  (US$)

Cost per  Therapy      (US$)
brentuximab Hodgkins lymphoma

14,000

18,667

224,000
Pertuzumab Breast cancer

4,000

5,333

68,000
pegylated interferon Hepatitis C

700

2,800

36,400
Carfilzomib Multiple myeloma

1,658

9,948

129,324
ziv-aflibercept CRC

2,300

4,600

59,800
Omacetaxine CML

560

3,920

50,960
Regorafenib CRC

450

9,446

122,800
Bosutinib CML

278

7,814

101,580
Vemurafenib Melanoma

172

4,840

62,915
Abiraterone Prostate

192

5,391

70,080
Crizotinib NSCLC

498

27,951

363,367
Enzalutamide Prostate

248

6,972

90,637
ado-trastuzumab emtansine Breast – metastatic

8,500

8,115

105,500
Ponatinib Leukemia

319

8,941

116,233
Pomalidomide Multiple myeloma

500

10,500

135,500

(Source: ION Solutions)

Even US researchers concerned about high cancer drugs cost:

It is interesting to note, that in a review article published recently in ‘The Lancet Oncology’, the US researchers Prof. Thomas Smith and Dr. Ronan Kelly identified drug pricing as one area of high costs of cancer care. They are confident that this high cost can be reduced, just as it is possible for end-of-life care and medical imaging – the other two areas of high costs in cancer treatment.

Besides many other areas, the authors suggested that reducing the prices of new cancer drugs would immensely help containing cancer costs. Prof. Smith reportedly said, “There are drugs that cost tens of thousands of dollars with an unbalanced relationship between cost and benefit. We need to determine appropriate prices for drugs and inform patients about their costs of care.”

Cancer drug price becoming a key issue all over:

As the targeted therapies have significantly increased their share of global oncology sales, from 11 percent a decade ago to 46 percent last year, increasingly, both the Governments and the payers, almost all over the world, have started feeling quite uncomfortable with the rapidly ascending drug price trend.

In the top cancer markets of the world, such as, the United States and Europe, both the respective governments and also the private insurers have now started playing hardball with the cancer drugs manufacturers.

There are several instances in the developed markets, including the United States, where the stakeholders, such as, National Institute for Health and Care Excellence (NICE) of the United Kingdom and American Society of Clinical Oncology (ASCO) are expressing their concerns about manufacturers’ charging astronomical prices, even for small improvements in the survival time.

Following examples would give an idea of global sensitivity in this area:

  • After rejecting Roche’s breast cancer drug Kadcyla as too expensive, NICE reportedly articulated in its statement, “A breast cancer treatment that can cost more than US$151,000 per patient is not effective enough to justify the price the NHS is being asked to pay.”
  • In October 2012, three doctors at Memorial Sloan-Kettering Cancer Center announced in the New York Times that their hospital wouldn’t be using Zaltrap. These oncologists did not consider the drug worth its price. They questioned, why prescribe the far more expensive Zaltrap? Almost immediately thereafter, coming under intense stakeholder pressure, , Sanofi reportedly announced 50 percent off on Zaltrap price.
  • Similarly, ASCO in the United States has reportedly launched an initiative to rate cancer drugs not just on their efficacy and side effects, but prices as well.

India:

  • India has already demonstrated its initial concern on this critical issue by granting Compulsory License (CL) to the local player Natco to formulate the generic version of Bayer’s kidney cancer drug Nexavar and make it available to the patients at a fraction of the originator’s price. As rumors are doing the rounds, probably some more patented cancer drugs would come under Government scrutiny to achieve the same end goal.
  • I indicated in my earlier blog post that the National Pharmaceutical Pricing Authority (NPPA) of India by its notification dated July 10, 2014 has decided to bring, among others, some anticancer drugs too, not featuring in the National List of Essential Medicines 2011 (NLEM 2011), under price control.
  • Not too long ago, the Indian government reportedly contemplated to allow production of cheaper generic versions of breast cancer drug Herceptin in India. Roche – the originator of the drug ultimately surrendered its patent rights in 2013, apprehending that it would lose a legal contest in Indian courts, according to media reports. Biocon and Mylan thereafter came out with biosimilar version of Herceptin in the country with around 40 percent lesser price.

Hence, responsible pricing of cancer drugs would continue to remain a key pressure-point  in the days ahead.

Increasing R&D investments coming in oncology:

Considering lucrative business growth opportunities and financial returns from this segment, investments of global pharma players remain relatively high in oncology, accounting for more than 30 percent of all preclinical and phase I clinical product developments, with 21 New Molecular Entities (NMEs) being launched and reaching patients in the past two years alone, according to IMS Health.

However, it is also worth noting that newly launched treatments typically increase the overall incremental survival rate between two and six months.

Opportunities for anti-cancer biosimilars:

With gradual easing out of the regulatory pathways for biosimilar drugs in the developed markets, especially in the US, a new competitive dynamic is evolving in the high priced, over US$ 40 billion, biologics market related to cancer drugs. According to IMS Health, on a global basis, biosimilars are expected to generate US$ 6 to12 billion in oncology sales by 2020, increasing the level of competition but accounting for less than 5 percent of the total biologics market even at that time.

Alarming situation of cancer in India:

A major report, published in ‘The Lancet Oncology’ states that In India, around 1 million new cancer cases are diagnosed each year, which is estimated to reach 1.7 million in 2035.

The report also highlights, though deaths from cancer are currently 600,000 -700,000 annually, it is expected to increase to around 1.2 million during this period.

Such high incidence of cancer in India is attributed to both internal factors such as, poor immune conditions, genetic pre-disposition or hormonal and also external factors such as, industrialization, over growth of population, lifestyle and food habits.

The Lancet Oncology study showed that while incidence of cancer in the Indian population is only about a quarter of that in the United States or Europe, mortality rates among those diagnosed with the disease are much higher.

Experts do indicate that one of the main barriers of cancer care is its high treatment cost, that is out of reach for millions of Indians. They also believe that cancer treatment could be effective and cheaper, if detected early. Conversely, the treatment would be more expensive, often leading to bankruptcy, if detected late and would, at the same time, significantly reduce the chances of survival too.

The fact that cancer is being spotted too late in India and most patients lack access to treatment, would be quite evident from the data that less than even 30 percent of patients suffering from cancer survive for more than five years after diagnosis, while over two-thirds of cancer related deaths occur among people aged 30 to 69.

Unfortunately, according to the data of the Union Ministry of Health, 40 percent of over 300 cancer centers in India do not have adequate facilities for advanced cancer care. It is estimated that the country would need at least 600 additional cancer care centers by 2020 to meet this crying need.

Breast cancer is the most common type of cancer, accounting for over 1 in 5 of all deaths from cancer in women, while 40 percent of cancer cases in the country are attributable to tobacco.

Indian Market and key local players:

Cancer drug market in India was reported to be around Rs 2,000 Crore (US$ 335 million) in 2013 and according to a recent Frost & Sullivan report, is estimated to grow to Rs 3,881 Crore (US$ 650 million) by 2017 with a CAGR of 15.46 percent, throwing immense business growth opportunities to pharma players.

Dr.Reddy’s Laboratories (DRL) is one of the leading Indian players in oncology. DRL has already developed biosimilar version of Rituxan (Rituximab) of Roche, Filgastrim of Amgen and has also launched the first generic Darbepoetin Alfa and Peg-grafeel.

Other major Indian players in this field are Cipla, Lupin, Glenmark, Emcure, Biocon, Ipca, Natco, Intas, Reliance Life Science, Zydus Cadila and some more. These home grown companies are expected to take a leading role in the fast growing oncology segments of India, together with the major MNC players, as named above.

Analysis of detailed opportunities that would be available to these companies and consequent financial impacts could be a subject of separate discussion.

Conclusion:

Unlike many other developed and developing countries of the world, there is no system yet in place in India to negotiate prices of innovative patented drugs with the respective manufacturers, including those used for cancer. However, NPPA is now moving fast on reducing prices of cancer drugs. It has reportedly pulled up six pharma for not providing pricing data of cancer drugs sold by them.

Further, CL for all patented anti-cancer drugs may not be a sustainable measure for all time to come, either. One robust alternative, therefore, is the intense price negotiation for patented drugs in general, including anti-cancer drugs, as provided in the National Pharmaceutical Pricing Policy 2012 (NPPP 2012).

This important issue has been under consideration of the Department of Pharmaceuticals (DoP) since 2007. The report produced by the committee formed for this specific purpose, after dilly-dallying for over five years, now hardly has any takers and gathering dusts.

I reckon, much discussed administrative inertia, insensitivity and abject lack of sense of urgency of the previous regime, have desisted the DoP from progressing much on this important subject, beyond of course customary lip services, as on date. Intense lobbying by vested interests from across the world, seems to have further helped pushing this envelope deep inside an inactive terrain.

The new Government would hopefully make the DoP break its deep slumber now to resolve this critical issue decisively, in a time bound manner, assigning clear accountability, without any further delay.

At the same time, shouldn’t both the Honorable Ministers of Health and Chemicals & Fertilizers, taking the State Governments on board, put their collective resources together to create the following, expeditiously:

- A robust national health infrastructure for cancer care

- A transparent mechanism to prevent escalating cancer drug prices and other treatment costs

Hope, the good days would come to the cancer patients of India, at least, sooner than never.

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. 

Cheaper Drugs: Happy Patients: Angry Industry

Posted on by
Reply

Recent price reductions of a number of cardiovascular and diabetes drugs falling outside the National List of Essential Medicines 2011 (NLEM 2011), have attracted fury of the pharma industry . By a notification dated July 10, 2014, the National Pharmaceutical Pricing Authority (NPPA) has invoked Para 19 of the DPCO 2013 for these price changes, the implications of which would indeed be far reaching.

NPPA has now decided to examine inter-brand price variation for single ingredient formulations in eight therapeutic groups, which, besides cardiovascular and diabetic drugs, would include, anti-cancer, HIV/AIDS, anti-TB, anti-malaria, anti-asthmatic and immunological (sera/vaccines). In these therapy areas, the Maximum Retail Price (MRP) of the brand(s) exceeding 25 per cent of the simple average price of all in the same molecular category having 1 percent or above market share, would be capped at the 25 per cent level.

Pharma industry, in general, feels that this ‘unwelcoming decision’ of the NPPA, which allegedly goes beyond the scope and spirit of DPCO 2013, would invite great uncertainty in its business environment.

On the other hand, many consider this price reduction as a ‘Good Omen’ for millions of patients suffering from related life-long ailments. They argue, the purpose of this ‘Bitter Pill” of the NPPA, is to send a clear message to the pharma industry to shape-up with responsible drug pricing.

The new Minister’s recent statement:

It may not be a bad idea to take into consideration the above notification of the NPPA in the light of what the new minister of Chemicals and Fertilizers – Mr. Ananth Kumar said on May 28, 2014. According to media report, the Minister expressed his intent as follows:

“… As far as branded medicines of multinational pharmaceutical companies are concerned, we will talk to all of them and try to bring down prices of essential drugs for poor by 25-40 per cent… The pharmaceutical industry is very important for the health of the country, he added…our main mission will be to ensure the availability of all necessary medicines at affordable prices, especially for poor across the country.”

It is, therefore, quite possible that the NPPA’s decision on price reduction of cardiovascular and diabetes drugs has the Minister’s concurrence.

Industry’s key concern:

This recent decision of the NPPA has reportedly angered the industry, as the Drug Price Control Order 2013 (DPCO 2013) clearly articulates two basic criteria for drug price control in India, as follows:

1. Span of price control:

This was re-defined (from DPCO 1995) on the ‘essentiality criteria’ of the drugs, which in turn is based on the National List of Essential Medicines 2011 (NLEM 2011)

2. Methodology of price control:

This was re-defined (from DPCO 1995) with a clear departure from ‘Cost-Based Price Control’ to the ‘Market-Based Price Control’.

The industry alleges violation of these criteria for the recently announced price reduction of a number of diabetic and cardiovascular drugs, as those do not fall under NLEM 2011.

Price variation is of no-use to patients for prescription drugs:

As the prices of non-scheduled formulations are not fixed by the NPPA, which can virtually be launched at any price to the market, there has been a huge variation of prices between the branded generics within the same chemical entity/entities. Following is a quick example:

Molecule Disease MRP of Lowest Price Brand MRP of Highest Price Brand
Telmisartan 10’s Hypertension Rs. 25 Rs. 385
Glimeperide 10’s Diabetes Rs. 40 Rs. 133 (Brand Leader)

From this chart, one may be able to fathom some basis in the NPPA’s argument that similar price variations in many branded-generics are of no-consequence for prescription drugs, as doctors decide the medicines that a patient would take. If doctors were influenced to prescribe high priced medicines, the patients would require paying more for those drugs, further increasing their Out of Pocket (OoP) expenses. It is also not uncommon that highest price brands are category-leaders too, as indicated in the table above.

Key lacunae in DPCO 2013:

  •  NLEM 2011 does not cover many combinations of TB drugs, a large number of important drugs for diabetes and hypertension, which I shall deliberate in just a bit.
  • Many other critical life saving medicines, such as, anti-cancer drugs, expensive antibiotics and products needed for organ transplantation have been left out of price control. In fact, the prices of a number of these drugs have reportedly gone up after the notification of DPCO 2013.
  • The government has now reportedly admitted in an affidavit filed before the Supreme Court that the market value and share of medicines covered by new DPCO 2013, as ‘Essential Drugs’, is a meager 18 per cent of the Indian Pharmaceutical Market (IPM).
  • As a result, DPCO 2013 based on NLEM 2011 undermines the entire objective of making essential drugs affordable to all.
  • All these lacunae in the current DPCO 2013 calls for a major revision of NLEM 2011. The Union Health Ministry has reportedly initiated steps to revise the list considering the existing market conditions and usage of drugs by the patients.

Invocation of a ‘Safeguard Provision’ in DPCO 2013:

Probably anticipating this scenario, a key safeguard provision was included in Para 19 of DPCO 2013, which reads as follows:

“Fixation of ceiling price of a drug under certain circumstances:

Notwithstanding anything contained in this order, the Government may, in case of extra-ordinary circumstances, if it considers necessary so to do in public interest, fix the ceiling price or retail price of any Drug for such period, as it may deem fit and where the ceiling price or retail price of the drug is already fixed and notified, the Government may allow an increase or decrease in the ceiling price or the retail price, as the case may be, irrespective of annual wholesale price index for that year.”

It now appears, NPPA could realize the key limitations of DPCO 2013, which was put in place rather hastily, in course of its implementation for over one year. Consequently, the patients’ long standing plight with high drug costs for many common life style diseases that are not featuring in NLEM 2011, prompted the the drug regulator in its above notification to bring 108 non-scheduled formulation packs of diabetic, cardiac and other drugs under Para 19 of DPCO 2013, catalyzing an outcry within the pharmaceutical industry in India. Out of these 108 formulation packs, 50 come under anti-diabetic and cardiovascular medicines.

Many important drugs are outside NLEM 2011:

Following is an example of the important cardiovascular and anti-diabetic drugs, which are not featuring in the NLEM 2011 and have now been brought under Para 19 of DPCO 2013:

Sitagliptin, Voglibose, Acarbose, Metformin hcl, Ambrisentan, Amlodipine, Atenolol, Atorvastatin, Bisoprolol, Bosentan,  Gliclazide, Glimepiride, Miglitol, Repaglinide, Pioglitazone, Carvedilol, Clopidogrel, Coumarin, Diltiazem, Dobutamine, Enalapril, Rosuvastatin, Simvastatin, Telmisartan, Terazosin, Torasemide, Trimetazidine and Valsartan, Enoxaparin, Eplerenone, Esatenolol, Fenofibrate, Heparin, Indapamide, Irbesartan, Isosorbide, Ivabradine, Labetalol, Levocarnitine, Lisinopril, Metolazone, Metoprolol, Nebivolol, Nicorandil, Nitroglycerin, Olmesartan, Prasugrel, Prazosin, Propranolol, Ramipril.

More reasons for industry outcry:

As reported in the media, the industry outcry reportedly highlights, besides what I have cited above, the following:

  • The price control order under Para 19 has been notified without any prior consultation with the industry.
  • The manner and method in which this unilateral decision has been taken is untenable.
  • The NPPA’s reasoning, about exploitative pricing by the industry as the reason for such a move, is incorrect given that every product category (in consideration) has approximately 30-70 brand options across price ranges for physicians and patients to choose from. The premise that products are not accessible due to affordability is misplaced. (The above table explains this point).
  • Disease environment was same when the government had cleared the policy and no “extraordinary circumstance” has emerged since then for the regulator to invoke Para 19 in public interest.
  • NPPA has exceeded its brief and gone into policy-making.

NPPA’s rationale for invoking Para 19 of DPCO 2013:

On the other hand, following reasons were cited by the NPPA for taking this decision:

  • The aim of DPCO 2013 is to ensure that essential drugs are available to all at affordable prices. The Supreme Court of India vide its Order dated November 12, 2002 in SLP no. 3668/2003 have directed the Government to ensure that essential and life saving drugs do not fall outside the ambit of price control, which has the force of law.
  • The Ministry of Chemicals and Fertilizers has delegated the powers in respect of specified paragraphs of the DPCO 2013, including paragraph 19, to be exercised by the NPPA on behalf of the Central Government in public interest.
  • There exist huge inter-brand price differences in branded-generics, which is indicative of a severe market failure as different brands of the same drug formulation identical to each other vary disproportionately in terms of price.
  • The different brands of the same drug formulation may sometimes differ in terms of binders, fillers, dyes, preservatives, coating agents, and dissolution agents, but these differences are not significant in terms of therapeutic value.
  • The main reason for market failure is that the demand for medicines is largely prescription driven and the patient has very little choice in this regard.
  • Market failure alone may not constitute sufficient grounds for Government intervention, but when such failure is considered in the context of the essential role that pharmaceuticals play in the area of public health, such intervention becomes necessary. This assumes greater significance, especially when exploitative pricing makes medicines unaffordable and beyond the reach of most, putting huge financial burden in terms of out-of-pocket expenditure on healthcare.
  • There is very high incidence of diabetes in the country, which affects around 61 million persons and the figure is expected to cross 100 million by 2030 as per the projection of the International Diabetes Federation; and it is estimated that every year nearly 1 million people in the country die due to diabetes and hypertension.
  • The drug regulator categorically mentions that In accordance with the guidelines issued by the NPPA, after approval of the ‘Competent Authority’, these price fixations of non-scheduled formulations under Para 19 of DPCO 2013 have been made.

Constituents of the same Ministry with conflicting view points:

Though both NPPA and the Department of Pharmaceuticals (DoP) come under Mr. Ananth Kumar, the new Minister of Chemicals and Fertilizers, both these constituents seem to have conflicting views on this important issue.

The pharma industry reportedly has sought the DoP’s intervention in this matter. The DoP, in turn, is learnt to have requested for the opinion of the Ministry of Law on using ‘Para 19′ provision in favor of public interest by the NPPA, invoking the power assigned to the drug regulator.

Another route for the industry is to legally challenge the said notification of the NPPA. However, one should keep in mind that a PIL is still pending before the Supreme Court questioning the validity DPCO 2013.

The arguments for and against:

Taking all the above points into consideration, the following two important areas of debate have now emerged on this NPPA notification, both in favor and also against:

A. Nothing has materially changed since DPCO 2013 was put in place:

Industry sources highlight that he following two points, that triggered NPPA’s invoking Para 19, have been there for a long time, including the period when the National Pharmaceutical Pricing Policy 2012 (NPPP 2012) was formulated:

-       Huge price differences among various branded generics of the same molecule

-       Cardiovascular ailments and diabetes have assumed endemic proportion

The other group counters that, if mistakes were made while formulating the NPPP 2012 because of intense pressure from vested interests in the erstwhile regime, why corrective actions can’t be taken now?

B. NPPA has exceeded its brief:

Industry sources question, how could NPPA possibly issue such notification of price reduction for non-scheduled formulations, as it is not a policy maker?

Others counter with equal zest: Of course NPPA is not a policy maker, it is a drug price regulator… And as a price regulator, it has implemented Para 19 of DPCO 2013 in the right earnest with the requisite powers conferred on it.

The impact:

According to published data, after the latest price revisions of diabetic and cardiovascular drugs, around 21 per cent of the anti-diabetic drug market faces the ceiling price, while the total market of cardiovascular medicines under price control is now estimated at around 58 per cent, with an overall adverse impact of reportedly Rs 550 Crore on the Indian Pharmaceutical Market. Overall price reduction for these two categories would range between 5 and 35 per cent, the average being around 12 per cent.

MNCs seem to have been hit harder:

An additional bad news for the MNCs is that the scope of Para 19 has now gone beyond the generic space and included even patented product.

For the first time a patented product Sitagliptin has been brought under the purview of Drug price Control order. This decision could give an unprecedented handle to the NPPA to regulate prices of even patented drugs through invocation of Para 19 of DPCO 2013 in future.  Moreover, many high-priced branded generics of MNCs are brand leaders too. Thus, in a relative yardstick, invocation of Para 19 would hit the MNCs harder, creating an uncertainty in their business environment.

Conclusion:

Drug prices are cheapest in India in dollar terms, claims the pharma industry. Does this claim hold much water? May be not, because it should be realistically seen in terms of Purchasing Power Parity (PPP) and Per Capita Income in India. In that sense many would argue that drug prices in India, on the contrary, are not cheaper at all.

Moreover, it is important to take into cognizance the huge inter-brand price differences in branded-generics due to a flawed system, as patients have no role to play in choosing a drug (within the same molecule) that they would need to buy. It is the doctor who is the sole prescription decision maker, where price, per se, may not play a very significant role.

In a situation like this, despite the anger of the industry, many would ponder whether or not NPPA’s engagement and reasoning, on behalf of the Government, to bring some sense in the madness of drug pricing in India be just wished away?

Cheaper medicines in general and generic drugs in particular, would always make the patients and the payor happy, leaving the industry mostly angry.

Keenly observing the recent series of events and taking note of a number of highly credible viewpoints, besides a couple of seemingly spoon-fed, ill-informed and run-of-the mill type editorials, this is about time for the stakeholders to judge without any bias what is right for the country, its people and of course the business to work out a win-win solution, dousing the likes of ‘Fire in The Blood‘, once and for 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. 

Union Budget 2014-15: Ticks The ‘Top Priority’ Boxes on Healthcare

Posted on by
Reply

The Union Budget 2014-15, especially for healthcare, needs to be analyzed against the backdrop of what the common patients have been going through in the healthcare space of India, over a period of time.

In that context, I would quote new sets of data from a consumer expenditure survey carried out reportedly by the National Sample Survey Organization (NSSO) in 2011-12, capturing the following disturbing facts for a period between 2000 and 2012:

  • Total family spend on medical bills increased by 317 percent in urban areas and 363 percent in rural areas for institutional care, while ‘at-home’ medical expenses increased by about 200 percent in both urban and rural areas.
  • For institutional care in hospitals and nursing homes, costs of tests increased by a hopping 541 percent in urban areas. Even for the at-home patient, costs of diagnostic tests increased by over 400 percent in the same period.
  • Increases in doctors’ fees in hospitals were 433 percent in rural areas compared to 362 percent in urban cities,
  • Hospital charges went up by 454 percent in rural areas compared to 378 percent in urban areas.
  • Medicine costs in hospitals went up by 259 percent in rural versus about 200 percent in urban areas.
  • The number of families that reported expenditure on hospitalization dipped from 19 percent to 14 percent in urban areas and from 19 percent to 15 percent in rural areas. Lack of proper facilities at accessible distances was reported to be a key factor in dipping cases of hospitalization in rural areas.
  • Conversely, families that spent on patient care at home increased from 61 percent to 75 percent in urban areas and from 62 percent to 79 percent in rural areas.

Against the above backdrop, within 45 days after coming to power, in his maiden Union Budget Proposal for 2014-15, the Finance Minister of India has ticked most of the right boxes of national health priorities for India. It may not be a dream budget covering everything and all expectations; nonetheless, the budget reflects the intent of the government for the coming years.

Without going into minute details of the Union Budget in general, in this article, I shall dwell on its impact on the healthcare arena of India, in particular.

Key focus areas for healthcare:

Broadly speaking in the healthcare space what impacts the stakeholders most, besides others, are the following and no responsible government can afford to wish these away:

  • Access
  • Affordability
  • Capacity Building
  • Innovation
  • Ease of Doing Business

Within these five key areas, the Finance Minister appears to have focused on the four, namely – ‘Access’, ‘Affordability’, Capacity Building and overall ‘Ease of Doing Business’ in India.

I shall deliberate on each of these points briefly in a short while.

An example of pre-budget expectations of a pharma industry association:

With the current healthcare issues of India in mind and the above priority areas in the backdrop, I read recently in a business magazine, the expectations of one of the pharma industry association’s from the Union Budget 2014-15. Without being judgmental, I am now quoting those points for you to evaluate any way you would like to.

The key expectations of that pharma association were reportedly as follows:

1. Weighted Tax Deduction on Scientific Research:

“Currently there are no specific tax benefits available to units engaged in contract R&D or undertaking R&D for group companies. Benefits should be provided for units engaged in the business of R&D and contract R&D by way of deduction from profits”.

2. Clarity on taxing giveaways to doctors:

“The ambiguity of the CBDT circular in this regard has created widespread concern in the industry. As an interim measure, the CBDT may consider constituting a panel with adequate representation from the industry and Departments of Revenue and Pharmaceuticals to define expenses as ‘ethical’ or ‘unethical’ and lay down guidelines for implementation”.

3. Tax holiday for healthcare infrastructure projects:

“It is necessary to extend the tax holiday benefit to hospitals set up in urban areas to enable companies to commit the substantial investments required in the healthcare sector”.

4. FDI – Ambiguity on coverage (e.g. whether allied activities such as R&D, clinical trials are covered):

“Currently, there are no specific guidelines laid down on whether the FDI provisions are applicable to pharmaceutical companies undertaking allied activities e.g. R&D, clinical trials etc”.

5. Excise Duty on Active Pharma Ingredients (APIs):

“The excise duty rate of APIs be rationalized and brought on par with pharma goods i.e. excise duty on the inputs (API) should be reduced from 12% to 6%. Alternatively, the Government may introduce a refund mechanism to enable Pharma manufacturers to avail refund of excess CenVat Credit”.

Other issues that this particular pharma association had penned in its pre-budget memorandum of 2014-15, were as under:

  • Adoption and implementation of uniform marketing guidelines (e.g. the Uniform Code of Pharmaceutical Marketing Practices circulated by the DoP)
  • Rationalization of clinical trial guidelines
  • Updating of governing laws such as Drugs & Cosmetic Act to reflect the current industry scenario
  • Stakeholder consultation while introducing and implementing drug pricing guidelines

Interesting?

This memorandum is indeed interesting…very interesting, especially when it is taken as comprehensive and well-publicized expectations from the Union Budget of a pharma association in India. This pre-budget memorandum is just an example. Other pharma associations also had put on the table, their respective expectations from the government in the budget.

I gave this example, just to highlight what the new government has actually delivered in the charted priority areas in its warm-up maiden budget proposal, for the benefit of all concerned.

Pragmatic healthcare push in the Union Budget 2014-15:

I felt good to note, within a very short period, the new government could fathom the real healthcare issues of the country, as mentioned above, and proposed to deploy the national exchequers’ fund, probably following the good old saying “put your money where your mouth is”.

Initiates a major step towards ‘Health for All’:

In that direction, the government in its budget proposal has given a new thrust towards ‘Health for All’. For this purpose, two critical initiatives have been proposed:

Free Drug Service:

Free medicines under ‘Health for All’ would also help addressing the issue of poor ‘Access’ to medicines in the country.

Free Diagnosis Service:

Besides ‘Access’, focus on diagnosis and prevention would consequently mean early detection and better management of diseases.

Thus, free medicines and free diagnosis for everyone under ‘Health for All’ would help reducing Out of Pocket (OoP) expenditure on healthcare in India quite significantly. It is worth reiterating that OoP of over 70 percent, which is one of the highest globally, after Pakistan, pushes millions of people into poverty every year in India. This proposal may, therefore, be considered as a precursor to Universal Health Care (UHC).

Increase in FDI cap on insurance sector:

The Finance Minister has proposed an increase in the limit of Foreign Direct Investment (FDI) in the insurance sector from the current level of 26 per cent to 49 per cent. However, the additional investment has to follow the Foreign Investment Promotion Board (FIPB) route. Though this change is not healthcare sector specific, nonetheless, it would ensure deeper penetration of health insurance, improving access to healthcare.

Other key 2014-15 Union Budget proposals:

Other key proposals include:

  • Universal access to early quality diagnosis and treatment to TB patients
  • Two National Institutes of Aging (NIA) at AIIMS, New Delhi, and Madras Medical College, Chennai. NIA aims to cater to the needs of the elderly population which has increased four-fold since 1951. The number of senior citizens is projected to be 173 million by 2026.
  • Four more AIIMS-like institutions in Andhra Pradesh, West Bengal, Vidarbha in Maharashtra and Purvanchal in UP, for which Rs 500 Crore has been set aside.
  • Additional 58 government medical colleges. The proposal also includes 12 government medical colleges, where dental facilities would also be provided.
  • 15 Model Rural Health Research Centers (MHRCs) in states for better healthcare facilities in rural India.
  • HIV AIDS drugs and diagnostic kits have been made cheaper through duty rationalization.
  • For the first time, the budget proposal included central assistance to strengthen the States’ Drug Regulatory and Food Regulatory Systems by creating new drug testing laboratories and strengthening the 31 existing ones.

Focus on biotechnology:

The Finance Minister proposed a cluster-led biotech development in Faridabad and Bangalore, as well as agro-biotech clusters in Mohali, Pune and Kolkata.  It is a well-established fact that a cluster approach ensures that academia, researchers and the companies engage closely to create strong synergies for innovation and growth.

The announcement of Rs 10,000 Crore funds for ‘startups’ is also expected to help ‘startups’ in the biotech space.

Withdrawal of exemption of a service tax:

As a part to widen the service tax net, the Finance Minister has proposed withdrawal of exemption on service taxes in case of technical testing of newly developed drugs on humans. This has attracted ire of the pharma industry, just as any withdrawal of tax exemption does.

Re-arranging the proposals under high impact areas:

As indicated above, if I now re-arrange the Union budget proposals 2014-15 under each high impact areas, the picture would emerge as follows:

Access improvement:

- “Health for All” – Free drugs and diagnostic services for all would help improving ‘Access’ to healthcare by manifold.

- Universal access to early quality diagnosis and treatment to TB patients would again help millions

- Deeper penetration of health insurance and its innovative usage would also help a significant number of populations of the country having adequate ‘Access’ to healthcare.

Affordability:

- HIV AIDS drugs and diagnostic kits have been made cheaper through duty rationalization.

- “Health for All” – Free drugs and diagnostic services for all would help answering the issue of ‘Affordability’, as well.

Capacity building:

- Two National Institutes of Aging (NIA) at AIIMS, New Delhi, and Madras Medical College, Chennai.

- Four more AIIMS-like institutions in Andhra Pradesh, West Bengal, Vidarbha in Maharashtra and Purvanchal in UP, for which Rs 500 Crore is being set aside.

- Additional 58 government medical colleges, including 12 colleges where dental facilities would also be provided.

- 15 Model Rural Health Research Centers (MHRCs) in states for better healthcare facilities in rural India.

- Central assistance to strengthen the States’ Drug Regulatory and Food Regulatory Systems by creating new drug testing laboratories and strengthening the 31 existing state laboratories.

Innovation:

- Cluster-led biotech development

Ease of doing business:

- Numbers of common pan-industry initiatives have been enlisted in the general budget proposals, many of which would improve overall ‘Ease of Doing Business’ in the healthcare sector too.

A concern:

Despite all these, there is a concern. In the Union Budget proposals 2014-15, the health sector attracted a total outlay of Rs 35, 163 Crore, which is an increase from the last year’s Rs 33, 278 Crore. I wonder, whether this increase would be sufficient enough to meet all healthcare commitments, as it does not even take inflation into account.

Conclusion:

Taking all these into consideration, the Union Budget proposals for 2014-15, in my view, are progressive and reformists in nature. I am quite in sync with the general belief that the idea behind any financial reform of a nation is not to provide discretionary treatment to any particular industry.

With that in mind, I could well understand why this budget has not pleased all, including the constituents of the healthcare industry and would rather consider it only as a precursor to a roadmap that would follow in the coming years.

However, given the monetary and fiscal constraints of the country, the Union Budget 2014-15, with its key focus on healthcare ‘Access’, ‘Affordability’, ‘Capacity Building’ and overall ‘Ease of Doing Business’ in India, sends right signals of moving towards a new direction, for all. Opportunities for ‘Innovation’ and growth in the biotechnology area have also been initiated, which expectedly would be scaled up in the coming years.

Currently, the general belief both globally and locally is that, this new government has the enthusiasm, will and determination to ‘Walk the Talk’ to make India a global force to reckon with, including its healthcare space.

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. 

“Kickbacks And Bribes Oil Every Part of India’s Healthcare Machinery” – A National Shame?

Posted on by
Reply

“Corruption ruins the doctor-patient relationship in India” - highlights an article published in the well-reputed British Medical Journal (BMJ) on 08 May 2014. The author David Berger wrote, “Kickbacks and bribes oil every part of the country’s healthcare machinery and if India’s authorities cannot make improvements, international agencies should act.”

The author reiterated the much known facts that the latest in technological medicine is available only to those people who can pay for its high price. However, the vast majority of the population has little or no access to healthcare, and whatever access they have is mostly limited to substandard government care or to quacks, which seem to operate with near impunity. He further points out that “Corruption is rife at all levels, from the richest to the poorest”. It is a common complaint both from the poor and the middle class that they don’t trust their doctors from the core of hearts. They don’t trust them to be competent or to be honest, and live in fear of having to consult them, which results in high levels of doctor shopping.

Dr. Berger also deliberated on the widespread corruption in the pharmaceutical industry, with doctors bribed to prescribe particular drugs. Common stories usually doing the rounds that the decision makers in the hospitals are being given top of the range cars and other inducements when their hospitals sign contracts to prescribe particular expensive drugs preferentially.

The article does not fail to mention that many Indian doctors do have huge expertise, are honorable and treat their patients well. However, as a group, doctors generally have a poor reputation.

Until the profession along with the pharma industry is prepared to tackle this malady head-on and acknowledge the corrosive effects of medical corruption, the doctor-patient relationship will continue to lie in tatters, the paper says.

The saga continues through decades – unabated:

The above worrying situation in the space of medical treatment in India refuses to die down and continues since decades.

The article published in the British Medical Journal (BMJ) over a decade ago, on January 04, 2003 vindicates this point, when it brings to the fore, “Health care is among the most corrupt services in India”.

This article was based on a survey released by the India office of the international non-governmental organization ‘Transparency International’. At that time, it ranked India as one of the 30 most corrupt countries in the world. The study covered 10 sectors with a direct bearing on people’s lives, where the respondents rated the police as the most corrupt sector, closely followed by healthcare.

Medical Council of India (MCI) is responsible for enforcing the regulations on medical profession. Unfortunately, the MCI itself is riddled with corruption, fueled by the vested interests. As the first BMJ article indicates,   Subsequently, there has been controversy over the surprise removal, on the day India was declared polio-free, of the health secretary Keshav Desirajus, possibly in response to his resistance to moves to reappoint Desai to the reconstituted MCI.

Another point to ponder: Quality of Doctor – MR interactions

It is a well-established fact that the ethics, values and belief in pharmaceutical sales and marketing are primarily derived from the ethics, values and belief of the concerned organization.  Field staff systems, compliance, accountability, belief, value and culture also flow from these fundamentals. Thus, considering the comments made in the BMJ on the pharma companies, in general, let me now also deliberate on the desired roles of the Medical Representatives (MR) in this area.

It is well known that MRs of the pharma players exert significant influence on the prescribing practices of the doctors and changing their prescribing patterns too. At the same time, this is also equally true that for a vast majority of, especially, the General Practitioners (GPs), MRs are the key source of information for various drugs. In tandem, several research studies also indicate that doctors, by and large, believe that pharma companies unduly influence them.

Theoretically, MRs should be properly trained to convey to the target doctors the overall profile – the efficacy, safety, utility, precautions and contra-indications of their respective products. Interestingly, the MRs are trained by the respective pharma companies primarily to alter the prescribing habits of the target doctors with information heavily biased in favor of their own drugs.

As a result, range of safety, precautions and contra-indications of the products are seldom discussed, if not totally avoided, putting patients at risks by creating an unwarranted product bias, especially among GPs, who depend mainly on MRs for product information. Thus, the quality of product communication is mainly focused on benefits rather than holistic – covering all intrinsic merits/demerits of the respective brands in a professional manner.

Considering the importance of detailing in delivering the complete product information primarily to the GPs, there is a critical need for the pharma companies to train and equip the MRs with a complete detailing message and yet be successful in winning the doctors’ support.

This issue also needs to be properly addressed for the interest of patients.

“Means” to achieve the goal need to change: 

Globally, including India, many pharma players have not been questioned, as yet, just not on the means of their meeting the financial goals, but also the practices they follow for the doctors. These often include classifying the physicians based on the value of their prescriptions for the specific products. Accordingly, MRs are trained to adopt the respective companies’ prescribed ‘means’ to influence those doctors for creating a desirable prescription demand. These wide array of so-called ‘means’, as many argue, lead to alleged ‘bribery’/’kickbacks’ and other malpractices both at the doctors’ and also at the pharma companies’ end.

To address this issue, after the Chinese episode, GlaxoSmithKline (GSK) has reportedly announced that by the start of 2016 it will stop paying doctors to speak on its behalf or to attend conferences, to end undue influence on prescribers.

The announcement also indicated that GSK has planned to remove individual sales targets from its sales force. This means that MRs would no longer be paid according to the number of prescriptions they solicited from the doctors met by them.

Instead, GSK introduced a new performance related scheme that will reward the MRs for their technical knowledge, the quality of the service they deliver to support improved care of patients, and the overall performance of GSK’s business. The scheme is expected to start in some countries effective January 2014 and be in place globally by early 2015.

Further, GSK underscored that the latest changes were “designed to bring greater clarity and confidence that whenever we talk to a doctor, nurse, or other prescriber, it is patients’ interests that always come first.”

This is indeed a refreshing development for others to imbibe, even in India.

Capturing an Indian Example:

Just to cite an example, a couple of years ago Reuters in an article titled “In India, gift-giving drives drug makers’ marketing” reported that a coffee maker, cookware and vacuum cleaner, were among the many gifts for doctors listed in an Abbott Healthcare sales-strategy guide for the second quarter of 2011 in India, a copy of which was reviewed by Reuters.

It is interesting to note from the report, even for an antibiotic like Nupod (Cefpodoxime), doctors who pledge to prescribe Abbott’s branded drugs, or who’ve already prescribed certain amounts, can expect some of these items in return, the report mentioned.

Since decades, media reports have highlighted many more of such instances. Unfortunately, the concerned government authorities in India refused to wake-up from the deep slumber, despite the alleged ruckus spreading like a wild fire.

Self-regulation by the industry ineffective:

This menace, though more intense in India, is certainly not confined to the shores of this country. As we all know, many constituents of Big Pharma have already been implicated in the mega pharma bribery scandal in China.

Many international pharmaceutical trade associations, which are primarily the lobbying bodies, are the strong votaries of self-regulations by the industry. They have also created many documents in these regards since quite some time and displayed those in their respective websites. However, despite all these the ground reality is, the charted path of well-hyped self-regulation by the industry to stop this malaise is not working.

The following are just a few recent examples to help fathom the enormity of the problem and also to vindicate the above point:

  • 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.
  • 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.
  • 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 of overseas doctors and other health officials to prescribe medicines.
  • 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.

Pricing is also another important area where the issue of both ethics and compliance to drug regulations come in. The key question continues to remain, whether the essential drugs, besides the patented ones, are priced in a manner that they can serve the needs of majority of patients in India. I have deliberated a part of this important issue in my earlier blog post titled “Is The New Market Based Pricing Model Fundamentally Flawed?”

There are many more of such examples.

Stakeholders’ anguish:

Deep anguish of the stakeholders over this issue is now being increasingly reverberated on every passing day in India, as it were. It had also drawn the attention of the patients’ groups, NGOs, media, Government, Planning Commission and even the Parliament.

The Department Related Parliamentary Standing Committee on Health and Family Welfare in its 58th Report strongly indicted the Department of Pharmaceuticals (DoP) on this score. It observed that the DoP should take prompt action in making the ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’ mandatory so that effective checks and balances could be brought-in on ‘huge promotional costs and the resultant add-on impact on medicine prices’.

Despite deplorable inaction by the erstwhile Government on the subject, frequent reporting by Indian media has triggered a national debate on this issue. A related Public Interest Litigation (PIL) is also now pending before the Supreme Court for hearing in the near future. Its judicial verdict is expected to usher in a breath of fresh air around a rather stifling environment for the patients.

Let us now wait and see what action the new minister of the Modi Government takes on this issue.

A prescription for change:

Very recently, Dr. Samiran Nundy, Chairman of the Department of Surgical Gastroenterology and Organ Transplantation at Sir Ganga Ram Hospital and Editor-in-Chief of the Journal of Current Medicine Research and Practice, has reportedly exposed the widespread (mal) practices of doctors in India taking cuts for referrals and prescribing unnecessary drugs, investigations and procedures for profit.

Dr. Nundy suggested that to begin with, “The Medical Council of India (MCI), currently an exclusive club of doctors, has to be reconstituted. Half the members must be lay people like teachers, social workers and patient groups like the General Medical Council in Britain where, if a doctor is found to be corrupt, he is booted out by the council.”

Conclusion:

Efforts are now being made in India by some stakeholders to declare all malpractices related to pharma industry illegal through enactment of appropriate robust laws and regulations, attracting exemplary punishments to the perpetrators.

However, enforcement of MCI Guidelines for the doctors and initiatives towards enactment of suitable laws/regulations for the pharma industry, like for example, the ‘Physician Payments Sunshine Act’ of the United States, have so far been muted by the vested interests.

If the new Modi government too, does not swing into visible action forthwith, this saga of international disrepute, corruption and collusion in the healthcare space of India would continue in India, albeit with increasing vigor and probably in perpetuity. This would, undoubtedly, sacrifice the interest of patients at the altar of excessive greed and want of the vested interests.

This new government, as most people believe, has both the will and wherewithal to hold this raging mad bull of pharma malpractices by the horn, ensuring a great relief and long awaited justice for 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. 

Moving Up The Generic Pharma Value Chain

Posted on by
Reply

June 2014 underscores a significant development for the generic drug exporters of India. Much-delayed and highly expected launch of generic Diovan (Valsartan) is now on its way, as Ranbaxy has reportedly received US-FDA approval to launch the first generic version of this blood pressure drug in the United States.

As deliberated in my earlier blog titled “Big Pharma’s Windfall Gain From Indian Pharma’s Loss, Costs American Patients Dear”, delay in launch of the generic equivalent of Diovan caused a windfall gain for Novartis from US$ 1.7 billion US sales of this drug last year, instead of usual declining turnover of an innovative molecule post patent expiry.

The generic version of Diovan (Valsartan) is estimated to contribute around US$ 200 million to Ranbaxy’s sales and US$ 100 million to its profit after tax, during the exclusive sale period. Against these numbers, delay in the launch of generic Diovan has reportedly cost payers and consumers in America around US$ 900 million in the first 18 months.

Since four Ranbaxy manufacturing facilities in India are now facing US-FDA ‘import bans’ due to violations of ‘Good Manufacturing Practices’ of the American regulator, its Ohm Laboratories unit located in New Jersey has been allowed to make generic Valsartan for the US.

Go for gold: 

Hopefully, Ranbaxy would soon get similar approvals from the US drug regulator for its ‘first to launch’ generic versions of Nexium (AstraZeneca) and Valcyte (Roche), as well.

It is worth mentioning that around 90 percent price erosion would take place with intense competition, as soon the period of exclusivity for such ‘first to launch’ generics gets over.

Nonetheless, this is indeed a very interesting development, when the global generic pharmaceutical segment is reportedly showing signals of a tough chase for overtaking the branded pharmaceuticals sector in terms of sales turnover too.

India has a huge a stake in this ball game, as it supplies around 30 to 40 percent of the world’s generic medicines and is well poised to improve its pharma exports from around US$ 15 billion per year to US$ 25 billion by 2016. Since 2012, this objective has remained an integral part of the country’s global initiative to position India as the “pharmacy to the world.”

However, considering the recent hiccups of some Indian pharma majors in meeting with the quality requirements of the US-FDA, though this target appears to be a challenging one for now, the domestic pharma players should continue to make all out efforts to go for the gold by moving up the generic pharmaceutical value chain. In this context, it is worth noting that penetration of the generic drugs in the US is expected to increase from the current 83 percent to 86-87 percent very shortly, as the ‘Obamacare’ takes off with full steam.

Moving up the value chain:

In the largest pharma market of the world – the United States, global generic companies are increasingly facing cutthroat price competition with commensurate price erosion, registering mixed figures of growth. Even in a situation like this, some companies are being immensely benefited from moving up the value chain with differentiated generic product launches that offer relatively high margin, such as, specialty dermatologicals, complex injectibles, other products with differentiated drug delivery systems and above all biosimilars.

As a consequence of which, some Indian generic companies have already started focusing on the development of value added, difficult to manufacture and technology intensive generic product portfolios, in various therapy areas. Just to cite an example, Dr. Reddy’s Laboratories (DRL) is now reportedly set to take its complex generic drug Fondaparinux sodium injection to Canada and two other emerging markets.

Thus, those Indian pharma companies, which would be able to develop a robust product portfolio of complex generics and other differentiated formulations for the global market, would be much better placed in positioning themselves significantly ahead of the rest, both in terms of top and the bottom lines.

One such key opportunity area is the development of a portfolio of biosimilar drugs – the large molecule proteins.

Global interest in biosimilars:

According to the June 2014 report of GlobalData, a leading global research and consulting firm, the biosimilars industry is already highly lucrative. More than 100 deals involving companies focused on the development of biosimilars have been completed over the past 7 years, with a total value in excess of US$10.7 billion.

GlobalData further states, there are a number of factors driving the initiative toward global adoption of biosimilars, from austerity measures and slow economic growth in the US, to an aging population and increasing demand for healthcare in countries, such as Japan.

The costs of biosimilars are expected to be, at least, 20 to 30 percent lower than the branded biologic therapies. This still remains a significant reduction, as many biologics command hundreds of thousands of dollars for 1 year’s treatment.

According to another media report, biosimilars are set to replace around 70 percent of global chemical drugs over the next couple of decades on account of ‘safety parameters and a huge portion of biologic products going off patent’.

Biosimilar would improve patient access:

Although at present over 150 different biologic medicines are available globally, just around 11 countries have access to low cost biosimilar drugs, India being one of them. Supporters of biosimilar medicines are indeed swelling as the time passes by.

It has been widely reported that the cost of treatment with innovative and patented biologic drugs can vary from US$ 100,000 to US$ 300,000 a year. A 2010 review on biosimilar drugs published by the Duke University highlights that biosimilar equivalents of novel biologics would improve access to such drugs significantly, for the patients across the globe.

Regulatory hurdles easing off:

In the developed world, European Union (EU) had taken a lead towards this direction by putting a robust system in place, way back in 2003. In the US, along with the recent healthcare reform process of the Obama administration, the US-FDA has already charted the regulatory pathway for biosimilar drugs, though more clarifications are still required.

Not so long ago, the EU had approved Sandoz’s (Novartis) Filgrastim (Neupogen brand of Amgen), which is prescribed for the treatment of Neutropenia. With Filgrastim, Sandoz will now have at least 3 biosimilar products in its portfolio.

Key global players:

At present, the key global players are Sandoz (Novartis), Teva, BioPartners, BioGenerix (Ratiopharm) and Bioceuticals (Stada). With the entry of pharmaceutical majors like, Pfizer, Sanofi, Merck, Boehringer Ingelheim and Eli Lilly, the global biosimilar market is expected to be heated up and grow at a much faster pace than ever before. Removal of regulatory hurdles for the marketing approval of such drugs in the US would be the key growth driver.

Globally, the scenario for biosimilar drugs started warming up when Merck announced that the company expects to have at least 5 biosimilars in the late stage development by 2012.

Most recent global development:

A key global development in the biosimilar space has taken place, just this month, in June 2014, when Eli Lilly has reportedly won the recommendation of European Medicines Agency’s Committee for Medicinal Products for launch of a biosimilar version (Abasria insulin) of Sanofi’s Lantus insulin. This launch would pave the way for the first biosimilar version of Sanofi’s top-selling drug clocking a turnover of US$7.8 billion in 2013. Eli Lilly developed Abasria with Boehringer Ingelheim of Germany.

In May 2014, Lantus would lose patent protection in Europe. However, biosimilar competition of Lantus in the US could get delayed despite its patent expiry in February, as Sanofi reportedly announced its intention of suing Eli Lilly on this score.

Global Market Potential:

According to a 2011 study, conducted by Global Industry Analysts Inc., worldwide market for biosimilar drugs is estimated to reach US$ 4.8 billion by the year 2015, the key growth drivers being as follows:

  • Patent expiries of blockbuster biologic drugs
  • Cost containment measures of various governments
  • Aging population
  • Supporting legislation in increasing number of countries
  • Recent establishment of regulatory pathways for biosimilars in the US

IMS Health indicates that the US will be the cornerstone of the global biosimilars market, powering a sector worth between US$ 11 billion and US$ 25 billion in 2020, representing a 4 percent and 10 percent share, respectively, of the total biologics market.

The overall penetration of biosimilars within the off-patent biological market is estimated to reach up to 50 percent by 2020.

Challenges for India:

Unlike commonly used ‘small molecule’ chemical drugs, ‘large molecule’ biologics are developed from living cells using very complex processes. It is virtually impossible to replicate these protein substances, unlike the ‘small molecule’ drugs. One can at best develop a biologically similar molecule with the application of high degree of biotechnological expertise.

According to IMS Health, the following would be the key areas of challenge:

High development costs:

Developing a biosimilar is not a simple process but one that requires significant investment, technical capability and clinical trial expertise. Average cost estimates range from US$ 20-100 million against much lesser cost of developing traditional generics, which are typically around US$ 1-4 million.

Fledgling regulatory framework:

In most markets apart from Europe, but including the United States, the regulatory framework for biosimilars is generally still very new compared to the well-established approval process for NCEs and small-molecule generics.

Intricate manufacturing issues:

The development of biosimilars involves sophisticated technologies and processes, raising the risk of the investment.

Overcoming ‘Branded Mentality’:

Winning the trust of stakeholders would call for honed skills, adequate resources and overcoming the branded mentality, which is especially high for biologics. Thus, initiatives to allay safety concerns among physicians and patients will be particularly important, supported by sales teams with deeper medical and technical knowledge. This will mean significant investment in sales and marketing too.

Indian business potential:

The biosimilar drugs market in India is expected to reach US$ 2 billion in 2014 (Source: Evalueserve, April 2010).

Recombinant vaccines, erythropoietin, recombinant insulin, monoclonal antibody, interferon alpha, granulocyte cell stimulating factor like products are now being manufactured by a number of domestic biotech companies, such as, Dr. Reddy’s Laboratories, Lupin, Biocon, Panacea Biotech, Wockhardt, Glenmark, Emcure, Bharat Biotech, Serum Institute, Hetero, Intas and Reliance Life Sciences.

The ultimate objective of all these Indian companies is to get regulatory approval of their respective biosimilar products in the US and the EU either on their own or through collaborative initiatives.

Domestic players on the go:

Dr.Reddy’s Laboratories (DRL) in India has already developed Biosimilar version of Rituxan (Rituximab) of Roche used in the treatment of Non-Hodgkin’s lymphoma.  DRL has also developed Filgastrim of Amgen, which enhances production of white blood cell by the body and markets the product as Grafeel in India. DRL has launched the first generic Darbepoetin Alfa in the world for treating nephrology and oncology indications and Peg-grafeel, an affordable form of Pegfilgrastim, which is used to stimulate the bone marrow to fight infection in patients undergoing chemotherapy. The company reportedly sold 1.4 million units of its four biosimilars, which have treated almost 97,000 patients across 12 countries. Besides, in June 2012, DRL and Merck Serono, of Germany, announced a partnership deal to co-develop a portfolio of biosimilar compounds in oncology, primarily focused on monoclonal antibodies (MAbs). The partnership covers co-development, manufacturing and commercialization of the compounds around the globe, with some specific country exceptions.

Another Indian pharmaceutical major Cipla, has reportedly invested Rs 300 Crore in 2010 to acquire stakes of MabPharm in India and BioMab in China and announced in June 19, 2014 collaboration with Hetero Drugs to launch a biosimilar drug with Actroise brand name for the treatment of anemia caused due to chronic kidney disease. Actorise is a biosimilar of ‘Darbepoetin alfa’, which is marketed by US-based Amgen under the brand Aranesp.

In 2011, Lupin reportedly signed a deal with a private specialty life science company NeuClone Pty Ltd of Sydney, Australia for their cell-line technology. Lupin reportedly would use this technology for developing biosimilar drugs in the field of oncology. Again, in April 2014, Lupin entered into a joint venture pact with Japanese company Yoshindo Inc. to form a new entity that will be responsible both for development of biosimilars and obtaining marketing access for products in the Japanese market.

In November 2013, The Drug Controller General of India (DCGI) approved a biosimilar version of Roche’s Herceptin developed jointly by Biocon and Mylan.

In June 2014, Ipca Laboratories and Oncobiologics, Inc. of USA reportedly announced the creation of an alliance for the development, manufacture and commercialization of biosimilar monoclonal antibody products.

Many more such initiatives reportedly are in the offing.

Oncology becoming biosimilar development hot spot:

Many domestic Indian pharmaceutical companies are targeting Oncology disease area for developing biosimilar drugs, which is estimated to be the largest segment globally with a value turnover of around US$ 60 billion growing over 17 percent.

As per recent reports, about 8 million deaths take place all over the world per year due to cancer.

Indian Government support:

In India, the government seems to have recognized that research on biotechnology has a vast commercial potential for products in human health, including biosimilars, diagnostics and immune-biological, among many others.

To give a fillip to the Biotech Industry in India the National Biotechnology Board was set up by the Government under the Ministry of Science and Technology way back in 1982. The Department of Biotechnology (DBT) came into existence in 1986. The DBT currently spends around US$ 300 million annually to develop biotech resources in the country and has been reportedly making reasonably good progress.

The DBT together with the Drug Controller General of India (DCGI) has now prepared and put in place ‘Regulatory Guidelines for Biosimilar Drugs’ in conformance with the international quality and patient safety standards. This is a big step forward for India in the arena of biosimilar drugs.

In June 2014, under the advanced technology scheme of Biotechnology Industry Partnership Program (BIPP), the DBT has reportedly invited fresh proposals from biotech companies for providing support on a cost sharing basis targeted at development of novel and high risk futuristic technologies mainly for viability gap funding and enhancing existing R&D capacities of start-ups and SMEs in key areas of national importance and public good.

However, the stakeholders expect much more from the government in this area, which the new Indian government would hopefully address with a sense of urgency.

Conclusion: 

According to IMS Health, biosimilar market could well be the fastest-growing biologics segment in the next few years, opening up oncology and autoimmune disease areas to this category of drugs for the first time ever. Moreover, a number of top-selling biologic brands would go off patent over the next five years, offering possibilities of reaping rich harvest for the biosimilars players of the country. Critical therapy areas such as cancer, diabetes and rheumatoid arthritis are expected to spearhead the new wave of biosimilars.

While moving up the generic pharma value chain, Indian pharma players desiring to encash on the emerging global biosimilars opportunities would require to do a thorough analysis, well in advance, to understand properly the key success factors, core value propositions, financial upsides and risks attached to investments in this area.

Indian companies would also need to decide whether moving ahead in this space would be through collaborations and alliances or flying solo would be the right answer for them. Thereafter would come the critical market access strategy – one of the toughest mind games in the long-haul pharma marketing warfare.

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.