I’d like to introduce a guest column by Salil Kallianpur, a healthcare marketing professional with experience in the pharmaceutical and medical devices industries. Salil is an avid reader and follower of healthcare current affairs, its politics, and strategies. He comments on the intersection of healthcare and life on his blog My Pharma Reviews. He is based in Mumbai. The views in this article are his own and not those of his employer, a pharmaceutical organisation.
The price of medicines has always been a matter of animated, even acrimonious, debate. Most of the time, activists assume that the only way to solve social challenges is through government and charity and that the only purpose of business and investing is to make money. Responsible sections of the pharmaceutical industry reject that worldview. Consider this.
Swiss drug maker Roche reduced the price of its blood cancer drug Mabthera by 50% in South Africa. Sanofi slashed prices on its diabetes drug Lantus and its cancer treatment Taxotere in the Asia-Pacific region. Eisai cut prices of its Alzheimer’s drug Aricept in 6 Asian countries and GSK cut prices on “essential” drugs by 40% to 50% in Kenya.
These recent Big Pharma attempts at tiered pricing in the developing world signal a deviation from the age-old strategy of recovering research costs through high prices.
What’s changed? Continue reading
India’s ambitious plan to provide free medicines to its people has received worldwide attention. For details see here. It’s no secret that the world’s largest democracy also spends an abysmally low percentage of GDP on healthcare. This is a belated attempt to correct that. In theory, this is a welcome move. In an earlier post, I had spoken of how India should not limit itself to tools such as compulsory licensing to improve drug access and affordability.
But having taken the call to make amends, what’s extremely hazy is how this scheme is to work in practice. Here are five questions to ask about India’s proposed free drugs programme. Continue reading
The pharmaceutical industry puts a heavy premium on innovation – the ability to come up with new drugs. Indeed this separates the boys from the men. Generic pharmaceuticals however are seen as similar to any other commodity manufacturing sector.
However, in the last two years one generic and one innovator have been both done in by manufacturing issues. Ranbaxy’s controlling family threw in the towel when it found it had no appetite to set right persistent quality issues at its manufacturing facility. More recently, Genzyme has become fair game to predators such as sanofi-aventis after it lost investor confidence over manufacturing problems.
More and more innovators are outsourcing manufacturing to cut costs with what some regulators believe could be inadequate oversight. If they are not careful it might be this and not drying research pipelines that could trip them up.
Abbott’s acquisition of Piramal’s Indian branded drugs unit has raised the spectre of rising prices in some quarters. The reasons are two-fold : one, Abbott will pay Rs 17,000 crore for a Rs 2000 crore business and the need to earn a decent return on this will make it raise drug prices. And two, Abbott now has 7 per cent of the Indian market and is in number one position. Ergo, it is in a position of strength from where it can get away with price hikes.
Perhaps, Abbott will find the need to raise prices. But I believe it will find it difficult to do so across-the-board beyond a reasonable extent. For two reasons. One, what it has acquired are branded generics. This business has multiple copycats already on the market and nothing – at least, in the law – prevents more from joining the party. So, it is competitive. Two, the Piramal unit’s growth has also been driven by the opening up of ‘bottom-of-the-pyramid’ type markets that hitherto were under-served by companies. For instance, Dharavi (Asia’s largest slum) in Mumbai. These are extremely price-sensitive. So there will have to be a trade-off between profit and growth which defeats the purpose of the acquisition which is primarily for market share. And three, while a good number of drugs are outside government price control, the National Pharmaceutical Pricing Authority reserves the right to fix prices under a public interest clause if they are raised by more than 10 per cent in a year. Indeed, Piramal and a good number of other companies fell afoul of this law not too long ago and saw some drug prices fixed by the government in spite of these drugs falling outside the purview of drug price control. This also meant that companies could not change prices of these brands again with consulting the drug price regulator.
True, Abbott may launch its patented drugs at a hefty premium but that it is already doing anyway. The concerns of rising drug prices in the context of the Abbott-Piramal deal, to my mind, are overdone.
The EU’s industry commissioner says trade in counterfeit medicines in the Union has exceeded its worst fears, according to German daily Die Welt. “The number of counterfeit medicines arriving in Europe … is constantly growing. The European Commission is extremely worried,” the commissioner, Gunter Verheugen, said yesterday. 34 million tablets have been seized in 2 months from various custom points, he said.
Verheugen did not name names. But an AFP report based on Verheugen’s interview to the German daily pointed out that a July EU report had identified India as a large source of many of the fake pharmaceuticals seized in 2008.
That is embarassing, even shocking. If it is true.
But the EU’s definition of counterfeit is elastic. It stretches to include generics of products currently under patent protection in the EU – even if they are in transit to other countries. It is this expansive definition that has led to seizures of Indian drug shipments at EU custom points, and the tarring of India a as a significant source of counterfeits, says D G Shah, secretary-general of the Indian Pharmaceutical Alliance. In recent months, tens of drug shipments from well-known Indian companies such as Dr Reddy’s, Macleods, and Cipla that were merely passing through EU ports on their way to countries in Latin America have been seized, in response to complaints from patent-holding companies such as Sanofi-Aventis, and Novartis. These drugs were however not under patent in the buyer countries.
Given that India is a huge exporter of generic drugs to those countries, and that transit via Europe is a preferred route, then is it any surprise that India is such a large source of ‘counterfeits’?
New Delhi has so far been ineffective in preventing these seizures. It has belatedly reacted by taking the EU to dispute settlement in the WTO. But that’s clearly the beginning rather than the end of the issue as Verheugen’s latest interview – probably intended to keep the issue alive – indicates.