What can the pharmaceutical industry expect from the new government?

India’s economy is performing poorly, at least compared to its relative dynamism just a few years ago. With a general election to be concluded by the end of May 2014, many are looking to the country’s next government to break India out of its economic doldrums. Pre-poll surveys (whether you like them or not) have predicted a strong wave of support for the Bharatiya Janata Party (BJP), led by its prime ministerial candidate Narendra Modi. It is expected that a business friendly environment and policies that support the health care sector may well be on the cards if this was indeed to happen.

 I am certainly hopeful that a BJP led govt comes to power at the Centre with a majority mandate. This will ensure that the government has a free hand to set the economic agenda of the country. This is, of course, assuming that the agenda will favor right leaning economic policies all the way which may not be likely. 

 Are changes to India’s health policy likely?

 At the moment, it is speculative to say what the changes in policy are likely to be since the BJP has not spelt out its agenda or made its “Vision 2025″ document publicly available. That said, the only thing one can be fairly certain about is that market sentiment will be buoyed only if the political environment remains stable. It will be a shame if a fractured mandate forces any party to align with parties of opposed ideologies – or God forbid – an Alternate Front comes to power.

 On the health policy, I can be fairly certain that a new govt will have two important things to address: 1) reduce the current account deficit (to control inflation and prices) and 2) bring in revenues to a depleted treasury. To work towards these two objectives, it can be fairly assumed that industry friendly policies will be adopted since welfare schemes are populist in nature and cannot be withdrawn in India.

 While the FDI policy is clear (uncapped), the same is not true of areas such as clinical trials and IPR. The BJP manifesto promises to support industry that transfers technology into India. If this happens, we may see FDI flow into greenfield projects which has been quite slow so far. However, this will require complexities such as the Land Acquisition Bill, Labour laws etc. to be simplified. At the moment it is assumed that a Modi govt will be more inclined to push Economic Reforms 2.0 than the UPA was. This means that we may see a fillip to the industry overall.

 If the govt pursues industry friendly policies we are unlikely to see capped pricing on patented drugs but a more nuanced approach to balance prices of medicines and access. There maybe an inclination to strengthen insurance coverage through RSBY and the private sector, state-purchase and distribution of medicines through the Jan Aushadi 2.0 scheme, more hospitals through PPPs etc.

 What will be very interesting is to see how the IPR issue is tackled. I believe this is more a diplomatic failure and grandiose posturing rather than a real issue. There have been more cases of CLs being rejected than issued. Validity of patents have been upheld fairly, so I feel it is unfair to term India’s IPR regime as “fluid”. India has the responsibility of protecting the health interests of its citizens and it should continue to do so. The issue can easily be laid to rest through some deft diplomacy which a govt strengthened by stability can achieve. 

 Another development that hasn’t captured public imagination and debate in India is the US sponsored TPP agreement. Indian generic players can be strongly impacted if the TPP comes into effect and the US de-prioritizes India as a result of the agreement.

 Will the new government pursue Universal Health Care?

 UHC is something that has been on the cards of all political parties for a long time. However, there seems to be no clear direction on how to progress. With the BJP proposing to support federalism and strengthening the state govts, it remains to be seen if they will put their money where their collective mouths are and first, increase spending on healthcare as a % of GDP to at least 3% (the WHO mandates 6%) and second, transfer a bulk of that money to state govts.

 This is the tricky part. Opinion polls have shown that the BJP will rule at best in 15 out of 29 states. Assuming 100% of BJP states comply with UHC, ~50% of India’s population would be deemed to be covered. This is in line with the UPA govts plan of increasing health coverage to about 52% of the population, up from the currently covered 35%.

 This alone would be a significant step to achieve in 5 years since UHC would involve a paradigm shift in health policies and programs in favor of vulnerable population groups, restructuring of public health cadres, reorientation of undergraduate medical education, more emphasis on public health research, and extensive education campaigns

What should the new government’s focus be?

 The one big issue would be to ensure quality and affordable health for all its citizens. It is criminal that after almost seven decades, Free India still cannot save mothers and babies from dying, ensuring that the sick get treated without either going bankrupt or being turned away from hospitals for not being able to pay and that productivity of its citizens is so sub-optimal. No Right to Education can make a malnourished child learn. No Right to Food can save lives of children who do not know it is important to wash their hands before eating. No Right to Information can empower the sick and the disabled. No aspiring superpower can afford to miss so badly on MDGs.

 Only when its populace is healthy can India think of educating its young, employing its youth and caring for its elderly. Health can have a multiplier effect on the GDP of India. And it must be available freely and equitably to every citizen of this country.

 Will the change be for the better?

 Apart from progressing on UHC, the present government could have done a lot to ensure that the health care sector was seen as a attractive destination to investors. While there are statistics to show that the sector still is attractive, it has been badly dogged by several flip-flops from the government, be it on clinical trials, on FDI, on drug pricing, on IPR, or on frowning on acquisitions. With the global economic crisis and govts across the world cutting back on health care costs, India had a golden opportunity to position itself as a world class health provider. Formidable terms such as “largest number of FDA approved plants outside the US”, “pharmacy to the world”, “medical value travel destination of the world” were all lost to other nations who grabbed the opportunities with open hands.

Over the last decade, India was a tragic case of epithets becoming epitaphs. There are no silver bullets here. Tackling these issues is a very big project. But the present system needs to change. Many countries have successfully transformed similar systems after seeing them lead to a rise outlays but a drop in outcomes. The next government must do what it can to help push India toward similar progress. 

Pharma Selling Model must Adapt

Pharma Selling Model must Adapt  (Listen to the audio file (5:03) by clicking on the link)

Worldwide, medical research and health care philosophy is undergoing fundamental shifts. The first is a fundamental and significant shift in healthcare philosophy and medical research – from a world in which we “react” to disease and illness after it has happened, to one in which we will be doing far more in advance to “prevent” specific health care problems. The driver for this massive change is the emergence of extremely specialized and highly personalized medical treatments based upon your own particular DNA.

The second shift (which is because of the first) is that healthcare is now becoming

  1. Predictive – forewarn people of susceptibility to diseases
  2. Preventative – empower them with information and resources to take preventive measures and to keep themselves healthy
  3. Personalized – provide information that is most relevant to them and what they want to know instead of generic and unimaginative information (n=1, R=G)
  4. Participative – make people a part of decisions made about their health. After all, its their lives. Enable them and trust them to hold themselves accountable

The common underlying cause for these two shifts is the advent of technology

These developments raise some interesting questions. Are these changes heralding in rapid change across the pharma industry and causing companies to re-evaluate their sales and marketing strategies? Are the pharma industry’s sales forces, with their current structure and training, capable of leveraging – to their advantage – the impact that the advent of technology has on the way patients seek treatment and on the way doctors treat them?

SALES or MARKETING – The Customer Doesn’t Care!

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Last month, this picture put up by Anup Soans on his Facebook (FB) page elicited 215 ‘likes’, 361 ‘shares’ and 76 comments (as on Dec 2nd). The popularity of this post intrigued me not because it was something that had never happened earlier – Anup is quite popular on social media – but since it quickly assumed an accusatory tone and one of grievance.

Although I have no way to ascertain it, I am sure the cartoonist meant the picture to be something else before another creative person labeled the drummer as the ‘CEO’, the workers on the train cart as ‘head office managers’ and the lone person pulling the train cart with its heavy load of people as the ‘field managers’.  

While the picture is a bit exaggerated, the way it was perceived on the FB post seemed to turn the entire concept of teamwork on its head. Despite a little prodding by the author, not one person looked at this as representing teamwork. It did not occur to anyone that the CEO seemed to be making an effort to keep the functions of the organization (if we assume the train cart to be one) in a smooth rhythm so that efficiency increases – a concept best demonstrated by the famous Kerala boat races. No one thought it was fantastic that all ‘head office managers’ worked as one team towards furthering the objectives of the organization without pushing individual agenda. The red-faced lone ‘field manager’ who pulled the cart didn’t seem to convey to anyone that while it was his job to further the organization towards its planned goal, it could well be a rotating assignment and when he pulled the cart up to a certain point – or goal – he could then hop on board the cart and begin to assist the other ‘head office managers’ with their work while someone on board took up the task of pulling the cart.

I found it very interesting that most people who commented seemed to do so in a pattern. The pattern was that sales and marketing are not two arms of the organization but are different silos. Marketing personnel know little about what sales personnel do and more often than not ‘force’ their ideas on them. A few other gentlemen, who tried to support the marketing function, did so either feebly or their arguments were quickly drowned out. I was reminded of the ongoing social media battle between supporters of two major political parties, which could be understood as that of opposing ideologies and goals. In this case however, sales and marketing people seemed to worry more about which function was better, more important or needed more effort and not on how the picture was a symbol of different functions within the organization working in tandem to help it attain its goal.

The ‘war’ between sales and marketing goes back a long time and spans across industries. However, it is also well documented that this lack of alignment ends up hurting organizational performance. Time and again, both groups stumble (and the organization suffers) because they don’t work together. There is no doubt that, when Sales and Marketing work well together, companies see substantial improvement on important performance metrics: Sales cycles are shorter, market-entry costs go down, and the cost of sales is lower.

As the Harvard Business Review says[1], the conflict between Sales and Marketing apart from being economic, is cultural in nature. This is true in part because the two functions attract different types of people. Marketers are deemed to have more formal education than salespeople. They are expected to be highly analytical, data oriented, and project focused, always thinking about building competitive advantage for the future. Sales teams do not appreciate it as much as they should because they perceive it to happen behind a desk in air-conditioned offices rather than out in the field. Salespeople, in contrast, spend their time talking to existing and potential customers. They’re skilled relationship builders; they’re expected to not only be savvy about customers’ willingness to buy but also intuitively know which products will fly and which will die. They want to keep moving. They’re used to rejection, and it doesn’t depress them. They live for closing a sale. It’s hardly surprising that these two groups of people find it difficult to work well together. Yet there is not a more opportune moment to harness the skills of both teams than the current one.

The pharmaceutical industry in India just hiccupped. From the customer facing side, new regulations such as the new pricing policy has just made medicines more affordable. However, a clamp-down on clinical trials has put the launch of new, innovative medicines on the back-burner for the moment. Also, there is no inflow of foreign capital into the sector putting capital expansion plans of companies on hold. Additionally, more and more Indian companies derive their real growth in earnings from serving overseas markets.

In such a scenario, the last thing a customer would appreciate is a chasm between internal departments in an organization that hamper his ability to provide services to his patients. Corporate equity is at potential risk if information flow on products is delayed because the marketing team does not respond to requests from the sales team or if crucial travel information of a KOL traveling to an international conference is withheld.

While I will not attempt to offer solutions or debate them here, I want to leave you with some thoughts. Why is it so difficult for colleagues within the same organization to work together? Isn’t everyone trying to do the same thing i.e. attain market leadership? How does it matter where you work or what you do? Aren’t you proud of what you are doing? Are we getting into the quicksand of wanting to do someone else’s role? At the risk of sounding preachy, I’d like to invoke the Bhagvad Gita here which extols us to merely do our duty and not worry about someone else. Just excelling at what we do helps us to create great value – tangible and otherwise. Cumulatively, this ever expanding pool of excellence is the fuel that propels organizations from being good to becoming great. So instead of worrying about why others fail, let us continue to focus on our own success.

If the red-faced man in the picture didn’t pull the train cart, how would it move forward? If the men on board didn’t tighten the bolts on the track and pat down the stones of the ballast, how would that section of the track become secure? If the CEO didn’t beat the drum to a rhythm, how would the overall efficiency of the team increase and progress be achieved?

Now if the red-faced man was constantly badgered by the ones on board, would he pull the cart? If he stopped pulling the cart, would the whole team (organization) move? Would the CEO then really matter?

As economic growth continues at its anemic pace, we’re all looking for ways to make our operations more productive. Bridging the sales-vs.-marketing divide is a way of achieving this. Let us change our perspective. It will make a positive impact on customers. We know well that customers these days are too mobile, too connected, and too informed to tolerate any gap between what one department says and another does. So, if we allow sales and marketing to operate in silos, at the end of the day, do you really think the customer cares? He would just move on to the next company.

Published in the December 2013 issue of MedicinMan


[1] ‘Ending the War between Sales and Marketing’: Philip Kotler, Neil Rackham, Suj Krishnaswamy; Harvard Business Review July-August 2006.

Gujarat Drug Regulator Sets the Bar High

How did you feel when you read in the newspaper that two drug majors Ranbaxy and Wockhardt were pulled up by US regulators for impropriety in manufacturing practices and submitting false data about their products? Were you worried about the quality of medicines that you bought at the neighborhood pharmacy? Would you feel confident that the medicines your doctor prescribed to your child were of the best quality? Who can help you to answer these questions?

COMPLEXITY AND INADEQUACIES

India’s Drug Regulator or the Central Drug Standards Control Organization or CDSCO is charged with exactly that duty. It must lay the concerns of the Indian citizen to rest and ensure that the medicines available in the country are of the best quality, are affordable and are readily available.

Sadly, that is not always the case. A 2012 report from an Indian Parliamentary Committee exposed many failings such as inadequate infrastructure, shortage of drug inspectors and a lack of accurate data. In 2003, the R.A. Mashelkar Committee report estimated a requirement of more than 3,200 drug inspectors. Currently there are 1364 sanctioned posts, and around 864 are filled up. 

The Drug Controller General of India (DCGI) recently told media that Rs 3,500 crore would be spent on expanding the regulatory agencies by 2017. The result of the lapse is that 3% to 20% of medicines made in India are spurious, depending on what data you look at. Your fear for the quality of medicine you buy for your child is not totally unfounded.

India has a complicated regulatory structure and a web of entities at the central and state levels tasked with monitoring the pharmaceutical industry. This complexity causes much to fall between the cracks. This becomes evident when the industry declares over 20,000 licensed manufacturing units and the DCGI estimates them at only 8000.

CREATIVITY IN GUJARAT

State governments are responsible for licensing, approvals, inspection and recalls of drugs manufactured in their jurisdiction. With the aforementioned challenges, the Food and Drug Administration in Gujarat stands out for its creative use of IT based services to ease up the entire pharmaceutical value chain – from manufacturing to dispensing medicines to patients.

With over 3000 manufacturing units, Gujarat accounts for nearly a third of India’s pharmaceutical manufacturers and about 28% of exports. To cut out inefficiencies such as travel time, paperwork and physical presence at drug regulator offices, the State Food and Drug Administration (FDA) digitized and crunched the process. Manufacturing licenses for new plants are issued in 15-20 days (inclusive of site inspection) which is far lesser than the mandated 30 days. The resultant cutting of red-tape has attracted companies based in neighboring Maharashtra to set up manufacturing bases in Gujarat.

SPEED ACROSS THE VALUE CHAIN

To improve the distribution of medicines across the state, 1300 officers across 25 district offices are empowered to issue retail pharmacy licenses online. In most cases when the application is genuine, the licenses are issued the same day. Technology has helped connect the entire state machinery and curtail malpractices like multiple licenses issued to the same pharmacist which was possible in the days of offline license allocations when district offices were not connected and one district officer had no way of checking if the applying pharmacist already had another license issued in a different district. As a result, avarice and corruption has been controlled to a great extent.

THE PATIENT BENEFITS

When a fake medicine is discovered or a medicine fails the quality test, the State FDA sends out the information through an SMS to the 30,000 retail pharmacies across the state almost. Patients benefit through the use of technology as they have easy access to information about failed, spurious and unapproved medicines on the FDA website A patient who earlier had no way of knowing about fake medicines feels tremendously empowered when he has the same information as the seller. The process is so popular that it has been adopted by other states like Maharashtra and Kerala amongst others.

While the use of technology is not a substitute for manpower (inspectors are still needed for physical inspection of manufacturing plants and retail pharmacies) it definitely speeds up the entire process and makes it easy for the manufacturer and the consumer alike. Wouldn’t you feel relieved when you know that your neighborhood pharmacy sells the best medicines that you can confidently buy for your child?

Published on 21/11/13 at Mera Bharosa here

Clinical Trials and Judgmental Errors

A few days ago, the Union Health Ministry accepted the Prof. Ranjit Roy Chaudhury Expert Committee report on approval of new medicines, clinical trials & banning of medicines. One of the points in the Action Taken Report was that the Ministry decided to admit data from Phase I and Phase II trials done overseas for medicines that are being developed in India. This, they say, will reduce the time for new medicines to be launched in India.

Phase I trials study the effect of newly discovered medicine – which is either a chemical or a biological compound (new chemical/molecular entities or NCE/NMEs) – on the body of healthy volunteers. These studies determine the way the medicine behaves in the human body. The data is important to identify the dose at which the medicine has the best desired effect.

Once the dose is identified, Phase II studies are conducted to assess the efficacy and the safety of those medicines at the identified doses. Both these phases are essential first steps in the journey of drug discovery and provide confidence to both researchers and government regulators that the medicines are safe for mass commercialization. Phase III trials study the safety and efficacy of new medicines closer to availability in the market and Phase IV study them after the medicines are available on the market.

Before the Roy Choudhury Committee recommendation, the law did not allow the Central Drugs Standard Control Organization (CDSCO) – of which the Drugs Controller General of India (DCGI) is a part – to accept Phase I and II data of NCEs/NMEs that were conducted abroad. What confounded this rule was the fact that India does not have enough capacity in the first place, to deal with the requirements of Phase I and Phase II trials. This often delayed the process.

 It is another story that these delays were inconsequential because very few NCE/NMEs are actually developed – and therefore need to be tested – in India. Almost all new medicines launched in India are discovered abroad and none of those innovator companies conduct Phase I or II studies here.  This is because Phase I trials are completed in 4-8 weeks in the US and Europe while it takes at least 16 weeks to complete the first phase in India.

If the idea is to encourage drug discovery in India, it is an inconsequential one. As a study in 2012 by the Institute of Bioinformatics and Applied Biotechnology, found that the prospects for original drug discovery in India are poor. Improving drug discovery in India will need reforms at a much broader structural level. Merely allowing trials to be done abroad is hardly an incentive for companies to begin to invest in drug discovery – a process that involves hundreds of millions of dollars. So how does this development actually help the Indian patient?

To be fair, this maybe an attempt to reverse the damage created by the knee-jerk reactions plaguing the clinical trials industry in India. The rules currently allow parallel Phase II and Phase III Clinical trials in India for NCEs/NMEs undergoing clinical trials anywhere. This is an important step if the government is serious about making new drugs available faster to the Indian patient, since it is willing to approve medicines which have been studied in a sizeable sample of Indian subjects during Phase III. However, by clamping down on approvals of clinical trials, MNCs will continue to remain unclear on whether those parallel trials will ever take off in India.

Companies will also be forced to reconsider bringing to India even those medicines that have completed all trials (Phase I-IV) overseas. This could mean a delay of many years. To worsen this situation, the government wants to amend a rule that allowed the waiver of clinical trials in Indian subjects if the medicines had approval abroad. The government now intends to make it possible to waiver trials in Indian subjects only if there is a national emergency or an epidemic. This means a few more years of delay to the availability of new medicines in India. Add to this the ambiguity around India’s stand on IP laws and pricing of new medicines.

So will the changes make new medicines available in India faster than before? Are these changes going to be accepted independent of the other interlinking factors which often seem contradictory? At the moment, the hullabaloo around India’s health policy continues. Viewed macroscopically, it seems to be a misguided case of almost comical trials and judgmental errors.

Free Medicines or Better Health?

 

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A few days ago, the Vice President of the Indian National Congress party, Mr. Rahul Gandhi tweeted that his party would implement the free medicines scheme for the poor across India. Since the tweet coincided with Mr. Gandhi’s visit to Rajasthan, it can only be assumed that he was touting a relatively successful scheme that his party’s government runs in the state.

Sometime last year, India announced a $5.4 billion policy to provide free medicine to its people. This was the outcome of the report of the High Level Expert Group appointed by the Planning Commission in 2011 to look into the broader issue of Universal Health Coverage (UHC), a key requirement to improve social indices in India.

While the availability of free generics can be a decision that could change the lives of hundreds of millions of Indians, the proposal runs the risk of being overly simplistic and potentially dangerous. The underlying assumption here is that merely providing medicines free would help improve the health and the productivity of the nation. In isolation that is simply not true.

Health is a concept that far exceeds doctors, hospitals and medicines. You need these only when you have to treat a condition. The concept of keeping good health is to prevent anything from affecting you mentally, physically or spiritually. When the government decides that the first step towards UHC is free medicines, it is a step forward gone horribly wrong. It means that the government will do little to keep you in good health and will come up with hare-brained schemes even after you fall ill, leaving you to largely fend for yourself.

This is not to say that receiving free medicines is not a great idea. To the sick and the infirm, it will provide succor to millions who have to otherwise pay for it from their pockets. The problem is in its implementation. That Rajasthan did well with the scheme – as did a few other states – is well studied. However the fact that its nation-wide scale up was shelved demonstrates the government’s sheer lack of confidence. Here’s why.

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Currently, less than 35% of India’s population has access to health care. This means approximately 2 out of 3 residents in India do not have a medical facility (clinic or primary health centre) to go to or a doctor to consult, much less be able to get a prescription and buy medicines. Even the 1 out of 3 residents, who have access to a medical facility, barely get to see a trained medical professional. This is because of an acute shortage of trained staff and chronic absenteeism – doctors get their salaries from the government anyway and prefer to spend more time at their private clinics where they can charge for their services. And if the patient is lucky to see a doctor and get a prescription, chances are that the medical stores will be out of stock. The medicines are either not purchased and delivered to the stores or sold into the private market for a hefty profit.

If this is the state of affairs when only 420 million people are anywhere close to accessing health care, imagine the sheer grit, determination and resources needed to scale this up to 1.2 billion Indian citizens and a few million other residents[1]. Is it any wonder then that today 80% of doctors, 26% of nurses, 49% of beds, 78% of ambulatory services and 60% of in-patient care are provided by the private sector?[2]

Providing free medicines is indeed a laudable idea but one that is fraught with impracticality. Mr. Gandhi must outline the measures he would put into place to prevent corruption in the tenders floated for the purchase of high quality medicines, create adequate storage facilities, tackle absenteeism of medical professionals in public hospitals and ensure constant supplies. These are just a few issues. And going by the way the Public Distribution System has shaped up over the last few decades, there is enough room for skepticism.

So, what is the alternative? Given that India vies for the title of “Pharmacy to the World”, it is safe to assume that there is no domestic shortage of production of medicines. The difficult part is to ensure that the medicines are of good quality. If the FDA can tighten the noose on Indian suppliers of generic medicines to the USA, there is no reason why the Indian regulatory agency cannot do it for its own residents. By ensuring the quality of medicines, the government can rely on the open market mechanism that influences the consumption of health care. The naysayers will do well to merely check on the systematic rot and neglect that public sector pharmaceutical companies have been put through by the government to understand why manufacturing has to be private-sector dependent.

The delivery system would also be efficient since it has to be competitive and competent. The huge saving thus accruing to the Government could be utilised to step up public investments in rural and urban health infrastructure and services, thereby generating employment and income opportunities — both directly and indirectly. For the genuinely needy, `medicine vouchers/stamps’ could be supplied through the Panchayat Raj or local government machinery that could be strengthened and empowered for the purpose. But all this services the sick and is a drain on the economy. Countries with the most efficient health care systems are those that prevent illness through early detection combined with community-based primary care to limit more costly upstream interventions.

India faces enormous challenges such as high disease prevalence, unregulated and fragmented health-care delivery system, non-availability of adequate skilled human resource and inadequate finances to name a few. To address these challenges there has to be a paradigm shift in health policies. While the planners of his government have realized that the central government is not ready to set up a scheme of this scale in the face of such challenges, it seems Mr. Gandhi is more optimistic about it.


[1] Report of the Steering Committee on Health for the 12th Five Year Plan, Health Division, Planning Commission, Sec 2.3, Page 24.

 [2] Report of the Steering Committee on Health for the 12th Five Year Plan, Health Division, Planning Commission, Sec 1.6.8, Page 15.

Images courtesy: Rahul Gandhi from here and the Adilabad PHC from here.

Edited version published earlier at Mera Bharosa.