Why Medicine Prices in India Are Exorbitant – Part II
Branded Medicines, Irrational FDCs, ‘Me-Too Medicines’, and Ever-Greening of Patents
Beyond the flawed Drug Price Control Order -2013, there are other reasons for unnecessarily high medicine-prices in India. This second part of the article explains these reasons for high medicine prices.
Brands, Branded Generics, and their Quality
When a new medicine is invented, an international committee affiliated with the WHO assigns a ‘generic name’ (i.e., an International Non-proprietary Name, or INN) to it. This generic name is used in all scientific journals, books, and international trade. However, the company that invents the medicine is allowed to have its own proprietary name, usually for marketing purposes. This proprietary brand name is registered under the relevant national and global laws, and registration is optional. The company has a monopoly over this brand name generally for 20 years, which is the validity period of the patent granted to the inventor.
For example, a common medicine for temporary relief from fever, headaches, and body aches is N-acetyl-para-aminophenol (APAP), which is given the generic name (or INN) paracetamol. The U.S. pharmaceutical company, McNeil, patented it in 1955, under the brand name Tylenol. From the date of filing the patent, this company, for 20 years, had a monopoly over the production and sale of this medicine under the brand name ‘Tylenol’. During this patent period, according to American law, no other company could produce paracetamol without permission and payment of royalties to the original manufacturer. After 20 years, any manufacturer could obtain a manufacturing license from the relevant authority in their country and could sell that medicine under the generic name paracetamol or under whichever brand name it chose.
A medicine whose patent period is over and is thus classified as ‘generic’ is unfortunately, sold by companies not under the generic name but under different brand names. This results in the creation of various ‘branded generics’. In India, for example, paracetamol, which has been off patent for many years, is sold in the domestic market under various brand names such as Crocin, Calpol, Metacin, Dolo, and other ‘branded generic’ names. Such branding puts the generic name in the background, resulting in dozens of brands, if not more, of the same generic medicine. These brands are priced much higher than the price of the generic medicine because the consumer is unaware of the original, generic name of the medicine because it is printed in a very small font in an inconspicuous manner on the label of the branded package. The consumer pays for the higher price of the much advertised brand as s/he is unaware of the original, generic name of the medicine. This branding creates an additional burden on doctors also as they have to remember the various brand names of different generics, as their training is based on generic names and all medical literature is in generic names. In India pharma companies market more than 60,000 [branded] generic drugs across 60 therapeutic categories. Although some generic manufacturers market their medicines under the generic name in the bulk market and sell these to some hospitals and government agencies, most companies in the “generics business” use their own brand names for the generics. These multiple brands arise out of commercial competition; each company trying to win over doctors—by fair means or foul—to prescribe it’s brand rather than those of their competitors. Such promotional exercises involve huge expenses, and larger companies, with more resources, can afford to spend more. Consequently, a handful of big companies dominate the market through advertising, expenses for which are ultimately borne by the patient. Once doctors are convinced (rather brainwashed) of the “superior quality” of a particular branded generic, the pharma company escalates its price. Quite often, many doctors remain unaware of this price rise or simply turn a blind eye to it. As a result, the market price of such a brand can touch 10 to 20 times its production cost.
The simple solution to this problem is for the government to weed out all brand names of medicines that have completed their patent period. This was suggested way back in 1975 by the Committee on Drugs and Pharmaceutical Industry (Hathi Committee Report) which recommended “abolition of brand names in a phased manner” except, of course, for those currently under patent monopoly. Although the government of the day was initially responsive, even its minimal implementation was thwarted by legal action initiated by pharma companies.
Abolition of brand-names is opposed by big pharmaceutical companies and their supporters. They argue that the quality of their brands is assured and that their prices are higher because maintaining high standards incurs higher costs. They also claim that the “generics” or branded generics from smaller companies are substandard. Majority of doctors are brainwashed by this propaganda of big pharma companies. But as mentioned earlier, more than 90 percent of medicines in the Indian market are “generic”, i.e. are out of patent.
There are no studies which have shown that the quality of the innovator’s brand or that of the brand of other leading, big companies is OK whereas that of the branded generics is low. Thus, there is no justification for higher prices of leading brands on the grounds that their quality is high and it’s costly to maintain high quality.
A Charitable Trust called Locost Standard Therapeutics – ‘LOCOST’ – has been for last more than 30 years, manufacturing essential medicines of standard quality for primary care and has been selling these only under generic name to non-profit, charitable health NGOs at very low prices. It keeps a very low margin for itself, enough for sustenance of the manufacturing plant and it’s upgradation. It’s prices are one fourth to one tenth of the prices of leading brands in the market. Therefore medicine prices could be reduced by one-third, to one fifth simply by abolishing all brand names, as recommended by the Hathi Committee in 1975, and as a result, medicines should be sold only under their generic names. The medicine prices will be lowered because consumers would know that the same medicine is being marketed by different companies and hence the consumer would prefer the cheaper one.
Brand names also create unnecessary confusion, as there is often no connection between the fancy brand name and the medicine it contains. An additional problem with brand names is that there is always the risk of a patient receiving the wrong medicine, as some brand names sound and look alike while containing entirely different drugs. For example, “A to Z,” “AZ-A,” and “AZ” are brand names for a vitamin, an antibiotic, and an anti-worm medicine, respectively. Moreover, given that hand-written prescriptions by doctors could be often notoriously difficult to read, these can be misread by pharmacists with serious consequences for the patient.
Irrational Fixed Dose Combinations (FDCs)
Medical textbooks and other authorities favor combining certain medicines into a single tablet or liquid preparation when it is more beneficial than administering them separately. Such preparations are called FDCs. For example, textbooks recommend that iron deficiency anaemia should be treated with a preparation containing both iron and folic acid because iron deficiency is often accompanied by folic acid deficiency. Similarly, adding vitamin D to a calcium tablet is more effective, as it enhances calcium absorption in the intestines. These rational FDCs can be more expensive than single-ingredient medicines, but the extra cost can be justified if there is greater cost of production and greater effectiveness.
Combinations of two or more drugs that lack scientific rationale are known as irrational FDCs. These irrational FDCs are more expensive because the unnecessary additional ingredients add to the cost without added benefits. Secondly pharma companies make misleading exaggerated claims about their extra efficacy (when in reality there are no such extra efficacy) and jack up the prices under the pretext of this “moiré powerful” formula being marketed by the company. These irrational FDCs also come with more side effects than single-ingredient preparations. Assessing their quality is also more challenging due to the presence of multiple ingredients. Of the 348 medicines in the NLEM-2011, only 16 (5 percent) were FDCs as only these are scientifically justified.. However, more than 40 per cent of the formulations in the Indian market are FDCs. Besides being unnecessarily costly, they have more side-effects due to unnecessary ingredients. These irrational FDCs are a very important reason why medicines in India are unnecessarily costly. Hence only those FDCs recommended by standard medical textbooks, or other medical authorities, should be allowed. Hundreds of irrational FDCs currently on the market should be banned. This would reduce unnecessary medicine expenditures and lower the risk of additional side effects caused by these extra, unwarranted ingredients.
“Me-too Medicines”
Pharmaceutical companies often find it more profitable and easier to develop a “new medicine” which is a mere chemical variant of an existing, older medicine. These chemical analogues of existing medicines generally offer no significant therapeutic advantage over the original. Such ‘new medicines’ are known as “me-too” medicines. Pharma companies focus on such ‘me too’’ medicines rather than choosing the more difficult and costly path of developing a medicine belonging to a different chemical class, which has a distinct advantage over the existing medicines.
Me-too medicines’ are generally introduced into the market when the patent period of the original molecule is about to expire. These “new” medicines are marketed at much higher prices, with claims of being better options. Sometimes these claims are partly true. However, more often than not, through clever, aggressive marketing, these “new” medicines become popular with doctors regardless of whether they offer significant improvements. In most cases, the prices are much higher than whatever additional benefits (if any) justify. This is because the new analogue is claimed to be a new medicine and is under patent monopoly.
For example, angiotensin receptor blockers (ARBs) are a class of medicines used to treat high blood pressure. Enalapril is one of the oldest and cheapest ARBs. However, five other medicines in this class have since been developed by pharmaceutical companies. Similarly, the Indian market now has seven types of statins, eight types of ACE inhibitors, and nine types of quinolones. Are so many costlier “me-too” medicines really needed? Why should patients pay more for either non-existent, or at best, marginal additional benefits?
“Me-too medicines” cannot be banned, as they have been shown to be effective and safe like the original medicines. However, claims of superior effectiveness and safety should be rigorously examined by independent experts. Pharmaceutical companies’ promotional material for these “me-too medicines” should be scrutinized accordingly.
Product Patents on Medicines
The Indian Patents Act, 1970, replaced the product patent regime of the British Raj with a process patent regime. This led to a boom in the production of generic medicines in India and also significantly reduced the prices of medicines because the monopoly of foreign MNCs was broken and cost of production was also reduced. Quality generics were exported even to developed countries, and now about half of medicines produced in India are exported and about half of these exports go to developed countries. India thus emerged as the “pharmacy of the developing world.”
However, things began to change after India became a member of the World Trade Organization, (WTO). The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) covers a wide range of topics, including product patents. The TRIPS Agreement requires WTO members to provide patent protection for products and processes that meet certain criteria, while allowing for some exceptions. On the grounds of being less developed, India could delay the adoption of the product patent regime. But finally, under pressure from Big Pharma and their governments, the Indian government in 2005 reintroduced product patents in pharmaceuticals. This meant that, as in the pre-1970 days, new, patented medicines cannot now be manufactured in India for a maximum of 20 years after being invented, unless permitted by the innovator company. Thus, these new medicines, which are fruits of modern science and technology, are monopolized through the product patent regime by the innovating company and are sold at exorbitantly high prices—far beyond the reach of even middle-class families.
Currently, these new medicines make up a small proportion of the total market. But they are a matter of life and death for patients suffering from ailments like multi-drug-resistant tuberculosis, certain cancers, and hepatitis C, because of their very high prices. In the coming two to three decades, far more effective and safer medicines are likely to be developed for both existing and new health problems affecting large populations. Therefore, it is crucial that the Indian government plays an active role in building international political pressure against the product patent regime by collaborating with like-minded forces. The goal should be to amend international laws and return to a process patent regime.
Thanks to the ‘Doha Declaration’, India could keep in its modified Indian Patent Act 2005, a provision for “compulsory licensing” through which if needed in Public Interest, it could mandate that an innovator company must permit other companies to manufacture a particular medicine for which the innovator company has a product patent. Unfortunately, due to the pressure of the MNCs and the Western governments, the Indian government has been very wary of invoking the provision of “compulsory licensing”. This policy should be reversed and the Indian government should make full use of the “compulsory licensing” provision and other such “flexibilities” allowed in the modified ‘Indian Patent Act’-2005.