Has the Indian pharmaceutical sector become a soft target?
The last couple of years have been very unsettling for the sector. It has declined by 25 percent from five-year (2012-16) Compound Annual Growth Rate of 12 percent.
The last one year has witnessed more than 400 Indian and foreign pharmaceutical companies going to the courts to resolve their grievances. Almost of all of them relate to implementation of the pricing policy and haphazard banning of fixed dose combinations (FDCs).
Consequently, the sector reported a sharp decline in the rate of growth. Its growth in the domestic market declined from 15 percent year-on-year in 2015 to 9 percent for the latest 12-month period ended February 2017 over corresponding period, according to QuintilesIMS TSA audit data. It has declined by 25 percent from five-year (2012-16) Compound Annual Growth Rate of 12 percent.
Implementation of Pricing Policy:
The last couple of years have been very unsettling for the sector. The pricing regulators’ (National Pharmaceutical Pricing Authority - NPPA), activism have sometimes surpassed even that of the health activists.
This activism has become a nightmare for the sector. Its imaginative and arbitrary implementation of the National Pharmaceutical Pricing Policy (NPPP) 2012 and the Drugs (Prices Control) Order 2013 have left the sector gasping for breath.
This is further compounded by an unbridled turf war between the Government (Department of Pharmaceuticals - DoP) and the Regulator (NPPA). This has led to unwarranted price fixation, denial and delays in price approvals for new products, frequent price changes forcing price reductions, open defiance by the Regulator (NPPA) of the government (DoP)'s quasi judicial orders, and frustrating litigation for the sector. It has left the sector wondering if the country has a rule of law.
Drug regulatory reforms:
On the other hand, the Health Ministry has embarked on well-intentioned multiple reforms for improving efficiency of administration and for ease of doing business. However, in its exuberance for effective administration, it is missing a larger picture - where should these reforms lead the country to?
Is it missing the point that the future growth of the national sector is now closely linked to the status of India’s drug regulatory regime? It is therefore imperative that the health ministry defines its destination and pathway. These “reforms” without a vision have become hurdles to growth of the sector.
The Prime Minister's Office intervened to resolve these issues and assigned the task to a Group of Secretaries (GoS). However, the GoS, ignorant of the complexity of the sector, has brought new woes for the sector, which is now faced with fresh challenges.
They include de-linking DPCO from NLEM; empowering DoP to "revamp list of price controlled drugs" as and when required; sale of "single salt" formulation in salt name only; linking trade mark to a drug; restricting one brand to a product per company; "declaration of non-infringement" (patent linkage) for drug regulatory approval; etc.
The sector has no clue of the purpose of these changes. It is not even aware if any other options have been considered to achieve the objective. It also wonders if the nodal ministry has carried out impact assessment of the proposed changes on the national sector and patients.
Impact of abolition of brand names:
This proposal is partly based on an erroneous impression about the US market. The first misconception is that the US does not allow use of brand names for generics. This is not true, not only for the US but also for any advanced country. The manufacturers are free to choose their marketing strategy.
The second misconception is “generics” are cheaper than “branded” products. This is again based on the lack of understanding of the US market. The “generics” are used in the US for off-patent and “branded” for patented products. No wonder that generics are cheaper than products under patents.
The proposal is partly based on the ignorance of the Indian market. All products in India are not equivalent to the originator’s product. This is permitted by law.
The law stipulates that products launched within four years of the first approval are required to establish bio equivalence for regulatory approval. After four years, any manufacture can launch without bio equivalence or stability data. A quick estimate shows that only about 15 per cent of the products in the market are launched in the first four years.
Thus, majority of the products in the market have not established their equivalence or proved their stability. There is an accumulated mass of more than 50 years’ of such products in the market. They may or may not be harmful but will certainly not cure patients.
Doctors learn this from their experience of dealing with thousands of patients. A doctor is also aware that his customers (patients) will not return to him, if his patients are not cured by products that he prescribed.
Doctors therefore make an informed choice of a brand. The abolition of brands will shift the choice from doctors to chemists. A chemist knows too well that his customers will return to him, irrespective of outcome, as they will blame doctor, not chemist for not being cured.
It is said that this change is driven by the PMO. One wonders if the officials have shared the ground reality with the PMO. Who would have courage to say that more than half the products in the market are not equivalent and therefore not inter-changeable?
Taking practicalities into consideration:
Besides ignorance of the difference in quality of products, what is worrisome is non-application of minds to the day-to-day life of people around them.
Many families and family physicians who take care of seniors explain daily dosages to the patients as under: Pink tablet in the morning, white after lunch and yellow at night.
One product has as many as 200 manufacturers. They all do not follow a common colour coding. If the brands are abolished, there is no certainty that the patient will get the same colour product every time the generic prescription is filled. It could thus play havoc with the lives of patients.
Brands have equity even in certain foreign markets. The abolition of brands in the domestic market would also impact exports. The manufacturers from Bangladesh, Jordan, South Africa, etc., will find it easier to make inroads into the markets developed by Indian companies.
Moreover, many emerging markets emulate India’s policies and practices governing the pharmaceutical sector. Thus, having lost product identity, the companies will find it difficult to retain their market share even in the foreign countries, leave alone growth.
This is just one new initiative for the sector. Many more are in the pipeline. It is a sad narrative intentions to promote this sector will end up blocking its growth. Reforms in a hurry without requisite experience and expertise could lead to disastrous consequences.The writer is secretary-general of the Indian Pharmaceutical Alliance.