Public Health
Shouldn't India be reforming its own manufacturing process before trying to change global market dynamics?

Not very far from the Serpentine Bar at the Palace of Nations in Geneva, the United Nations HQ, where both lobbyists of the private sector and non-state actors are competing to convince the World Health Organization’s (WHO) member-states to vote in their favour, delegates from India were holed up in Room VII, discussing with other delegates one of the most controversial issues at the World Health Assembly (WHA) this year – making medicines affordable.

Should the cost of pharmaceutical and medical research be 'delinked' from the price of medicines in the market? In other words, should medicines be priced based on what it actually costs to produce them, or what makes them affordable for people across the world?

Speaking at that discussion on the evening of May 25, Union Health Minister of India, JP Nadda, made the argument that the cost of developing the drug, and the price at which they are sold in the market, should be delinked. In other words, patients shouldn’t pay for expensive medicines – someone else should.

However, the other main focus of the health minister was to emphatically state that India – known as the pharmacy of the world – has high quality standards in the manufacturing of drugs. It begs the question, if India wasn’t worried about the of quality of drugs being produced in its country, why would it go the extra mile to make the point that its manufacturing is indeed of high standard?

And how is manufacturing quality and monitoring of medicines linked to the issue of delinking research costs and prices of medicines?

Pharmacy of the world has a quality problem

In 2013, whistle-blower Dinesh Thakur blew the lid off the dangerous drug manufacturing processes of Ranbaxy Labs in India and how it lied to regulators about its procedures. But Thakur’s crusade was also a sad commentary on the quality of drug manufacturing and regulation in India.

“I don't know how much more worse it can get. Practically no one in the West believes clinical trial data from India. Approximately 45 manufacturing facilities in India are under some type of regulatory action from the US FDA,” says Thakur, speaking to The News Minute (TNM) over email as the WHA was underway in Geneva.

Earlier he had told Reuters that “the authorities in India did not contact him about it or probe the reasons for the fine, nor did they respond when he approached them through 2014.”

In fact, even the Indian pharma industry accepts that it is not up to international standards, and that they will need at least 5 more years to improve.

“Complaints from regulators have ranged from issues over hygiene and maintenance to concerns over falsifying manufacturing-related test results and data. Dr Reddy's Laboratories, India's number two drug maker, continues to work on resolving data integrity problems found by the FDA in November 2015 at a key plant to produce cancer drugs. While its larger rival, Sun Pharmaceutical Industries, has not been able to get a clearance on two plants sanctioned by the FDA in 2013 and 2014 despite remediation efforts,” a Reuters report on May 17, 2017, notes.

The Indian health establishment, however, is in denial.

Speaking to TNM on the sidelines of the WHA, health minister JP Nadda said that the criticism of quality of India’s pharma sector is not real at all. “Sixty percent of the world’s drugs are Indian – accessible, affordable, equitable and quality drugs. Our regulatory systems are very strong, many new steps have been taken. Nearly Rs. 2700 crores is being spent now to strengthen the system, labs and human resources. We have been certified by the WHO as having a functional regulatory system, both for medicines and vaccines,” he said, adding that, “the criticism is not coming from the right quarters.”

In his earlier address, Nadda pointed out, “The Government of India entrusted the largest ever survey of not of standard quality drugs in the country to an autonomous institution. The design for the study was prepared by the Indian Statistical Institute. NGOs and pharmacy teachers were involved for picking up samples in accordance with the design including from the remotest places. Out of 47012 samples tested and analysed, only 3.16% were found to be NSQ.”

But, pharma sector spokespersons point out, this underlying issue of manufacturing quality, and its denial, could further escalate if the delinking of research costs and access is done in a hurry.

What does ‘delinking research costs to access’ really mean?

One of the main arguments made by the private pharma industry globally to justify the high and increasing cost of drugs is that developing them is expensive. The cost of development of one molecule, which could end up being a failure, could be as high as USD 3 billion, according to some estimates. (However, many argue that the costs are not as high as pharma companies claim, which is why many including India are asking for the true quantification of costs.)

If we need to continue finding newer cures and treatments, we need to innovate, and to innovate, we need money and incentives, goes big pharma’s argument. There have been several counters to big pharma’s arguments, but there is now a growing consensus among low-income countries and non-governmental organizations fighting the price regime of the pharma companies that to make medicines truly affordable for low-income patients, the cost of developing them should not be linked to the price in the market. Patients should not pay the heavy price – someone else should.

But who is that ‘someone’?

No one has a clear answer, let alone the Indians. When asked about this, JP Nadda said, “Right now, there are discussions around it. Most countries are not clear about it, we are also not clear about it. It is in the process of evolution.”

The United Nations Secretary General’s High Level Panel on Access to Medicines has a few suggestions, you can have a look at them below.

And once the product has been developed using the mechanisms above, it will be licensed to multiple generic manufacturers in every country for them to sell it at a low price. In India, for instance, several pharma companies – big and small, and possibly several hundreds of them – will be able to manufacture any drug. Essentially, governments pay for research and development, private sector manufactures it and sells it at a fraction of the present costs.

The private sector, expectedly, is fighting this proposal.

Big pharma up in arms

Red-flagging the issues with the proposed methods of alternative financing of research, Mark Chataway, a communication professional who works with several pharma companies, intergovernmental organizations and non-profits says, ​"The ‘push mechanism’ has not delivered as much as many hoped it would. At the turn of this century, people thought that product development partnerships would solve some of the great medical needs​. There has been progress but all of it involves ways to use discoveries originally made by the pharmaceutical industry. There have been no major breakthroughs using this route."

He also says that the ‘pull’ mechanism, which involves a ‘prize fund’ for researchers coming up with newer cures and treatment, could tempt researchers into hiding the defects in their products. “I worry most about the perverse incentives that prizes would create to ignore warning signs of shortcomings or side effects until after the prize has been awarded,” he says.

But here is the main issue – while he believes the issue of quality of manufacturing has to be dealt with separately and is not necessarily linked to delinking access and cost, the existing system, especially in countries like India, isn’t ready to adopt the new financing models being proposed.

Pharma companies are now also held responsible for reporting any side-effects or unexpected defects in the medicines throughout the lifetime of the sale of the drug. In fact, in many cases, the defects are found only after 10-15 years of sale of the medicine – and they are traced because of monitoring by pharma companies mandated by regulators.

“The scandals around some generic manufacturers ​show that their reporting and quality systems are simply inadequate. We cannot trust those systems with the much more complex job of registering new medicines and watching for unexpected interactions or side effects in the first few years that a new medicine is on the market,” Chataway points out. His point is simple: if the manufacturing quality can hardly be controlled now, wouldn’t it be even more difficult with several other manufacturers in the fray?

Speaking about the quality of manufacturing in India, Thakur also points out, “If the government proceeds with large scale implementation of Jan Aushadi stores (generic medicines stores) without fixing the supply chain and manufacturing problems, we will have a public health epidemic in India sooner than later.”

The same thing could happen, experts point out, if the delinking goes through. Indian markets will be flooded with cheap generics which have no market accountability, and the regulation could get tougher. While high prices alone cannot ensure quality, removing the incentives of market forces could further encourage manufacturers to be reckless about quality, and the already overburdened regulator would not be in no position to police them. And these concerns are in line with worries over India’s ‘generic-only’ drug plan.

Thakur however says that quality of manufacturing is a problem to be dealt with independently, and cannot be used as an excuse to keep drugs expensive.

Non-state actors calling for the delinking, however, are asking for a feasibility study before it is done, and say that big pharma is already scared. “Under pressure from drug companies to avoid controversy this week, negotiators eliminated text that called upon the WHO do a feasibility study of ending monopolies on cancer drugs, and addressing transparency of drug prices, R&D costs and access gaps,” said James Love, Director of Knowledge Ecology International (KEI), referring to a resolution at the WHA on cancer drugs and affordable medicines. “Certainly, the drug companies are afraid of a feasibility study, because, they know that delinkage is feasible.  And, as governments struggle to obtain affordable versions of cancer drugs, they face a choice.  Do they investigate and scale up alternatives to high prices to fund R&D, or block any consideration of alternatives to high prices,” he added.

Greed and value

Not many would disagree that corporate greed in the pharma sector is real. Chataway says that there “are a few ​examples of what can only be called greed. They are almost all in the USA and involve old drugs that have a monopoly because they treat rare conditions. For diseases affecting lots of people, the market works well most of the time,” and refers to how Hepatitis C medicines have reduced considerably due to market competition.

But ‘value-based’ pricing, he says, could be the answer. “Many pharma companies are really keen to do this because they know they would do well out of it and that patients would too. Look, for example, at the most heart-wrenching example: about 85,000 Indian women die every year from cervical cancer. At least 70,000 of those deaths could be prevented by vaccines that are available now and being used in countries ranging from Yemen to the USA. Yet, India says this vaccine is unaffordable. What if it offered the manufacturers only the money that the country would save over the lifetime of the young women who should be receiving the vaccine now? It would be a way of sharing the risk and proving the value of the vaccines. The issue is that few health systems can collect or analyse cost data well enough to do this kind of innovative payment by results,” says Chataway.

Several member-states TNM spoke to at the WHA in Geneva said that there is no clarity on the delinking process and alternative financing, and many including the USA are unwilling to back this major policy change. Whether the delinking proposal goes through or not (WHO resolutions are non-binding), many are left wondering if India is missing out on a long-term environment of innovation in search of a few inexpensive generics.