By Venkatesh Nallapati       

SCIENCE AND ART    BELONG TO THE WHOLE WORLD AND BEFORE THEM VANISH THE BARRIERS OF    NATIONALITY                     – G o e t h e

ABSTRACT:

For the approval of Federal Drug Authority (FDA) in the US of A, a drug has to pass through three phases of clinical trials with 30-years of positive test results and billions of dollars spent in conducting this research. These stringent approval benchmarks may appear cumbersome for the uninitiated but they serve two purposes – one there is no compromise on public health; two the long years of labour does not go unrecognized. The only way the scientific rigour and research that entail expenditure of billions of dollars is protect the patent.

A patent is generally for twenty years. It allows a pharmaceutical company to spend millions on research secure in the knowledge that it has exclusive rights to profit from the sale of the patent drug during the period of validity of the patent. 

On the plus side, this protection not only promotes new advances in the field of health sciences but also makes sure they meet the quality threshold that is administered by the FDA.

On the flipside, this capitalist model is hard to enforce on nations that do not fall within the jurisdiction of the patent laws or in countries which are capable of producing generic drugs using what is called reverse engineering process.

Developing countries like China and India have strong footprint in this area. Their generic drugs cost a fraction of the ‘original’ drug and therefore have a wide demand. With the increased globalization in today’s world it is hard not to account for such practices and face the all-too-important question – do such practices impinge on the scientific integrity and undermine the safety standards that are maintained in the western world.

There is another issue at play. What do you do when the patent laws were never put into affect when the drug was first reproduced? Moreover do you actually patent the drug or the process of producing it? Theoretically “the patent law allows inventors to obtain patents on processes, machines, manufactures, and compositions of matter that are useful, new, and non-obvious.”[1] 

If this is indeed so, can an original patent holding company ensure that no duplication is allowed? The paper goes into these and many other relevant issues related to drug patenting in the broad context of Indo-US relations and the reality that the so called generic drugs, much like “Doctors without Borders” (a humanitarian organization active in war torn Africa) bring health care within reach of the poor.  

Indian pharmaceutical industry is expected to triple to US$20 billion by 2015 and join world’s top-10 pharmaceutical markets.   By adhering to the patent laws, India has taken a huge stride towards opening up its market to globalization

The paper also will discuss the future of Indian pharmaceutical industry which is expected to join the league of world’s top-10 pharmaceutical markets by 2015 with a turnover of US$ 20 billion. India’s is a great success story. By adhering to the patent laws one way or the other India has made big leap towards opening up its market to global players. How does globalization affect local trade? Will it lead to pushing up the prices of drugs?  India, in fact, countries like India are in a Catch -22 situation. It is possible that the churning that they are undergoing today may lead to some better bench marks in medical insurance. It may promote greater medical awareness.  This may in the medium to long term mean greater emphasis on local drug research with investment coming in from global pharmaceutical majors.

WHAT IS A GENERIC DRUG…

When a pharmaceutical company first markets a drug, it is usually under a patent that, until it expires, allows only the pharmaceutical company that developed the drug (or its licensees) to sell it. Generic drugs can be produced without patent infringement for drugs where:

1)  The patent has expired.

2)  The generic company certifies the brand company’s patents are either invalid, unenforceable or will not be   infringed.

3)   For drugs which have never held patents.

4)   In countries, where the drug does not have current patent protection.

According to the FDA, a generic drug is identical, or bio-equivalent, to a brand name drug in dosage, form, safety, strength, route of administration, quality, performance characteristics, and intended use.

Being the first to gain the most is a fundamental principle in the generics business because several companies compete to create generics of successful products going off patent. For a generics company to maintain revenue growth in a market in which product prices continue to fall, it must secure a continuous flow of new products with quality and speed to market being key drivers. Thus, generics companies must be highly skilled in product and process development.

HISTORY OF INDIAN DRUG MANUFACTURING

The lack of patent protection made the Indian market undesirable to the multinational companies that had dominated the market . Indian companies carved a ‘niche’ with their expertise in reverse-engineering new processes for manufacturing drugs at low costs.

India gained its foothold on the global scene with its innovatively engineered generic drugs and active pharmaceutical     ingredients (API);    it is now seeking to become a major player in outsourced clinical research as well as contract manufacturing and research.

Indian government started to encourage the growth of drug manufacturing by indigenous companies in the early 1960s, and with the Patents Act in 1970.[5] However, economic liberalization in the 90s by then Prime Minister P.V. Narasimha Rao and his Finance Minister Dr. Manmohan Singh (presently Prime Minister heading a Congress led coalition) enabled the industry to become what it is today. The Patent Act removed composition patents from food and drugs, and though process patents were allowed, the time span was shortened to five years from seven years. The lack of patent protection made the Indian market undesirable to the multinational companies that had dominated the market and many of them streamed out. Indian companies carved a ‘niche’ in both the Indian and world markets with their expertise in reverse-engineering new processes for manufacturing drugs at low costs. Some large Indian companies did take steps towards drug innovation. But these are at best ‘baby steps’, and the Indian pharmaceutical industry as a whole has stuck to the formula that has brought them good luck.[6]

India has in the meanwhile gained a foothold in the global arena with its innovatively engineered generic drugs and active pharmaceutical ingredients (API). It is now seeking to graduate as a major player in Outsourced Clinical Research (OCR) as well as Contract Manufacturing and Research (CMR). There are 74 U.S. FDA-approved manufacturing facilities in India, more than in any other country outside the U.S.[7]

Large pharmaceutical companies often spend millions of dollars protecting their patents from generic competition. Apart from litigation, companies use other methods, such as re-formulation or licensing a subsidiary (or another company), to sell generics under the original patent. A prime example of how this works [8] is simvastatin (Zocor), a popular drug created and manufactured by US-based Merck & Co., which lost its US patent protection on June 23, 2006. India-based Ranbaxy Laboratories (at the 80 mg strength) and Israel-based Teva Pharmaceutical Industries (at all other strengths) received 180-day exclusivity periods for simvastatin. Due to Zocor’s popularity, both companies began marketing their products immediately after the patent expired.

THE PARADISE LOST…

Drug development goes through several stages with no guarantee for success at any stage. It is a risk pharmaceutical companies take willingly with their eyes set on the profits from patents at a later day. Clearly it costs money and time to come up with a drug or vaccine. The incentive is intellectual property; laws should be strictly enforced to encourage medical breakthroughs. Exclusive right to manufacture drugs provides the monetary incentive.  There is no disagreement whatsoever on these pre-requisites for the growth of drug industry; but what is the remedy if a company is overtaken by greed just when the affordability dictates increased usage of a drug.

This problem becomes pronounced India, and similarly placed countries, which don’t have a universal healthcare system as is known in the West.  Nor social security net for that matter.  Yet, heath is paramount importance. It is one of the basic responsibilities of the State, the other tasks being affordable food and reasonable shelter to the poor.  The Indian government has twin tasks – one falling inline with the WTO rules and appeasing the industrial nations, and two looking after its own interest of providing medicines for the sick and care for the needy. India did not accede to the Patent regime until recently only with a view to its local pharmaceutical market. The goal was to be able to produce companies that would not be consumed by their western counterparts and to develop a market that met the economic threshold of the common man.  

I am not going to present a moral dilemma but the grave scenarios where a human livelihood is compromised by the costs of promoting an intellectual development.I am not going to present a moral dilemma as the problems related to intellectual property rights could certainly arise in other contexts as well. Any how, in 2001, the problem of intellectual property right relating to the public health domain was addressed by the WTO in Doha round. Here I am referring to the grave scenarios where a human livelihood is compromised by the overhead costs of promoting an intellectual development.

Take the AIDS epidemic in Africa, for instance. A large number of people do not have access to the much needed anti-viral drugs. To combat such issues nations that have the intellectual know-how have put the human rights over intellectual property rights. We have distinct examples of organizations like “Doctor’s Without Borders” using these generic drugs to fund their humanitarian aid. It is often said that the Indian pharmaceutical market is profiting at the expense of the lucrative US medicine market. The American giants are known to spend millions on legally enforcing their patents. Even the litigation has produced mixed results:

Patent challenges filed in the U.S.:17

WON
• 2001 Eli Lilly over anti-depressant Prozac
• 2002 Pfizer over blood pressure drug Norvasc

LOST
• 2002 Bayer over antibiotic Cipro
• Astra Zeneca over ulcer drug Prilosec[9]

These are just a small microscopic example of the legal battles that are fought these days. Just imagine how much worse it would get in the next five years with patents on some ‘blockbuster’ drugs about to expire. According to EvaluatePharma [10] an estimated $250 billion in sales will be compromised due to the expiring contracts. Clearly this opens up a whole new opportunity to come up with produce generic drugs. The magnitude of the problem becomes clear by looking at the sales figures the American pharmaceutical MNCs.

The table shows some big companies that are loosing their patents on their blockbuster drugs along with its therapeutic area, and their sales volumes over the last two decades

Patents that expired in 2011

                        Patents expiring in 2012

            The 10 Biggest-Selling Drugs That Are About to Lose Their Patent:[11]

WHAT THE FUTURE HOLDS…

Despite the huge revenue loss that is staring at its face, the pharmaceutical industry is expected to witness great strides over the next decade. In fact, it appears to be more than ready to take the losses in its stride. A wishful thinking? No. This prognosis is based on reality check and the visible patterns of the world’s emerging economies. The spurt in health care reforms in India has generated a high level of interest; the western world has correctly grasped the advantages in establishing a close working relationship with India. Patents or no patents, the bottom line in India is that the pharmaceutical growth will triple   to US $20 billion by 2015. It will pitchfork India into world’s top-10 pharmaceutical markets.[12]   Not only is it a market laden with research and intellectual development but it promises an instant revenue from the consumer sector as well.

India is undergoing a major paradigm shift at the house-hold level. The number of middle-class households is increasing and so are the disposable incomes.  According to a study carried out by McKinsey&Co, nearly 140 million people will rise above the poverty line in India during the next decade. It will translate into an increase in spending on basic healthcare and consumption of ‘mass therapy drugs for acute ailment’. As a consequence the lack of a proper health-care structure that has been the characteristic of India will also change for the better.

India’s paradigm shift at the house-hold income level will lead to increased spending on basic healthcare and consumption of ‘mass therapy drugs for acute ailment’I have reason to believe that with the expansion of medical infrastructure, and the ability to attend to or treat more patients will throw up the need for more drugs and better drugs.     These days in India the focus is not only on towns and cities and their suburbs but also on the villages where the real India lives. Rural transformation is led by as much government as voluntary effort.  It is Indian version of return to basics in a manner of speaking.

From a marketing perspective, rural India is a huge un-tapped market; it is just waiting to be explored. From a pharmaceutical perspective, rural India is a market where “English” medicine was never considered for treatment.

Needless to say the days ahead in India will give rise to greater healthcare costs and more importantly greater healthcare spending. In order to combat this rise in chronic diseases the need for a central health insurance domain will become necessary. It brings us back to where it all began, namely the need for patent law.

I believe that the emerging scenario provides an opportunity for pharmaceutical companies to scale down their R&D budgets through outsourcing. And paves the way for cheaper medication that leads to improving the overall livelihood conditions! 

REFERENCES

[1] Schacht Wendy, “Patent Law and Its Application to the Pharmaceutical Industry: An Examination of the Drug Price Competition and Patent Term Restoration Act of 1984” Jan 10th 2005.

[2] http://en.wikipedia.org/wiki/United_States_patent_law

[3] Orange Book: http://www.fda.gov/downloads/Drugs/DevelopmentApprovalProcess/UCM071436.pdf,

http://prnnewsletter.com/yahoo_site_admin/assets/docs/prnv2n5web.129184018.pdf

[4] The price of innovation: new estimates of drug development costs: http://www.cptech.org/ip/health/econ/dimasi2003.pdf

[5] Ghatak, Lopamudra. “Fat pay, yuppie lifestyle – join biotech, not IT." Asia Africa Intelligence Wire 15 March 2005.

[6] “Government to allow 100% FDI in Biotech (Biotech will be exempted from the requirement of compulsory licensing) ” India Business Insight-Global Newswire–Asia Africa Intelligence 31 May 2005.

[7]  Na, K. Oanh. "India’s sales pitch to Silicon Valley." San Jose Mercury News 12 April 2005.

[8] Teva, Ranbaxy May Have Windfall With Generic Zocor: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=alDbGZHIP7rc

[9] Dr. Reddy Laboratories’ legal battles: http://www.drreddys.com/media/pdf/feer.htm

[10]World Preview 2016: https://www.evaluatepharma.com/secure/FileResourceDownload.aspx?id=17eb853b-20fb-4559-85d4-c77f18a5141a

[11] The 10 Biggest-Selling Drugs That Are About to Lose Their Patent: http://www.dailyfinance.com/2011/02/27/top-selling-drugs-are-about-to-lose-patent-protection-ready

[12] Kumra Gautam, Mitra Plash, Pasricha Chandrika. India Pharma 2015:‘Unlocking the Potential of the Indian Pharmaceuticals Market’.