Monsieur Modi’s Generic Prescription

Detriments Public Interest

Generic genie is back! And, the discussion has started again, falling in cascades, with Prime Minister Narendra Modi’s public address immediately after inaugurating a charitable hospital at Surat on 17 April where he indicated to bring in law to make it mandatory for doctors to prescribe medicines in their generic names. The Prime Minister also unprecedentedly yet scathingly attacked the medical fraternity for their handwriting on prescriptions which, according to him, “poor people do not understand” and, therefore, they have “to buy that medicine from private stores at high prices”.^[1] However, despite his tall claim of bringing a new health policy after fifteen years; linking it with Swachh Bharat Abhiyan^[2] for a healthier India and capping the prices of medicines and stents etc, the Prime Minister urged earnestly upon the wealthy people “to come forward and contribute towards health care of the needy people”.^[3] Such exhortation of the Prime Minister triggers the belief that the policy maker at the helm does not have much faith in himself and in his own prudence rather depends upon the voluntary contributions of the rich. 

However, that does not refrain the sycophancy from rendering Modi-adulation. A section of the media, some so-called social activists and a few political pundits irrespective of their affiliations, since then, started burning their mid-night candles to put praise-worthy arguments in favour of prescribing medicines in their generic names as if, it would be the only remedy to reduce drug prices. Such arguments are, naturally, discursive in nature and made out of a narrow vision. In the process, they are targeting two inescapable components of the drug industry – (i) doctors and (ii) medical representatives; probably to hide their larger agenda.

The issue is not just reducing the cost of medicine. It has to be made available at least at an affordable price if not at free of cost. But the question here is whether doctors’ prescription in generic version alone can reduce the medicine price. Immediate and truthful answers to few more questions might help to understand the whole gamut of brand versus generic debate in the given socio-economic scenario of the country under the neo-liberal jurisprudence. These are -           

·         Is Narendra Modi’s prescription for generic drugs a new and a sincere one?

·         What is the difference between brand and generic prescription of drugs?

·         What is the Indian scenario?

·         Why generic medicines are more beneficial for USA than for India?

·         Can generic prescription bring cost equilibrium?

·         Why such brand-generic controversy and who would reap benefit out of it?

·         Why the Indian drug farms are restricted to enter into the US generic market?

·         What actions are to be taken in real terms to make medicine price affordable?

Unfortunately, without even trying to address the core issues, attempts are being made to hold the medical practitioners and the medical representatives responsible for escalating cost of medicine. Though, it is in everybody’s dream to have medicines at affordable cost.

But, for high price of medicine why the doctors alone are to be blamed? There can be no denial of the fact that in a market-driven economy like India where the word ‘profit’ is the most appetizing and brand promotion is a dire need to ensure that very profit; there exists an element called “pay for prescription”. But, that’s not everything and not universal in nature. All doctors are not bribe-takers. That is why, the doctors hailed Narendra Modi’s announcement for generic medicines while rightly expressing their concerns for accessibility to these medicines.^[5] 

Similarly, the medical representatives, who are not bribe-givers by any means, are also made as soft targets for allegedly pushing their products through doctors, chemists and distributors in lieu of freebies, junkets and incentives.^[4] Interestingly, the Uniform Code of Pharmaceutical Marketing Practices (UCPMP) which came into effect from 1 January, 2015 after long deliberations was left at the discretion of the pharmaceutical companies to voluntarily adopt and implement by way of submitting a self declaration by their Managing Directors or Chief Executive Officers. 

As per the UCPMP, no gifts, pecuniary advantages or benefits in kind may be supplied or offered to physicians to prescribe drugs by a pharmaceutical company or any of its agents or distributors. Gifts for the personal benefit of healthcare professionals or their family members should not be offered or provided by the pharma companies. Code prohibits companies from paying cash or monetary incentives to any healthcare professionals under any pretext. And the companies should not provide free samples of drugs to any person, not qualified to prescribe such product.^[6] 

If the UCPMP was made voluntary then the medical representatives should not be held responsible in case of pay for prescription since they are not the “agents”. The legal entity of a medical representative is sales promotion employee ^[7] appointed by the company for the purpose of industrial activity called sales promotion defined by the Industrial Disputes Act, 1947.^[8] Modi government cannot enforce UCPMP upon its corporate masters. But, its obedient propagandists, with extreme fierceness, are out to malign the innocent medical representatives.

Is Narendra Modi’s prescription for generic drugs a new and a sincere one?

During the era of neo-liberal economy, Narendra Modi’s hue and cry for generic medicines is not the pioneering one. The UPA government also issued circulars and instructions from time to time to government hospitals and Central Government Health Scheme (CGHS) dispensaries to “prescribe generic medicines” to the “maximum extent possible”. In December 2012, the UPA government had issued a “statutory direction” to state governments under sections of the Drugs and Cosmetics Act, 1940 to “grant/renew” licenses to manufacture for “sale or for distribution of drugs in proper/generic names only”.

Recently, through a notification [MCI-211(2)/2016(Ethics)/131118] dated 21 September 2016, the Medical Council of India (MCI) amended  the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations 2002 which was published in the Gazette of India on 8 October, 2016.^[9]  The amendment modified the Regulation 1.5 which read:

Every physician should prescribe drugs with generic names legibly and preferably in capital letters and he/she shall ensure that there is a rational prescription and use of drugs.

Earlier, in 2002 regulation, it was written:

Every physician should, as far as possible, prescribe drugs with generic names and he/she shall ensure that there is a rational prescription and use of drugs.

Thus, the change in MCI Regulations effectively makes it mandatory for doctors, including those in private practice, to prescribe generic drugs. However, failure of his government to enforce the harsh MCI guideline has probably prompted Modi to exercise his verbosity on the issue.

Ironically, the Parliamentary Committee on Government Assurances (PCGA) in its report, submitted on 11 August, 2016 sharply criticized the NDA government for not fulfilling its assurances to control the prices of patented drugs and labeled the Ministry as it did not believe in keeping its promises. Such criticism came amidst claims of the NDA Government to have brought more generic drugs under price control. The Committee pulled up the Department of Pharmaceuticals (DoP) in not so subtle language but used terms like ‘gross negligence’, ‘lackadaisical attitude’, ‘vested interests’ to describe the work (or lack, thereof) of the DoP which falls under the Ministry of Chemicals and Fertilizers.^[10] 

 This is enough to describe Modi government’s commitment in reducing drug prices!

What is the difference between brand and generic prescription of drugs?

Before entering into the centre stage of the controversy between brand and generic drugs, it is important to know the differences between these two. Philip DeShong, professor of chemistry and biochemistry at the University of Maryland, offers the following explanation: 

“The major difference between a brand-name pharmaceutical and its generic counterpart is neither chemistry nor quality, but whether the drug is still under patent protection by the company that initially developed it. When a company develops a new drug, it typically receives a patent that lasts 20 years. This means that other pharmaceutical companies may not sell this substance without permission from the developing company during that time. Once the patent expires, however, other companies may begin to sell the compound. Because companies wishing to sell the generic drug have much lower development costs, they can produce it at a lower unit cost, sell it for less and still make a profit on the sale.”^[11]

According to the US Food and Drug Administration (USFDA) definition, a generic drug is identical or bio-equivalent to a brand-name drug in dosage form, safety, etc. These medicines are usually much less expensive than the original branded medicine.

Therefore, brand-name drugs are the ones made originally by a pharmaceutical company and are sold under a patent protection whereas generic drugs are inevitably made once its branded counterpart’s patent protection is already expired. Generic drugs are relatively cheaper; whereas, brand-name drugs are expensive because they are sold exclusively by the company that developed them.^[12]

What is the Indian scenario?

With regard to the brand-name medicines and their generic counterparts, the scenario in India is entirely different from that of the USA and Europe. There are innumerable works on it. However, we can refer to the “working paper” of the Indian Institute of Management, Ahmedabad (W. P. No. 2015-11-02) published in November 2015 namely “Competition Law and the Pharmaceutical Sector in India” as a ready reckoner.

Immediately after independence, the Indian pharmaceutical industry was dominated by global multinational manufacturers. The prevailing system was due to a law enacted in British India called Patents and Designs Act, 1911, which ensured strong product patent protection regime. Entry into the Indian market was easy for the global manufacturers who had the technological capabilities to bring new medicines to the market, but at a very high cost for the existing population (in fact, average drug prices in India were among the highest in the world). There were very few indigenous manufacturers of consequence during this time, and eight of the top 10 pharmaceutical firms were subsidiaries of MNCs. Most of the patents granted originated from foreign countries, a consequence of underdevelopment of India. During that period, price of medicines was very high and access to such products was not guaranteed.^[13]

Government of India formulated the Patents Act in 1970 which allowed process patent protection for pharmaceutical products for a period of 7 years from the date of patent filing. The Patents Act, 1970 along with the Foreign Exchange Regulation Act, 1973 and the Drug Price Control Orders (DPCOs) under the framework of National Drug Policy, 1978 together eliminated incentives of foreign multinationals to sell their branded products in India; and in their place, domestic pharmaceutical companies developed their specialization in manufacturing generic versions of patented pharmaceutical drugs.

Further, the domestic companies were supported by research and development activities undertaken by the government of India. Two public sector companies, Hindustan Antibiotics Ltd. (HAL) and Indian Drugs and Pharmaceuticals Ltd. (IDPL) engaged in significant research and development, and their R&D efforts spilled over to the private sector through various means -- often through movement of scientists. In addition, research efforts of laboratories such as Central Drug Research Institute (CDRI), Indian Institute of Chemical Technology (IICT) and National Chemical Laboratory (NCL) provided various technical supports to the pharmaceutical industry.^[13]

Initially, the Indian companies were confined to simply producing for the domestic market. Later on, they developed capabilities to produce generic versions of branded drugs for the world market that were off-patent. They also specialized in production of bulk drugs that formulation-producing MNCs outsourced to India, and thus generated exports.^[13]

Indian firms have historically specialized in process innovation, and not necessarily product innovations. This is due to the fact that the Indian pharmaceutical industry developed in a protected environment where product patent was not recognized from a period of 1970 to 2005.^[13]

Thus, India became self-reliant in pharmaceutical sector and the prices of medicines were also effectively lowered. Moreover, in the country’s domestic market a specific feature called branded generic was evolved which is not found in most developed markets. However, there exists inter-brand competition at the intra-molecule level and vice versa which is peculiar to India.

Why generic medicines are more beneficial for USA than for India?

USFDA notes that the cost of a generic drug is 80% to 85% lower than the brand-name product on average in the domestic market of USA.^[14] Therefore, the doctors are encouraged to prescribe only the name of the molecule for a generic drug, and not the brand name. Pharmacists are also incentivized to steer the consumers to the cheapest available option. Strict quality controls are in place to ensure that all the drugs sold by different companies meet the required quality standards. The insurance companies also insist on the lowest priced generic available since medicines are under insurance coverage. Thus, patients in these jurisdictions receive low cost generic medicines.

Presently, the prices of drugs in India are fixed as per the provisions of the First Schedule of the Drugs (Prices Control) Order, 2013 and are included in the National List of Essential Medicines (NLEM). These prices are uniformly applicable to all branded and generic medicines containing the “same molecule”/“Active Pharmaceutical Ingredient” (API). All manufacturers of scheduled drugs/formulations have to comply with the price fixed by the National Pharmaceutical Pricing Authority (NPPA) from the date of its notification. In the case of non-scheduled medicines, i.e., medicines not included in the First Schedule of the DPCO-2013, manufacturers are free to fix the launch prices. But, they cannot increase the Maximum Retail Price (MRP) by more than 10% of the MRP of the preceding 12 months.^[14] Thus, according to the Order of the government of India, there should not be any price difference between the branded and the generic medicines of the same molecule.

Secondly, the government has to clarify how it will ensure that the pharmacist or chemist would dispense the most appropriate drug to the patient once a doctor prescribes the same in its generic version. There are over 800,000 chemists in India. According to the experts, the decision making will now shift from doctor’s desk to the chemists’ counter. Since the doctor will mention only the generic name of a drug on the prescription, now the chemist might sell medicines that suit him the best and might push those that yield him better profits.^[15]  Even on the question of price, studies have shown that it is the retailer’s margin that often plays the key role in deciding how much the patient pays for a drug.

Thirdly, generic drugs should work “therapeutically” and the government should ensure uniform quality of all medicines sold in the market. At present, no more than 1% of generic drugs sold in India undergo quality tests. Therefore, the priority of the government should be to bring a legal framework to ensure “quality” in generic drug testing. For this, the number of drug inspectors from its present strength of approximately 1,500 must be increased by many folds. Then only the doctors can prescribe generics with confidence.

Fourthly, public provisioning and insurance coverage of healthcare in India is very low, and in most cases, insurance coverage is limited to inpatient care only. Medicines purchased for outpatient care mostly remains out of the purview of insurance. Thus, medicine constitutes 72% of the out-of-pocket expenditure which is among the highest in the world.

Therefore, there is a marked difference between the two scenarios of the West and India in case of brand-name medicines and their generic versions. Without tackling the logistics and properly implementing the policies, only proclamation of generic would harvest not much benefit for the people of India.

Can generic prescription bring cost equilibrium?

In India, for treating a particular disease or disorder, options for several brands are available with same molecule/API and different brands also co-exist with different molecule/API.  Let us take the example of diabetes. To consider the example of diabetes has its reason. According to the statistics from the International Diabetes Federation (IDF), India has more diabetics than any other nation of the world. An estimation of 2015 pegged the number of diabetics in the country at about 62 million – an increase of over 10 million from 2011. If By the year 2030, over 100 million people in India are likely to suffer from diabetes, say researchers.^[16] So, diabetes market in India is very “lucrative” for the drug cartel.

Now, let us consider two treatment options of diabetes mellitus besides many – (i)Fixed Dose Combination of Linagliptin and Metformin Hydrochloride (2.5mg/500mg) under the brand name Trajenta Duo; and (ii)Glimepiride and Metformin Hydrochloride (2mg/500mg) under the brand name Amaryl M2. With MRP of Rs 229.00 per 10 tablets of Trajenta Duo, each tablet costs Rs 22.90 while each tablet of Amaryl M2 costs Rs 15.72 with MRP of Rs 235.94 per 15 tablets. Considering the patient’s requirement, if a doctor has to prescribe Linagliptin and Metformin Hydrochloride (2mg/500mg) then, the patient has to go for a costlier option for the same therapeutic area (diabetes in this case).

The question, however, is why this particular patient has to spend more in compare to another diabetic receiving the cheaper medicine? How, in this case, a generic prescription is useful? So, it is necessary to make all anti-diabetic drugs available at equal price despite their different molecular composition. Can Modi government do that? Now, someone may argue that higher price for “better” medicine. Yes, that’s the real agenda! Push costlier medicines under the veil of generic. And, especially in a buoyant market like diabetes, corporate interest can be served better in this way.

Another example: Now it is a comparison between two branded drugs having the same Fixed Dose Combination of Glimepiride and Metformin Hydrochloride (2mg/500mg) – (i)Amaryl M2, a brand marketed by US multinational Sanofi and, (ii)Azulix 2MF, a brand marketed by Indian drug major Torrent Pharma. Per tablet of Amaryl M2 costs to the patient Rs 15.72 whereas per tablet of Azulix 2MF costs Rs 8.70. Again, if the doctor prescribes his patient by the molecule name of Glimepiride and Metformin Hydrochloride (2mg/500mg) and the patient is dispensed with Amaryl M2 then, how will Modi government ensure economy to the patient? In this case, again the multinational would reap the harvest!

Therefore, trumpeting only generic would have minimum or no benefit to the patient unless other necessary measures are not taken.

Why such brand-generic controversy and who would reap benefit out of it?

 

With dramatic changes in the landscape of the pharmaceutical industry, where the multinational drug cartel led by the US are losing their domestic market rapidly, such controversies ought to occur for their benefit.   

From 2016, generic alternatives are available for some of the highest revenue drugs, including products such as Lipitor®, Plavix®, Seroquel®, Actos® and Singulair®, as the patents on those drugs expired. Within next five years, the amount of worldwide revenue impacted by drugs going off-patent would range from about $80 billion to $250 billion which amounts a significant percentage of the worldwide pharmaceutical market of over $850 billion. In addition to the “patent cliff” faced by branded pharmaceuticals, long awaited regulations providing an approval pathway for biosimilar drugs may further open the door to more generic competitions as alternatives to patent-protected brand-name drugs. With about 120 drugs going off-patent over the next ten years, the growing percentage of generics appears to represent a long term trend. This trend will pressure the sales and earnings of some of the major multinational drug farms.^[17]

Under these circumstances, the generic market becomes the most attractive for the profiteering drug corporate.

The Indian pharma industry is expected to grow over 15 per cent per annum between 2015 and 2020. It will outperform the global pharma industry, which is set to grow at an annual rate of 5 per cent between the same period. The Indian pharmaceutical market is expected to grow to US$ 55 billion by 2020, thereby, emerging as the sixth largest pharmaceutical market globally by absolute size. Branded generics dominate the pharmaceutical market in India, constituting nearly 80 per cent of the market share (in terms of revenues).^[18] Can the multinational drug cartel ignore such lucrative market?

But, the branded generics of the Indian drug manufacturers are the biggest hurdle for them to cross in their way to establish monopoly during the off-patent regime. Since these products have been established through ethical promotion and continue to maintain their market position through doctors’ prescription, therefore, to beat the competition at the first place, it is necessary to cause injury to the sales promotion employees and to the medical fraternity. Once the competition is finished, the robust Indian drug market will become the open field for the multinationals and the scenario of 1950s and 1960s will return.

So, it is not for the benefit of the Indian people that the generic campaign has restarted. It is only to facilitate the multinational drug cartel to pave the Indian market in a much smoother way.

Why the Indian drug farms are restricted to enter into the US generic market?

India is regarded as the “pharmacy of the developing world”. Indian companies provide cheap generic drugs to countries across the world and account for 80 per cent of donor-funded HIV treatment.^[19]

According to data from the Ministry of Commerce and Industry, India has also maintained its lead over China in pharmaceutical exports with a year-on-year growth of 11.44 per cent to US$ 12.91 billion in FY 2015-16. In addition, Indian pharmaceutical exports are poised to grow between 8-10 per cent in FY 2016-17. Overall drug approvals given by the US Food and Drug Administration (USFDA) to Indian companies have nearly doubled to 201 in FY 2015-16 from 109 in FY 2014-15. The country accounts for around 30 per cent (by volume) and about 10 per cent (by value) in the US$ 70-80 billion US generics market.^[20]

India's biotechnology industry comprising bio-pharmaceuticals, bio-services, bio-agriculture, bio-industry and bio-informatics is expected to grow at an average of around 30 per cent a year and reach US$ 100 billion by 2025. Bio-pharma comprising vaccines, therapeutics and diagnostics, is the largest sub-sector contributing nearly 62 per cent of the total revenues at Rs 12,600 crore (US$ 1.89 billion).^[20]

 

 Facing the challenges of loss of market share, the US pharma lobbyists are now advocating trade restrictions before the Indian drug farms. Earlier, India was under pressure from the United States to introduce ‘data exclusivity’, which grants Intellectual Property (IP) protection to the data produced while developing a drug, as well as the drug itself. In practice, this would mean banning compulsory licensing, and might even restrict generic versions of off-patent drugs.^[21]  Such move by the US authorities can reverse the advancement of India’s position in pharmaceuticals which was achieved through longstanding battle since 1970s over generic drugs. However, India’s Prime Minister Narendra Modi, eager to attract foreign investment, indicated that he was open to such reforms.

Another trade barrier, erected by the US authorities, is the Generic Drug User Fee Amendments (GDUFA). Since its implementation in Oct 2012, USFDA inspections have doubled in India. Back in 2012, around 11% of inspections were conducted in India while today it has shot up to 20% whereas overall inspections globally remained at similar level. This has led to considerable increase in issuance of Warning Letters (WLs), around 55% of today versus 33% of total earlier. WL resolutions have also become longer and rarer - only 9 out of 108 WLs have been sorted out taking an average of nearly 500 days. Data suggests that just one resolution out of the 64 WLs issued in past 52 months.^[22]

Despite promulgating sales of generic drugs in their domestic market, the US administration is restricting the entry of Indian drug manufacturers to their country though; these companies are poised to supply generic drugs with equal efficacy and at much reduced price when compared with their own branded drugs. And, at the same time they are keen to grab the Indian generic market!

What actions are to be taken in real terms to make medicine price affordable?

 

Since India successfully negotiated the ‘compulsory licence’ under the TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement, the government of India should  continue to allow local companies to produce generic copies of foreign drugs for domestic use as well as to sell to the foreign buyers. Effective implementation of DPCO, a long pending task, is required to be fulfilled immediately to reduce drug prices and to make it more affordable for the domestic buyers.

Moreover, there should be a complete removal of excise duties and other taxes levied on medicines to make them cheaper for the end user. It is also important to see that the Indian drug industry isn’t crippled by extreme patent reforms. Government of India should remind the US that the self-reliance of India’s drug industry cannot be subjugated to the US multinationals. Anyway, India’s generics are largely sold in poor countries; the trade business in the core markets of North America, Europe and Japan remains undamaged for the US drug farms.

Conclusion

 

Abolition of brands is a concept of the socialist economy and, I am in favour of it. Capitalism, especially when it becomes Crony in nature, can never do away with brands. Therefore, even apple which supposedly “keeps doctor at bay” is sold under different brand names in departmental stores! Ironically, as we have already discussed in this article, Modi government is unable to initiate actions against multinationals to control the prices of patented drugs. This government is also ready to accept IP protection against the national interest. It is, therefore, obvious that Narendra Modi and his team would always try their best to please the corporate masters in the field of medicine ensuring higher profit margin. And, all these are being done under the generic pretext! Hence, Monsieur Modi’s generic prescription does serve super profiteering multinationals against people’s interest. 

@pradipsinterpretations     

 References:

1.     http://www.india.com/news/agencies/modi-hints-at-rules-for-doctors-to-prescribe-generic-drugs-2036677/
2.http://pradipsinterpretations.blogspot.in/ 2017/04/nationalhealth-policy-2017-excoriated_16.html
3. http://economictimes.indiatimes.com/ articleshow industry/healthcare/biotech/pharmaceuticals/pm-narendra-modi-hints-at-rules-for-doctors-to-prescribe-generic-drugs/articleshow/58220117.cms
4.      http://timesofindia.indiatimes.com/india/law-soon-to-ensure-doctors-prescribe-cheaper-generic-drugs-assures-pm/ /58231392.cms
5.      http://www.hindustantimes.com/health-and-fitness/doctors-welcome-move-to-prescribe-generic-drugs-say-accessibility-may-be-an-issue/story-8u5g9uCvrjLmz5XHhxm8EM.html
6.       http://pharmabiz.com/ArticleDetails.aspx?aid=85907&sid=3
7.       https://india.gov.in/sales-promotion-employees-conditions-service-act-1976-0
8.http://taxguru.in/corporate-law/definition-industry-section-2-industrial-disputes-act-1947-14-1947.html
9.       https://spicyip.com/2016/10/mci-gives-generic-prescription-a-shot-in-the-arm.html
10.https://spicyip.com/2016/08/parliamentary-committee-slams-the-department-of-pharmaceuticals-over-drug-prices.html
11.  https://www.scientificamerican.com/article/whats-the-difference-betw-2004-12-13/
12. http://www.differencebetween.com/difference-between-generic-and-vs-brand-name-drugs/
13.   https://ideas.repec.org/p/iim/iimawp/13762.html
14.http://indianexpress.com/article/explained/cheap-generic-vs-costly-branded-issues-in-picking-right-drug-in-india-4620165/
15.http://www.business-standard.com/article/economy-policy/modi-govt-plan-on-generic-drugs-makes-pharma-companies-doctors-jittery-117041800490_1.html
16.   http://www.mapsofindia.com/my-india/india/prevalence-of-diabetes-in-india
17.https://nckpharma.com/index.php/why-biosimilar-has-different-approval-process-from-generic-drugs/
18.   https://www.ibef.org/industry/pharmaceutical-india.aspx
19.http://www.scidev.net/global/medicine/analysis-blog/private-sector-india-generic-drug-wars.html
20.   https://www.ibef.org/
21. Maha Rafi Atal, University of Cambridge, United Kingdom, previously a journalist, including at Forbes.( mra42@cam.ac.uk)
22.http://economictimes.indiatimes.com/news/industry/healthcare/biotech/pharmaceuticals/data-on-us-fda-observations-on-indian-firms-disturbing-edelweiss/articleshow/57288845.cms