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Voluntary Practice Alone of Pharma Marketing Code, Has Never Worked…Anywhere

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Since the last three and a half decades, ‘Code of Pharmaceutical Marketing Practices’, prepared by various global pharma trade associations and most of the large global pharma companies individually, have come into existence for strictest voluntary adherence. These are being relentlessly propagated as panacea for all marketing malpractices in the drug industry.

Squeaky clean ‘pharma marketing codes for voluntary practices’ can be seen well placed in the websites of almost all large global pharma players and their trade associations.

Though its concept and intent are both commendable, following the regular flow of media reports on this topic, a relevant question surfaces: Do the votaries, sponsors and creators of these codes “walk the talk”?

If yes, why then mind boggling sums in billions of dollars are being paid as settlement fees by large number of global pharma companies for alleged colossal marketing malpractices in different countries of the world.

This scenario prompts a large number of stakeholders believe, though over-hyped by the global pharma industry, ‘Voluntary Practices’ alone of Pharma Marketing Code’, has never worked anywhere in the world.

In this article, I shall discuss this very point in the Indian context, following the recent decisions and developments related to ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’.

No more proof required:

Although no further proof is required to vindicate the point, just to put this particular deliberation into perspective, I would cite below no more than a couple of recent examples of comments and arguments on this subject, out of so many, as are being frequently reported by the international media:

A February 24, 2014 article highlights that in the last few years alone pharmaceutical companies have agreed to pay over US$13 billion to resolve only U.S. Department of Justice allegations of fraudulent marketing practices.

On November 6, 2014, BBC News deliberated and commented, “Imagine an industry that generates higher profit margins than any other and is no stranger to multi-billion dollar fines for malpractice.”

It is worth noting, all those pharma players paying hefty fines due to alleged humongous marketing misadventures, also prominently display their well-crafted codes of pharma marketing practices for strict voluntary adherence in their respective websites.

Why are such wrongdoers not brought to book in India?

Instances of serious marketing malpractices by several pharma companies in India are also being widely reported from time to time by both the international and national media, including television channels. Even a Standing Committee of Indian Parliament had expressed its grave concern on the subject and urged the Government to place stringent deterrent measures in this area, soon.

Concernedly, instances of levying massive fines or for that matter any other punitive measures taken by any competent authority for similar delinquency in the local drug industry have not been reported from India, just yet. This is only because, India doesn’t have in place any specific regulatory and legal framework as deterrent that would detect, investigate and decide on punitive measures against the erring pharma companies for such misconducts, wherever justifiable.

Government decided to implement a globally failed model:

Personally I have high regards on a large number of astute bureaucrats in India, whom I had occasions to interact with both one-on-one and in groups. Most of their minds are razor sharp and the analytical ability is of the highest order. I am reasonably confident that they know quite well what would work and what would not, to get the expected results in India. The chronicle of the ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’ in that sense is intriguing.

Be that as it may, the bottom-line is, totally ignoring the reality in this regard, the Department of Pharmaceutical (DoP) wanted to make a beginning with the failed model of ‘Voluntary Practices’ of the UCPMP in India.

Accordingly, on December 12, 2014, by a circular to Pharma Industry Associations, namely, IPA, OPPI, IDMA, CIPI, FOPE and SPIC, the DoP announced ‘The Uniform Code of Pharmaceuticals Marketing Practices (UCPMP)’. The communique said that the code would be voluntarily adopted and complied with by the Pharma Industry in India for a period of six months effective January 1, 2015.

The DoP also stated that the compliance to this code would be reviewed thereafter on the basis of the inputs received.

I discussed the key issues related to this DoP circular on voluntary implementation of UCPMP in my blog post of December 29, 2014 titled, “India’s Pharma Marketing Code (UCPMP): Is It Crafted Well Enough To Deliver The Deliverables?”

The time for review:

Thereafter, the clock started ticking to catch the 6-month deadline. As June 2015 took its place in the pages of history, it was about time to ascertain the quality, depth, breadth and seriousness level of implementation of the UCPMP during the past six-month period.

Meanwhile a media report of August 4, 2015 speculated that the Government is planning to make the UCPMP mandatory on the drug and medical devices industry, making it tighter and providing teeth to it.

Has voluntary implementation of UCPMP made any difference?

Stakeholders are now curious to know, what difference has the voluntary UCPMP made during January – June 2015, period?

The mechanism as enunciated by the DoP in its above circular prescribes a virtually unimplementable review process, making the whole exercise subjective and creating a ‘your perception versus my perception’ sort of situation.

This gets vindicated when a leading news daily of India quoting an industry person reported, “There are (only) 15-20% black sheep who are bringing bad name to the entire industry”. Come on…this is a totally subjective, baseless and no more than just an off the cuff comment.

Voluntary implementation requirements of UCPMP grossly impractical:

The ‘Mode of Operation’ of voluntary UCPMP was listed by the DoP under point 8 of its above circular, as follows:

  • All the Indian Pharmaceutical Manufacturer associations will have UCMP uploaded on their website.
  • All the associations will upload on their website the detail procedure (as stated in Para 10) of lodging complaints.
  • All the associations will also have a provision on their website for uploading the details of complaints received i.e. the nature of complaint, the company against whom the complaint has been made, the action taken by the committees under the association including the present status in the complaint and such details of a complaint should remain uploaded in the website for three years. The details of proceedings in a complaint and decisions thereafter will be sent by the concerned Association on Quarterly basis, to National Pharmaceutical Pricing Authority, on following address: Member Secretary, NPPA, 3rd Floor, YMCA Cultural Centre Building, 1 Jai Singh Road, New Delhi.

The above UCPMP circular finally says:

“The Managing Director/CEO of the company is ultimately responsible for ensuring the adherence to the code and a self declaration, in the format given in annexure shall be submitted by the executive head of the company within two months of date of issue of UCPMP and thereafter within two months of end of every financial year to the Association for uploading the same on the website of the Association. The same must be uploaded on the website of the company also.”

Unrealistic review process:

I have two fundamental questions in this regard, as follows:

1. Do all pharma Trade Associations have websites?

It appeared from my Internet search that just one pharma trade association in India has a website. However, I could not gather the required details even from that particular association’s website.

The readers may also try to locate the very existence of other Indian pharma trade associations’ websites, if I have made any mistakes during my trip to the cyberspace, and attempt to get the relevant details on UCPMP as stated in the DoP circular.

2. Are all ‘voluntary compliance letters’ from the Managing Directors in place?

Are voluntary compliance letters on UCPMP from all Managing Directors of  all the pharma companies are with the Department of Pharmaceuticals by now? If not, based on which information the above news item reported that only 15-20 percent of the pharma companies did not comply with the voluntary UCPMP?

Relying only on ‘Voluntary Practice of Code’ is a globally failed model:

A healthy ecosystem for ethical marketing practices should be created and propagated within the pharma organizations of all size and scale of operation. In that sense, voluntary code of pharmaceutical marketing practices prepared by individual pharma organizations or their trade associations such as IFPMA play a commendable role. However, only those are not just enough anywhere in the world, as enumerated above.

Encouragement for voluntary practice of pharma marketing codes by the stakeholders is desirable in India too, predominantly to catalyze a change in the decades old and overall fragile ‘Jugaad’ mindset in this important area of pharma business.

In that sense, just as a starter, DoP’s initial push with voluntary practice of UCPMP is conceptually understandable, though the Department appeared to have messed up totally in its critical operationalization area for the purpose of a diligent review after 6-months.

Many countries initially relied on ‘voluntary practice’ of Pharma Marketing Codes crafted by the pharma players and their global trade associations, mostly in line with the Gold Standard of IFPMA Code of Pharmaceutical Marketing Practices. However, later on, all these countries had to put in place other regulatory and legal checks and balances for the interest of patients.

Why ‘voluntary practice’ concept alone, is not enough?

Strong internal and external performance pressures, while navigating through turbulent business environment facing strong head winds, could temporarily unnerve even the seasoned persons with nerves made of steel, as it were. It has been happening all the time, now more frequently, for different reasons.

Thus, all-weather ‘voluntary practice of marketing code model’ in isolation, has globally failed in the pharma industry, almost everywhere.

Appropriate regulations and robust laws promising justice to all, would always demonstrate a commendable role as a tough deterrent in those trying situations, unless any person or a legal entity is a hardcore manipulator focusing just on profiteering.

Related laws and regulation in other countries:

Most developed nations, such as Europe, United States, Canada, Australia, Japan, to name a few, have robust laws and regulations in this area, which act as serious deterrents to pharma marketing malpractices.

These deterrents fall primarily into the following three areas:

Specific anti-corruption regulatory and legal agencies:

Many Governments, such as, the United States and the member countries of the European Union (EU), are strictly enforcing appropriate legal and regulatory measures through dedicated enforcement agencies constituted specially for this purpose. These agencies can investigate any wrongdoings in the pharma marketing area and initiate judicial proceedings.

Specific anti-bribery Acts covering even overseas activities:

Current anti-bribery and anti-corruption laws in many countries, such as, the United States Foreign Corrupt Practices Act or the Bribery Act of the United Kingdom have impacted several global pharma players pretty hard, as these laws affect them even beyond the shores of their respective countries for indulging in marketing malpractices.

Public disclosures:

One such example is ‘The Physician Payment Sunshine Act’ of the United States. This was a part of its healthcare reform bill that was adopted in March 2010 and was finally released in March 2013.

Under the Sunshine Act, data on payments and gifts made to physicians and teaching hospitals by medical device and pharmaceutical companies must be publicly available on a searchable federal database, starting in September 2014.

What may happen, if UCPMP is made mandatory:

If UCPMP is made mandatory, I would suggest at least the following three actions:

  • Appropriate transparent rules, regulations and laws with adequate teeth to address this specific purpose either to be framed afresh or the existing anti-corruption and anti-bribery laws to be amended as required, besides others.
  •  A competent fully empowered authority within the Department of Pharmaceuticals (DoP) should be accountable for administration and implementation of the UCPMP effectively. The DoP may wish to revive its own idea of appointing an Ombudsman with quasi-judicial power for this purpose.
  • State FDAs should play an important role as detecting, investigating and prosecuting agency also for pharma marketing malpractices.
  • DoP website should provide comprehensive details of all punitive action taken against each erring company for this purpose.
  • A compliance certificate from the Managing Directors of the respective companies to the Central Board of Direct Taxes (CBDT) stating that the all sales and marketing expenditures computed for Corporate tax payments are in total conformity with the the UCPMP. Any false declaration should attract serious and exemplary penal consequences.

What would the pharma companies gain?

I would expect at least the following to happen:

  • From the sales and marketing perspective, this new ball game would help establish a level playing field for all the pharma players, to a great extent.
  • Expenditure on sales and marketing would obviously come down sharply, improving product margins significantly, even if a part of this saving is passed on to patients in form of price reductions.
  • Without the allurement of freebies, competitive and innovative brand marketing acumen of the pharma companies would get honed, which would ultimately emerge as the key differentiating factor for the balance of performance to tilt either towards success or failure.
  • Consequently, quality, depth and dimension of marketing inputs for a decisive competitive edge would me more cerebral and distinct in nature, unlike the marketing cacophony in today’s era of freebies.
  • With greater available resources, it would help the pharma players focusing more on talent, skill and technology development to attain sustainable business excellence.
  • The key focus would necessarily shift from ‘buying prescriptions’ to ‘creating prescriptions’ with value based innovative communication of bundled products and services.

Conclusion:

Relying solely on voluntary compliance of ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’, in my view, would not work in India, just as it has not worked even in the developed countries of the world.

This is primarily because, India does not currently have any serious deterrents in this area, including specific legal and regulatory systems, to limit pharma marketing malpractices, unlike many other developed nations of the world.

If the media speculation of DoP’s making the UCPMP mandatory is right, I would reckon, despite its intriguing circular of December 12, 2014, it is a courageous step in the right direction.

Although coming in form of a bitter pill, it would help the Indian pharma players embracing a long awaited and mandatory course correction for not just doing things right, but more importantly doing right things.

I would expect its longer term effect to be ‘win-win’ for all – pharmaceutical industry in India, the Government and above all the patients…well…of course, barring the regular recipients of freebies of all types, forms, kinds, nature and value.

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.

 

Data Manipulation: Leapfrogging Dangerously Into Clinical Trial Domain

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Over the last several years, repeated allegations of gross data manipulative practices, detected by global drug regulatory agencies, such as USFDA and MHRA, have shaken the Indian pharma exporting companies hard.

This has been hurting the overall business performance of most of these players, considerably, besides other consequential fallouts

Significant numbers of pharma manufacturing facilities of different scale and size have been receiving ‘Import Alerts/Warning Letters’, at regular intervals, from the overseas drug regulators. All such steps have resulted in refusal of entry of medicines manufactured in those plants into the importing countries. As on date, most of these bans are for the United States (US), some for the United Kingdom (UK) and now a fresh one that covers all the 28 countries of the European Union (EU).

Consequently, the drug export performance of the country has started moving south, as I indicated in my blog post of September 29, 2014, titled “Make in India…Sell Any where in The World”: An Indian Pharma Perspective.

While looking at the future, the situation seems to be even more concerning than what is generally envisaged today, as it involves many homegrown local pharma behemoths, including the topper of the Indian pharma league table – Sun Pharma.

Time to take the bull by the horns:

These are regular and serious episodes of allegedly deliberate wrong doings involving life saving medicines. It is about time that without further delay the Indian Government and the country’s drug regulators accept unequivocally that there is something fundamentally wrong in this area that needs to be set right urgently.

To come out of this peril soon, competent authorities need to first ascertain without squandering much time on the utopian “conspiracy theory”, whether this seemingly uncontrollable issue falls under:

  • Technical incompetence
  • Inadequate resource deployment
  • Or just an outcome of generally all pervasive and a very Indian “Jugaad” mindset

It could well be a mix of all the three above factors in different proportions.

‘Data manipulation’ dangerously leapfrogging into clinical trial domain:

So far, incidences of alleged data falsification were restricted mostly to drug manufacturing activities. Alarmingly, it has now leapfrogged into the immensely important domain of ‘Clinical Trials’, based on which the drug regulators decide on the ‘Marketing Approval’ of medicines for patients’ consumption, wherever required.

If the Government does not nip it in the bud, ruthlessly and now, it has the potential to heavily impact the innocent patients even costing their precious lives.

What it means commercially?

According to Pharmaceutical Export Promotion Council (Pharmexcil), the Indian pharmaceutical industry could lose around US$1 – US$1.2 billion worth of exports due to the latest decision of the European Union to ban 700 generic drugs that earlier received European Union (EU) clearance for sale in their member countries.

According to Pharmexcil, Europe accounts for US$3 billion out of total Indian pharma exports of US$15.4 billion, which includes both APIs and formulations. This is the first time, when there has been a negative growth in pharma exports to the EU.

Unrolling the GVK Bio saga:

On July 22, 2015 Federal Institute for Medicines and Medical Products of Germany reportedly posted the notice (in German language) of ban of 700 generic drugs effective August 21, 2015. This ban would be applicable to all 28 EU member nations.

Accordingly, from the above date, all these drugs of both the Indian and multinational companies for which clinical trials were done by India’s Hyderabad based GVK Biosciences, cannot be distributed or sold by pharma companies, wholesalers, drug stores and other outlets in the EU, as indicate in the above notice. This would be the largest ban of generic drugs imposed by the European Union, as it comes into effect.

This ban is reportedly the ultimate outcome of an inspection in 2014 by the French authorities of the GVK site that handled the clinical trials for those 700 drugs. The French inspectors found that a number of electrocardiograms were falsified by GVK Bio employees as part of 9 approval studies between 2008 and 2014.

Following this finding, earlier on January 23, 2015, by a Press Release, the European Medicines Agency (EMA) had announced that a number of medicines for which authorization in the European Union (EU) was primarily based on clinical studies conducted at GVK Biosciences in Hyderabad, India, should be suspended.

Though GVK Bio has disputed the claims, it has reportedly set aside up to US$6.5 million for new studies on these drugs.

Indian Government blames ‘vested interests supporting Big Pharma’!

Interestingly, on July 23, 2015, The Financial Express reported, “the Modi government has asked the heads of India’s diplomatic missions in EU member countries and at the European Commission (EC)-level to take up the issue with the concerned authorities and ensure that it is not ‘blown out of proportion’ by ‘vested interests’ supporting the Big Pharma (innovator drug companies).”

However, it is even more interesting that earlier on April 16, 2015, quoting the CEO of GVK Biosciences Private Limited Reuters reported, “India may go to the World Trade Organization (WTO) if the European Union does not reconsider a decision to suspend the sale of about 700 generic drugs that were approved based on clinical trials by GVK Biosciences.”

It is noteworthy, despite the above public announcement, between April and July 2015, India has not lodged any complaint to the WTO on this mega ban in EU, involving clinical trials conducted by GVK Biosciences.

In my view, any tangible immediate outcome of the Indian diplomatic move, particularly on this ban in the EU, as reported above, appears rather unlikely, if at all.

The rigmarole continues:

The narrative of alleged gross falsification of sensitive clinical trial data does not end here. Almost replicating what happened earlier with frequent incidences of drug manufacturing data manipulation, the same rigmarole now leapfrogs into another important domain with similar intensity.

On June 30, 2015, close on the heels of the above GVK Biosciences saga, the World Health Organization issued a ‘Notice of Concern’ after inspection of Chennai-based Contract Research Company, Quest Life Sciences facility.

It also brought to light, critical deviations from GCP (Good Clinical Practices), over data integrity, subject safety and quality assurance and in gross violation of procedures during clinical trials for HIV drugs, such as, Lamivudine, Zidovudine and Nevarapine dispersible tablets from Micro Labs.

WHO inspectors reportedly found that “two-thirds of electrocardiograms performed on patients were duplicates with dates and names changed by the company”.

The WHO letter also underscored, “These issues appear to be systemic in nature and occurring many times over a significant period of time, and not only as a one-time incident for the study submitted to WHO.”

Again, almost depicting the past, there does not seem to be any perceptible and strong regulatory interventions in India in this regard, event after the above ‘Notice of Concern’ from the WHO.

Could assume a snowballing effect:

This situation may eventually assume a snowballing effect, when data related malpractices in clinical trials would catch up with drug manufacturing related data manipulation detected by the foreign drug regulators in India. I have just given an example of its continuation in the clinical trial domain.

The following are a few examples of just the last six months of 2015 of the continuation of the same in the drug manufacturing area:

Cadila Pharmaceuticals Limited:

In a letter dated February 25, 2015 to Cadila Pharmaceuticals Limited, the USFDA wrote that in the pharma manufacturing facility of the company, located at 294 GIDC Industrial Estate, Ankleshwar, Gujarat, their (USFDA) investigator identified significant deviations from current good manufacturing practice (CGMP) for the manufacture of Active Pharmaceutical Ingredients (APIs). Those deviations cause the APIs manufactured there to be adulterated, in that the methods used in, or the facilities or controls used for, their manufacture, processing, packing, or holding do not conform to, or are not operated or administered in conformity with CGMP.

Emcure Pharmaceuticals Ltd.:

On July 13, 2015, by an ‘import alert’ posted on its website, the USFDA announced that the regulatory agency had barred imports from Hinjewadi manufacturing plant in Maharashtra of Emcure Pharmaceuticals Ltd., after their inspection revealed the company was not meeting manufacturing quality standards.

Aurobindo Pharma Ltd.:

Again, according to a July 22, 2015 media report, “Hyderabad-based Aurobindo Pharma is the latest addition to an expanding list of Indian drug firms that have come under the scanner of the US health regulator.” In this case also the USFDA reportedly raised issues related to the quality management systems of the company.

Business sustainability could be in jeopardy:

There are ample evidences that manipulations of specified drug quality standards, are making even the large home grown pharma companies to pay through the nose. In fact, it has already cost some of these companies an arm and a leg, at times jeopardizing even their very existence. One such company is Ranbaxy. The issues related to data fudging of Ranbaxy have been so complex and widespread that its recent acquirer Sun Pharma has already started struggling to keep its neck above water with this brand new acquisition.

According to July 27, 2015 media reports, GVK Biosciences are also in parleys to sell the business, following EU drug regulators’ serious allegations of clinical trial data manipulation at its Hyderabad facility.

Again, media reports of July 30, 2015 indicated that hit by the USFDA imposing import ban on three of its manufacturing facilities, Ipca Laboratories reported 86 per cent decline in net profit for first quarter ended June 30, 2015.

Though, some domestic pharma companies are still out of it, with grace, if this overall menace remains unchecked and not intervened by the Government, it could cost the nation dear, at least when it comes to near term exports business growth and global disrepute for the delinquency.

Are medicines for domestic consumption safe and effective?

When such rampant data manipulation can take place for ‘export quality’ of drugs, what about the quality standards of medicines, which are manufactured for consumption of local patients?

Despite intense furore on this subject, Indian drug regulators at the Central Drugs Standard Control Organization (CDSCO), very strangely, do not seem to be much concerned on this critical issue, at least, as perceived by majority of the stakeholders. It appears from the precedents, our drug regulators seem to act promptly, mostly when the Supreme Court of the country directs them for any specific action for public interest.

Considering blatant violations of GMP and GCP standards that are increasingly coming to the fore related to ‘export quality’ drugs in India, and that too only after the inspections by the foreign drug regulators, the following questions float at the top of my mind:

  • Why no such warnings are forthcoming at all from the Indian drug regulators?
  • Does it mean that the level of conformance to GMP and GCP is hundred percent for all medicines manufactured and clinically evaluated in India for the consumption of local patients?
  • If yes, why such incidences are not uploaded to the CDSCO website, just like USFDA?
  • If not, why?

Conclusion:

Increasing incidences of repeated GMP and GCP violations by the Indian drug exporters, as enunciated mostly by the USFDA, MHRA and now EMA are, in turn, fueling the apprehensions of many Indian stakeholders on the quality manufacturing and clinical evaluation of those drugs in the country.

In the critical public health safety area, there does not seem to be any room for diplomatic maneuvering by the Government, whatever is its financial impact on the drug exports performance of India.

This can be corrected, only if the Indian pharma industry and the Government, in tandem, wish to move in the right direction. Searching for justifications within imaginary ‘vested interests’ and self-created ‘conspiracy theory’ would be futile and counterproductive.

Making the wrongdoers swallow strong bitter pills would help salvaging the seemingly uncontrollable regulatory situation. Additionally, it would stop inviting disrepute to the country that the world was referring to, even until recently, as the ‘pharmacy of world’.

Any attempt to trivialize the situation, could meet with grave consequences  and prove to be foolhardy. The emerging scenario ultimately may even compel the local doctors and hospitals to avoid prescribing drugs of those companies involved in such wrong doings against patients’ interests. This actually happened earlier with Ranbaxy, though briefly. It is also possible that many erudite patients on their own may request the doctors to prescribe equivalent drugs of pharma MNCs, enjoying better brand equity in this regard.

Drug quality related avoidable malpractices and attempted hoodwinking to regulators, are taking place at a time when Prime Minister Modi is going global to give a boost to his much publicized ‘Make in India’ campaign.

In the current aspirational business climate of the country, it is an irony that alleged ‘Data Manipulation’, which was so far confined to pharma manufacturing activities in India, instead of getting mitigated, is now leapfrogging into the related clinical trial domain too, with utter disregard to patients’ health safety interest and the reputation of the country.

By: Tapan J. Ray

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

 

Indian Patents Act To Prevail Undiluted…Finally

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Curiously enough, what a little birdie told me just a couple of weeks ago, very similar to that I read in various media reports even less than a week later.

It was related to a somewhat trepidatious national policy in the making on Intellectual Property Rights (IPR) in India.

One major apprehension, besides a few others on this IPR Policy, was flying all over and nettling many. It was regarding the possibility of tweaking or dilution of the Indian Patents Act by the Government, coming under strong external pressure and also to get support on India’s food security in the World Trade Organization (WTO).

Probably to douse this simmering fire of trepidation, well calibrated, unambiguous and reassuring narratives on the subject were unfolded recently by the Government, that too in a quick succession, which were somewhat as under.

On July 20, 2015, at an event organized by the Federation of Indian Chambers of Commerce and Industry (FICCI), the Commerce and Industry Minister Nirmala Sitharaman reiterated that:

  • India’s IPR laws are quite in compliant with the TRIPS (Trade Related Aspects of Intellectual Property Rights) agreement.
  • There is no need for apprehension in any corner of the world as to what India’s patent regime is like.

The Minister also indicated at the same event that following a transparent process of drafting…and redrafting; the final blue print of the IPR policy has now been circulated to all concerned ministries for inter-ministerial consultations. After completion of that process soon, her Ministry would submit the final version to the Cabinet for approval.

It is now anticipated that by the end of this year the first ‘IPR Policy’ of India would be operational.

The creeping angst for a possible twitching in the country’s otherwise robust Patents Act, was mostly originated from a pointed recent utterance of Prime Minister Modi on this issue that we shall quickly explore in this article.

Another stronger assertion:

Immediately thereafter, while commenting on a related article published in an Indian business daily dated July 24, 2015, Minister Nirmala Sitharaman reasserted the following points even more emphatically and virtually in so many words:

  • India’s IPR laws are fully compliant with international obligations under the TRIPS agreement. This includes the Patents Act, 2005, whose provisions have time and again stood the test of judicial scrutiny.
  • There is no question of permitting ‘evergreening’ of patents, or of realigning our IPR laws to comply with US laws.
  • There is no question of sacrificing our IPR laws to get support from a particular country even on food security.

A brief background:

In October 2014, almost immediately after Prime Minister Modi’s return to India from the United States, the the Department of Industrial Policy and Promotion (DIPP) formed a six-member ‘Think Tank’, chaired by Justice (Retd.) Prabha Sridevan, to draft the ‘National IPR Policy’ and suggest ways and legal means to handle undue pressure exerted by other countries in IPR related areas.

The notification mandated the ‘Think Tank’ to examine the current issues raised in such reports and give suggestions to the ministry of Commerce & Industry as appropriate.

However, the domestic pharma industry, many international and national experts together with the local stakeholders, continue to strongly argue against any fundamental changes in the prevailing robust patent regime of India.

Taking quick strides, on December 19, 2014, the Think Tank’ released its first draft of 29 pages seeking stakeholders’ comments. According to Minister Nirmala Sitharaman, “Different people, countries, including the United States and other organizations have already given their inputs on the draft policy.”

The new policy would focus on stronger enforcement of IPR by increasing the manpower in IP offices and reducing pendency of IPR filings. It aims at bringing clarity to the existing laws and making changes wherever required to safeguard the interests of Indian industry and patent holders worldwide.

I reviewed this subject in my blog post of January 19, 2015 titled, New “National IPR Policy” of India – A Pharma Perspective.

Most recent apprehension:

The most recent spark for the speculation of a possible dilution in the Indian Patents Act 2005, came from the April 24, 20015 media report that quoted Prime Minister Modi expressing his intent on the issue, seemingly going overboard, as follows:

“India’s patent laws should be brought on par with global standards to make Asia’s third largest economy a hub for outsourced creative services.”

The basic purpose of making such an apparently ambiguous statement may be construed as an attempt to attract more Foreign Direct Investments (FDI) for the country.

Whatever it may be, this announcement of the Prime Minister sent a strong signal to many as an impending major shift in his Government’s thinking to move away from an otherwise robust and a decade old IPR regime in India, undoubtedly under intense external pressure.

The above pronouncement from an otherwise tough minded Prime Minister came as a bolt from the blue, as it were, to many stakeholders. This is mainly because; India has so far been maintaining in all forum that its IPR regime is fully TRIPS compliant and garnered enough international support from the experts in this area, including Nobel Laureates.

The Prime Minister made his intent even stronger, when he further elaborated his argument as under:

“If we don’t work towards bringing our intellectual property rights at par with global parameters, then the world will not keep relations with us. If we give confidence to the world on IPR, then we can become a destination globally for their creative work.”

Some American Government agencies reportedly lapped up Prime Minister Modi’s statement as they openly commented as follows:

“The United States also welcomes April 2015 statements made by Prime Minister Modi recommending that India align its patent laws with international standards and encourages India expeditiously undertake this initiative”

Intriguing comment:

Prime Minister Modi’s comment in this regard that “India needs to bring its patent laws on par with global standards,” comes of rather intriguing to many domain experts, as TRIPS agreement is the only universally accepted ‘Global Standard’ for IPR. Even the new Government has reiterated that Indian patent regime is fully TRIPS compliant.

India welcomes and encourages innovation:

With the enactment of Patents Act 2005, India has demonstrated that Intellectual Property Rights (IPR) and pharma patents in particular, help fostering innovation and is critical in meeting unmet needs of the patients.

However, the moot question still remains, what type pharmaceutical invention, should deserve market exclusivity or monopoly with overall freedom in pricing, keeping larger public health interest in mind.

There are still some loose knots in the process of speedy resolution of all IP related disputes and creation of a desirable ecosystem for innovation in the country, that the new IPR Policy is expected to effectively address, soon.

Two fundamental changes that the US is looking for:

Leaving aside the peripheral ones, the following two are the center pieces where the United States would want India to dilute its Patents Act 2005 considerably:

  • Patentability for all types of innovation, including ‘me-too’ ones and evergreening of patents, which would delay entry of affordable generic drugs.
  • “Compulsory Licensing (CL)” provisions, other than during natural calamities.

The status today: 

Though the Prime Minister has not further spoken on this subject publicly, from the recent statements of the Union Minster of Commerce and Industry it seems rather clear that for greater public health interest, India has decided to keep its Patents Act undiluted, at least, for now.

The Union Government has distinctly explained its stand in the following two areas:

I. No…No, to ‘Evergreening’ of patents in India:

In line with this thinking, for quite sometime a raging global debate has brought to the fore that there are quite a large number of patents on drug variants that offer not very significant value to the patients over the mother molecules, yet are as expensive, if not more than the original ones.

In common parlance these types of inventions are considered as ‘trivial incremental innovations’ and described as attempts to ‘evergreening’ the patents.

A paper titled, “Pharmaceutical Innovation, Incremental Patenting and Compulsory Licensing” by Carlos M. Correa argued as follows:

“Despite decline in the discovery of New Chemical Entities (NCEs) for pharmaceutical use, there has been significant proliferation of patents on products and processes that cover minor, incremental innovations.”

The study conducted in five developing countries – Argentina, Brazil, Colombia, India and South Africa has:

  • Evidenced a significant proliferation of ‘evergreening’ pharmaceutical patents that can block generic competition and thereby limit patients’ access to medicines.
  • Found that both the nature of pharmaceutical learning and innovation and the interest of public health are best served in a framework where rigorous standards of inventive steps are used to grant patents.
  • Suggested that with the application of well-defined patentability standards, governments could avoid spending the political capital necessary to grant and sustain compulsory licenses/government use.
  • Commented, if patent applications were correctly scrutinized, there would be no need to have recourse to CL measures.

Indian Patents Act under its section 3(d), discourages the above practices for public health interest. This particular provision, though absolutely TRIPS compliant is not followed in the developed markets, predominantly for commercial reasons. Hence the mounting pressure is on India for its major dilution.

II. Compulsory License (CL) provisions would stay to prevent misuse and abuse:

This is another major safeguard provision for the patients against abuse and misuse of patents, including obscene price tags of patented drugs, non-working of patents as a commercial strategy, limited availability, besides extreme urgency and some other situations. Though TRIPS very clearly allows all such provisions, India has so far granted just one CL.

With these India has amply demonstrated that CL provisions are important safeguards for the country and not for abuse or misuse by any one, including the Government. Moreover, it has to pass the acid test of rigorous judicial scrutiny that includes the Supreme Court of India.

Despite all these, more scares are being created around CL provisions in India than what is the reality in the country.

Various safeguards and deterrents against misuse and abuse of patents are absolutely essential for public health interest. Hence there is naturally no question of going back from such provisions in the statute.

It is worth noting, if Indian Patent regime is not TRIPS compliant, why hasn’t any country complained against India to the World Trade Organization (WTO) for having all these provisions in the Indian Patents Act, as yet?

India shows the new IPR way:

According to available reports, the following countries are coming closer to the Indian pharma patent regime:

  • Argentina has issued guidelines to reject ‘frivolous’ patents
  • Peru, Columbia and some other South American countries have placed curbs
  • Philippines has similar provisions
  • South Africa is contemplating to incorporate such steps
  • Australia is deliberating on making the law tougher

Positive reverberations in the domestic pharma sector:

Home grown pharma players seem to be visibly happy too, as the overall stand of the Government in this regards is getting clearer.

This in many ways gets vindicated, when a promoter, chairperson and managing director of a mid-size Indian Pharma and Biotech company, with high media visibility, reportedly comments on the finalization of Indian IPR Policy as follows:

“There is a need to protect interest and disallow monopolies like big pharma or big companies/corporates that want to invest and take advantage of the Indian market.”

Concerns of some ‘Who’s Who’:

The following is just an example of such concern:

On February 10, 2015,  the Nobel Laureate in Economics – Joseph E. Stiglitz, made the following comment in an article published in ‘The World Opinion Page’ of ‘Project Syndicate’:

“If the Obama administration succeeds in forcing India to strengthen its patent laws, the change would harm not only India and other developing countries; it would also enshrine a grossly corrupt and inefficient patent system in the US, in which companies increase their profits by driving out the competition – both at home and abroad. After all, generic drugs from India often provide the lowest-cost option in the US market once patent terms have expired.”

As things stand today, it would not be unreasonable to conclude that the Nobel Laureate Joseph E. Stiglitz’s worst apprehension on the Indian Patent regime, in all probability would not come true.

Conclusion:

For quite some time, Indian Government has been under intense nagging from the United States, other developed countries, many drug MNCs and the pharma lobby groups lavishly funded by them; to effect major changes in the Patents Act of the country that currently denies unreasonable commercial exploitations, in many ways. Section 3(d) of the statute is just one of the key examples.

The browbeaters of such ilk keep pontificating the importance of ‘innovation’ and that too with a condescending undertone, as if the Indian Government is blissfully ignorant about it.

They allegedly want the Government to dilute the robust safeguard provisions of Indian Patents Act, trying to unfairly tilt the balance of justice in their favor. Consequently, it would go against the patients’ health interest by considerably delaying entry of cheaper generic equivalents, of ‘me-too’ type of inventions, in the country.

Despite initial apprehensions based on the possible misconstrued observation of the Prime Minister Modi on this issue, clear and unambiguous recent assertions of the Government on the patent regime of India, especially in the ‘count-down’ days of the new IPR Policy announcements, is reassuring. It goes without saying, this cannot happen without the benediction of India’s all-powerful Prime minister.

As stated in the draft document, let us hope that the new IPR Policy would help establishing a dynamic, vibrant and balanced intellectual property system in India, to foster innovation and creativity in a knowledge economy and accelerate economic growth, employment and entrepreneurship.

Under this backdrop, it now emerges almost indubitably that Indian Patents Act 2005 would continue to prevail undiluted much to the dismay of its fiercest critics…Finally?

By: Tapan J. Ray

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

India’s Drug Pricing Policy: “Absurd, Unreasonable And Irrational” – Supreme Court

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On July 15, 2015, while hearing a petition related to the current ‘Market Based Drug-Pricing Policy’ of the country, the Supreme Court of India expressed its bewilderment on the very rationality of the ‘National Pharmaceutical Pricing Policy 2012’ and directed the Government for its review.

The petition was filed by an NGO called, ‘All India Drug Action Network’. It pleaded before the honorable court that ‘Market Based Drug-Pricing’ that is currently followed in India, was never used for any price regulatory purposes. Under this new policy, simple average ‘Ceiling Prices’, in many cases, are higher than the market leader price.

The petitioner reportedly also alleged that under the new drug policy, the profit margin for pharma companies and dealers has become in the range of 10-1300 per cent. Thus, the NGO sought a direction to the Government to continue with earlier ‘Cost-Based Pricing’ to arrive at ‘Ceiling Prices’ for all essential drugs.

‘All India Drug Action Network’ contended that the ‘National List of Essential Medicines (NLEM)’ consisted of only 348 drugs and had left out many other essential medicines from price control. Thus, it sought inclusion of more life-saving medicines in the NLEM whose prices would be regulated by the government. It also pleaded that the price control must extend to various “dosages, strength and combinations” of those drugs falling under NLEM.

Expressing its serious concern, the three-judge bench of the Apex Court reportedly told the Government, “You are fixing the maximum price of a medicine above the retail price of the leading company of the same drug. It is absurd.”

The honorable Supreme Court reportedly also observed that the “pharmaceutical companies were already charging 5,000 times of the production cost and then you are taking the average of them and fixing under the drug price control order. This is legitimizing the profiteering”.

Many construe this observation of the Supreme Court as virtual endorsement of ‘All India Drug Action Network’s accusation that the earlier ‘cost-based drug-pricing’ model was better for the patients, whereas the new ‘market-based drug pricing’ model just legitimizes profiteering and pushes drugs out of reach of the poor, who are already suffering under very high ‘out of pocket’ health expenditure burden.

The Honorable Court reportedly asked the Department of Pharmaceuticals of Union Ministry of Chemicals and Fertilizers to reconsider aspects like the formula to fix prices. And thereafter pass a “reasoned” order on the representation of the NGO on the issue within six months after hearing all parties concerned. It also asked the Centre to file a copy of its decision on the representation of NGO, which would file it in six weeks.

However, at the very beginning the bench had expressed, “this is not an easy area for the courts to intervene and it is very difficult for a court to sit in judgment in such kind of policy matters.”

The Additional Solicitor General appearing for the Government reportedly submitted that the Government is open to consider the representation. “We will have a look to add some more drugs under the price control order”, she reportedly said.

Key objectives for drug price control in India:

As has now been well established, backed by robust data, that in a country like India ‘Out of Pocket Expenditure’ for medicines is very high.

According to the World Bank Out-of-pocket health expenditure (% of private expenditure on health) in India was last measured at 85.88 in 2013.

In a situation like this, to ensure adequate access to affordable essential medicines for the common man, the Government has hardly any option but to regulate the prices of, at least, the essential medicines.

To achieve this objective meaningfully, the Government through the ‘National Pharmaceutical Pricing Authority (NPPA)’ tries to make sure that all such medicines are:

  • Adequately Available
  • Reasonably Affordable

Therefore, maintaining a right balance between ‘affordability’ and ‘availability’ of medicines is of critical importance, while framing any drug pricing policy, .

A January, 2013 article titled, “Pharma Policy 2012 and Essential Drug’s Pricing” gives the following examples to illustrate how current ‘market based pricing’ mechanism is going to make many drugs costlier:

Drug Disease Market-based pricing (simple average) Cost based pricing
Metformin Diabetes Rs.35 Rs.14
Atorvastatin Cholesterol Rs.127 Rs.16
Atenolol Hypertension Rs.38.5 Rs.08

Source: Jan Swasthya Abhiyan (JSA)

Why ‘drug price control’ at all in a ‘Free Market Economy’?

It is indeed a very pertinent question to ponder over.

However, equally pertinent answers are also available. One such was deliberated in a 2014 paper titled, “Competition Issues in the Indian Pharmaceuticals Sector” of Delhi School Economics (DSE). The paper deals with the subject related to failure of ‘Free Market Economy’ especially for branded generic drugs in India, despite seemingly intense price competition.

In an ideally free-market economy model, for each of these brands of identical drugs, having similar regulatory approvals from the Indian drug regulator on efficacy, safety and quality standards, competitive forces should have prompted uniform or at least near uniform prices for all such products.

Any brand of the same drug/drugs charging more, should generally have attracted lesser customers, if consumers would have exercised their purchase decisions directly; efficacy, safety and quality standards being the same, as certified by the drug regulator.

Interestingly, for prescription medicines, the much proven process of consumers exercising their free choice to select a brand, influenced by advertising or other available information, does not happen at all.

A snapshot of key changes in the new drug policy over the previous one:

The ‘Drug Price Control Order 2013 (DPCO 2013)’ clearly articulates two basic changes in the criteria for drug price control in India, as follows:

1. Span of price control:

This was re-defined in DPCO 2013 based on the ‘essentiality criteria’ of the drugs, which in turn is based on the ‘National List of Essential Medicines 2011 (NLEM 2011)’, instead of bulk drug based price control of DPCO 1995.

2. Methodology of price control:

This was also re-defined in DPCO 2013, making a clear departure from ‘Cost-Based Price Control’ of DPCO 1995 to ‘Market-Based Price Control’. The ‘Ceiling Prices’ are now arrived at by calculating the simple average price of each essential drug with market share of 1 percent and above. Instead, in DPCO 1995, ‘Ceiling Prices’ of price-controlled drugs used to be arrived at by applying specified ‘Maximum Allowable Post Manufacturing Expenditure (MAPE)’ on the manufacturing costs of each of such formulations. 

Key lacunae in DPCO 2013:

Besides contentious methodology of price control in DPCO 2013, NLEM 2011 does not also cover a wide range of essential drugs, which are so important for patients. I had highlighted this issue  in one of my earlier blog posts titled “Is The New ’Market Based Pricing Model’ Fundamentally Flawed?”

NLEM 2011 does not cover many combinations of TB drugs, a large number of important drugs for diabetes and hypertension. Many other critical life saving medicines, such as, anti-cancer drugs, expensive antibiotics and products needed for organ transplantation have been left out of price control. In fact, the prices of a number of these drugs have reportedly gone up after the notification of DPCO 2013, though NPPA has now started acting on this avoidable trend.

The government has reportedly admitted in an affidavit filed before the Supreme Court that the market value and share of medicines covered by new DPCO 2013, as ‘Essential Drugs’, is a meager 18 per cent of the Indian Pharmaceutical Market (IPM), instead of 20 percent under DPCO 1995.

As a result, DPCO 2013 based on NLEM 2011 undermines the entire objective of making essential drugs affordable to all.

All these lacunae in the current DPCO 2013 calls for a major revision of NLEM 2011, besides methodology of ‘Ceiling Price’ calculations. The Union Health Ministry has reportedly initiated steps to revise the list considering the existing market conditions and usage of drugs by the patients. This has reportedly happened again as recently as on July 16, 2015.

Observations of Indian lawmakers:

On April 20, 2015, a panel of 31 lawmakers of the Standing Committee on Chemicals and Fertilizers tabled its report in the Indian Parliament. The committee emphasized that patients in India should have access to all medicines, including life saving drugs, at affordable prices. Accordingly, it recommended expansion of the scope of price control to all medicines available in the country.

The Committee wondered why all medicines are still not listed in the ‘National List of Essential Medicines (NLEM)’ and is of the view that drugs of all kinds are essential and are required by the patients for treatment of various disease conditions at different times.

Government defines “Market Failure for pharmaceuticals”:

In its price notification dated July 10, 2014, the NPPA has categorically stated about “Market Failure for pharmaceuticals” as follows:

  • There exist huge inter-brand price differences in branded-generics, which is indicative of a severe market failure, as different brands of the same drug formulation, which are identical to each other in terms of active ingredient(s), strength, dosage, route of administration, quality, product characteristics, and intended use, vary disproportionately in terms of price.
  • It is observed that, the different brands of the drug formulation may sometimes differ in terms of binders, fillers, dyes, preservatives, coating agents, and dissolution agents, but these differences are not significant in terms of therapeutic value.
  • In India the market failure for pharmaceuticals can be attributed to several factors, but the main reason is that the demand for medicines is largely prescription driven and the patient has very little choice in this regard.
  • Market failure alone may not constitute sufficient grounds for the Government intervention, but when such failure is considered in the context of the essential role of pharmaceuticals play in the area of public health, which is a social right, such intervention becomes necessary, especially when exploitative pricing makes medicines unaffordable and beyond the reach of most patients. This also puts huge financial burden in terms of out-of-pocket expenditure on healthcare.

Has DPCO 2013 delivered?

Many stakeholders, barring some NGOs, felt initially that DPCO 2013 would be a win-win drug pricing policy for both the industry and patients, as it would apparently be less intrusive for the pharma players.

Along side, through ‘Public Relations’ overdrive, a hype was successfully created in the media by vested interests to generate a feeling that the drug prices are coming down by 30-40 percent as a result of the new market-based price control regime under DPCO 2013.

That could well be true for a handful of drugs. However, the fact is that the industry was adversely impacted by just around 2.3 percent, with the provision for annual price increases for even the price-controlled drugs. On the other hand, the span of price control came down from 20 percent of the just pervious DPCO 1995 to 18 percent in DPCO 2013, not impacting the industry as significantly as it was hyped before. This is quite evident even from the reported overall performance of the industry.

For the general patients, by and large, DPCO 2013 has not delivered what it was expected to on the ground.

Conclusion:

Realization of these facts has been just enough for the public disillusionment to set in, with a possible snowballing effect. Now the Supreme Court has intervened responding to a Public Interest Litigation (PIL). It has also made tough observations on the rationale of ‘market based drug price control’ and directed the government to review it.

On the other side, the Government appointed experts are reportedly revisiting the NLEM 2011 to include more essential drugs in this list.

In the midst of all these, the same drug pricing juggernaut continues to keep rolling, with almost similar narrative, though with different packaging and all associated theatrics of the day. Universal Health Care (UHC) for all now seems to be no more than an illusion, as vindicated by the recent union budgetary allocations for health in India

The Supreme Court of the country has observed afresh that India’s drug pricing policy is “Absurd, Unreasonable and Irrational”. This ticks the general population looking up to the honorable Apex Court as the savior to their long outstanding misery in this area, especially when steep ‘Out of Pocket Health Expenditure’ in India continues to stand out as a sore thumb.

Be that as it may, hoping against hope, the common man continues to clutch on mostly to Government assurances, just on its face value, that ‘Achhe din anne wale hain (Good days are coming)’ for most patients in the country…who knows?

By: Tapan J. Ray

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

India: Tops The GDP Growth, Remains At The Bottom On Health Care

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On February 9, 2015, the Wall Street Journal (WSJ) reported, “India’s statistics ministry surprised economists when it unveiled the new numbers for the growth of India’s gross domestic product. It ratcheted up India’s GDP growth figures using a new methodology that pegs expansion in Asia’s third-largest economy at 7.5 percent last quarter and 8.2 percent the quarter before that. Economists and the ministry, using the old methodology, had originally said growth was closer to 5.5 percent during those quarters. This recalculation indicates that India has already dethroned China as the world’s fastest-growing big economy, though China’s economy is still four times the size of India’s.”

For Indians in particular, this has indeed been a significant ‘feel good factor’.

However, keeping this ascending GDP growth rate in perspective, when we study the current health care related data of India as compared to BRICS nations (Brazil, Russia, India, China, South Africa) or even OECD (Organization for Economic Co-operation and Development) countries, India features at the rock bottom.

In this article, I shall quickly compare some critical health care parameters of India, against the same for other BRICS countries.

At the rock-bottom on healthcare:

This becomes absolutely clear when we look at the recent data on ‘Health Status’ of BRICS Nations, as follows:

Health Status of BRICS Nations (2013*)

Life Expectancy at Birth  Infant Mortality per 1,000 Live Births Child Mortality under 5 per 1,000 Live Births  Maternal mortality ratio (per 100 000 live births) 
Russia Federation 71 9 10 24
Brazil 74 12 14 69
South Africa 59 33 44 140
China 75 11 13 32
India 66 41 53 190

* Life expectancy at birth data is of 2012; maternal mortality ratio is of 2010; all the others are of 2013. Source: Health and Health Care in BRICS Nations by Victor G. Rodwin, Wagner School of Public Service, New York University, 

The legacy factor:

This has not happened overnight, public health care has been getting neglected in India over a long period of time. However, the process of slowing down in this area has become more pronounced in the recent years, as we shall discuss below.

The following table based on relatively recent data on ‘Health Expenditure’ in BRICS Nations, well captures the abject lack of focus in this area, which is so vital for sustainable economic progress of India:

Health Expenditure in BRICS Nations (2012*)

GDP Per capita (PPP)  Public Expenses on Health        (% GDP)  Private Expenses on Health  (%GDP)  Total Expenses on Health (%GDP)  Out-of pocket Health Expenses (% of Total Healthcare Expenditure) 1
Russia Federation  24,805 3.8 2.4 6.3 33.52
Brazil 16,096 4.3 5.0 9.3 31.08
South Africa 13,046 4.2 4.6 8.8 7.21
China 12,880 3.0 2.4 5.4 34.67
India 5,855  1.3 2.7 4.0 58.05

* GDP per capita in PPP is of 2014; Human Development Index is of 2013; the rest of the data is of 2012. 1. Calculated based on private expenditure on health (% of GDP), total expenditure on health (% of GDP), out-of-pocket health expenditure (% of private health care expenditure). Source: Health and Health Care in BRICS Nations by Victor G. Rodwin, Wagner School of Public Service, New York University.

Lowest Human Development Index:

Human Development Index (HDI) is broadly defined as a composite statistic of life expectancy, education, and per capita income indicators, which is used to rank countries into four tiers of human development. Net outcomes of both education and health care play critical roles in the statistical calculations of HDI.

Among the BRICS nations, India registers the lowest HDI at 0.586, as compared to 0.658 of South Africa, 0.719 of China, 0.744 of Brazil and 0.778 of Russia.

Source: Health and Health Care in BRICS Nations by Victor G. Rodwin, Wagner School of Public Service, New York University.

High economic costs of neglect to health care:

An April 30, 2015 article of Reuters stated that over 60 percent of deaths in India are due to non-communicable diseases (NCDs) such as cancer, diabetes, chronic respiratory and cardiovascular diseases, which are responsible for about 70 percent of spending on healthcare. They also make serious adverse impact on the economic health of the country, with NCDs and mental illness expected to cost India US$ 4.58 trillion between 2012 and 2030.

This, by all means, creates a high priority situation, which needs to be addressed with commensurate well thought-out policy measures backed by adequate budgetary support.

The condition assumes even greater significance, as healthy and well-productive workforces contribute immensely to high and sustainable economic growth aspiration of a nation, always.

Healthcare budget gets further axed:

To meet the expectations of many, when the incumbent government is trying to floor the gas pedal for accelerated economic growth of the country, requisite budgetary allocation for quality and affordable healthcare in India, continues to lag behind.

On the contrary, in December 2014, just prior to the Union Budget Proposal 2015-16, the new Government reportedly ordered more than Rs 6,000 Crore or US$948 million cut (20 percent) from its own healthcare budget allocation of around US $5 billion for the financial year ending March 31, 2015, due to financial constraints.

In 2014-15, the finance ministry also ordered a spending cut of around 30 percent to US$ 205.4 million on India’s HIV/AIDS program.

Then came the Union Budget proposal 2015-16. Interestingly, even after several well publicized announcements by the Government on the ‘National Health Assurance Mission’, with generous promises on rejuvenation of public health care services sooner, the budget ignored all these – lock, stock, and barrel.

For 2015-16, the health care budget allocation was kept at Rs. 33,152 Crore, a tad more than Rs. 30,645 Crore of 2014-15. There has been no indication either for any comprehensive and integrated focus on healthcare, adequately backed by commensurate budgetary allocation, any time soon.

Could crimp efforts to control the spread of diseases:

Just around this time, a report from Reuters, quoting one of the health ministry officials, stated that this budget cut could crimp efforts to control the spread of diseases.

Interestingly, more newborns die in India than in poorer neighbors such as Bangladesh, and preventable illnesses such as diarrhea kill more than a million children every year.

This issue becomes even more glaring, when India contributing to 21 percent of the global disease burden, accounts for just a fraction of global spending on health.

What the Government promised, but did not deliver:

Before the Union Budget proposal of 2015-16, another article of Reuters dated October 30, 2014, quoting an Government announcement, reported that under the National Health Assurance Mission, Narendra Modi government would provide all citizens with free drugs and diagnostic treatment, in addition to insurance cover to treat serious ailments.

The proposed plan was to be rolled out in phases from April 2015 and was to cover the entire population by March 2019. The project would reportedly cost an estimated US$11.4 billion annually, when the entire population of the country comes under it.

National Health Assurance Mission was reportedly to focus, among others, on the following:

  • Improving preventive healthcare services by ensuring adequate availability of medical practitioners in rural areas.
  • Creating new infrastructure under existing welfare programs.
  • Providing tertiary care services through an insurance-based model with the government offering more than 50 drugs free to all the citizens.
  • Offering in the package, along with the drugs, about 12-15 diagnostic treatments.
  • Encouraging the State Governments to enter into outsourcing agreements for the provision of treatment.

All admirers of the new dispensation felt greatly obliged for this announcement. It was to some extent fulfillment of a long awaited expectation for a just and efficient healthcare system in India.

Adding strength to the Government’s promise, it was also reported that the World Bank along with UK’s health cost-effectiveness agency NICE are assisting India in this regard, providing technical assistance and advice on treatments the government should offer in its health care package.

However, at the end of the day nothing got translated into reality, at least not just yet.

Patients are compelled to turn to expensive private sector providers:

At around 1.3 percent of GDP, India’s public health expenditure is already among the lowest in the world, even as compared to 1.4 percent of Bangladesh, 1.6 percent of Sri Lanka and 2.9 percent of Thailand.

It is noteworthy that the public sector is the main source of health funding in nearly all OECD countries. However, in India, only 33 percent of health spending was funded by public sources in 2012, a much lower share than the average of 72 percent in OECD countries.

Moreover, health accounted for only 4.8 percent of total government spending in 2012, significantly lower than the 14.4 percent across OECD countries.

A January 2015 paper titled, “Improving Health Outcomes And Health Care In India”, published by the OECD reconfirms that with India’s low life expectancy largely reflecting deaths from preventable diseases, the most significant gains in health would come from population-wide preventive measures.

The paper highlights that except a small number of states, overall access to public health care services in India is rather poor even today, resulting in many people turning to more expensive private-sector providers, who mainly serve those who can pay.

A quick comparison between public and private health care expenditure:

For a quick comparison between public and private health care expenditure, I shall refer to a very recent Government survey report.

This survey titled, “Key Indicators of Social Consumption in India Health” was conducted by the National Sample Survey Office (NSSO) under the Ministry of Statistics and Program Implementation of the Government of India from January to June 2014 period and was published in June 2015.

The following table prepared from the above NSSO survey, is an example that would highlight the extent of difference in the average medical expenditure per hospitalization between a public and a private sector hospital.

Average Medical Expenditure Per Hospitalization/Case in Public And Private Hospitals

Broad ailment category Public (Rs.) Private (Rs.)
Infections 3007  8134 
Cancers 24526  78050 
Cardio-vascular 11549  43262 
Respiratory 4811  18705 
Gastro-intestinal 5281 23933
Genito-urinary 9295 29608
Obstetric and neonatal 2651 21626
Psychiatric & neurological 7482 34561
Blood diseases (including anemia) 4752 17607
Endocrine, metabolic & nutrition 4625 19206

Need to garner resources to implement ‘National Health Assurance Mission’:

The High Level Expert Group (HLEG), constituted by the erstwhile Planning Commission in January 2011, under the chairmanship of Dr K. Srinath Reddy, produced a comprehensive report on ‘Universal Health Care (UHC) in India’ in November 2011.

On health financing, HLEG made 10 recommendations, where from I would quote just two as follows:

  • Government (Central government and states combined) should increase public expenditures on health from the current level of 1.3 percent of GDP to at least 2.5 percent in the first 5 years and to at least 3 percent of GDP by the next 5-year period.
  • Use general taxation as the principal source of health care financing – complemented by additional mandatory deductions for health care from salaried individuals and taxpayers, either as a proportion of taxable income or as a proportion of salary.

I reckon, to meet the budgetary needs for ‘National Health Assurance Mission’ both direct and indirect taxes require to be levied if possible, at least in the next budget, along with adequate incentives to the State Governments to do the same.

Conclusion:

Over a period of time, economic aspirations of India have grown by manifold and very rightly so. To achieve these aspirations, alongside, at least two critical social needs such as ‘Education’ and ‘Health Care’ must be focused on simultaneously. I underscore ‘simultaneously’. There does not seem to be any alternative either, if we want to ensure that Indian aspirations do not remain just a pipe dream, for long.

It does not give any pride to many when one witnesses India topping the league table of GDP Growth percentage, while continuing to remain at the rock bottom so far as the health care is concerned.

Education and health care are universally considered as the bulwark for sustainable progress and growth of any nation. Even all BRICS countries have realized and implemented that, being well ahead of India in those fronts, unquestionably.

Let’s believe and hope, India would not continue to neglect these two critical growth catalysts of any nation, for long, while trying to build a robust economy. Otherwise, pushing hard only for economic growth as a percentage of GDP, could well be akin to chasing a rainbow, if not creating an unsustainable bubble with disastrous consequences, in the long run.

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.

Evolving Trend Of Patient Engagement In Treatment Decisions

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Slowly but steadily the process of taking treatment decisions for the patients is undergoing a metamorphosis, where well informed patients no longer want to play just a passive role. These patients want the doctors to take a final decision on their treatment only after meaningful interactions with them.

Today, Internet is increasingly becoming a great enabler for the patients to get to know, learn and obtain more and more information about their fitness, overall health, illnesses, disease symptoms, various diagnostic test results, including progress in various clinical trials, besides drugs and their prices…and all these just with clicks.

As a result, equipped with relevant information from various dependable and user-friendly sources in the cyberspace, patients have started asking probing questions about the risks and benefits of various types of treatment decisions and diagnostics tests, recommended by the doctors. At times, such interactions even lead to changes, additions or deletions in choice of therapy, including drugs, devices and diagnostics tests.

Hence, this change, which could well be a game changer, assumes even commercial importance for the pharma companies and other healthcare players in this area.

The emerging trend of patients’ demand for engagement in the treatment decision making process by the doctors needs encouragement by all concerned, especially, doctors, marketers of pharma products and healthcare services.

This process would not just be more balanced, fair and humane; it would make the entire healthcare value chain more efficient and cost-effective, as it would also involve managing expectations of informed patients. Alongside, it would encourage outcomes based evaluation of healthcare process with commensurate pricing, making the system accountable and efficient more than ever before.

In an emerging situation like this, are the pharma companies connecting the evolving dots and re-strategizing their marketing game plans accordingly? In this article, that’s what I shall try to dwell on.

Pharma marketing still remains tradition bound:

Despite this gradually transforming scenario, which would possibly lead to a paradigm shift, especially in the way of making treatment decisions for the patients, most pharma players do not seem to be thinking so, as they continue to be tradition bound in their overall marketing approach.

Even today, to generate product prescription demand by influencing treatment decision of the doctors, the pharmaceutical companies provide them with not just product information through their respective sales forces, but also drug samples and a variety of different kinds of gifts, besides many other prescription influencing favors. This approach is working very well, albeit more intensely, in India too.

Be that as it may, this trend is a potential ‘Game Changer’.

Data vindicates continuation of traditional pharma marketing:

Broad types of marketing expenditure of the pharma industry vindicate that drug companies are still not deploying adequate resources for ‘patient engagement’ initiatives in creative ways.

According to a November 11, 2013 report of ‘The Pew Charitable Trusts’ titled, “Persuading the Prescribers: Pharmaceutical Industry Marketing and its Influence on Physicians and Patients”, pharma industry spent more than US$27 billion on drug promotion in 2012. Out of this expenditure, more than US$24 billion was incurred on marketing to physicians and over US$3 billion on advertising (mainly through television commercials) to consumers, wherever permitted by a country’s regulator.

This approach is traditional and is designed to promote drugs by influencing only the doctors’ prescription decisions and not so much towards ‘patient engagement’ for the same, as appears to be the emerging need of the time.

Expenditure by type of pharma marketing in 2012: 

A. Direct Marketing:

According to Cegedim Strategic Data, U.S. Pharmaceutical Company Promotion Spending (2013), expenditure by type of pharma marketing in 2012 was mainly as follows:

Type of pharma marketing Expenditure in US$
1. Detailing face-to-face to doctors 15
2. Free samples to doctors 5.7
3. Educational and Promotional Meetings 2.1
4. Promotional mailings 1.2
5. Journal and Web Advertisements 0.9
6. Direct-to-Consumer Advertising 3.1

B. Indirect marketing:

As indicate in the earlier mentioned report of ‘The Pew Charitable Trusts’, indirect marketing of US$2.35 billion incurred by the pharma companies were mainly in the following areas:

Continuing Medical Education (CME):

In 2011, the pharmaceutical and medical device industries provided 32 percent of all funding for CME courses in the United States, amounting to US$752 million out of $2.35 billion.

It is worth mentioning that to prevent these courses from functioning as veiled marketing, the Accreditation Council for ‘Continuing Medical Education’ regulates them.

However, a 2007 Senate Finance Committee report found that “drug companies have used educational grants as a way to increase the market for their products in recent years.”

Grants to Health Advocacy Organizations (HAO):

In this initiative, patient advocates can mobilize large numbers of people for an event on a specific disease related issue, which often goes to the benefit of pharma companies that manufacture related drugs.

A study found that organizations that had received grants from pharmaceutical manufacturers often endorsed the companies’ positions, while groups that had received minimal financing focused their advocacy on the drugs’ potential side effects.

Thus, the bottom-line is, in the marketing bandwidth of the pharma players, ‘patient engagement’ initiatives targeted towards patients’ benefits did not occupy a significant space.

Need to move beyond drugs and doctors:

From the above reports, it appears that while strategizing the marketing initiatives; pharma players start with products or brands and use doctors as the main decision makers to generate prescription support for those brands.

As stated earlier, though some global pharma companies are now talking about ‘patient centric’ approaches, but not much about ‘patient engagement’ approaches to harvest rich benefits out of the emerging new paradigm, in a win-win way.

Going beyond the drugs and the doctors, deploying significant resources to actively engage with the consumers to satisfy their needs and expectations, and in that process influencing patients’ behavior favorably towards the products or brands, need to be a critical part of the pharma marketing warfare, as we move forward.

Influencing patients’ behavior is challenging:

Influencing patients’ behavior through patient engagement is indeed more challenging. It calls for a multi-pronged approach involving all concerned stakeholders.

Besides innovative use of the cyberspace, digital Health Apps, among others, could well fit in nicely to achieve this goal.

I discussed this subject in my article dated March 30, 2015 in this Blog titled, “Quantum Value Addition With Health Apps, Going Beyond Drugs”.

In that direction, I reiterate that keeping pace with today’s ‘technology revolution’, rapid advent of various game-changing and user-friendly digital platforms, including Health Apps for consumers, are showing immense potential in this area. To usher in a refreshing catalytic change in the overall landscape for ‘patient engagement’ in healthcare, these platforms could emerge as key differentiating factors from the pharma players’ perspective.

Informed patients would want getting more and more engaged:

Currently, relatively smaller numbers of patients are keen to get engaged in their disease treatment decisions of the doctors or with the pharma companies on this subject, directly or indirectly.

Still a much larger number of patients, for historical reasons, remain passive while seeking treatment from the doctors.

This is changing and would change even faster with growing knowledge and awareness of digital power and its fast penetration in the hinterland along with increasing usage of smartphones.

As the patients would try getting more and more engaged in their respective treatment decision process, it would eventually hold the key to rapid progress of healthcare all over world. It has to happen in the ‘Smart Cities’ of  ‘Digital India’ too, which is just a matter of time.

An institutional patient engagement initiative:

Without any direct and significant involvement of pharma industry, there are already some exemplary organized moves towards this direction in several parts of the world. One such institution has recently been established through 2010 ‘Patient Protection and Affordable Care Act’ of the United States, known as ‘The Patient-Centered Outcomes Research Institute (PCORI)’. It helps patients in making informed healthcare decisions to significantly improve healthcare delivery and outcomes.

Active promotion of high integrity, evidence-based information that comes from intensive research, ably guided by patients, caregivers and the broader healthcare community, forms the bedrock of this Institute. PCORI ensures that, patients and the public at large have information that they can use to make decisions that reflect their desired health outcomes and other expectations.

This move can be termed as one of the key steps towards ‘Patients Engagement’ in the United States, setting a good example for many other countries to follow, across the world.

Meeting with the challenge of change:

To effectively respond to the challenges posed by the need of ‘Patients Engagement’ in the disease treatment process, some pharmaceutical companies, especially in the United States, have started developing more direct relationship with the patients. Besides innovative use of digital Health Apps, creation of ‘Patient Empowered’ social networks would help addressing this issue properly.

Global pharmaceutical majors, such as Pfizer, Johnson & Johnson, Novartis, Boehringer Ingelheim, AstraZeneca, Bayer, GlaxoSmithKline, Sanofi, Roche, Novo Nordisk, Becton, Dickinson & Co and Merck are now directly engaging with the customers through social media, such as, Twitter and Facebook. Some of them have also started experimenting with the Health Apps, as well; though in India not much green shoots are seen in this area.

Just to cite an example, I quote from the The Annual Review 2014 of Pfizer that captures the following:

“People today are able to access and exchange more information than ever before, and it’s no surprise that health is an area where information sharing is exploding. As patients become more informed, they become more involved – more active in their own care and the care of others, and in medical research.

This is the era of “patient-centricity,” where patients are far from passive subjects of study or treatment. Laypeople are taking starring roles in designing clinical trials; tracking and managing their personal health data; and, crowdsourcing new insights and solutions with diverse, far-reaching communities.”

This effort of Pfizer, by all means, is highly commendable, which leaves enough room for others in the pharma world to emulate, may be even more creatively.

Conclusion:

To achieve the objective of meaningful ‘patient engagement’ in the treatment decision making process, there is a primary need for the pharma players to put in place a credible, informative and interactive communication platform.

Today’s world prompts that this platform should ideally be digital and must be an outcome of extensive research on the information needs of patients in the identified areas. Patients’ queries and comments require to be appropriately answered by experts with compassion, remaining within the regulatory framework of the country.

Inputs and resources provided by the concerned pharma companies to the patients through these platforms would help strengthen the quality of their ‘patient engagement’ campaigns. This in turn would enable the patients to properly understand the disease, the rationale of treatment decision of the doctors, subsequent follow up steps and further treatment, if any, thereafter.

With such engagements, the image of the concerned pharma companies would grow by manifold in the eyes of the beholder – the patients. It would then expand much beyond just the buyer and seller relationship for drugs, transcending in the space of well-respected pharma institutions that helped patients in arriving at precise and most cost-effective treatment decisions for a better quality of life.

By: Tapan J. Ray

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

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

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

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

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

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

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

CBI underscores veracity of the problem:

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

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

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

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

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

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

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

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

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

More problems in the developing nations:

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

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

The above ‘Task Force’ also reported as follows:

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

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

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

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

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

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

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

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

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

On the other side – many worrying reports:

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

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

DCGI intends to justify his moot point yet again:

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

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

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

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

‘Fake Drugs’ and Online drug sales:

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

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

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

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

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

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

Status of online pharmacies in India:

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

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

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

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

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

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

Conclusion:

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

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

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

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

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

By: Tapan J. Ray

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

 

Does The Attempt To ‘Debunk Five Big Myths About Big Pharma’ Not Reconfirm The Truth?

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Late last week while returning to India, to my pleasant surprise, I bumped into a longtime overseas friend and his wife working in the pharma industry. Incidentally, they were also traveling in the same flight with a plan to spend their vacation in India.

We both were immensely delighted spotting each other, and were trying to catch up with plethora of subjects at a break-neck speed and mostly with child-like zest. As a result, we were jumping from one topic to another, keeping many loops of discussion unknowingly incomplete.

One such rapid-fire colloquy got almost permanently interrupted with the final boarding announcement. It happened, just when he was referring to busting of some “myths about Big Pharma” by the global CEO of one of the Big Pharma constituents, recently. The article, he said before we got up, was published in the May edition of Forbes Magazine.

As I had missed this curious narrative during my recent relatively long overseas travel commitments, yesterday in Mumbai I did trace that out with the help of our “Google Guru” and went through the content of the article with interest.

‘Debunking Five Big Myths About Big Pharma’:

In the May 19, 2015 issue of Forbes Magazine, I came across an Op-Ed, titled “Debunking the Five Big Myths About Big Pharma”, written by Mr. John Lechleiter, President, Chairman and CEO of Eli Lilly and Company, whom I immensely respect as an icon of the global pharma industry.

The author in his article identified the ‘Five Myths’ as follows:

Myth1: Pharmaceutical companies exaggerate the costs of developing new medicines to justify high prices.

Myth 2: Industry does not develop most new medicines; they come from government and university laboratories.

Myth 3: Prescription medicines are the main driver of health-care cost increases.

Myth 4: Public and private health-care payers must accept and pay whatever prices drug companies charge for medicines.

Myth 5: Government-controlled pricing of medicines in other countries explains their lower health-care costs.

The article is indeed interesting, as it raises more questions than answers. This is mainly because, ‘the debunking of the Five Myths’ was done using the same old fragile arguments much often repeated by the international ‘Big Pharma Trade Associations’ and by some others as well, whom many call privately as their ‘poodles’, although I am not very sure about that.

The reason and time for ‘debunking’:

In the above Op-Ed John Lechleiter forcefully asserts:

“The Big Five Myths’ about this industry routinely poison debates, obscure genuine problems, and distort policy recommendations on healthcare. These myths have been all over the public arena again recently, and it’s time to confront them systematically.”

“The First Big Myth”:

As stated above, the Eli Lilly Chief described the first ‘Big Myth’ of ‘Big Pharma’ as follows:

“Pharmaceutical companies exaggerate the costs of developing new medicines to justify high prices.”

Arguments behind debunking the ‘Big Myth 1’:

The Chief debunked the first ‘Big Myth’ with the following argument:

“In fact: The research and development (R&D) expenditures of this industry are staggering – and since they are matters of public record there is no way and no need to exaggerate them.”

Raises more questions than answers:

Just to illustrate my point, that this article raises more questions than answers, I shall, try to explain the so called ‘debunking’ of this first of the ‘Five Big Myths’ of ‘Big Pharma’, as penned by Lechleiter.

The author seems to have missed the core narrative behind the so-called ‘Myth’ – lock stock and barrel. Whether deliberately or not, I can’t really figure that out.

The reason behind high costs of patented drug:

Even if for the arguments sake, what the author has said is accepted as a gospel truth while ‘debunking Myth 1’, experts’ discourses on the facts behind high costs of patented drugs do not just focus just on the ‘R&D Costs’, it also seriously points towards abnormally high ‘Marketing Costs’, which in many instances several times more than the ‘R&D Costs’.

Some hard facts:

An article of 6 November 2014 of BBC News, titled “Pharmaceutical industry gets high on fat profits” written by Richard Anderson, Business reporter, BBC News highlights:

Drug companies justify the high prices they charge by arguing that their Research and Development (R&D) costs are huge. On average, only three in 10 drugs launched are profitable, with one of those going on to be a blockbuster with US$1bn-plus revenues a year. Many more do not even make it to market.

But as the table below shows, drug companies spend far more on marketing drugs – in some cases twice as much – than on developing them… and besides, profit margins take into account R&D costs.

World’s largest pharmaceutical firms
Company Total revenue ($bn) R&D spend ($bn) Sales and marketing spend($bn) Profit ($bn) Profit margin (%)
Johnson & Johnson (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
Hoffmann-La 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

The article states that in 2013, US giant Pfizer, the world’s largest drug company by pharmaceutical revenue, made an eye-watering 42 percent profit margin. The same year, five other major pharmaceutical companies made a profit margin of 20 percent or more – Hoffmann-La Roche, AbbVie, GlaxoSmithKline (GSK) and Eli Lilly.

Why does the drug industry spend more on marketing than on R&D?

Thus, one most persistent question that is being raised by the stakeholders is: Why does the drug industry spend more on marketing than on R&D?

Quoting these facts, a November 6, 2014 article of ‘FiercePharma’, titled “New numbers back old meme: Pharma does spend more on marketing than R&D”, also pointed out that even John Lechleiter headed Eli Lilly’s marketing spending clocked US$5.7 billion, compared with US$5.5 billion for R&D. That’s a difference of 7 percent.

High marketing expenditure and increasing marketing malpractices:

Interestingly there appears to be a curious coincidences between fines paid by ‘Big Pharma’ related to alleged marketing malpractices and spiraling marketing expenditure.

As I indicated earlier in my Blog Post of December 29, 2014, the following are a few recent examples of just the last three years to help fathom the enormity of the problem on this issue and also to vindicate the point made above:

  • 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.

Where does most of the marketing expenditure go?

On February 11, 2015, an article published in the ‘The Washington Post’ titled, “Big pharmaceutical companies are spending far more on marketing than research”, stated:

“Most of this marketing money is directed at the physicians who do the prescribing, rather than consumers.”

The HBO video that had gone viral:

The HBO Video with a dash of characteristic British humor of “John Oliver: Marketing to Doctors (HBO)” captures the essence of the issue. Many readers much have watched this video earlier. Nevertheless it helps understanding the point.

Some people associated with the industry did attempt nitpicking on this video and quite understandably; they did not find many takers.

Conclusion:

As deliberated above, I submit with humility that there are ample hard facts, which would debunk even more forcefully, the ‘debunking of the remaining so called four myths’ as was elucidated in the Forbes Magazine article authored by well-respected John Lechleiter, the President, Chairman and CEO of Eli Lilly and Company.

This seemingly well-timed article from the global pharma icon, though with disappointedly fragile content, I reckon, would not be able to evoke the desired response from its target audience. On the contrary, it carries the risk of being construed as no more than a half-hearted attempt of defending the indefensible and in that process reconfirming the truth, camouflaged in the paper as ‘myths’.

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.