Transaction Price Vs Long Term Outcome: What does the data say about affordability?

Posted by on Apr 26, 2017 in Blog | 1 comment

Now that we understand what “generic” means in the Indian context, lets look at whether we have any historical evidence of these “generic” medicines actually saving us money. The only studies that I know of are from public sector entities, the Central Government Health Scheme, the Indian Army and the Indian Railways. I have written extensively about these reports in my past blogs.

Anecdotally, yes, the price we pay at the pharmacist for a generic prescription is often lower than its comparable promoted brand. The reason is simple. There are costs to promote a product. You need people who go to clinics to extoll the virtues of your product, television and paper advertisements, goodies to the practitioners to induce them to write a prescription and so on. And those costs get added to the product price which we end up paying at the counter. So in principle, yes, for that transaction, as a consumer, I pay less than what I would if I chose a “promoted” branded drug.

Now lets look at what these public sector organizations, which supposedly were tasked to procure “generic” drugs for the benefit of their membership found.

For samples which were tested from the Armed Forces Medical Stores Depot (AMFS), the CAG report notes that the rate of rejection for locally procured medicine, due to samples failing quality tests, increased from 15% to 31% during 2006-07 to 2010-11. The average rate of rejection during the three year period of 2008-09 to 2010-11 was therefore 24% approximately. This means that one in every four drugs dispensed by these organizations is not of standard quality.

In its report no. 28 of 2014 on the Railways Hospitals, the CAG noted that substandard drugs worth Rs. 21.45 lakh were supplied to 20 hospitals over 8 different zones of the railways. As noted by PAC Committee in its report between 2009-2012, CGHS, Bombay had reported Rs. 28.45 lakhs worth of drugs as sub-standard. Of these medicines, stock worth Rs. 15.66 lakhs had already been issued to patients.

And then there is the experiment we call Jan Aushadi stores (JAS). Factly reports that one half of these stores have no stock to sell. Other than Rajasthan, this has been an abject failure as the graphic on the Factly website shows. A recent study by the Center for Health Policy at the Tata Institutes of Social Sciences said “From the policy perspective, it raises serious questions regarding the pricing of medicines in JAS and the goal to be achieved. With information asymmetry and supplier induced demand feature in the healthcare market, the OOP expenditure due to medicines is unlikely to decline in India with the existing JAS.”

I will not go into the reasons why Non-Standard Quality medicines are harmful. My past blogs explain this in great detail. Suffice to say that focussing just on the price that we pay at the counter is not very productive. There are larger, systemic issues that need to be fixed first.

When was the last time you went to a doctor and asked him to write a prescription for the cheapest drug? I have asked this question of many who I know and I got no positive answers. Instead, I got weird looks! Although my unscientific survey did not include someone who makes 500 rupees a day, I venture to guess that even he would ask the doctor to give him the “best” medicine, not the cheapest.

The best anecdote I read was from a critical-care physician in Mumbai. The most expensive drug she said, and I whole heartedly agree is the one that does not work. And NSQ drugs certainly do not work.

What does this tell us?

It doesnt matter how inexpensive a particular transaction is, without a view on the long term outcome, discussing affordability is moot. We just simply do not have the data to make well-reasoned conclusions that mandating “generic” prescriptions actually helps lower the cost of care.  In such a scenario, why do we spend so much time debating an issue which clearly is not properly defined ? This is a pointless discussion. Yes, it will rile up people on the television and create drama, but will it help us achieve the objective we have set for ourselves?

The only source of scientific evidence of what cheap, poor quality medicines do to public health is in the treatment of malaria, a disease that is endemic to our country as well. For a long time, scholars have studied the effect of substandard, counterfeit drugs that are so prevalent in the supply chain that treats this disease. The evidence unequivocal. Poor quality drugs cause (a) economic sabotage; (b) therapeutic failure; (c) increased risk of the emergence and spread of resistant strains of Plasmodium falciparum and Plasmodium vivax; (d) an undermining of trust/confidence in healthcare stakeholders/systems; and, (e) serious side effects or death. I am sure you agree that the cumulative cost of handling these outcomes is much larger to us as a country than the cost of the transaction at the pharmacy counter.

Good governance means not making policy based on anecdotes and emotive issues; rather, using actual data to formulate policy and define criteria to measure its effectiveness once implemented. I hope our Niti Ayog is listening.

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The real answer to affordability

Posted by on Apr 25, 2017 in Blog | 0 comments

Over the last two weeks, there has been a spirited debate about how to make medicines affordable to the citizens of India. Driven by the Prime Minister’s call to make less expensive medicines available to the people of the country, there have been several news-reports and well meaning discussions on this topic in the print media and on television. While these discussions seem to present every stakeholder’s point of view, no one seems to be interested in understanding how to best go about achieving this well-intentioned objective.

I wanted to take a step back and ask a few questions to all who profess to have an opinion on this issue.

  1. What data do we have to inform us that switching to a generic version of the drug saves us money?
  2. Do we want to discount the clinical experience of your doctor and impose restrictions on what to prescribe on her?
  3. How confident are we that this mandated “generic version” only prescription actually works as intended?

Lets get the nomenclature right first. The term “generic” as it is used in the Indian context is not the same as we seem to appropriate from the US context. In the US, “generic drugs” are those which are no-longer protected by patents. In our country, “generic” refers to “unbranded” medicines; because our companies produce and market drugs that are no longer under patent as “branded-generics”. Unless we understand this difference, the rest of the conversation doesn’t make much sense.

The next thing for us to understand is why would a manufacturer “promote” something that is no longer protected by a patent. The assumption we make in this case is that if a product is protected by a patent, the patent holder can charge a higher price  because there isnt anyone to compete against that product. Therefore, pharmaceutical manufacturers bred armies of what we call “medical representatives” who eulogized the benefits of such products to healthcare practitioners. In the Indian context, two different manufacturers could in-principle manufacture the same drug (whether it was protected by a patent until we adopted the TRIPPS agreement was immaterial). Therefore, how does one differentiate (meaning push its product to more consumers) if there is no differentiation in the product itself? Here came the magic of marketing. We devised flashy advertisement campaigns, promoted the virtues of “my” product under the guise of “medical-education” and came up with more innovative strategies which perhaps be left alone. This is how “brands” were born. Pharmaceutical companies used novel and very interesting strategies to ensure that their “brand” sold more than the “other brand” despite the fact that the underlying product was supposed to be identical.

There were other strategies like “Fixed Dose Combinations” that were invented to combine two or more drugs into a “cocktail” under the guise of better patient compliance with the dosing regimen. But that is a topic for another time. Lets just stick to the simple stuff for now.

Inspired by our penchant for jugaad, and the fact that the regulatory framework that was supposed to keep an eye on the industry was fast-asleep in the best case and was colluding the industry at worst, enterprising pharmacists (who made money on the margins that they retained buying from the wholesaler stockist and selling it to gullible patients) developed their own models for how to be profitable. They “pushed” the product that gave them the highest margin on sale. Knowing that two or more of the chemical salts were “supposed” to be similar, what was the harm in “substituting” the more expensive version to the patient? After all, they were running a business, not a charity. They negotiated hard with each brand on their margins and whoever offered them the most was the product of choice. Once they got used to this idea, the next concept of “frugal innovation” was to “make-our-own”. The regulatory framework never asked for any proof of therapeutic efficacy for any drug that was over four years old; so they could set up a tablet-punching machine in a garage and stamp out as many of these pills as they wanted. Because they cut corners at every step, meaning, no process checks, no quality control, their profit margins were the highest. This is how our “unbranded” medicine industry was born.

The pharmacists then “pushed” these unbranded drugs, many of them made in garages and had no efficacy and we ended up with an industry with 30,000 pharmaceutical manufacturers. And because the regulator was so incompetent, it seldom checked for quality or therapeutic efficacy of these products. In those rare cases it did, and its inspectors found problems, our legal-justice system essentially killed their efforts by letting these wrongdoers go with a slap on the wrist.

Now that we understand what “generic” drugs are in the Indian context, I would love to hear from you on what your views are on the questions I have posed above. I was so hoping to hear this on the many shows I have watched and written pieces I have read, unfortunately, they seem to regurgitate the same talking points. I am hoping that we can have a more meaningful discussion here.

More in the next blog.

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An open letter to K L Sharma

Posted by on Jan 24, 2017 in Blog | 5 comments

Shri K L Sharma, Joint Secretary (H), Ministry of Health and Family Welfare

Dear Shri Sharma,

If you recall, I met you in May 2015 after the PMO forwarded my letter to them to you for your consideration. During our meeting, you assured me that the government is taking steps to correct the systemic issues that plague the CDSCO and our regulatory process for approving medicines sold to 1.2 billion Indian citizens.

I am not sure if you have read about the recent observations made by a foreign regulator, US FDA upon inspection of a manufacturing facility of a large manufacturer of Active Pharmaceutical Ingredients located in Telangana. The observations made by the foreign inspectors thoroughly document behavior of the employees of this company which is consistent with inspection findings of almost every other large pharmaceutical manufacturer in India. CCTV records prove that the company destroyed and altered manufacturing records just prior to the inspection.

While we wait for the government to overhaul the Drugs and Cosmetics Act as you indicated to me, how do we ensure that the medicines already in the market today comply to the standards of basic quality to our citizens? I am sure you will agree that there isnt a valid reason to destroy records if everything was done by the book as many of these companies claim they do when manufacturing product for our consumption. Where Sir, is the rule of law that holds the people who indulge in such outrageous behaviour accountable to the people of this country? Isn’t destruction of records a criminal felony? If companies are so emboldened to do this for records for products sold in the US, which I am sure you will agree has a much more stringent quality expectation of their drug supply compared to what we accept in India, what do you think they are doing with the records for products they make for our patients? Do they even document what they do to manufacture products for our consumption? Does anyone care?

The CDSCO and its leadership has lost all credibility among its peers. No one takes what it says seriously anymore. Changing its name to Indian Drugs Administration does nothing to change the culture and the level of competence in our regulator. Creating a long checklist consolidating every observation made by a foreign regulator about our manufacturing facilities does not inspire confidence in our ability to understand what quality means and how to enforce standards in our manufacturing facilities. And issuing notifications to prescribers and consumers to follow label information does nothing to address the underlying problem of substandard drugs; as we have seen in the recent case of drug resistant antibiotics.

It is high time Sir, that the government did something to actually effect a meaningful change in the drug supply for the country. I realize passing legislation is not easy, and I do not envy your job. However, holding people accountable also has to be a part of the equation. When will we learn that cutting corners especially with medicine plays with lives of our citizens? Only when you hold people who do this publicly accountable. I just hope that the credibility that we, the people, have in the government to protect our drug supply doesn’t go the way of CDSCO.

Dinesh Thakur





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