NDDS or Evergreening of Patents? 

The Draft Pharmaceutical Policy - 2017

(Article-5)

The Department of Pharmaceuticals (DoP) under the Ministry of Chemicals & Fertilizers recently released the 18 page Draft Pharmaceutical Policy – 2017 which has been circulated among various stake-holders of the pharmaceutical industry and civil society. 

In an attempt to understand the draft, I have decided to present a series of articles portraying my own interpretations on this draft policy. The fifth article is here.

Acceptance of Novel Drug Delivery Systems (NDDS) as “New Drug” violates the Laws of the Land

The Draft Pharmaceutical Policy – 2017 notes: “There is disproportionate focus on generic formulations to the point of exclusion of lack of adequate R&D. Whatever R&D is there is also limited to new processes for the same product (Novel Drug Delivery System – NDDS). For a long-long time there has been no molecule discovery by indigenous manufacturers.” [Para:3.4; Page:7 of the draft].

The above observation is biased and paradoxical. Focus on generic formulations for their adequate production by the indigenous manufacturers has actually helped the nation to attain self-sufficiency for the supply of medicines. How that could be the reason for lack of adequate R&D? Manufacturing of medicine in sufficient quantity cannot contravene the research and development work for invention of newer drugs. Rather, both should be concomitant. However, based on the above observation, the draft policy suggests, “All Novel Drug Delivery Systems should be considered as ‘new drugs’, unless certified otherwise by the licensing authority. This will also encourage innovations.” [Para:5.17; Page:15 of the draft].

Such “policy initiative” adopted by the government at the centre raises serious doubts about its intentions. World-wide the research pipeline for drugs and pharmaceuticals has become virtually dried up. The healthcare and pharmaceutical industry changed radically once the era of patent protection gradually started winding down. The patent cliff era began in earnest in 2011 and crescendoed in 2012. Some major well-known drugs—like Lipitor (atorvastatin), Plavix (clopidogrel), and Singulair (montelukast)—faced patent expirations and increased competition in the United States. According to estimates by Evaluate Pharma, a whopping $120 billion in sales was lost to patent expirations between 2009 and 2014. Evaluate Pharma also forecasts that $215 billion in sales will be at risk due to patent expirations between 2015 and 2020. [Source: Drug Patent Expirations: $190 Billion Is Up for Grabs; by VanEck]. This trend will pressure the sales and earnings of some of the major multinational drug firms. Under these circumstances, the multinationals are desperate to maintain their high profits by various ways and means. One such method is obviously the evergreening patent rights of their products under the WTO regime.

Fortunately, India could protect its interest against such multinational hegemony in drugs and pharmaceuticals through the Section 3(d) of the Indian Patent Act 1970 (as amended in 2005) which does not allow patent to be granted to inventions involving new forms of a known substance unless it differs significantly in properties with regard to efficacy.  According to the Section (3d), such invention or discovery is “mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.” [Source: indiakanoon.org]. Such legal provision defended the country’s interest in the court of law when multinational drug firms like Novartis and Bayer were challenged against over-pricing their anti-cancer drugs.

The Supreme Court of India rendered judgment on an appeal by Novartis against rejection by the India Patent Office of a product patent application for a specific compound, the beta crystalline form of imatinib mesylate. Imatinib mesylate is used to treat chronic myeloid leukemia and is marketed by Novartis as “Glivec” or “Gleevec”. Affirming the rejection, the Supreme Court confirmed that the beta crystalline form of imatinib mesylate failed the test of Section 3(d). The Court clarified that efficacy as contemplated under Section 3(d) is therapeutic efficacy. [Source: The Judgment In Novartis v. India: What The Supreme Court Of India Said; Intellectual Property Watch].

The US drug lobby never appreciated Section 3(D). Minister of State (Independent Charge) in the Ministry of Commerce & Industry Smt. Nirmala Sitharaman, in a written reply informed Rajya Sabha on 30 July, 2014 that “the Indian Patent Act does not allow evergreening of patents. This is a cause of concern to the US pharma companies.” [Source: Press Information Bureau, Government of India, Ministry of Commerce & Industry]. Therefore, it was necessary for the corporate serving government to dilute the very existence of Section 3(d) in the pharmaceutical scenario of India to please their masters particularly those who are in abroad. The acceptance of NDDS as “new drug” is a major step towards that. It is important to note that, “making small changes to a drug, often about to come off patent, in order to gain a new patent that extends its manufacturer's control over it is a way of cheating on the implicit bargain of patents: that a government-backed monopoly is granted in exchange for the invention entering the public domain at the end of the patent's lifetime.” [Source: Indian Supreme Court Rejects Trivial 'Evergreening' Of Pharma Patents; techdirt]

Now, for any existing drugs if NDDS is developed and the same is considered as “new drug”, patent protection would be extended in that case and that “new drug” will be kept outside the purview of price control. In this regard, the draft policy mentions: “DPCO will include only ‘off-patent’ medicines in its schedule. ‘In-Patent’ medicines will not be subjected to price ceiling by NPPA.” [Para:5.18 j ii; Page:17 of the draft] Therefore, such provisions in the draft policy, if finalized, would result in increasing medicine prices while ensuring the endless monopoly for few drug majors mostly the multinationals. During the post-patent regime, when the monopoly of multinationals is at stake, this would perhaps be the most priceless gift for them from the Modi-government!

(To be continued....)

@pradipsinterpretations

No Responsibility of Quality Control for Multinationals

The Draft Pharmaceutical Policy - 2017

(Article-4)

The Department of Pharmaceuticals (DoP) under the Ministry of Chemicals & Fertilizers recently released the 18 page Draft Pharmaceutical Policy – 2017 which has been circulated among various stake-holders of the pharmaceutical industry and civil society. 

In an attempt to understand the draft, I have decided to present a series of articles portraying my own interpretations on this draft policy. The fourth article is here.

Abolishing Loan Licensing would free multinationals

from their responsibility of quality control

The Draft Pharmaceutical Policy – 2017 has mentioned: “Loan licensing was decided to be discontinued in phased manner in the drug policy 1986” since “it raises many quality maintenance and assurance issues.” [Para:5.8; Page:12 of the draft]. The paragraph concludes by saying: “(i) phasing out over 3 years (ii) loan licensing to be allowed only for WHO GMP approved facility (iii) loan licensing to be allowed upto only 10% of the total production of the Company.” Such statement appears to be bold and deserves applause. The draft, despite waging war against loan licensing, cleverly maintained silence on contract manufacturing.

According to “Drug Quality and Safety Issues in India” published by the Indian Council for Research on International Economic Relations in September, 2015: “In India, at present, manufacturing of drugs is done in three ways–own licence, loan licence and third-party agreements. In case of a loan licence, any company which does not have its own arrangements for manufacturing can use the facilities of another manufacturer. In this scenario, the applicant of a loan licence often provides the necessary raw material to the manufacturer and maintains strict oversight during the entire process. Third-party agreements, on the other hand, just entitle a manufacturer to undertake the manufacturing process on behalf of another entity that would only market the product, with greater autonomy of operation to the former. During our field research, we found an absence of clarity among respondents on the legal liability with regard to quality of products that enter the market through third-party manufacturing.” [Maulik Chokshi; Rahul Mongia and Vasudha Wattal].  

The loan license is defined under Rule 69-A and 75-A of the Drugs & Cosmetics Rules 1945, whereas, there is no third party manufacturing agreement provision in the Act and Rules. [Source: Drug manufacturing can be outsourced from a loan licensee; 04 March, 2015]. Third-party or contract manufacturing is actually out sourcing of products which provides easy solution for manufacturing one’s own brand names from other manufacturing unit. It is a very popular concept among marketing companies. In third-party manufacturing, name and address of the manufacturer must be mentioned on the label of the drug. Marketing company’s name should be mentioned separately. Ownership of brands will be the property of the marketing company but quality will be the responsibility of the manufacturing company. According to Pharma Franchise Help, “Multinational companies are also gotten manufactured their products at loan license or third party basis.” [Source: What is third party/contract manufacturing in Pharmaceuticals/Ayurvedic sector? Procedure, Requirements, Inventory]. In absence of loan license, multinationals would manufacture their products on third party basis only. Thereby, they would enjoy the brand equity but for quality assurance some small company from remote parts of the country would be held responsible!

The article, “List of Contract Manufacturing Pharma Companies in India” by Pharma Tips, published on 2 February, 2013 noted: “In spite of all the assurances, given by the multinational, a lot of scepticism has crept in to the views on contract manufacturing. Most of production personnel deputed in these plants have always commented that they have been unable to exercise the same controls as they could have in their own parent company.” The article further stated: “Today most of the companies including the minor contract manufacturers have moved to the remote areas of Himachal Pradesh, Sikkim to gain certain tax benefits. The question is—do these units have the required infrastructure, facilities, work force availability as is present in the major cities such as Delhi and Bombay. Many of the blue chip companies have even got their products manufactured on contract from these companies based in these remote areas.” [Source: Pharma Tips].

The draft pharmaceutical policy, incidentally, wants to abolish drug manufacturing under loan license which does have certain legal provisions to ensure the quality of medicines. But, it does not target third party manufacturing which is outside the purview of law and does not guarantee the quality of drugs. Therefore, the question is whether quality of medicine is the priority or under its pretext multinationals are freed from all responsibilities.

(To be continued.....)

@pradipsinterpretations

The Principle of Monopolization

The Draft Pharmaceutical Policy - 2017

(Article-3)

The Department of Pharmaceuticals (DoP) under the Ministry of Chemicals & Fertilizers recently released the 18 page Draft Pharmaceutical Policy – 2017 which has been circulated among various stake-holders of the pharmaceutical industry and civil society. 

In an attempt to understand the draft, I have decided to present a series of articles portraying my own interpretations on this draft policy. This is the third of the series.

The Principle of One Manufacturer-One Salt-One Brand Name would destroy competition and establish monopoly

Blanket promotion of Brownfield FDI in pharma sector is undoubtedly a contentious issue. But, the draft pharmaceutical policy – 2017 extends enough scope for its further consolidation through the principle of ‘one company – one drug – one brand name – one price’. The draft policy suggests: “the government will pursue the policy of sale of single ingredient drugs by their pharmacopeial name/salt name. For patented drugs and Fixed Dose Combination (FDCs) drugs the brand names may be used. However here, the principle of ‘one company – one drug – one brand name – one price’ would be implemented.” [Para:5.5; Page:12 of the draft].

Government has come out with the above proposal since it has discovered (?) that “the same company manufactures the same salt (pharmacopeial name of the drug) on the same production line but sells it under different brand names at different prices! The widely varying prices for the same drug and the mark ups thereon for retailers, distributors and the stockists has created a largely negative perception about the industry’s drug pricing practice.” [Para:3.7; Page:7&8 of the draft]. This is a lie of its highest order. If the government intends to implement the price control mechanism effectively then the price can be controlled for any number of medicine brands available in the market. The issue of effective price control mechanism for drugs and pharmaceuticals would be discussed later in this article.

However, the principle of ‘one company – one drug – one brand name – one price is not for reducing the drug price. Such attempt has been made with a view to destroy the competition among brands. The inter-brand market competition is a unique phenomenon of Indian pharma sector which has been developed through years of historic events like process patent, compulsory licensing etc. India’s self-reliance in drugs and pharmaceuticals is indicative enough through experiencing the presence of a plethora of medicinal brands. The draft policy notes: “In the pharmaceutical industry, about 2500 pharmacopeial salts are manufactured but there are more than 60,000 brand names….” [Para:3.10; Page:8 of the draft]. All these brands are surviving through intense competition. The major brands, however, enjoy the lion’s share of the total volume sales of a particular therapeutic segment.

India’s generics (available in India under different brand names for a particular pharmacopeial name) market has immense potential for growth. The share of generic drugs could have represented about 85 per cent of the prescription drug market by 2016 amounting USD26.1 billion and is expected to reach USD27.9 billion in 2020. Due to their competence in generic drugs, growth in this market offers a great opportunity for Indian firms. Generic drug market is further expected to grow in the next few years, with many drugs going off-patent in the US and other countries. Moreover, India accounts for 20 per cent of global exports in generics. During 2016, India exported pharmaceutical products worth USD16.89 billion, with the number expected to reach USD40 billion by 2020. [Source: India Brand Equity Foundation; March, 2017].

It’s difficult for the multinational drug firms to capture and dominate such highly competitive market of India. But, it is also their dire need to do so since they are losing sales and profit in their domestic markets due to economic meltdown since 2008 and they shall be losing monopoly due to patent expiry. Hence, they are eyeing the buoyant market of India. But, without killing competition, how can they achieve their desired goal?

Astonishingly, the Draft Pharmaceutical Policy – 2017 is designed to abolish this competitive environment of the country’s drugs and pharmaceutical market. The “New Policy Initiatives” emphatically declares: “the practice of P2P (product to product) manufacturing by which one manufacturer manufactures one pharmacopeial drug in multiple brand names and gives them to other manufacturers to market them at price chosen by the marketers, will be phased out. This will be achieved by following a principle of one manufacturer, one salt, one brand name and one price.” [Para:5.9; Page:13 of the draft].

This means, in coming future a manufacturing company shall produce a particular medicine only for one particular company. Thus, fewer brands would survive and large number of smaller brands would simply get evaporated. Next, it would be easier for the multinationals to acquire/purchase those few brands through Brownfield investment route to establish their absolute monopoly. The country has already experienced the “muscle power” of multinationals particularly in drug industry. India would be pushed back to the pre 70s scenario where foreign multinationals dictated the pharma market and medicines used to cost one of the highest in the world. 

(To be continued....)

@pradipsinterpretations