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India’s Drug Quality Concerns: Is Light At The End of The Tunnel In Sight Now?

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A brief chronology of some recent events on issues pertaining to patient-health-safety with drugs, as captured below, would possibly generate a mixed feeling for many. This includes a serious concern about, especially generic drug quality safety standards in India, on the one hand, and a ray of hope in the tools available to patients to know more about drugs that they have been prescribed. In this article, I shall dwell on this area. My intent is to bring to the fore the vital point – Is the beginning of the end of a long dark tunnel in sight now?

 A chronology of some recent events:

As reported on July 16, 2023, while talking on the subject, “Pharmaceutical Quality — What are we missing?”, the Drug Controller General of India (DCGI) made a notable comment. He, reportedly, said that the poor quality of drugs exported from India to foreign countries had tarnished the image of the country in the international market. The DCGI further added, pharmaceutical quality has become a subject of discussion on the global platform and the international community has started doubting whether India is capable of making quality pharmaceuticals for the global population.

He underscored, “We boast of our country as the pharmacy of the world, but it seems that it is too difficult to maintain the top position for long. If the position is lost, it will be painful and difficult to restore the faith of the international community. Further, we will lose the opportunity to serve the whole humanity of the world. The responsibility of the loss will not only fall on the manufacturers, but equally on all the stakeholders.”

Alongside, a news report on August 01, 2023, brings some hope in this regard, which I shall elaborate in course of this deliberation.  

A long saga of events: 

Yes, as it appears from the following backdrop:

Over the last several decades, there have been many instances where international drug regulators, including the U.S. FDA, expressed concerns about the quality standards of Indian manufactured drugs. These concerns have generally been related to specific manufacturing facilities – ranging from top domestic manufacturers to smaller ones, raising an uncomfortable apprehension – does India produce ’World-Class’ medicines, for all? 

About a decade ago, one of the most well-known cases was in 2013 when the U.S. FDA issued an import alert on products from the Ranbaxy Laboratories facility in India due to data integrity and manufacturing quality issues. This led to significant scrutiny of other Indian pharmaceutical companies as well. Issues related to data integrity, product quality, and good manufacturing practices lead to inspections, warning letters, import alerts, or other regulatory measures.

It continued. For example, around that time, even Sun Pharmaceutical Industries, one of India’s largest pharmaceutical companies, received a warning letter from the U.S. FDA in 2015 (Source: U.S. FDA). Similarly, Wockhardt, another top Indian pharmaceutical company, faced regulatory scrutiny in 2013 when the U.S. FDA issued an import alert and seized products manufactured at their facility in India. The FDA raised concerns about violations of good manufacturing practices and data integrity issues at the facility. This led to recalls of several products and affected the company’s reputation. (Source: Reuters).

As the juggernaut kept moving, on  December 08, 2016, I wrote in this blog, “Even Smaller Countries Now Question Indian Drug Quality Standard.” On March 04, 2023, the Mint reported, “Death of children in Gambia linked to consumption of India made cough syrups, as the US CDC report states.”  

As I write, the veracity of impact of such incidences remains as serious, if not more, although instances seem to be much fewer. For instance, as reported by Reuters on August 01, 2023: “India has directed Riemann Labs, a manufacturer linked to cough syrup deaths in Cameroon, to stop manufacturing activities, the country’s health ministry said in a statement on Tuesday.”

Thus, On May 27, 2019, I again wrote about: “Drug Quality Imbroglio And ‘Culture of Bending Rules’ in India” in this blog– and that was not the first time I flagged this menace in the country against patient safety.

Even big Indian pharma continued to be struggling with GMP issues:

Big Indian pharma companies are also involved in issues related to lapses in high drug quality standards even recently. Such as, even in 2021, Dr. Reddy’s Laboratories, received a warning letter from the U.S. FDA after an inspection of their manufacturing facility in India. The letter cited violations of good manufacturing practices, data integrity issues, and inadequate investigations of product complaints. Source: The Economic Times). Just a year before, in 2020, the U.S. FDA noted several observations related to good manufacturing practices and quality control. (Source: Moneycontrol).

Drug regulators fight the fire as and when it comes up:

Both the state drug regulators and the Drug Controller General of India (DCGI) fight the fire at the respective manufacturing locations, as and when these come up. No significant actions on the ground for patient safety against such drugs were visible on the ground.  

For example, as reported on August 03, 2023: “Following recent incidents of several countries reporting deaths allegedly linked to “contaminated” India-manufactured drugs, the government has set a deadline for mandatory implementation of the Good Manufacturing Practices (GMP) which were revised in 2018, bringing them on par with World Health Organization (WHO) standards.”

The government ponders making technological interventions for patients:

There are early signs of the government trying to embrace technology for patients’ safety. For example on November 17, 2022, the Union Health Ministry released a gazette notification no 823Eimplementing the Drugs (Eighth Amendment) Rules, 2022, making it mandatory for pharmaceutical companies to affix a QR code on the pack of top 300 formulations from August 1, 2023. A QR code, as reported, will contain the unique product identification code, generic name of the drug, brand name, name and address of the manufacturer, batch number, date of manufacture, expiry date and manufacturing license number.

This was part of the Ministry’s ‘track and trace’ mechanism, and of course, an intent at that time. However, a specific timeline for implantation has now been clearly enunciated.

This time it’s a two-pronged action:

For the first time, I think, a two-pronged action has been announced by the government – an enabling action for patients on the one hand against a strong punitive measure for the errant drug manufacturers on the other:

According to the above gazette notification of the Union Ministry of Health, on August 01, 2023, the central government announced stricter regulations for drug authentication and transparency by imposing mandatory QR codes on drugs. This will be effective from the same day. Patients will now be able to check the QR code on their medicines to ensure their authenticity. 

On August 03, 2023, the government set a deadline for adopting WHO-standard good manufacturing practices for drug manufacturers. Companies with a turnover of over Rs 250 crore will have to implement the revised GMP within six months, while medium and small-scale enterprises with turnover of less than Rs 250 crore will have to implement it within a year. 

Conclusion:

Besides all important patient safety, there are, at least, three other important factors for manufacturing high quality drugs for all and on an ongoing basis, sans lapses, as below:

  • Patients’ trust in the healthcare system relies on the availability of reliable medication. When patients have confidence in the drugs they are prescribed, they are more likely to comply with treatment regimens, leading to better health outcomes. 
  • A strong pharmaceutical sector that focuses on safe and effective drugs can foster economic growth by generating revenue, creating jobs, and attracting investments. It can also stimulate research and development efforts.
  • A reputation for producing quality drugs can boost India’s position as a global leader in pharmaceuticals, attracting international collaborations and partnerships.

Which is why, from the entire perspective, as above, amid India’s drug quality concerns, I reckon, one may still tend to wonder now – Is a light in sight now at the end of the dark and long tunnel? 

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.

 

On The Flip Side of Pharma Industry: A Saga of Perennial Contradictions

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Awesome contribution in the battle against multiple diseases, is obviously the primary facet of the pharma industry. However, on its flip side, one would witness a saga of numerous contradictions. Some of these exist perennially in well-protected opaque cocoons, regardless of what recent research data reveal. The consequences of which leaves a detrimental impact on the patient’s health interests, eventually turning into highly contentious issues, in the socio-political milieu of recent times.

While there are many such contradictions involving the pharma industry, this article will endeavor to understand just one inherent dispute. This is related to the impact of high R&D expenditure on drug prices. It assumes importance, especially at a time, when the world’s most influential pharma trade organization continues arguing in favor of the dictum – high new drug prices are driven by mind-boggling cost of drug innovation, as R&D spending keep shooting north. Incidentally, many others challenge this assertion backed by robust data, claiming it’s not so, actually.

Thus, the question that comes up, if high R&D cost prompts high drug prices, what happens when this major cost of new drug innovation comes down, as is, apparently, happening now. A proper resolution of this contradiction by ushering in transparency in this area, is important to safeguard a critical health interest of many patients. A recent research report, followed by several other important developments in this area, exposes this contradiction, probably more than ever before.  

Some recent reports revealing the contradictions:

To drive home the point of contradictions, I shall cite a few references below, from a pool of many others. For example, one such report of September 26, 2019 unfolded: ‘The cost to bring a new drug to market has decreased to under US$ 2Billion’. This was announced by Clarivate Analytics plc  while releasing the “2019 Centre for Medicines Research (CMR) International Pharmaceutical R&D Factbook.”

Interestingly, another article had sharply contradicted the above, presenting a different story altogether. Quoting the Tufts University Center for the Study of Drug Development, it highlighted that it costs US$ 2.6 billion growing at 8.5 percent annually. However, adding an estimate of post-approval R&D costs increases, the cost estimate to US$ 2870 million. Many estimated, it would take pharma companies more than 15 years of average sales to reach breakeven.

Curiously, a different research paper, titled ‘Comparison of Sales-Income and Research and Development Costs for FDA-Approved Cancer Drugs Sold by Originator Drug Companies,’ published by the JAMA Network Open on January 04, 2019 concluded quite in line with the ‘2019 CMR International Pharmaceutical R&D Factbook.’ It found, ‘Cancer drugs, through high prices, have generated incomes for the companies far in excess of research and development costs; lowering prices of cancer drugs and facilitating greater competition are essential for improving patient access, health system’s financial sustainability, and future innovation.’

Again, contradicting the above, one more article – ‘The Link Between Drug Prices and Research on the Next Generation of Cures,’ published ITIF (Information Technology & Innovation Foundation) on September 09, 2019, touted to: ‘Put simply, drug companies must make significant profits on their best-selling drugs in one generation in order to reinvest in the next generation.’

The saga of contradiction continues.

A glimpse at the current scenario:

While trying to understand the inherent contradiction in the space of cost of drug innovation by analyzing the available data, let us examine the current scenario, of course with reasons. Going by the oft-repeated justification that high R&D expenses drive the drug prices up, the converse scenario would be – a dip in the R&D expenditure should lead to a reduction in medicine prices, commensurately.

But this is unlikely to happen – drug prices won’t possibly come down due to voluntary measures of the drug manufacturers. As various recent developments indicate, it will be clear in the course of this discussion that the same justification won’t be jettisoned anytime soon.

Pharma CEOs do acknowledge that they have some role to play in helping lower drug prices. However, they continue defending prevailing high new drug prices by highlighting, their multibillion-dollar investments in R&D are responsible for advances in treatments of many serious ailments, such as cancer, hepatitis C, schizophrenia and autoimmune diseases.

This was again contradicted by another BMJ Research Study of October 23, 2019, which concludes: ‘A review of the patents associated with new drugs approved over the past decade indicates that publicly supported research had a major role in the late stage developments of at least one in four new drugs, either through direct funding of late stage research or through spin-off companies created from public sector research institutions. These findings could have implications for policy makers in determining fair prices and revenue flows for these products.’ Nevertheless, in the midst of it, signs of a shift in focus of many pharma companies in this area, is clearly discernible. 

Signs of a shift in R&D focus are clearly discernible:

This gets well- reflected in the “2019 Centre for Medicines Research (CMR) International Pharmaceutical R&D Factbook.” As the report unfolds, one of the basic shifts is a change in focus on R&D targets. Until recently, the research focus of most companies was on Noncommunicable Diseases (NCD) such as, Parkinson’s disease, autoimmune diseases, strokes, most heart diseases, most cancers, diabetes, chronic kidney disease, osteoarthritis, osteoporosis, Alzheimer’s disease, and others. Whereas, today there has been an increased focus on rare diseases.  

What does it signify?

It obviously signifies, most companies are now trying to launch steeply priced niche products for rare diseases. This includes complex biologic products, gene therapy, personalized medicine and the likes. Which is why, a majority of current new drug approvals, targets smaller patient populations. For example, between 2010 and 2018, the number of addressable patients per drug approval decreased by 15 percent, as the above report revealed.

The bottom-line, therefore, is with the low hanging fruits already been plucked, many pharma players don’t seem to consider targeting innovation of reasonably priced mass market products. It has already happened with antibiotics and would now probably happen with several NCDs.

Two main drivers for this shift:

The two main drivers for this shift, resulting an increase in drug approvals, and significant reduction in cost per new molecular entity (NME), may be summarized as follows:

  • Increased focus on rare diseases. Of the 57 NMEs launched in 2018, 22 had an orphan drug designation, indicating that they targeted rare disease area.
  • Increased activity of smaller pharmaceutical companies. In 2018, as high as 74 percent of drug launches were developed by companies with an R&D spend of US$ 700 million to US$2 billion. Major pharma companies (R&D spend of greater than US$2 billion) accounted for just 26 percent of drug launches.

A good news!

The increase in new drug approvals driven by smaller pharma companies is a good news and also encouraging. This suggests, becoming a big company with deep pocket is no longer a prerequisite to bring an innovative drug to the market. On the contrary, making R&D programs more efficient is the name of the game, today.

Changing pharma investment strategies:

As is evident from the CMR International Factbook, drug manufacturers’’ investment strategies are also undergoing a makeover. In the R&D domain, external innovation, in general, is now playing a more critical role. Perhaps, more than ever before. In the first half of 2019 alone, global spend for pharma M&A and licensing activities was, reportedly, around US$140 billion. Interestingly, it outpaced projected 2019 R&D spend by more than 60 percent.

Do high R&D cost impact drug prices and vice versa?

This brings us to the key question: Does the high cost of R&D impact drug prices and vice versa? Or, it is being over-hyped as a tool to justify high drug prices. There are umpteen instances to believe so – for example, the world’s best-selling drug – Humira of AbbVie. According to the Wall Street Journal (WSJ) of September 28, 2017, the initial U.S. patent for Humira expired in December 2016, but the additional patents expire in the 2020s.

Interestingly, according to other reports, AbbVie has collected more than US$115 billion in global Humira sales since 2010. In 2018 alone its sales amounted to US$ 19.9 billion. The report reiterates, ‘AbbVie has made and will continue to make a lot of money from Humira.’ From these facts, one can presume that AbbVie’s R&D expenditure or the product acquisition cost, has long been recovered, but still doesn’t seem to have any significant impact on the drug price.

Pharma CEOs continue to repeat the same argument:

While testifying at a hearing of the Senate Finance Committee, pharma CEOs had to confront with a Senators’ question - “Prescription drugs did not become outrageously expensive by accident, Drug prices are astronomically high because that’s where pharmaceutical companies and their investors want them.” However, acknowledging that their prices are high for many patients for high R&D expenditure, the company chiefs tried to deflect blame onto the insurance industry, government and middlemen known as pharmacy benefit managers.

The CEOs also highlighted the rebates given on list prices to benefit patients. However, the reality is, under the current system, savings from rebates are not consistently passed through to patients in any form. Interestingly, despite such scenario, pharma CEOs don’t want the government negotiating drug prices directly. It’s apparent that none of their reasonings were found to be the genuine reasons for high drug prices, even by the US Senators.

Thus, pharma’s points of justification for high drug prices have not changed, over a long period of time. On the contrary, shifting greater focus on the R&D of rare diseases, where the number of patients is much less, the CEOs seem to be bolstering their same argument on a different ground, despite reducing R&D costs.

Surfaces a glaring contradiction:

Presenting the current situation from the drug industry perspective, the article titled, ‘Drug Prices and Innovation’, published in the Forbes Magazine on June 20, 2019, emphasized on some interesting points.

It said: ‘In 2018 return on investment in drug discovery/development were 1.9 percent, far below the 10.5 percent cost-of-capital - the rate-of-return the industry must provide to compete for capital with similar investments.’  The article also emphasized: ‘Under the current pricing regime, the expected returns from drug discovery do not justify the investment. They have not done so since 2010 and are expected to turn negative by 2020.’ It further added, big pharma, despite one of the highest rates of R&D spending of any industry, chronically fails to fund research sufficient to support adequate growth and returns to the average drug don’t cover the cost of development.

On the other hand, according to a presentation by CVS Health that cited Macrotrends.net as its source,pharmaceutical manufacturers’ profit margins have reportedly exceeded 26 percent for the last three years and 22 percent for the past 10 years.

This brings out again, the glaring contradiction between what is being highlighted and what is actually happening in the pharma business. Lack of transparency in this area of the drug industry, is believed to be the root cause of this confusion among many.

Conclusion:

As it has been recognized the world over, the high new drugs prices are an issue over the contentious argument of ‘high R&D expenditure’ being the ‘root cause’.  It is, therefore, imperative for the stakeholders to demand transparency in this area. If finding a solution to this health-related issue is considered critical, without further delay, this needs to be expeditiously addressed.

As the saying goes, once the disease is diagnosed accurately, zeroing in on an effective treatment becomes easier. Let me hasten to add, for new, innovative and patented drugs, the situation in India is generally no different. Thus, there is no scope for any contradiction in this area, whatsoever. As the saying goes, once the disease is diagnosed accurately, zeroing in on an effective treatment becomes easier.

Voluntary implementation of ‘responsible’ drug pricing policies, by pharma manufacturers themselves, has been given a long rope. Time is running out now. If this does not happen soon, government control of drug prices will be essential, just as is being contemplated in the United States – the ‘capital’ of the free-pricing world. Moreover, it has been well documented in several studies that price control won’t jeopardize drug innovation, as pharma manufacturers will have to come out with innovative new products and treatments – event for survival of the business.

Saving lives – more lives, alongside making reasonable profits in the business, remain the primary facet of the pharma industry. However, the flip side of it, revealing a perennial saga of contradictions, such as one we discussed above, raises concerns of their being perceived as profiteering with drug prices, by many. Such practices go not only against patients’ health interest, but also negates the core purpose of existence of the industry – surely, endangering long term survival of this business model – as the modern technology unleashes its mesmerizing power 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.

 

MNCs to Challenge MNC Patents in India: Boon for Patients?

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Close on the heels of a reasonably successful patent challenge by the German pharma Multinational Corporation (MNC) Fresenius Kabi for the breast cancer drug Tykerb of GlaxoSmithKline (GSK) in India, another MNC Mylan, with its headquarter in the United states, has explicitly expressed its plan to challenge frivolous and weak patents of MNCs, in conformance to the Indian Patents Act, to provide less expensive generic drugs to patients.

This is indeed another interesting development, which could possibly culminate into robust, cleverly crafted and fiercely competitive business strategies of many other MNCs, revolving around patent challenges in India, for business excellence in the country.

Mylan develops new products in India:

Mylan is now reportedly working with the local Indian player Biocon to develop a strong new product pipeline, which would include a portfolio of biosimilar drugs. The advanced breast cancer drug Trastuzumab (Herceptin) of Roche is just one of many in the list. Mylan has also expressed its intent to market ‘Herceptin’ at a price, which will be affordable to many more cancer patients of India.

It is worth mentioning that some other domestic Indian companies like, Reliance Life Sciences and BDR Pharma are reportedly working on generic Trastuzumab (Herceptin), besides some South Korean bio-pharma players.

Mylan has also inked an agreement with Biocon to develop and market an insulin drug derived from the global major Sanofi’s expensive patented product Lantus.

All these developments apparently augur well for India.

Weak patent?…Recapitulating Herceptin saga in india:

Though Roche decided to discontinue its patent rights for Herceptin in India, it reportedly lost this patent earlier in Europe. This vindicates the views of experts that Herceptin patent was weak, as it would probably not be able to clear the litmus test of a stringent patent scrutiny. The report, therefore, argues that core reason for withdrawal of Herceptin patent in India by Roche cannot be attributed, even remotely, to the ‘weak IP ecosystem’ in India.

To extend the patent right for Herceptin, in early September 2013, Roche reportedly announced that the European Commission has approved a new formulation of its breast cancer drug Herceptin, which allows the medicine to be administered more quickly.

A tough market, yet difficult to ignore:

For global innovator pharma majors, India still remains a tough market to crack, despite strong overseas political pressures of various types, intense collective and individual lobbying efforts and deployment of expensive global ‘Public Relations’ firms working in full steam.

Their strong success factors of the yesteryears in this area, which worked so well across the world, are getting mostly negated by the ‘evolving patient friendly IP laws’ of the emerging economies.

Considering the vast business potential of the pharmaceutical market of 1.2 billion people in India, it is now envisaged by many, more like-minded MNCs will gradually jump into this fray with similar intent of patent challenges in conformance with the Indian Patents Act 2005.

If this scenario assumes a cascading effect on a broader canvas, ultimate beneficiary will be the ailing patients, having much greater access to more affordable newer drugs for many dreaded diseases, like cancer.

Other countries too tightening up the patent laws:

To provide less-expensive generic drugs to patients, other countries also have started following India to leash astronomical prices for new drugs, especially for life threatening and intensely debilitating ailments. China has reportedly strengthened its compulsory licensing provisions already for dealing with costly drugs, paving the way to force entry of generic drugs in the Chinese market well before patent expiry.

In 2012, Indian Patent Office, in a path breaking decision granted Compulsory License (CL) to a local company, Natco Pharma, to manufacture the patented kidney-cancer drug, Nexavar of Bayer reportedly at a cost of Rs. 8,800 (around US$ 176) for a month’s therapy of 120 capsule against Bayer’s price of Rs. 280,000 (around US$ 5,600) for the same.

This is the first-ever case of CL granted in India thus far to make life saving drugs affordable to patients.

On September 3, 2012, the Indonesian government took the unprecedented step of overriding the patents on seven HIV and hepatitis treatments, citing urgent need to improve patient access. These drugs were reportedly beyond the reach of most of the patients in Indonesia.

Thailand has also used this provision more than once, and countries like, Brazil has reportedly threatened quite often for invoking CL during price negotiations of such drugs with global pharma majors.

Winds of Change in South Africa:

Now South Africa has also exhibited its firm intent to have a tight leash on the grant of pharmaceutical patents of all types.

A recent report indicates that the Department of Trade and Industry (DTI) of the Government of South Africa is calling for comments on its proposed ‘National Policy on Intellectual Property’ by October 4, 2013, which if implemented, would significantly curb patent evergreening and expand production of generics.

The same report mentions that at present, South Africa does not examine patent applications. Instead, the system allows pharmaceutical companies to obtain multiple patents on the same drug, even for inventions, which do not fall under the country’s definition of innovation. This allows the pharma players to extend their respective patent lives, blocking competition and charging exorbitant prices.

The report also points out, while in 2008, South Africa granted 2,442 pharmaceutical patents, Brazil approved only 278 in the 5 years between 2003 and 2008.

Patents revoked in India:

Since November 2010 following 8 MNC patents have been revoked in India after respective patent challenges:

  • Combigan and Ganfort of Allergan (for specified eye conditions)
  • Tykerb of GSK (for breast cancer)
  • Sutent of Pfizer (for liver and kidney cancer)
  • Pegasys of Roche (for hepatitis C)
  • Iressa of AstraZeneca (Anti-cancer)
  • Anti-asthma FDC aerosol suspension of Merck & Co (Anti-asthma)
  • Dulera of Novartis (Anti-asthma)

China and Brazil revoked patents: 

In August 2013, just about a year after China introduced the country’s amended patent law, its State Intellectual Property Office (SIPO) has reportedly revoked the patent on HIV/AIDS and hepatitis B drug – Viread (tenofovir disoproxil fumarate) of Gilead Science Inc.

Aurisco, the largest manufacturer of Active Pharmaceutical Ingredients (APIs) in China, challenged this patent. The ground of patent revocation was that the drug lacked novelty and was not entitled to protection.

In 2008 Brazil also declared the patent of tenofovir invalid. It is worth mentioning that tenofovir of Gilead is the third-best-selling drug of the company, clocking sales of US$ 849 million in 2012.

Top 10 ‘jaw-dropping’ most expensive medicines of the world:

No. Name Disease Price US$ /Year
1. ACTH Infantile spasm 13,800,00
2. Elaprase Hunter Syndrome 657,000
3. Soliris Paroxysmal nocturnal hemoglobinuria 409,500
4. Nagalazyme Maroteaux-Lamy Syndrome 375,000
5. Folotyn T-Cell Lymphoma 360,000
6. Cinryze Hereditary Angioedema 350,000
7. Myozyme Pompe 300,000
8. Arcalyst Cold Auto-Inflammatory Syndrome 250,000
9. Ceredase / Cerezyme Gaucher Disease 200,000
10. Fabrazyme Fabry Disease 200,000

(Source: Medical Billing & Coding, February 6, 2012)

The good news is, protests against such ‘immoral and obscene pricing’ have started mounting, which are expected to have a snow-balling effect in the years ahead.

Mounting global protests:

Probably due to this reason, drugs used for the treatment of rare diseases are being reported as ‘hot properties for drug manufacturers’, all over the world.

The above report highlighted a changing and evolving scenario in this area.

In 2013, the Dutch Government had cut the prices of new enzyme-replacement therapies, which costs as high as US$ 909,000. Similarly, Ireland has reduced significantly the cost of a cystic fibrosis drug, and the U.K. rejected a recommendation to expand the use of a drug for blood disorders due to high costs.

Soon, the United States is also expected to join the initiative to reduce high prices of orphan drugs as both the government and private insurers increasingly come under the cost containment pressure.

Emerging markets – the Eldorado:

Competition within MNCs is expected to be even more fierce in the coming years as the developed markets continue to slow down, as follows, due to various reasons:

No. Country

USD Bn.

% Share

Val. Gr.
Global Pharma Market

961

100

5
USA

329

38

-1
Japan

112

13

0
China

82

10

24
Germany

42

5

-6
France

37

4

-8
Brazil

29

3

6
Italy

27

3

-8
13. India

14

1

11

Source: IMS Knowledge Link Global Sales 2012

This compelling scenario is prompting a change in the dynamics of competition within  MNCs in the emerging pharmaceutical markets. The intents of Fresenius Kabi and Mylan, as enunciated above, I reckon, are just very early signals of this challenge of change.

All these would probably help turning the tide in favor of a seemingly win-win solution to bring down the prices of patented medicines at an affordable level, improving their access to vast majority of patients in the world.

Scope for more patent challenges in India:

Quoting a study, a recent media report highlighted that only 3% of the patent applications filed in India since 2006 were challenged. The study concluded:

“This demonstrates that given the various resource constraints faced by the Indian patent office, one can never really be sure of the patent quality unless the patent is challenged.”

Therefore, this process is expected to gain momentum in the years ahead as more MNCs join the fray of patent challenges, though driven primarily by business interests, but nevertheless, would benefit the patients, in the long run.

Further, as indicated in my previous columns, a study indicates that 86 pharmaceutical patents granted by the IPO post 2005 are not breakthrough inventions but only minor variations of existing pharmaceutical products and demanded re-examination of them.

Since, most of the above patents have not been challenged, as yet, the quality of these patents cannot be ascertained beyond any reasonable doubt, as we discuss today. If challenged, some experts envisage, these patents may not be able to stand the scrutiny of section 3(d) of the Indian Patents Act.

In that sense, if the pharma MNCs with deep pockets, challenge these patents, there stands a good chance of making generic equivalents of those products at affordable prices for the Indian patients.

However, considering different degree and elements of market entry barriers, it appears, most of the patent challenges in India by the MNCs would probably be for biologics, as compared to small molecule chemicals.

Flow of newer drugs in the Indian market is now irreversible:

Taking stock of the emerging scenario, it appears, India will continue to see newer drugs coming into the market at a lower price in the years ahead, come what may. This flow seems to be unstoppable due to the following reasons:

  • Stricter implementation of Section (3d) of the Patents Act in India will ensure that NCEs/NMEs not conforming to this act will not be granted patents. In that case, those products will be open to generic copying by all, in India. Thus, in the absence of a market monopoly situation and fuelled by intense price competition, the patients will have access to those newer drugs.
  • More patent challenges of already granted patents could lead to revocation of more number of patents paving the way for entry of their generic equivalents.
  • If any MNC decides not to launch a new product in India having obtained its patent from the IPO, after three years, as per the statute, the same product becomes a candidate for CL in the country.
  • If any patented new product is launched without ‘reasonably affordable price’, again as per statute, the possibility of applications for CL coming to the IPO from the local players will loom large.

Hence, considering all these points, it appears, if the new products do not conform to the Indian Patents Act and are not launched with responsible pricing, the possibility of their generic entry at much lower prices is almost inevitable.

Conclusion: 

Legal battle is expensive, even in India, and patent challenges are perhaps more expensive. All those new products, which are not patentable in India or may otherwise be challenged against other statutes of the Patents Act, will carry risks of getting caught in protracted litigations or generic competition.

MNCs with deep pockets coming forward with such intent, though may be based purely on their business interest in India, would ultimately offer spin-off benefits of affordable pricing, especially, to the patients suffering from life threatening and fast debilitating illnesses like, cancer.

That said, do all these developments unravel yet another way to improve access to newer medicines in India, signaling a boon for patients?

By: Tapan J. Ray

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

 

FDC Saga: Defiant Manufacturers, Sloppy Regulators and Humongous Inaction

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“TO SIN BY SILENCE WHEN THEY SHOULD PROTEST MAKES COWARDS OF MEN”       – Abraham Lincoln

The ghost of untested, irrational and even of bizarre kind of Fixed Dose Combination (FDC) drugs, which continue to be launched, promoted, prescribed and sold freely across the length and breadth of India, has started haunting the Ministry of Health of India, yet again, in 2013. 

Though the issue originated decades ago, in 1988 appropriate ‘Rule’ of the Drugs and Cosmetics Act of India was amended suitably to have a firm regulatory grip over this situation. Despite this much awaited amendment, the situation almost went astray with incessant market entry of a large number untested FDC medicines of dubious medical rationale.

A free for all situation, as it were, in the FDC arena, continued to be facilitated by blatant laxity on the part of, especially, the state drug regulators by allowing unfettered market entry of such drugs, ignoring the CDSCO directive.

On the other hand, the Central Drugs Standard Control Organization (CDSCO), despite its statutory powers,  continued to suffer from humongous inaction untill the issue resurfaced again in 2007 and then of course, now in 2013.

The WHO Model:

The 2005 ʹProcedure to update and disseminate the WHO Model List of Essential Medicines, Criteria for Selection’ includes the following statement regarding Fixed Dose Combination products (FDCs):

ʺMost essential medicines should be formulated as single compounds. Fixed‐dose combination products are selected only when the combination has a proven advantage over single compounds administered separately in therapeutic effect, safety, and adherence or in delaying the development of drug resistance in malaria, tuberculosis and HIV/ AIDS.ʺ

Thus, FDCs:

  • Need to demonstrate clinical efficacy and safety beyond the individual drugs when given alone.
  • Need to ‘demonstrate bioequivalence of the single combined dose unit with the components administered in the same doses separately but concomitantly’.

‘Adherence’ aspect of WHO Model for FDCs is also important. Problems with ‘adherence’ could lead to inadequate and inconsistent dosing, which in turn could lead to development of drug resistance.

With robust and unquestionable medical rationale, FDCs are expected to provide superior efficacy and improved compliance without causing any untoward risk to patients.

A major disadvantage:

However, one of the major disadvantages with the FDCs is lack of flexibility in adjusting dose of individual ingredients, even if it is required for some patients. Internationally, most popular example is the FDCs of antiretroviral drugs for HIV infected patients like, Combivir, Trzivir, Kaletra etc.

Interestingly, in India there are FDCs for almost all disease areas from allergic disorders to Wolf-Parkinson-White syndrome (exaggerated), as it were.

Market attractiveness for FDCs in India: 

The domestic market for FDCs is very large and growing much faster, in sharp contrast to the western world. The following table will vindicate this point:

% Share

Drug

2008

2009

2010

2011

Plain

55

55

55

54
Combinations

45

45

45

46

Domestic Market: USD 13 Billion; MAT Apr 2013

Source:IMS

Thus, because of growing market demand, pharmaceutical companies in India tend to market FDCs of all different permutations and combination, at times even crossing the line of any ‘sound medical rationale’. For this reason, we find in the website of ‘Central Drugs Standard Control Organization’ (CDSCO), the banned list of so many FDCs.

A messy regulatory situation:

Introduction of new FDCs does not only warrant a ‘sound medical rationale’ but also ‘strict conformance to all prescribed regulatory requirements’ for patients’ interest. 

To check unfettered market introduction of potentially harmful FDCs, the Ministry of Health issued a Notification in September 1988, including FDCs in Rule 122 E of the Drugs & Cosmetics Rules (D&CR) 1945.

In effect, it removed the powers of the State FDAs to give manufacturing or marketing approval of FDCs. After the notification was issued, all manufacturers/marketers of all new FDCs are required to apply only to the Drug Controller General of India (DCGI) under Rule 122E of the D&CR 1945 as a new drug, along with the stipulated fees by way of a Treasury Challan.

Since this entire process entails appropriate regulatory data generation, besides  time and expenses involved, the above ‘Rule’ was continuously and deliberately broken and manufacturing and marketing approvals for various types of FDCs falling under ‘new drug’ category were regularly sought and granted by the State Drug Controllers.

Many believe that the State FDAs were equally responsible for knowingly flouting the Law, as were the pharmaceutical manufacturers.

Patients’ safety – the foremost concern:

Despite serious concerns expressed by a Parliamentary Standing Committee, this complicity resulted in the market being flooded with ‘irrational combinations’ which posed a real threat to patients’ interest and safety. The State FDAs were reminded of the notification by the earlier DCGI.

294 FDCs were banned by the DCGI in 2007. Thereafter, the important issue of patients’ interest and safety got converted into a legal quagmire, as many FDC manufacturers chose to go to the court of law to protect their business interest and also managed to obtain a ‘Stay’ order from the Madras High Court. The matter is still subjudice.

Be that as it may, those 294 FDCs banned by the Ministry of Health of India on health and safety grounds continue to be promoted, prescribed and sold to patients across India without any hindrance, whatsoever.  

Untangling the messy knot:

As the issue got entangled into prolonged litigations, the CDSCO took initiative of resolving this contentious issue again in 2009 with the help of an expert committee, involving the manufacturers.

This subcommittee cleared 48 FDCs under ‘similar FDCs already approved’, after discussing the merits and demerits, including pharmacodynamics, pharmacokinetics, side effects, dosage, medical rationale etc. of each ingredient and the combinations. The decision of the Sub Committee was then submitted to the Drug Technical Advisory Board (DTAB).

After formal approval of DTAB, these combinations are construed to be new drugs and any company wishing to market/manufacture the formulation would require submitting its Application in Form 44 to the DCGI to get approval in Form 45.

This decision was expected to send a clear signal to all concerned that resorting to any form of shortcuts to bypass strict adherence to prescribed regulatory requirements, could seriously jeopardize patients’ interest and safety. The same process was subsequently followed for the balance 142 FDCs, as well.

Thereafter, a special committee was again appointed by the CDSCO in 2013 to look into this matter in a holistic way. However, such sporadic knee-jerk reactions have failed to deliver any tangible results in this area – not just yet.

The saga continues:

Even after the above critical decision of the DTAB the saga still continues.

In March 2013, by a written reply, the Minister for Health and Family Welfare reportedly informed the Lok Sabha (the lower House of the Parliament) that in twenty three cases of new FDC, licenses have been granted by the State Licensing Authorities (SLAs) without the mandatory approval of the DCGI and action will be taken in all these cases.

However, no one seems to know, as yet, what action the Government has taken against those errant officials.

Current scenario:

Recently, the Directorate General of Health Services (DGHS) by a notification to State Drug Controllers has reportedly ordered all manufacturers of new FDC products, licensed locally before October 2012 without CDSCO permission, to submit safety and efficacy data prior to 30 August 2013.

This decision of DGHS has created a furore within the concerned FDC manufacturers, yet again, the possible outcome of which is yet to be ascertained.

The State Drug Controllers had issued manufacturing licenses for these FDCs prior to October 2012. At that time concerned manufacturers were given 18 months time period to prove efficacy and safety of these medicines to the DCGI. Regrettably, as per the above report, the DCGI has confirmed that he has received hardly any response from the FDC manufacturers till date on this regulatory requirement.

CDSCO has also stated that manufacturers, who will fail to submit the required data by the deadline run the risk of having their products banned from the market.

Before this, the State Drug Controllers were informed about this requirement on January 15, 2013.

At this point it is worth mentioning, the DCGI in October 2012 had reportedly also barred the State Drug Controllers from granting manufacturing licenses to pharmaceutical companies under brand names of the drugs, directing them to strictly issue licenses under generic name of the molecule. Additionally, he also asked the state licensing authorities not to grant licenses to combination drugs, which are technically ‘new drugs’ and fall within the domain of DCGI only.

Conclusion:

This logjam with FDCs certainly cannot continue in perpetuity, neither should such regulatory sloppiness be acceptable to any right thinking stakeholder.

All blatant violations of Drugs and Cosmetics Act of India must be stopped forthwith and the violators be brought to justice without delay. Patients’ health interest, as required by the drug regulators, is non-negotiable.

The order of DGHS asking all manufacturers of new FDCs, licensed locally before October 2012 without CDSCO permission, to submit safety and efficacy data prior to 30 August 2013, should not follow recently reported Pioglitazone type of volte face, once again, under similar outside pressure.

It is high time now for the Government to bring the unending saga of  irrational and harmful FDCs, orchestrated by defiant manufacturers, encouraged by sloppy regulators and catalyzed by humongous systemic inaction, to its logical conclusion, for patients’ sake. 

By: Tapan J. Ray

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

 

 

‘Old is Always Not Gold’: The Saga of Uncertainty on the New Drug Policy Continues

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Along with the initiation of globalization process of India in 1991, many significant reform oriented steps are being taken by the Government for the pharmaceutical industry as its growth booster.

In tandem with gradual reduction in the span of price control, the government also ensured dereservation of specified drugs only for the public sector and opened it up to the private sector, as well.  During this period, foreign investments through automatic route was first raised from 49 to 74 percent and then to 100 percent.New product patent regime with the introduction of the Patents Act 2005 ushered in a paradigm shift in the pharmaceutical landscape of India, encouraging the domestic industry to invest in R&D. In line with these reforms, weighted deduction on in-house research and development  facility was increased to 200 percent to cover expenditure towards R&D, patent filing, regulatory approvals and clinical trials, over a period of time.

With creation of an enabling growth environment, the government helped the domestic industry catapult itself as a major global force to reckon with, in the generic pharmaceutical space of the world.

Unfortunately, in recent times, the policy makers of the country instead of flooring the gas pedal keeping public health interest in mind, seems to have decided to shift its foot on the brake, creating great uncertainty within the industry.

Recent developments: A cause of concern

As reported by the media the recommendations of the Group of Ministers (GoM) on the Draft National Pharmaceutical Pricing Policy 2011 (NPPP 2011) was scheduled for discussion in the Union Cabinet meeting on November 8, 2012.

Meanwhile, the Ministry of Finance (MoF) reportedly sent its views on the same to the Department of Pharmaceuticals (DoP) and also the Prime Minister’s Office (PMO) advocating continuation of the current cost plus pricing policy.

As a result, the media  reported that the NPPP 2011 was eventually removed from the Cabinet Meeting agenda of November 8, 2012, as the PMO referred the policy back to the GoM requesting the Cabinet Secretariat to mandate the Ministers to hold a fresh meeting (now scheduled on November 21, 2012), consider the view of MoF and get back to the Union Cabinet with a final proposal so that an appropriate decision may be taken by the Cabinet on the new Drug Policy before November 27, as stipulated by the Supreme court of India.

With this, the saga of uncertainty on the new Drug Policy continues unabated.

Finance Ministry views: Continue with cost plus formula:

The key recommendations of the Ministry of Finance as reported are as follows:

  1. The proposal to limit the NPPP to control prices of only formulations leaving aside bulk drugs is not ‘supported’.
  2. Top priced brands in many therapy areas are also the brand leaders. As a result, high prices of such drugs while calculating the ceiling prices would push up prices of many low priced drugs significantly.
  3. The current system which is a cost plus system is adequate to cover all legitimate costs for a manufacturer, particularly when the costing is being done annually and should be continued.
  4. The same cost plus system should also apply to other formulations where additional therapeutic elements will be added. Related incremental cost in those cases can be considered to determine the ceiling price of combination formulations.
  5. The Maximum Retail Prices (MRP) for all NLEM 2011 drugs may be fixed by the NPPA accordingly and the pharmaceutical companies would be free to price these NLEM products at any level below the MRP.
  6. Annual indexation of price with WPI is not supported. The cost analysis should determine the quantum of increase.
  7. Data related to prices and market shares should be collected from sources other than IMS even for drugs covered by them. The methodology to be followed by NPPA for evaluating IMS data and for collecting the data for medicines from other sources should be included in the NPPP.
  8. A phased movement towards 100 percent generic manufacturing, as recommended by the Ministry of Health (MoH), for all drugs under the NLEM should be considered.

The industry view: Have a Balanced Approach

As I understand, the industry feels that the Finance Ministry recommendations are continuation of the same old policy, which has failed to address the key issue of providing affordable and quality healthcare, including medicines, to all, since over last four decades.

However, the pharmaceutical industry has supported the recommendations of the GoM on NPPP 2011 as they reckon it will be a positive step to ensure affordability for the patients, ensure adequate availability and at the same time will not cripple the growth of the industry.

As recommended by the GoM, the draft NPPP 2011 would take the Weighted Average Price (WAP) of all brands with greater than 1% market share by volume as the ceiling price. This formula should improve patient affordability as Weighted Average Price (WAP) of all brands will be most representative of the Indian pharmaceutical market.

The GoM-recommended pricing policy, the industry feels, will certainly have an adverse impact on the pharmaceutical industry as price controls will be expanded and prices will now be based on roughly 91 percent of the pharmaceutical market by value. This will result in over 20 percent price reduction in 60 percent of the NLEM medicines. More importantly, the policy will also achieve the objectives of the Government in ensuring essential medicines are available to those who need these most, by managing prices in the retail market and balancing industry growth.

The existing cost-plus policy, industry leaders argue, has significant limitations and has adversely impacted industry and patients, for example, by shifting bulk drug production out of India (to countries like China), reducing innovation in cost control medicines, limiting new introductions and failing to help medicines reach patients located in rural India.

Many stakeholders have written about the negative implications of a cost-plus pricing methodology. Too stringent price control norms would stifle the pharmaceutical industry and may result in serious shortages of essential drugs in the country. An apt example in this case is that the existing price control regime under DPCO 1995 has caused manufacturing to shift away from the country about 27 notified bulk drugs under price control.  In fact, only 47 out 74 bulk drugs under DPCO 1995 are now produced in the country. Such a situation needs, the industry articulates, to be prevented from happening in the future.  It is quite likely the focus of the national pharma industry may shift then to export, defeating the primary purpose of the new policy.

Moreover, the WHO in its feedback on the draft NPPP 2011 welcomed the intent to move away from cost-plus pricing as it has been abandoned elsewhere. Even developing countries typically have no price control on private market (non-government, non-social insurance reimbursement) sales of pharmaceuticals.

Based on a survey of developing countries similar to India, it is seen that the countries that do have price control for private market drugs, employ market based methods e.g. in Brazil cost-based price regulations do not exist outside of government reimbursement, social insurance reimbursement schemes.  In short, essential medicines predominantly seem to be reimbursed either via government or social insurance or provided free by the government.

Since the Government has recognized that a pricing policy alone cannot ensure access to quality medicines, over the last few months, it has undertaken several steps in the right direction to improve access and affordability of medicines.

The Government has already announced that it will spend over US $5.4 billion to provide essential medicines free to patients in government-run hospitals and clinics. The Government is also in the process of putting in place a central procurement authority to purchase medicines for its use, which, if operated on a level playing field, can realize economies of scale and create the conditions necessary to drive down costs through competition. All such policies can enhance access to medicines and also promote healthy competition in the industry. Both the outcomes cannot be achieved with any price control regime alone.

Expanding access to quality medicines at affordable prices is in everyone’s best interest, and the industry seems to have expressed its willingness and keenness to engage in the development and implementation of policies that will make medicines in India more affordable and accessible to all. 

Pharmaceutical industry expressed its support to the key principles of the new pricing policy, essentiality of drugs and market based pricing so as to ensure greater patient sensitized pricing of medicines. As cited by the Economic Advisory Council (EAC) of the Prime Minister, the negligible increase in drug prices over the last 7 years illustrates the intense competition in the Indian Pharmaceutical Market. In comparison, prices of other essential items including food items have increased steeply. Between 2004 and 2012, price rise of drugs has only been 3/8th of all commodities and half of that of manufactured products.

However, in order to make the pricing formula more robust and to prevent prices of lower priced drugs from moving towards the ceiling price, a section of the industry recommended that this formula be combined with price increases limited to Weighted Price Index (WPI) or 10 percent p.a. (the present price increase cap for non-DPCO) whichever is higher, for individual brands. This measure is expected to make it a fool proof pricing mechanism.

New Drug Policy to focus on all-round inclusive growth:

The role and objectives of the NPPP should help accelerating all-round inclusive growth of the Indian pharmaceutical industry and try to make it a force to reckon with, in the global pharmaceutical industry.

The drug policy is surely not formulated just to implement rigorous price control of drugs. The policy includes other key objectives to contribute significantly towards achieving the healthcare objectives of the nation and also to boost the growth of the industry, working closely with other related ministries of the government.

As stated above by the industry, to correct the imbalance between availability and affordability of essential medicines, in 2005, the government constituted a special taskforce, which is widely known as ‘Dr. Pronab Sen Committee’. This committee was mandated to recommend options other than existing methodology of price control (DPCO 95) for achieving the objective of making available life-saving and essential drugs at reasonable prices.

In its report, the committee did suggest an alternative measure at that time, concluding that the present price control system (DPCO 95) is inappropriate, inadequate and complex, besides being time consuming in its implementation.

Conclusion:

Unfortunately, the views of the MoF point towards continuation of the same old regime, which has failed to deliver for so many decades.

I therefore reckon, it is about time to recognize that the ‘Old is not always Gold’, at least in this particular issue. The government should in no way allow the saga of uncertainty in the formulation of a vibrant and inclusive Drug Policy to continue. The policy makers should consciously shun away any possibility of taking retrograde steps on this critical matter for the sake of both patients and the pharmaceutical industry of India, alike.

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