India’s Solution To Drug Costs: Ignore Patents And Control Prices – Except For Home Grown Drugs
By: John LaMattina, Forbers
Drug pricing is a major issue in India. The Indian government believes that the prices of lifesaving drugs shouldn’t be set by market forces. In a country where very few people have health insurance, 70% of Indians pay for healthcare expenses out of their own pockets. When it comes to cancer drugs, the problem is even more acute. There is no way that people in India can pay even a fraction of the cost for drugs that can be priced at $50,000/year in the West.
This issue was again in the news last week when the Indian Supreme Court denied a patent application for Glivec (also known as Gleevec), an important treatment for leukemia made by Novartis. (Derek Lowe has done a great job in explaining the nuances of this patent decision, which won’t be repeated here.) Given that there is no patent for Glivec in India, any generic drug manufacturer in India can now make and sell this drug, which will be priced at a fraction of what Novartis charges in the rest of the world. This is good for the company that will profit from usurping all of the R&D that Novartis put into the discovery and development of Glivec. It is also good for patients who couldn’t afford Glivec. However, it must be noted that Novartis provides Glivec free of charge to 16,000 patients in India, roughly 95% of those who need it via the Novartis “Glivec International Patient Assistance Program”. The remaining 5% are either reimbursed, insured, or participate in a very generous co-pay program. Thus, not granting a patent for Glivec really hasn’t prevented patients from getting this life-saving medication.
The Glivec situation is not unique. India has granted compulsory licenses to other cancer drugs, including Bayer’s Nexavar, Roche’s Tarceva, and Pfizer’s Sutent. These licenses allow India generic drug manufacturers to make these drugs with impunity. These actions have been justified by the secretary of India’s Pharmaceuticals department in the following way: “We need to ensure that expensive drugs are available at affordable rates to the poor.” It is hard to argue with that philosophy. However, India is expanding this policy beyond expensive cancer drugs. Again, just this past week, the Indian Supreme Court refused to prevent an Indian generic manufacturer, Glenmark Pharmaceuticals, from manufacturing and selling Merck’s diabetes drug, Januvia, in India. Merck will likely appeal this decision. While it is an important drug, Januvia does not carry an expensive price tag. In fact, when it was launched in India, Merck charged $0.86/tablet, one-fifth the US cost. Nevertheless, despite recognizing the need to make Januvia affordable in India, Merck’s intellectual property for this drug will be ignored in this country for the foreseeable future.
In addition to not granting patents for new drugs, the Indian government sets prices for drugs that are patented, but this is not just for expensive medications. There are now 348 drugs that have price caps. However, India has now introduced a new element to this policy. Drugs that have some form of innovation that can be attributed to Indian researchers can be IMMUNE from price controls for five years. Three types of innovation can qualify for this benefit:
1) drugs that arise from indigenous R&D;
2) improvements by an Indian company on a process for making an existing drug;
3) development of a new drug delivery system by Indian R&D.
The rationale for this policy was explained by a government official: “This would spur innovation and make sure price-control regime doesn’t dissuade pharma firms from research and development”. You can also envision that these new rules could be used by Indian generic companies to circumvent pharmaceutical company patents . For example, what is to stop an Indian company from developing a new process for making an important new drug developed by a non-Indian pharma company? It would not be surprising for the Indian government to allow a patent on this process and again the innovative company would be out of luck in protecting their commercial rights for this medicine in India.
If all of this wasn’t galling enough, a New York Times editorial came out in support of the Indian decision on Glivec:
“(This decision) could help poor patients get drugs at prices they can afford while preserving an incentive for true innovation.”
I don’t think that India is preserving an incentive for innovation. If anything, recent Indian policies are sending a signal that intellectual property is tenuous in this country and will be granted only in those cases where it can benefit India. Thomas Friedman has taught us that the world is flat. It may well be. But, when it comes to drug pricing and intellectual property, the plane is severely tilted in India’s favor.