Back in September of last year, I posted about the increasing conflict between the government of India and the multinational pharmaceutical companies (MNCs) over the MNCs’ patents to the latest generation of highly-priced, mostly cancer drugs (“Dueling Sitars”). I noted that the motivations and objectives of both sides aren’t obvious. For the MNCs, the market in India for patented drugs is small, only about 10% of the total about $12 billion which is a small part of the world market of more than $400 billion. Perhaps, the MNCs want to protect their lucrative US/EU markets from Indian “similar-but-not-identical-and–therefore-not–infringing” versions of their patented best-sellers, but it is likely the regulatory agencies will require expensive supporting data for the new-comers. Perhaps, the MNCs are seeking clarity in Indian patent law to set the stage for license negotiations with the generic companies who may make good partners for MNCs wanting to enter emerging markets (my naïve hope). As for the government of India, its chief concern should be to generate economic growth and an improved tax base to be able to meet the health needs of its many poor, as well as the expectations of a growing middle class and many employers who want an affordable health care system (not the 18% of GDP we pay), so making the Indian economy unattractive to the MNCs is not sensible. Rather I guessed that, given the lack of a government policy (and money) to increase spending on drugs and insurance programs, the Indian bureaucracy decided it would enable domestic companies to produce cheaper versions by denying MNC patents or circumventing them by compulsory licensing. The latter is essentially licenses granted by the government without agreement of the owner of the rights and are not allowed under international trade agreements except in situations of national need like epidemics. I posited that a better solution was for the government to encourage MNCs to invest in and/or partner with the domestic pharma industry to invent low-cost versions of their meds specific to the emerging/developing markets.
Clearly, my blog is not read by the policy-makers in India, because since my posting the government has escalated its pressure on the MNCs both by denying patents and initiating compulsory licenses. In January, the Department of Pharmaceuticals began the process for the compulsory licensing of three cancer drugs, Roche’s trastuzumab or Herceptin, used for breast cancer, and Bristol-Myer Squibb’s (BMS) chemotherapeutics ixabepilone/Ixempra and dasatinib/Sprycel. While the articles in the local press (India Express and Business Standard) reported that the Department expects the drugs to be sold at 95% of their MNC prices which is what happened when a compulsory license was granted for the BMS chemotherapeutic, Nexavar, no domestic companies were reported as seeking licenses. Ironically, Roche and BMS seemed to be following my strategy. Over the past year both have licensed drugs to India’s Emcure Pharmaceuticals. Roche licensed Herceptin and Rituxan for India and rest-of-world markets, and BMS licensed BiCNU for all markets (FiercePharma article and Emcure news). My only explanation is that the government is hoping to grant licenses to multiple companies to get the lowest possible prices.
On the patent front in the past year, India re-examined and revoked patents granted to Pfizer for Sutent (an anti-cancer drug), to Roche for its hepatitis C drug, Pegasys, and to Merck for an asthma treatment, although the Sutent patent was reinstated in June (another FiercePharma article). Just last week India’s Intellectual Property Appellate Board revoked the patent to GlaxoSmithKline (GSK) for the salt version of its cancer drug, Tykerb, while upholding the patent to the original form (the former was to expire two years after the latter) (Reuters article). Interestingly, as reported by Reuters, the Tykerb re-examination was at the request of the Indian unit of the German company, Fresenius SE, and Tykerb’s price had already been reduced by 30% by GSK’s program to lower its prices in developing markets. This week, as reported by FierceBiotech citing Reuters (another FiercePharma article), the Patent Office cancelled divisional patents granted to Roche for Herceptin because the patent applications were improperly filed; it was not reported how this action may effect the granting of a compulsory license for Herceptin which is apparently still pending.
And then adding to the market turmoil for both domestic companies and the MNCs, in May the government expanded the list of generic essential drugs subject to price controls to almost 350 (WSJ article). This move was not popular with the domestic companies who said the formula is unfair to them (Economic Times article) and with an NGO called All India Drug Action Network which says the formula actually increases some prices and is petitioning the Supreme Court to stop its implementation (DNA India). Unfortunately, given these negative trends, I can image the various India bureaucracies crashing together and deciding that all drugs are essential and should be priced by an arbitrary formula driven by the government’s budget. The result may be short-term savings by patients who pay out of pocket and by the government-run health system but in the long term destruction the drug market for both the domestic and international companies. Let’s hope they can avoid such a collision.