'Patents have little to do with the ability to access medicines'

Written by BV Mahalakshmi | Updated: May 31 2011, 01:17am hrs
Ranjit Shahani is the president of Organisation of Pharmaceutical Producers of India (OPPI) and vice-chairman and managing director of Novartis India. He is of the firm view that intellectual property (IP) is the lifeline of the pharmaceutical industry, and protection of this IP is one of the key concerns of any pharmaceutical management. According to him, when India brought in IPR reforms, many feared this would lead to decreased access to medicines. However, it is availability more than affordability that impedes access. Without patent protection, innovations decline as R&D needs immense investments. In an interview with BV Mahalakshmi, he says that innovation, research and patent protection are critical to introducing new drugs into the market. Excerpts:

There are apprehensions across the pharmaceutical industry that patents and IPR protection might increase drug prices and access to medicines might be reduced. Do you think such a fear is rational

Over 99.5% of the domestic pharmaceutical market in the country comprises cheaper branded generics covering all disease areas. Therefore, any fear that intellectual property rights (IPR) would curtail healthcare access is completely unfounded. Patents have little to do with the ability to access medicines. Patented medicines in India account for less than 0.5% of the market by value and even less by volume. The US, which is the largest pharmaceutical market in the world, has a robust IPR system in place and is also the largest generics market in the world. Over 72% of all prescriptions in the US are for generics. Many domestic pharmaceutical companies with a presence in the US are recording better performance in that market than back in India, notwithstanding the stringent IPR regime there.

Access to medicines in the developing world is a complex problem. Medicine prices and IPRs are just two pieces of the puzzle. A range of underlying or related issues must be addressed concurrently. Special pricing arrangements in developing countries can occur within the context of sufficient intellectual property and trade-related safeguards. The pharmaceutical industry has several initiatives to improve access to medicines such as Novartiss Oncology Assistance Programme, Astra Zenecas TB Research Centre, Sanofi Aventis' efforts to launch a malaria drug, etc.

Does the current price control regime help improve access to modern medicines

It is availability more than affordability that impedes healthcare access. Lack of healthcare infrastructure is a major stumbling block. Therefore, this exercise can at best address issues within 35% of the Indian population that can access medicines. These 350 million people are largely clustered around urban centres where health care facilities exist.

As per an analysis done by National Pharmaceutical Pricing Authority, price monitoring has been more successful than price control with below 1% price increases for non-price control products last year despite the high overall general inflation in the country. OPPI supports monitoring of drug prices.

Price control has not served the purpose for which it is meant. Price control of medicines will discourage R&D investments for drug development which is already low at less than 5% of turnover. Essential medicines will not be available as there will be tendency to shift production to unregulated drugs.

Besides, access to medicines is a complex problem and must be addressed in a holistic manner. Multiple low priced therapeutic alternatives will exist for most future innovations by way of generics as well as other patented drugs. Intensity of generic competition will mitigate concern over pricing of new drugs and will force pricing down.

The government and pharmaceutical industry can actively work together to frame a policy which best achieves the goals of health for all, while fostering R&D and innovation and encouraging foreign direct investment in the knowledge sector. Drugs should be made affordable by reducing the transaction costs such as duties, taxes and trade margins. At present, the transaction costs double the price of medicines. The ultimate aim should be to move from price control to price monitoring where increase in prices beyond a certain percent per annum are monitored by the government. There should be a public private partnership in place for anti-cancer and HIV/AIDS drugs.

To what extent prices of pharmaceuticals stand in the way of access to healthcare

Access to healthcare goes far beyond just prices of pharmaceuticals. Iron tablets are among the cheapest in India and yet we have the maximum number of women suffering from anaemia. Similarly, while primary vaccination is available free to all infants in the country, the coverage is still not universal and stands at around 60%. Coverage is even poorer when you take the case of HIV/AIDS patients for whom ART therapy is available free of cost. The per capita expenditure on overall healthcare and drugs is low at about R1,000 and R200 per annum, respectively. Public health spending should increase from 0.9% to 2 to 3% of GDP.

As talks between the EU-India FTA negotiations continue, there are apprehensions that new measures may restrict the production of affordable generic medicines across the world. How far is this speculation true

This is a misconception that seems to persist. Regulatory data protection does not delay the launch of generics. The prevailing situation in developed markets of the world such as the US, EU and Japan where regulatory data protection exists will vindicate this position. Further, medicines can be made available through access safeguards in international agreements and, in the case of essential and life-saving medicines, special pricing arrangements in developing countries can, and must, be made. This is often true in the case of HIV/AIDS medications.

Do you think a shift from a primarily generic industry to a more innovative research-based model would help deal with issues related to healthcare access

Global pharma companies have made modern lifesaving drugs affordable through global best practices in R&D, manufacturing and marketing. Overall local R&D investment in India is only about 5% of sales as compared to R&D investment in the US of about 18-20%. With the third largest pool of brain power in the world, India is uniquely positioned to become a hub for discovery, trials, manufacture and marketing of global quality drugs. We need to put in place a vibrant ecosystem that fosters innovation. After all, growth of the generic industry in the long term will only be sustained if there is patent expiry of innovative products.