Drugs for profit

Of Glivce and Novartis
Debosree Roy

Remember the brothers- Grimm's tale about two children, Hansel and Gretel, left to fend for themselves in the woods, who are lured by the wicked witch into her gingerbread house? And remember why the witch fed them pastries? Remember what made the witch wicked? Here is a story of many such Hansels and Gretels and one very wicked witch.

Glivec is a beta crystal form of Imatinib Mesylate manufactured and marketed by Swiss pharmaceutical company Novartis as a prescription drug for Chronic Myeloid Leukaemia (CML). It was the first pharmaceutical product to receive exclusive marketing rights in India. The company receiving the rights was Novartis and the year was 2003. Fast forward to 2009, Glivec was denied a patent renewal by the Intellectual Property Appellate Board (IPAB) on the ground that it was priced high and that the appeal failed to satisfy the efficacy requirement of the Indian Patent Act of 2005. This happened after the product received patent in 40 other countries. Novartis has followed suit with a second writ petition to the Supreme Court of India. It came up for hearing on 11 September 2012.

There is only one salient issue in this fiasco of sorts; it shows the face of Big Pharma at its very worst. The life-saving drug costs Rs 1,20,000 per month to pay-for-service patients in India. With a median income of $735, which roughly translates to Rs 39,300.45, after taxes, the cost to patient for Glivec may break banks. On top of that, income in India is marked with disparities across regions and a substantial urban-rural divide. Some dubious measures have been taken to superficially lower the poverty level in India, e.g., the planning commission's recent reduction of per capita daily consumption thresholds. However, the fact remains that in planning for household expenditure, health investments, especially medicines, are put on the back burner because they are simply not affordable to the poor in India. Diseases incidence does not vary across income categories. However, disease outcomes do. So why does Novartis want to protect its property rights to the formula to this life-saving drug. Because they say that, they have made good investments in time and money to develop this drug, which is an only of its kind in the market. They also need to protect their rights on the formula so that they can increase its efficacy over time. As for the prices, they claim that their international patient assistance program disburses the drug free of cost to 95% of Indians suffering from CML or gastrointestinal cancers. Remember why the wicked witch wanted to feed Hansel and Gretel with pastries, to fatten them up, so that she can make a good meal out of Hansel and a hard working servant out of Gretel.

Contextualizing to the situation at hand, Indian generic manufacturers have the same drug available for Rs 10,000 per month cost to patient, which is a decimal percentage of the Novartis price. Now, this generic for Glivec at this cost per person per month can also be made available to low income populations in other countries as well because India is a manufacturer and exporter of life saving generic medicines. So now, one understands why Novartis wants to renew its patent for Glivec; it wants to secure and sustain its monopoly in the high-priced only of its kind CML drug market worldwide.

Let's take a look at the production function of a brand name drug before it's intellectual property rights are declared public, AKA, disenfranchising product patent for the drug formula. The longer a brand name retains its patent by virtue of little tweaks in the formula or dosage, a phenomenon called ever-greening, the longer generic manufacturers have to wait before they start hauling profits. Now, what is good for the so-called "larger humanity" which is characteristically diseased and unable to afford treatment, would be nothing short of a judgement call. Generics, brand name, whatever they be, drugs are sold for profit and often at prices that are quite unaffordable by a majority of poor people, especially in health systems having a pay for service arrangement and a large number of consumers not making it to the poverty threshold of the country in terms of income.

Undoubtedly, generic prescriptions are more accessible than brand name. Generics have a low cost of production because the strategy theoretically preempts laboratory and population based research, marketing and outreach. On top of that, large-scale production (which generic manufacturers can adopt given a favourable economic environment) also cuts back marginal costs of production. Price-wise generics are accessible. From the demand side, a good health system should typically have an infrastructure conducive to optimal delivery of health products. There can be drugs sitting in warehouses or being exported to health systems that have pharmacies in remote locations stockpiling the same due to lack of consumers or some nefarious purpose. It is only when the right prescription is filled with the right dosage and the patient consumes the medicine and the outcomes are right, that one can say that the health system is working. Otherwise, it is a sloppy health system. If anything the prevalent health system in India is a contributing part of the sloppiness of its delivery system. The system is fragmented at its best. There are supposed to be state-based single-payer systems to toe the bill for poor patients. However, they are mostly available in urban conglomerates and tend to vamoose as one moves away from the city. In reality, the majority of India lives in its villages and the majority of India's poor live in its villages too. Poor citizens, rural citizens, but citizens nonetheless, who can be forgotten, are left to their own devices to fend for their health needs, kind of like Hansel and Gretel, who were left by their parents, because they were dispensable. In this scenario, safeguarding drug costs would hardly improve outcomes in Indian patients.

From the supply side, manufacturing and merchandizing regulations need to be in place before introducing a good in the market to preserve linearity of the production function. The Indian market economy is also an important stakeholder in this issue. Since opening up in the 1990s, the economy has seen highs and lows. However, the real GINI index (an index for income inequality) remained a flat 32.6. Rules and regulations, like the product patent act, are good. It discourages stagnation in a particular product's production function, encourages economies of scale, creates imperfect competition (by introducing more producers in the market) and improves access outcomes of the product. In the long run, subsidizing such products are economically viable too (that is when India does have a formal insurance or nationalized health system!)

Frontier
Vol. 45, No. 22, Dec 9-15, 2012

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