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Digital Marketing: Is Pharma Still A Laggard?

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

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

Expanded reach:

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

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

The ‘T-Factor’ changing the operating environment:

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

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

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

Pharma industry is slow in adopting ‘Digital Marketing’:

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

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

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

Digital space cannot be ignored:

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

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

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

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

Absence could be very costly: 

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

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

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

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

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

‘Digital Marketing’ in pharma – a quick look:

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

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

Its relevance:

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

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

The key advantages:

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

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

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

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

Calibrated increase in usage of ‘digital media’:

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

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

Starting with selective approach:

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

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

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

A few examples:

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

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

Conclusion:

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

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

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

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

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

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

By: Tapan J. Ray

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

Pharma & Healthcare: Where The Healers Turn Looters?

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Two news reports of the last week, though no longer shocking, made me think exactly the same way as the headline of this article epitomizes.

These reports are not just two isolated instances, but an integral part of a similar chain of events that I partly addressed in one of my earlier blog posts titled, “Is The Core Purpose of Pharma Business Much Beyond Profit Making?” of November 10, 2014.

With the fist clenching media reports of just the last week, I shall try to dwell upon that in absence of good governance how two of the greatest healers and the medical care givers in the arena of healthcare – the doctors and the hospitals, are being increasingly perceived by the common citizens as nothing less than looters.

The doctors:

A November 21, 2014 report highlights that the Medical Council of India (MCI) has summoned over three hundred doctors from various parts of India, based on an anonymous complaint, for taking lakhs of rupees as bribes from an Ahmedabad based pharmaceutical company. All those 300 doctors have been told to bring copies of their Income Tax returns and bank statements.

Just a year ago, in September 2013, the Chief Vigilance Commissioner reportedly received a letter alleging that doctors were taking bribes from Pharma companies. The complaint was forwarded to the Health ministry. The MCI took over the case in December 2013 and formed a subcommittee to investigate the doctors.

The complaint details that the Ahmedabad-based pharma company has been paying to the doctors not just huge cash, but also gifting them cars and flats, besides sponsoring foreign trips for the family.

In return, the involved doctors are allegedly prescribing that Ahmedabad based pharma company’s products that are priced 15 to 30 percent higher than those of well-established other pharma players.

In addition, according to reports, the doctors would also air on the Television sets placed at their respective clinics, advertisements of the pharma company products against hefty cash or equivalent in kind.

Although, the allegations of unholy nexus between pharma players and the doctors are continuity of a good old saga, the risk taking incentives that it provides to the wrong doers are very significant. The anonymous letter alleged that the concerned pharma company’s profit zoomed from zero to Rs. 400 Crore in a period of just 5 years.

According to available reports, the MCI has already questioned 166 doctors, out of which 7 are senior doctors from Maharashtra, including 3 physicians from Mumbai.

The hospital:

Another report on the subject that appeared yesterday is related to overcharging for an oncology medicine of Novartis – Sandostatin LAR, over the last nine months by the well-known Tata Memorial Hospital of Mumbai.

According to the report, even when Novartis revised the price of Sandostatin LAR from Rs. 65,499 for a 20mg vial to Rs 32,000 during Oct-Dec 2013 and the chemists in the hospital’s vicinity were selling the same vial for Rs 32,000, Tata Memorial continued to sell it at Rs 48,296.

The report also states that patients could have saved much more, if the hospital had prescribed an Octreotide generic of the same strength, Octride Depot 20mg by Sun Pharma with an MRP of Rs 17,800 is sold at Tata Memorial for Rs 12,157, instead of Sandostatin LAR 20mg.

However, the newspaper claims, “DNA was the first to report about the price disparity at the hospital on Nov 5. Tata Memorial Hospital has decided to reimburse cancer patients who were overcharged for a Novartis-branded oncology medicine over the last nine months.”

Interestingly, we get to know only about a few of such instances, only when these are reported either anonymously or by some employees or through rare impartial investigative journalism of international standard.

Treatment of dreaded diseases like Cancer also not spared:

The above hospital case assumes immense importance, as it is related to a dreaded disease and an expensive cancer drug. In real every day life, many such cases of various hues and colors are taking place in India incognito, at the cost of patients.

A scary scenario:

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.

High incidence 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.

The Lancet Oncology study showed, 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.

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.

Cancer drug price – a global issue to address:

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, 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.

Developments in 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. These prices have already in force.

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.Herceptin,

Hence, affordable pricing of cancer drugs would continue to remain a key pressure point, as it just happened yet again.

The government to intervene again:

According to a media report of the last week, the new government in India is planning to control prices of anti-cancer drugs to address this critical issue.

As the current National List of Essential Medicines (NLEM) does not include many important anti-cancer medication, Tata Memorial Centre of Mumbai has recommended to the government that oncology drugs, such as Trastuzumab, Erlotinib, Irinotecan, Lenalidomide, Capecitabine, All Trans Retinoic Acid (ATRA), Bendamustine, Rituximab, Temozolomide (TMZ), Zoledronic acid, Megestrol acetate and Letrozole, should be added to the NLEM.

As a first step towards this direction the National Pharmaceutical Pricing Authority (NPPA) has invited comments on the same from the pharmaceutical industry and other stakeholders to bring these drugs under price control.

Quoting NPPA the report states, “the recommendations are based on factors such as the ability of the drug to improve the overall survival chances of the patient. The other factors include higher priority to drugs that have the potential to cure a fraction of patients versus those that have been proven to only prolong lives; the number of patients potentially impacted in India based on data from population based cancer registries of the National Cancer Registry Program; the non-availability of alternative medications of the same or other pharmacological class that can act as a reasonable ‘substitute’; and price of the drug to patients and the differential in price between various brands.”

Although this is a welcome move to most of the patients, the pharma industry would certainly not be happy with this development, because of very obvious reasons and is expected to strongly oppose this initiative of the government. Let us wait and watch how this scenario unfolds further.

Conclusion:

In pursuit of the Eldorado to generate more and more wealth, shorn of least concerns for majority of patients, quite a few companies are not sparing even the dreaded diseases, such as cancer, pushing many patients to abject poverty, if not untimely death.

Increasingly, many healthcare players across the world are reportedly being forced to pay heavily for ‘unethical behavior and business practices’ by the respective governments. Unfortunately, no such steps are being taken in India, not just yet.

At least on paper, for errant doctors and hospitals there is MCI to take prompt remedial measures. For implementation of Drug Price Control Order (DPCO) there is NPPA, though effectiveness of these two seemingly powerful bodies are far from the expectations of the stakeholders, occasional reported jingoism notwithstanding.

Currently in India, there are no legally binding ‘codes of pharma marketing practices’ in place. Even the Department of Pharmaceutical does not seem to have any legal jurisdiction for taking penal action against the errant pharma players for marketing malpractices or misdemeanor.

In this chaotic scenario, is it not quite challenging to fathom how would the government possibly discourage any healthcare or pharma player from turning looter instead of playing the expected role of a healer, ensuring beyond doubt that there is no wolf in sheep’s clothing?

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.

 

 

Nutraceuticals: An Emerging Opportunity in The Gray Area Between Pharma And Nutrition

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Close association between nutrition and health has assumed a historical relevance. Growing pieces of evidence, even today, suggests that nutritional intervention with natural substances could play an important role, especially in the preventive healthcare. The World Health Organization (WHO) too has highlighted that mortality rate due to nutrition related factors in the developing countries, like India, is nearly 40 percent.

The ‘Gray Area’:

In the space between pharmaceutical and nutrition, there is an emerging ‘gray area with 50 shades’ having significant business relevance.

In a related publication, A.T. Kearney – a leading global management consulting firm has elaborated it as under:

“At one end of this natural nutrition spectrum, are functional foods and beverages as well as dietary supplements, aimed primarily at maintaining health. At the other, more medical end of the spectrum, are products aimed at people with special nutritional needs. In the middle, is an emerging gray area of products that have a physiological effect to reduce known risk factors, such as high cholesterol, or appear to slow or prevent the progression of common diseases such as diabetes, dementia or age related muscle loss.”

Evolution of the terminology ‘Nutraceuticals’:

Dr. Stephen DeFelice of the ‘Foundation for Innovation in Medicine’ coined the term ‘Nutraceutical’ from “Nutrition” and “Pharmaceutical” in 1989. The term nutraceutical though is now being commonly used in marketing such products has no regulatory definition, other than dietary or nutritional supplements.

It is interesting to note that the dietary supplement industry defines nutraceuticals as, “any nontoxic food component that has scientifically proven health benefits, including disease treatment and prevention.”

Probably because of this reason, it is often claimed by the manufacturers of nutraceutical products that these are not just dietary supplements, but also help in the prevention and/or treatment of many disease conditions.

In India, nutraceuticals are mostly promoted to the doctors just as any other ethical pharma products. These are also prescribed by the medical profession, not just as nutritional supplements but also for the treatment of disease conditions, ranging from obesity to arthritis, osteoporosis, cardiological conditions, diabetes, anti-lipid, gastroenterological conditions, dementia, age-related muscle loss, pain management and even fertility. All these are generally based on off-label therapeutic claims of the respective manufacturers.

Currently, this particular category of nutraceutical products, despite being out of price control and operating within much relaxed regulatory environment, is showing just a moderate growth trend in India.

The market:

According to a report of Frost & Sullivan, the global nutraceutical market has clocked maximum growth in the last decade.

Nutraceuticals as an industry emerged in the early 1990s. However, from 2002 to 2010 has been the key growth phase for the industry. From 1999 to 2002, the nutraceutical industry grew at an Annual Average Growth Rate (AAGR) of 7.3 percent, while from 2002 to 2010, the AAGR doubled to 14.7 percent, in line with the Indian Pharma Market (IPM).

The penetration of nutraceuticals in India was around 15 percent in 2013. In the same year, the turnover of the global nutraceuticals market was around US $168 billion in which India had a demand share of around 2 percent, i.e. around US $2 billion.

Growing at a Compound Annual Growth Rate (CAGR) of 17.1 percent, the Indian market is expected to reach US$ 4 billion by 2018. China, Southeast Asia, and India are the fast-growing markets, with each experiencing growth in double digits.

In the last couple of years functional beverages have emerged as a fastest growing category for the Indian market, with many companies expanding their portfolio in the segment. This category is expected to grow at a CAGR of 21.7 percent by 2018.

However, in terms of ingredients, especially plant extracts and phytochemical, Indian manufacturers have entrenched their place as suppliers, both locally as well as globally.

Some other key findings of this report are as under:

  • India is currently a nascent market for nutraceuticals, without a robust business model in place. Both MNCs as well as domestic companies in the pharmaceutical and food and beverage space have tested the market with a variety of launches, with some degree of success.
  • The existence of alternative medicines in India, and the Indian consumer’s belief in them, could provide a platform for the nutraceutical industry to cash on.
  • The Indian consumers’ awareness about conventional nutraceutical ingredients such as omega-3 fatty acids or lutein is very limited. The nutraceutical manufacturers would require spreading awareness about their products to the Indian masses, much more effectively.
  • As compared with the developed countries such as the USA, Europe, and Japan, the percentage of population consuming nutraceuticals in India is much low. The middle to high income groups are the dominant consumers of functional foods and beverages along with dietary supplements, while the lower income groups consume mainly prescription-based dietary supplements.
  • Health awareness and an increase in the penetration of organized retail stores are expected to play a major role in driving the nutraceuticals’ consumption in India.

Current regulations in India:

The Food Safety and Standards Act (FSSA) of India, 2006 predominantly regulate manufacturing, storage, distribution, sale and import of nutraceuticals in India. Unlike pharma products, no other regulations are still in place, though the government reportedly is in the process of inviting suggestions from the stakeholders on the subject.

Experts feel that FSSAI needs to play a more important role in defining standards to streamline the operations for nutraceuticals business in India, which should include, besides others, the following:

  • Quality of raw materials
  • Safe manufacture of product with cGMP standards
  • Health claims
  • Labeling
  • Distribution & storage

In the absence of comprehensive regulations many companies are unable to decide on necessary investments that will be required for this business in the longer term.

Currently, nutraceuticals are much less expensive to develop, manufacture, market and distribute, offering a rainbow of business opportunities in the healthcare space.

A brand ‘New Ministry’ in place:

In all likelihood, renewed measures would now be taken to bring nutraceuticals under the mainstream healthcare.

It appears more feasible today than ever before, as the Prime Minister Modi, with an eye on reviving indigenous and traditional medicine has recently created a brand new ministry with a Minister of State (Independent Charge) at the helm to look after Department of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy (AYUSH).

Need to generate robust clinical data:

In this context, a relatively new development is worth noting. It has been reported that all new traditional medicines will need to undergo clinical trials before their regulatory marketing approval in India. However, it has also been amply clarified that “such products will include only the new patented drugs and not the classical formulations that find mention in India’s ancient texts, some of which are 5,000 years old.”

I reckon, for all nutraceutical formulations with specific therapeutic efficacy and safety claims, there is a need to generate supportive robust clinical data for the patients’ long term health interest.

Therapeutic efficacy of a drug in the treatment of a disease condition is established with pharmacokinetic, pharmacodynamics, other pre-clinical and clinical studies. Some experts believe that these studies are very important for nutraceutical products too, particularly when therapeutic claims are made on them, as these substances undergo a series of reactions within the body.

Similarly, to rule out any long-term toxicity problem with such products, generation of credible clinical data is again critical. At present, these are not usually followed for nutraceutical products in India, even when therapeutic claims are made.

The experts, therefore, quite often say, “A lack of reported toxicity problems with any nutraceutical should not be interpreted as evidence of safety.”

Regulatory requirements for nutraceuticals in the USA:

In America, the Congress had passed the ‘Dietary Supplement Health and Education Act’ in 1994. This act allows ‘functional claims’ to dietary supplements, like “Vitamin A promotes good vision” or “St. Johns Wort maintains emotional well-being”, as long as the product label contains a specific disclaimer that the FDA has not evaluated the said claim and that the product concerned is not intended to diagnose, treat, cure or prevent disease.

The above Act bestows some important responsibility on to the doctors, who are required to provide specific and accurate scientific information for nutraceutical products to their patients. This process assumes critical importance, as the patients would expect the doctors to describe to them about the usefulness of nutraceutical products as alternatives to approved drugs. In such cases, if any doctor recommends a dietary supplement instead of pharmaceutical products, the doctor concerned must be aware of the risk that the patient’s health may suffer, for which the affected patient could sue the doctor for malpractice.

Indian Health Ministry should take note of these points for ethical promotion of nutraceuticals in India.

Sanofi considered nutraceuticals as a business opportunity in India:

So far in India, Sanofi is the only Pharma MNC that has entered into nutraceuticals business in a big way. Sniffing the market opportunity in this segment, the French major acquired the nutraceuticals business of Universal Medicare Private Ltd of worth Rs.110 Crore, in August 2011. The nutraceuticals product portfolio of Universal Medicare included more than 40 brands from cod liver oil capsules, vitamins/mineral supplements and antioxidants to liver tonics.

Ambivalence of Pharma MNCs:

According to A.T. Kearney report, unlike food industry, the global pharma industry has approached nutraceuticals with a ‘great deal of ambivalence’.

Pfizer and Novartis have sold their nutrition businesses.While the same Pfizer that sold Wyeth Nutrition to Nestle, invested an undisclosed sum to acquire Danish vitamins company Ferrosan and the dietary supplements manufacturer of the United States, Alacer, reinforcing what was already a billion-dollar business enterprise.

On the other hand GlaxoSmithKline (GSK) and Novartis have recently announced a joint venture for consumer products business, which could probably be a stepping-stone to get into nutraceuticals. Who knows?

Food companies leading nutraceuticals business:

The A.T. Kearney report also states that at present the food companies, and not the pharma players, are in the lead, accounting for about 90 percent of nutraceuticals sales with expertise in branding, consumer market expertise and access to mass distribution channels.

A few consumer companies have also inked partnership with pharma companies. For example, Coca-Cola and Sanofi have partnered to sell health drinks in French pharmacies.

Conclusion:

Nutraceuticals business, as many believe, is an emerging opportunity in the ‘Gray Area’ between pharmaceuticals and nutritional product classes. So far, the food companies have been charting this frontier that remained uncharted by a large majority of the pharma players. This is mainly because the success requirements for nutraceutical products, including dietary supplements, are quite different.

That said, a transparent and well-charted regulatory pathway for nutraceuticals, especially for formulations with therapeutic claims, would have a significant impact on its future growth potential in India.

Many nutraceutical products in the country with specific therapeutic claims do not seem to have supporting robust clinical data, leave aside being peer reviewed and published in the reputed international journals on the claims for safety or efficacy.

The entry of one of the global majors, Sanofi, having a clear focus on Evidence Based Medicines (EBM), ushers in a new hope and promise to get the loose knots tightened in this important area, while driving the business growth of the category.

Just as EBM, scientific ‘Evidence Based Nutraceuticals (EBN)’ with therapeutic claims, should be the centerpiece of consumer confidence and interest in this emerging niche of healthcare business in India.

By: Tapan J. Ray

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

Is The Core Purpose of Pharma Business Much Beyond Profit Making?

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Dr. Margaret Chan, the Director General of the World Health Organization (WHO), at a briefing to discuss the Ebola outbreak in West Africa at the UN Foundation in Washington on September 3, 2014 said:

“Big Pharma’s greed for profits, not lack of funding, delaying Ebola treatment development.”

Highlighting that the disease has already taken lives of 4,951 people in West Africa, Dr. Chan castigated the pharmaceutical industry for failing to develop an effective treatment for the deadly virus Ebola since 1976. “Though the Ebola crisis has become the most severe acute public health emergency seen in modern times, a profit-driven industry does not invest in products for markets that cannot pay”, Dr. Chan added.

That said, the Big Pharma has now initiated some efforts in this area, as the disease currently poses a significant threat to non-African countries, including America.

The sentiment reverberates:

Echoing similar sentiment, an article published in the BBC News on November 7, 2014 reiterated:

“Big pharma companies are in the business to make money, so will generally develop those drugs that offer the greatest potential for profit. This means a number of important drugs are neglected – the current Ebola crisis being a case in point.”

The profit oriented approach isn’t restricted just to the diseases of Africa:

The above article also points out that, besides diseases of the developing world, the Big Pharma has been slow to develop newer and multi-drug resistant antibiotics, as well.

This is mainly because, it is lot more difficult for the pharma companies to make huge quantum of profit from discovery of newer antibiotics for acute infections having limited use for around 7 to 10 days, as compared to the medicines for chronic illnesses that people will have to necessarily take every day, for life.

It appears today that the ongoing public opinion and pressure are possibly not adequate enough to trigger even a slightest change in the fetish for profit-making incentives of the Big Pharma companies.

Despite high profitability, the fetish for even more profit continues:

The pharma industry that basically exists to help saving lives of patients of all types, status and color in various ways, now seems to focus mostly on generation of more and more profit than ever before.

- The following table would vindicate the point of profitability of the industry:

Highest and Lowest Profit Margins of 5 key Industrial Sectors, 2013                        (Profit Margin in %)

No.

Sectors

Highest

Lowest

1.

Pharmaceuticals

42

10

2.

Banks

29

5

3.

Carmakers

10

3

4.

Oil & Gas

24

2

5.

Media

18

6

NB: Highest and lowest margins achieved by individual company                             (Source: Forbes, BBC News)

To generate mind boggling profits, many of the Big Pharma constituents have reportedly resorted to various types of gross misconduct and malpractices too, the Chinese saga being the tip of the iceberg.

- The following are some recent examples to help fathom the enormity of the problem:

  • In September 2014, GlaxoSmithKline was reportedly fined US $490m by China for bribery.
  • In March 2014, the antitrust regulator of Italy reportedly fined two Swiss drug majors, Novartis and Roche 182.5 million euros (U$ 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.

Many more of such instances are regularly being reported by the international media, unabated.

More profit through high drug pricing – The key argument in favor:

The Big Pharma argues that high drug pricing is absolutely necessary to generate a kind of profit, that is essential to fund heavy investments for drug innovation to meet the unmet needs of patients. Moreover, only 3 out of 10 drugs launched are profitable, on an average.

This argument really goes over the top. It does not hold much water either, as the Big Pharma reportedly spends more on the process of drug marketing than on innovation (R&D) of new drugs.

The following table would paint a different picture altogether, marketing expenditure being far more than the R&D costs: 

R&D and Marketing Spend of World’s largest Pharmaceutical Companies

Company Total Revenue (US$ Bn.) R&D Spend  (US$ Bn.) Marketing Spend (US$ Bn.) Profit (US$ Bn.) Profit Margin (%)
J & J (US) 71.3 8.2 17.5 13.8 19
Novartis (Swiss) 58.8 9.9 14.6 9.2 16
Pfizer (US) 51.6 6.6 11.4 22.0 43
Roche (Swiss) 50.3 9.3 9.0 12.0 24
Sanofi (France) 44.4 6.3 9.1 8.5 11
Merck (US) 44.0 7.5 9.5 4.4 10
GSK (UK) 41.4 5.3 9.9 8.5 21
AstraZeneca(UK) 25.7 4.3 7.3 2.6 10
Eli Lilly (US) 23.1 5.5 5.7 4.7 20
AbbVie (US) 18.8 2.9 4.3 4.1 22

(Source: GlobalData, BBC News)

Thus, it is difficult to fathom why are numbers of drugs, such as, Sovaldi and others costing as much as US $ 84,000 and above for a treatment course, when the cost of manufacturing is no more than an insignificant fraction of that treatment cost?

Considering all these and looking at the published profit and loss accounts of various pharma companies, it appears that, the line between ‘making reasonable profit’ and ‘profiteering’ is getting increasingly blurred in the pharma world.

Why is the marketing cost so high?

Since about the last decade and half, despite reasonably high expenditure on R&D there does not seem to have been many reports on breakthrough innovations. According to an expert of the World Health Organization (WHO), “of the 20 or 30 new drugs brought to the market each year, typically 3 are genuinely new, with the rest offering only marginal benefits.”

In a situation like this, when the challenge mostly is of generating targeted revenues with the new products of ‘me-too values’ rather than with those having intrinsic ‘unmet values’, marketing costs to generate doctors’ prescription would obviously escalate disproportionately. Even the process followed to generate these prescriptions, often cross the red line of regulatory, ethics and compliance standards, as have been cited above.

The following questions come up consequently:

- Are these exorbitant avoidable marketing expenditures adding any tangible or intangible values to the ultimate consumers – the patients?

- If not, why burden the patients with these unnecessary costs?

India is no different against similar parameters:

Back home in India, the deep anguish of the stakeholders over similar issues is now being increasingly reverberated with every passing day, as it were. It has also drawn the attention of the patients’ groups, NGOs, media, Government and even the Parliament.

The quality of the pharmaceutical sales and marketing process in India has touched a new low and continues to go south, causing suffering to a large number of patients. Well documented unethical drug promotion is increasingly becoming an emerging threat to the society.

Even today, the Ministry of Health and the Department of Pharmaceuticals of the Government of India provide few checks and balances on unethical drug promotion in India and prefer to keep the eyes meant for vigilance, closely shut.

Despite deplorable inaction of the government on the subject and frequent reporting by Indian media, the national debate on this issue is yet to attain a critical mass. A related Public Interest Litigation (PIL) is now pending before the Supreme Court for hearing, hopefully in the near future. Its judicial verdict is expected to usher in a breath of fresh air around a rather stifling environment for healthcare in India.

I deliberated on a similar issue in one of my earlier blog posts of September 1, 2014, titled, “Pharma And Healthcare: Mounting Trust deficit In Post Halcyon Days”

Conclusion:

While it is well-acknowledged that pharma industry has contributed immensely for the development of a large number of life saving new drugs to save precious lives all over the globe, none can also deny that for such efforts the companies concerned have not been hugely profited either…and, as we have been witnessing, not necessarily through legitimate means, always.

That said, in the backdrop of all the above examples, the core issue that emerges today as raised by many, including the World Health Organization (WHO), is the growing inherent conflict between predominantly the profit driven business goals of the pharma players and the public health interest of a nation.

Considering a number of recent serious public outbursts of the global thought leaders and also from the international media on the ‘profit dominating goals’ of the pharma industry, in general, the following questions need to be addressed with all seriousness:

- Is there a need to define afresh the core purpose of pharmaceutical business for all?

- Does the core purpose go much beyond profit making?

- If so, how would the industry plan to engage the stakeholders for its credible public demonstration?

Meanwhile, taking a serious note of it and learning from the past examples, India should initiate experts’ debate on the subject soon, to effectively resolve the conflict of two different mindsets, not resting on the same page in many ways.

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?

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“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. 

Leading Through The Challenge Of Change: Is Pharma Leadership Too Archaic?

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A recent major global survey titled “Testing The Health Of The Pharmaceutical Industry” has revealed that a sizable majority of executives polled, though believe the sector is in good shape, are concerned of its reputation. Interestingly, 73 percent of respondents believe that pharma companies should become “Genuine Healthcare Providers”.

From many other reports, as well, one gets to know that the overall image of the global pharmaceutical industry, despite the high profile personas being on the saddle, is currently as good or as bad as the same of, say, Tobacco or Alcoholic beverages sectors. Lamentably, the common perception is that the industry is hugely self-serving, problem making, largely exploitative and mostly surreptitious in its dealings.

This perception prevails, despite the fact that pharma industry exists to help mankind fighting against diseases continuously, thus improving the quality of life, quite unlike the other two industries, as indicated above.

Media reports on ignoble acts of this otherwise noble industry keep coming in tidal waves regularly and unabated, from many parts of the world, the latest being the alleged mega bribery scandal involving the large global majors in China, besides many others.

While industry leadership is generally smooth articulators, ‘Talking the Talk’ and ‘Walking the Walk’ slogans in the frontiers of ethics, values and shared goals of many of these much reported companies, are probably used to run expensive global ‘Public Relations (PR)’ campaigns, lobbying and advocacy initiatives in the corridors of power.

What then could possibly be the reason of such perception gap that this great industry is allowing to increase, over a long period of time? Could it be that pharma collective leadership has not been able to adequately adapt itself with the demands of changing healthcare environment and the needs of various nations in this space, across the globe? Is the leadership, therefore, too archaic?

Is Pharma leadership too archaic?

In this context, an interesting article titled, “Healthcare Leadership Must Shift From Cottage Industry To Big Business”, published in one of the latest issues of Forbes, though deals with issues pertaining to the ‘Healthcare Industry’ in America, nevertheless makes some interesting observations, which are relevant to India as well, just as many other countries of the world.

It states that the ‘Healthcare Leadership’ has not kept up with the industry’s evolution to big business over the past 25-30 years – nor does it possess the required change management competencies to effectively lead and rapidly turn-around an adaptive healthcare business model.

As a result, unlike many other knowledge industries, pharma sector is still struggling hard to convert the tough environmental challenges into bright business opportunities.

Inward looking leadership?

From the available details, it appears that today, mostly inward looking pharma leadership tends to ignore the serious voices demanding access to medicines, especially for dreaded diseases, such as, Cancer. Instead of engaging with the stakeholders in search of a win-win solution, global pharma leadership apparently tries to unleash yet another barrage of mundane and arrogant arguments highlighting the importance of ‘Drug Innovation’ and hyping how expensive it is. The leaders do it either themselves or mostly through their own funded trade associations.

In tandem and unhesitatingly, the leadership and/or their lobbyists reportedly exert all types of pressures even to get the relevant laws of sovereign countries amended or framed to further their business interests. The leadership continues to demonstrate its insensitivity to the concerns of a vast majority of patients, other stakeholders and their respective governments, further reinforcing its self-serving image.

Does anyone really talk against ‘Drug Innovation’?

The moot question, therefore, is: Why is this hype? Who on earth really talks against drug innovation? None, I reckon. On the contrary, drug innovation is considered by all as absolutely fundamental in the continuous combat of mankind against a galore of ailments. It should certainly be encouraged, protected and rewarded all the way, following a win-win pathway for providing access to these innovative drugs for all. There is no question about and no qualms on it.

Insensitive comments do matter:

Insensitive comments from the leadership further widens the perception gap. Let me give two examples:

I. Recently while justifying the price of US$ 1000/tab of the Hepatitis C drug Sovaldi of Gilead, the CEO of Sanofi reportedly highlighted, “Unprecedented innovation comes at a price.” This is of course true, but at what price…US$ 1000/tablet? If this comment is not insensitive and outrageous, does it at least not smack of arrogance?

II. Another such insensitivity was expressed through reported proclamation in public of the Global CEO of Bayer, not so long ago, which clarified that: “Bayer didn’t develop its cancer drug, Nexavar (sorafenib) for India but for Western Patients that can afford it.” Incidentally, the above comment came from the same Bayer whose research chemists synthesized Prontosil, the first antibiotic, in 1932, more than a decade before penicillin became commercially available. Prontosil and subsequent “Sulfa” drugs – the first chemicals used to treat bacterial infections, ushered in a new era for medicine, saving millions of lives of patients globally. At that time, the then Bayer CEO probably did not say that Prontosil was developed “just for the Western Patients that can afford it.”

‘Inclusive Innovation’ for greater access:

Any innovation has to have an impact on life or life-style, depending on its type. Each innovation has a target group and to be meaningful, this group has to have access to the innovative product.

So far as drugs and pharmaceuticals are concerned, the target group for innovation is predominantly the human beings at large. Thus, to make the drug innovation meaningful, the new medicines should be made accessible to all patients across the globe, with social equity, as per the healthcare environment of each country. This underscores the point that drug innovations would have to be inclusive to make meaningful impacts on lives.

New age pharma leadership should find out ways through stakeholder engagement that innovative drugs are made accessible to majority of the patients and not just to a privileged few…fixing a price tag such as US$ 1000/tab for Sovaldi, Sanofi CEO’s above comment notwithstanding.

Leadership lessons to learn from other industries:

Traditional pharma leadership has still got a lot to learn from other industries too. For example, to speed up development of electric cars by all manufacturers, the Co-Founder and Chief Executive Officer Elon Musk of Tesla Motors has reportedly decided to share its patents under ‘Open Source’ sharing of technologies with all others. Elon Musk further reiterated:

“If we clear a path to the creation of compelling electric vehicles, but then lay Intellectual property (IP) landmines behind us to inhibit others, we are acting in a manner contrary to that goal.”

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

Why such type of leadership is so rare in the global pharma world? Besides some tokenisms, why the global pharma leaders are not taking similar large scale initiatives for drug innovation, especially in the areas of dreaded and difficult diseases, such as, Cancer, Alzheimer’s, Multiple Sclerosis and Metabolic disorders, just to name a few?

Finding cost-effective ways for even ‘Unprecedented’ drug innovation:

Taking a lesson from the Tesla example and also from my earlier blog post, ‘Open Source’ model of drug discovery, would be quite appropriate in the current scenario not just to promote more innovative and intensive approaches in the drug discovery process, but also to improve profit.

According to available reports, one of the key advantages of the ‘Open Source’ model would be substantial reduction of cost even for ‘Unprecedented’ innovations, besides minimizing the high cost of failures of several R&D projects. These, coupled with significant savings in time, would immensely reduce ‘mind-to-market’ span of innovative drugs in various disease areas, making these medicines accessible to many more patients and the innovation inclusive.

Indian Pharma – promoter driven leadership:

Back home in India, fast growing India Pharma businesses predominantly consist of generic drugs and are family owned. A 2011 study conducted by ‘ASK Investment Managers’ reported, “Family Owned Businesses (FOB)” account for 60 percent of market cap among the top 500 companies in India and comprise 17 percent of the IT Industry, 10 percent of refineries, 7 percent of automobiles and 6 percent of telecom, in the country. In the domestic pharmaceutical sector, almost hundred percent of the companies are currently family owned and run, barring a few loss making Public Sector Units (PSUs).

As most of these companies started showing significant growth only after 1970, we usually see the first or second-generation entrepreneurs in these family run businesses, where the owners are also the business leaders, irrespective of size and scale of operations.

However, it is unlikely that the pharma business owners in India would be willing, just yet, to go for a regime change by hiring professional leaders at the helm of a business, like what the IT giant Infosys announced the week last or Cipla did sometime back. Nevertheless, they all should, at least, attune themselves with the mindset of the new age pharma leaders to reap a rich harvest out of the opportunities, at times veiled as threats.

New leadership to be ethically grounded and engage everyone:

Unlike what is happening with the current pharma leadership today, the new age leadership needs to be ethically grounded and engage all stakeholders effectively in a transparent manner with impeccable governance.

Quoting Dr. Michael Soman, President/Chief Medical Executive of Group Health Physicians, the above Forbes article states that in the new age healthcare leadership model, the leader may not have to have all of the answers to all the problems, but he would always have a clear vision of where we wants to lead the company to.

This new leadership should create a glorious future of the pharma industry together with all other stakeholders by asking: “How can we all be part of healthcare solutions?”

Conclusion:

Unfortunately, despite so much of good work done by the pharmaceutical industry in various fields across the world, including in India, the general public perception on the leadership of the pharma world, is still very negative for various reasons. Pharma industry also knows it well.

Thus, around the close of 2007, the Chairman of Eli Lilly reportedly said publicly what many industry observers have been saying privately for some time. He said: “I think the industry is doomed, if we don’t change”.

The available statistics also paints a grim picture of the traditional big pharma business model going from blockbuster to bust with the mindset of the leadership, by and large, remaining unchanged, barring some cosmetic touch-ups here or there.

The old business model – sprawling organizations, enormous capital investments, and spiraling costs, underwritten by a steady stream of multibillion blockbuster products – is simply a pipe dream today.

Has anything much changed even thereafter? May be not. Thus, to meet the new challenge of change in the healthcare space, doesn’t the new age pharma leadership still look too archaic, at least, in its mindset and governance pattern?

Is it, therefore, not high time for them to come out of the ‘Ostrich Mode’ collectively, face the demanding environmental needs squarely as they are, try to be a part of healthcare solutions of a nation in a win-win way and avoid being perceived as a part of the problem?

Effective leadership learning process has always been eclectic, borrowing ideas and experiences from other disciplines. In case of pharma, it could well be from other knowledge industries, such as, Information Technology (IT), Telecommunications etc. But change it must. Not just for business growth creating shareholders’ value, but for long-term survival too, basking in glory.

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.

 

 

Big Pharma Receives Another Body Blow: Would Indian Slumber End Now?

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On May 13, 2014, The New York Times reported, while major pharmaceutical companies have been facing increased scrutiny of their marketing practices from governments around the world, last Wednesday the Chinese authorities sent a strong warning to the pharmaceutical industry implicating Mark Reilly, the former head of Glaxo’s China operations, of ordering his subordinates to form a “massive bribery network” that resulted in higher drug prices and illegal revenue of more than US$150 million.  Mr. Reilly, a Briton, and two Chinese-born Glaxo executives, Zhang Guowei and Zhao Hongyan, had allegedly arranged to bribe government officials in Beijing and Shanghai.

The Chinese police has reportedly said that its 10-month investigation has found that under Mr. Reilly, Glaxo had pushed its staff to meet aggressive sales targets and that the company had conducted “false transactions” through its financial department to transfer “illegal gains” made in China to overseas companies. The authorities also said Mr. Reilly and other senior executives at Glaxo had bribed officials to stop investigations of wrongdoing at the company.

The report also states, although bribery is common in China, it is rare for foreign-born executives from MNCs to be prosecuted. In 2009, a Chinese-born Australian executive at the British-Australian mining giant Rio Tinto was arrested in a bribery and money-laundering case.

“Ethics Matter” – A Chinese warning to MNCs:

On May 16, 2014, Xinhua – the official news agency of China wrote in an editorial that Chinese probe into GSK’s local sales practices should send a warning to other foreign companies doing business in the country that “Ethics Matter”.

This stern action by China is indeed another body blow on the so called ‘ethical image’ of Big Pharma, despite its sophisticated global ‘Public Relations’ machinery working overtime under the respective pharma associations across the world.

Drug price manipulation:

While citing the example of a hepatitis B drug – Heptodin, Xinhua editorial said that GSK “manipulated prices to disguise real costs”, as Heptodin is declared as 73 Yuan to customs in China even though the actual cost is 15.7 Yuan and is sold at 26 Yuan in Canada or 30 Yuan in the U.K.

Quoting a Ministry of Public Security official at a briefing on May 14, it stated that Glaxo charged prices in China that in some cases were seven times as high as in other countries, and used the extra money to pay bribes.

According to this media report, in June last year, “Chinese authorities began investigating allegations that Glaxo had funneled money through local travel agencies to pay bribes to doctors in return for prescribing its drugs. They last year detained some executives on suspicion of economic crimes involving 3 billion Yuan of spurious expenses and trading in sexual favors.”

Not a first time allegation:

This is not the first of such cases and most probably won’t be the last also. Since quite some time many pharmaceutical giants are being reportedly investigated and fined, including out of court settlements, for bribery charges related to the physicians.

In this context July 4, 2012, edition of The Guardian reported a similar astonishing story on Big Pharma. When you click on this short video clipping, which was published on September 29, 2012 you would see that Big Pharma’s Medicaid fraud penalties had reached a record high with GlaxoSmithKline fined $3 Billion in the United States at that time.

It is widespread:

Following are a few more recent examples to help fathom the enormity of the problem:

  • 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.

There are many more of such examples.

The situation is alarming in India too:

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

An article titled, “Healthcare industry is a rip-off” published in a leading daily, the author highlighted that the absence of regulatory oversight in the healthcare industry needs urgent attention.

The quality of the pharmaceutical marketing in India has touched a new low, causing suffering to patients. Unethical drug promotion is increasingly becoming an emerging threat to society. The Government provides few checks and balances on drug promotion.

To counter the problem of ‘Unethical Drug Promotion’ to a great extent, the author broadly recommended the following:

  • Preparing treatment guidelines,
  • Conducting periodic prescription audits,
  • Generating consumer awareness and empowering consumer with relevant information in an user friendly way
  • Regulating entertainment of doctors in the garb of Continuing Medical Education (CME)

Moreover, 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’.

Even the Planning Commission of India has reportedly recommended strong measures against pharmaceutical marketing malpractices as follows:

“Pharmaceutical marketing and aggressive promotion also contributes to irrational use. There is a need for a mandatory code for identifying and penalizing unethical promotion on the part of pharma companies. Disclosure by pharmaceutical companies of the expenditure incurred on drug promotion to be made mandatory, ghost writing in promotion of pharma products to attract disqualification of the author as well as penalty on the company, and vetting of drug related material in Continuing Medical Education (CME) should be considered.”

Unfortunately, nothing substantive has been done in India to effectively address such malpractices in a comprehensive manner, as yet, to protect patients’ interest.

A pending PIL:

Despite deplorable inaction by the 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.

Ethical marketing conduct in India – A Survey:

A survey report of Ernst and Young titled, “Pharmaceutical marketing: ethical and responsible conduct”, carried out in September 2011 on the UCMP and MCI guidelines, highlighted the following:

  • Two-third of the respondents felt that the implementation of the UCPMP would change the manner in which pharma products are currently marketed in India.
  • More than 50 percent of the respondents are of the opinion that the UCPMP may lead to manipulation in recording of actual sampling activity.
  • Over 50 percent of the respondents indicated that the effectiveness of the code would be very low in the absence of legislative support provided to the UCPMP committee.
  • 90 percent of the respondents felt that pharma companies in India should focus on building a robust internal controls system to ensure compliance with the UCPMP.
  • 72 percent of the respondents felt that the MCI is not stringently enforcing its medical ethics guidelines for the doctors.
  • 36 percent of the respondents felt that the MCI’s guidelines could have an impact on the overall sales of pharma companies.

 Conclusion:

Increasingly many companies across the world are reportedly being forced to pay heavily for ‘unethical behavior and business practices’ by the respective governments.

Intense quarterly pressure for expected business performance by stock markets and shareholders could apparently be the trigger-points for short changing such codes and values.

Be that as it may, I reckon, the need to announce and implement the UCPMP by the Department of Pharmaceutical under the new Modi Government, assumes critical importance in today’s chaotic pharmaceutical marketing scenario. At the same time, demonstrable qualitative changes in corporate ethics and value standards in this regard should always be important goals for any pharmaceutical business corporation in India.

Though late, China has at least started cracking down on the perpetrators of this alleged crime. As corruption conscious Modi-Government assumes office in the country, would India wake-up now to stop this growing menace by enacting and then strictly enforcing the rule of law?

By: Tapan J Ray

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

Is Credibility Erosion of Pharma Accelerating?

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

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

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

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

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

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

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

Key reasons for acceleration of credibility erosion:

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

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

1. Accelerating credibility erosion due to business malpractices:

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

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

Global:

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

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

India:

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

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

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

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

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

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

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

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

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

Why is the drug price so important?

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

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

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

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

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

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

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

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

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

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

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

Conclusion:

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

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

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

By: Tapan J. Ray

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