Cipla tells Merck your anti-AIDS drug too costly in India

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Cipla tells Merck your anti-AIDS drug too costly in India

Domestic pharma giant Cipla has taken the route of applying for a "voluntary license" for Merck's HIV Isentress (a generic raltegravir) saying it is not reaching needy patients in India and is prices exorbitantly.

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Below is a verbatim transcript of Vikas Dandekar of pharmasianews.com views on the news. Also, watch the accompanying video.

Q: How strong is Cipla's case?

A: This is first time that Cipla is contemplating a move toward compulsory licensing. It's applied for voluntary license to Merck and this is a third generation product, which is very complicated and maybe difficult to manufacture since it's one of the newest in the band of HIV treatments.

The fact of the matter is Isentress in India has also been launched by Merck at a fourth of its US prices - that's USD 7 for a day's treatment as against USD 28 in the US. So it's going to very interesting to see exactly how this whole issue pans out because Merck is justifying its pricing, so whether Cipla will be able to make its case from the manufacturing angle and from the availability angle - those are the points which we will need to see.

Voluntary license is not new. In the last two-three months we have seen Natco making aggressive moves. It applied for a voluntary license for Bayer's Nexavar, which is an anti-cancer drug and it did a similar move for Pfizer Selzentry, which is anti-HIV drug. We are at a situation where this entire policy mechanism is going to be tested and it would be interesting from hereon.

Q: Two questions: 1) clearly it would be manufacturing wise viable for Cipla, isn't it? After all in drugs like these we know that the manufacturing expenses are very small part of the actual product because a lot of the research and potential profit is factored into the price. 2) What about Merck. What will they do? They have already had one move in terms of selling the drug at a one-fourth the price, surely they are not going to sit tight and they could make other moves?

A: These are very fair points because Cipla has made a mark in the world of anti-HIV treatments. All of its cocktail therapy it is said that one out of every three patients in the world of having HIV has a Cipla drug. Having said that, it's also going to be a little difficult because these are all inhibiters, which have a very complicated process of manufacturing. It's almost like reaching a point of biotechnology products where the efficacy and issues of safety will come up but not in the case of Isentress.

So maybe we will see a situation where Cipla will be ready with its manufacturing processes and that's where the degree of this policy will be challenged. Secondly, Merck is not in the league of other companies which have actually put very high prices on its drug and as you said. It may so happen that Merck will also come out with strong answer to this. We should also be aware that Merck and companies like Novartis also have strong branded generic strategies.

We don't know whether we will see fight on products and pricing again or Merck will stay on and say that its patents are valid and it doesn't justify a compulsory licensing yet. So it's a story which is still unfolding. Merck will have time to reply to Cipla and the government will also come into play giving its own justification on what exactly it needs to be done at this point.

Q: You touched on the idea of it will be interesting to see how policy will respond. Will we see some kind of policy evolution in that, in what circumstances will such voluntary licensing be allowed? How do you expect policy to respond? It cannot respond in a very commercial fashion, there is a public interest involved. How do you think policy will evolve?

A: Absolutely, that's where last year around August the Department of Industrial Policy and Promotion under the Ministry of Commerce had floated a white paper asking for views from every group from global MNCs to Indian companies to patient groups to lawyers on exactly how the policies should be framed so as to reach the product safely to the patients and reduce the conflict of industry association.

We still haven't heard much on that. Maybe this is a pre-emptive move from the Indian companies to exactly test how the government wants to behave on this particular issue. As you and I know, it's like very difficult subject of treating cancer and treating HIV. Not many companies have developed the expertise. So it will be interesting to see exactly how the government wants to respond. We don't have any compulsory licensing yet.

Canada had one and then buy the time the applications were approved and the manufacturing processes were mastered, it was already two-three years before which the CL could come into implementation. So it will be interesting to see how fast the government wants to make a move in this.

Q: The Cipla stock has not reacted, I am not asking you to calculate EPS or things like that but long-term is this something which will bring money to the company?

A: I feel this is a strong revenue mechanism, after all we know that companies do make profits out of these policy mechanisms and going forward since products are going to be become very complicated we will see a situation where lots of compulsory licensing applications will be put in place. A number of companies are seeing this particular space and I am sure it will pan out for the Indian companies in a very positive way.