India firm shakes up cancer drug market with price cuts

http://dawn.com/2012/06/17/india-firm-shakes-up-cancer-drug-market-with-price-cuts/

by deadbea7 • 14 years ago

84 64 14 years ago

drsim• 14 years ago

The world needs more people like him: in a position of power with the guts to stick it to companies who put money before humanitarianism.

deadbea7• 14 years ago

I would also give credit to Indian patent laws that allow people like him to shake things up.

"In 1972, India made only the process for making drugs patentable, not the drugs themselves."

Compare this to the US where I believe you can patent the active ingredients of a drug, allowing pharmaceuticals to charge more for lifesaving medicine for a longer period of time.

mistercow4• 14 years ago

Wow, that's a really smart policy on several levels. Besides not stifling competition regarding individual drugs, it encourages companies to develop new methods of synthesis, which has potential side benefits like making the market less fragile against shortages of raw ingredients.

boundlessdreamz• 14 years ago

From the article

"But in 2005, India brought its law in line with World Trade Organization (WTO) rules recognising 20-year patents, pushing up the prices of newly launched drugs."

ig1• 14 years ago

The problem is that if these drugs end up entering the grey market in the developed world, it disincentives investment in the next generation of drugs.

Huge amounts of money have to be raised to make a new drug. The cost of bringing a new drug to market is typically $800m-$1.2bn (i.e more than exit value of Instagram or Yammer is required just to get to launch).

With treatments for viruses it gets even more problematic, in developing countries where regulations and medical practices are lax, a large number of people taking drugs in an uncontrolled manner can allow viruses to mutate making the drugs ineffective for everyone.

The issue isn't as simple as good vs evil as the article makes out. There are complex ethical, economical and medical issues here and this article completely ignores that.

accountswu2• 14 years ago

Whatever the complexities of the system, the bottomline is that for-profit corporations should not be allowed to milk medical "consumers" the way they are allowed in the US. If the US can bail out the banksters with trillions of dollars (yes, the Federal Reserve printed trillions and gave it to corporations, not just American banksters and corporations but to corporate buddies all over the world), why must an American patient pay 10-100 times the price charged by the same company in Mexico? That for a medicine that is more than a decade old?!

The US government (read taxpayers) paid milions to GM in bailout money in the last week of September 2008, GM opened a new plant in St. Petersburg, Russia in the first week of October 2008.

How is it all not as simple as good vs evil? Could the trillions of dollars of taxpayer bailout money not be spent on providing healthcare to all Americans and their generations to come?

When they fail we all need to chip in, when they succeed (say their drug is successful) we all have to pay for their profits.

Anyone remember the millions of dollars Rumsfeld made over the bird flu scam? Remember Tamiflu? Bird flu killed a fraction of the number of people routinely killed by common cold and malaria around the world but the UN rushed to declare it a pandemic and that translated into billions of Dollars of purchases of medication from governments around the world. The medication did not even provide the defense it claimed to provide any way.

WiseWeasel3• 14 years ago

Maybe the US is simply a poor market to launch new drugs into, if it costs that much to get it to market. It might be better to launch in other countries, like India, and then work towards a US launch after extensive use data is available.

kkowalczyk• 14 years ago

This argument is demonstrably false.

Look at any commodity market, with no barriers to entry, no IP protection, thin margins, say: making bread. The logic that everybody will stop making bread because there's more money to be made in making iPads is false.

The general rule is: as long as there is money to be made, people will compete for this money.

There's a lot of money to be made in drugs and as long as it's true, companies will compete for this money, even if the margins won't be as great as they are today.

Look at http://en.wikipedia.org/wiki/List_of_pharmaceutical_companie...: the top pharma company makes $12bn profit on $62bn of revenue with $7bn spent on R&D.

The $12bn is a lot of wiggle room and twice the amount they spend on R&D. They are making profits hand over fist.

The $7bn total spent on R&D also puts your $1bn per drug into question - does the biggest pharma company can only do 7 new drugs per year (and I'm really generous in assuming all of that R&D goes into developing new drugs)?

mjwalshe2• 14 years ago

and I am afraid that India has a shady counterfeit drugs industry where they are selling drugs with less than the required amount of the active ingredient which leads to resistance to say aids drugs.

And when the BBC World Service investigated they people who talk to them had to have their identity & voices disguised because they did not want to end up dead

cdooh4• 14 years ago

Why is Cipla able to produce the drug at a fifth the price? Can someone please explain how Western companies price their drugs? How much do they send on R&D, marketing and all that? I mean it doesn't really make them look good does it? P.S. Being from Africa I can testify to how much of a difference Cipla's 1dollar a day AIDS drugs make a huge difference!! Here in Kenya medication is given free of charge under government and NGO subsidies. AIDS is no longer a death sentence if you're poor.

ashray2• 14 years ago

They don't do much R&D. Most of their drugs are copies of drugs that have been developed in western countries. The drugs are just reverse engineered and reproduced. This is pretty legal under Indian patent law and hence carries on, while Cipla, makes massive amounts of money by being just a drug manufacturer.

They do save lives though :P

cdooh4• 14 years ago

I meant western companies how much do they send? I once read an article that suggested that even after they've made back the money spent on R&D they still keep their prices high to keep making a profit

DufusM2• 14 years ago

From what I have heard from people who work in pharma companies in India, the main reasons drugs are cheaper when manufactured in India are:

- not much R&D costs to design new drugs (however they do spend on designing the manufacturing process) - cheap labor for manufacturing, including a good supply of chemical engineers. - environmental regulations for chemical manufacturing are stricter in Western countries.

mjwalshe2• 14 years ago

yes as the residents of Bohpal can tell you - well the ones that are still alive that is

ashishgandhi3• 14 years ago

Indian pharmaceuticals are a joke. They have zero inventions to their name. Their "secret" to selling drugs cheap lays in the following line from the article.

"In 1972, India made only the process for making drugs patentable, not the drugs themselves."

Do you really think this is smart?

Heavy R&D costs are involved in coming up with compounds that save lives. If you only have the manufacturing process that's patentable then what happens is you can "reverse engineer" drugs as the article says. I would thought the significant majority of R&D costs is pertained to identifying compounds that cure. The cost of determining the process to manufacture these discoveries was less significant.

    cost to invent drugs = identifying compounds (90%, say) + determining manufacturing process (10%)

With no way to recover[1] the 90% of the cost involved in inventing drugs you no only take away the incentive to invent drugs but you disincentivize it.

I've lost family members to cancer and I would like my country's legislature to NOT disincentivize research for cancer or any other area. I'm not sure if there have been significant medical inventions here. I tried to look but couldn't find any.

[1] You competitors will spend 10% of the cost to determine a different process to manufacture drugs and sell the compounds at tenth of your price and taking the market away from you.

Edit: Down vote? Is it because of the dissent or is it because you think I'm wrong? I'm an Indian citizen and have the right (luckily) to dissent. If you think I'm wrong I would love to know what inventions have Cipla et. al been credited with.

cdooh4• 14 years ago

Also speaking as someone who's lost friends to cancer, I'd not like it if the drug was there but out of my reach because it was too expensive. It's like looking through glass, you can see the other side but you can't get through

ashishgandhi3• 14 years ago

I don't believe the right answer to solving the cost problem is stealing (super) costly inventions. Cheaper and more widely accessible healthcare would probably be the more apt choice if you ask me. Debate about models such as free public healthcare, compulsory insurance, compulsory insurance where the government pays the difference that the less wealthy can't make up for, etc. would be more apt I feel. Also discussion about how to bring down cost of research can be fruitful.

But without the incentive to invest in the huge cost involved with discovering drugs, you will have nothing to look at the other side, glass or no glass.

ashray2• 14 years ago

I understand and mostly agree with your sentiment. R&D is important.

However, I do feel it's important to bring up the point of making generic drugs more accessible to the masses. Sure, cancer is a big beast, but the masses out there mustn't die of tuberculosis, malaria, pneumonia, etc. just because the drugs are too expensive.

It seems like there just isn't a one-size-fits-all kind of solution. Officially licensing drugs for cheaper sales in developing countries might be a reasonable road to go down.. got any other solutions ?

anaheim• 14 years ago

cost to invent drugs = identifying compounds (90%, say) + determining manufacturing process (10%)

^ Where are you getting these numbers from? They seem way too simplistic, and your argument essentially falls apart without them.

Real 'invention cost' would be determined by far more factors - cost of raw materials

- labour cost (I bet it's cheaper for pharmaceutical companies to pay workers much lesser in India too.),

- whether your competitors are targeting the same market (if these companies stopped researching said drugs, Cipla would come up with a cheaper way to do the R&D required, and then make a killing, even with their low rates, since they would have cornered the market.)

Plus the goodwill of Govts of developing countries that are offered these medicines at low rates may lead to fruitful collaboration with national research institutes in those countries, thereby lessening the need for enormous profit margins anyway.

As someone said below, the fact that there is more money to be made selling iPads rather than bread does not mean that everyone switches to making iPads.

wisty• 14 years ago

Good question. Let me break it down for you:

Of 5,000 new compounds, you'll find 250 which are interesting enough to test in a lab (animals or in vitro), 5 which are interesting enough to test on humans, and 1 which gets approved.

It costs peanuts to find the 5,000 new compounds, and a little bit to figure out which ones are interesting (say, $50,000 each, about $250 million). Those 250 interesting drugs will cost a million each to test - subtotal $250,000. The 5 drugs which are tested on humans cost a fair bit (say $50 million each - $250 million for all 5). Getting the final compound approved takes a lot too, because you need a massive trial.

All up, it's about $1 billion per drug.

If you want to reverse engineer it, it's about $10 million dollars for a chemical engineer to read the publicly available formula, figure out how to synthesize it, and set up a small plant.

Whether it's a new drug, or a drug you copied, it costs a few cents labor / materials to make each dose once the factory is built. Yes, India could knock $0.01 off each tablet, by employing cheaper factory techs. But no-one cares about saving $0.01 off a $1 product.

India could do the R&D cheaper, but not a lot cheaper. It's like building an OS - you need experience people who know what they are doing, not just cheap process workers.

Ripping off US companies isn't a bad idea, because it lets Indian workers gain more experience, which will help them create better R&D jobs. In the long run, this might even be good for the US, because Indian R&D could create a lot of good drugs for the US to buy.

DufusM2• 14 years ago

The article also quotes that this has changed in the last 7 years and adds more subtlety to the issue.

"But in 2005, India brought its law in line with World Trade Organization (WTO) rules recognising 20-year patents, pushing up the prices of newly launched drugs.

Cipla, India’s fourth largest pharmaceutical company by sales, has been pressing the government to allow widespread use of “compulsory licences”, which are permitted under WTO rules.

The licences allow companies to make existing life-saving drugs to sell in countries where they are otherwise priced out of reach."

While product design is important, availability of a strong manufacturing supply chain is also important. India's role in pharma is similar to what China provides for regular manufacturing.

jellicle• 14 years ago

>Do you really think this is smart?

Of course it is. This has easily brought India trillions of dollars worth of benefits. Is there any benefit to India at all of paying billions of dollars per year to the United States for.... nothing?

blackspider• 14 years ago

Of course India shouldn't! Why should they? Why would anyone want to pay for something that cost billions of dollars to be discovered now that it is discovered. We should all steal! </sarcasm>

kamaal4• 14 years ago

>>I'm an Indian citizen and have the right (luckily) to dissent.

Oh! I am an Indian too.

Cost reduction is innovation too. Its like what Telecommunications companies have done to call rates here. Remember the days when getting a telephone connection required recommendation letters from ministers? These days you can get one for 100 rupees with a address proof in 20 minutes.

Pharmaceutical patents at most act like software patents sooner or later some one discovers them. But to act like 'I discovered first, so pay me eternally or suffer mercilessly and die' attitude will only do damage.

You are also right in the sense that we must incentivize research. But for that we need larger health care reforms especially in the areas of health insurance. Every Indian must have a means of affording health insurance and pay for quality health care. I like Narayana Hrudayalays's schemes in Bangalore, for farmers and alike.

Regarding when that will happen, your guess is as better as mine.

ashishgandhi3• 14 years ago

Oh most definitely! I totally agree with making healthcare accesible to all income groups and at the same time cheaper for everyone.

Don't like to copy-paste but in one of my other comments I wrote: ... Debate about models such as free public healthcare, compulsory insurance, compulsory insurance where the government pays the difference that the less wealthy can't make up for, etc... (http://news.ycombinator.com/item?id=4124317)

craigyk• 14 years ago

Yes, it is smart. On many levels, even the long run.

I think you might not be aware that a very large percentage of drugs in the West emerge from publicly funded research... sometimes even 'basic science' research. While pharma does do its own R&D, it mostly just farms promising leads from academic research.

Where they do shell out big bucks is in the cost of performing clinical trials. This is a regulatory cost. While I think trials are a critical step, I'd be surprised if costs here couldn't come down substantially through means that don't involve R&D. Maybe India could offer something in this regard?

India's pharma companies might be a lot more 'innovative' if their academic science and government spending on science were stronger. This might just be a matter of time.

Finding a different way of manufacturing a drug can be very innovative work. Trust me, the chemists that come up with these organic syntheses all too often consider themselves geniuses.

pm904• 14 years ago

I get the feeling that there is simply no way to get exorbitantly priced drugs to the masses without bankrupting any kind of fund that provides for this (govt/national agency etc). The mistake in your argument is that you assume pharmas are losing out from the market in poorer countries like India. While this may be true to a certain extent, the sales of such drugs would be significantly low if they were bought at the original price. Also, the Indian govt./private sector doesn't provide any kind of healthcare benefits, AFAIK most healthcare is self-sponsored, which is different from US where big insurance companies handle much of the costs. There is a grey area here. It isn't simply that you try to protect your IP at all costs or try to be over-zealously righteous. As another commenter mentioned, this kind of idea stealing happens all the time, and although it may not be strictly legal, it has done much more good to us than sticking to laws would have.

jamesaguilar• 14 years ago

It's a very smart approach during the catching up phase. Basically, it's an unstoppable free-riding mechanism.

ajays2• 14 years ago

On the other hand: the rest of the world has benefited a lot from the Indian pharma industry's growth. The same companies that you're criticizing are actually subcontracted by Bayer, etc. to produce their products so they can be sold in the developing world. If Indian did not produce these medicines, they would not be available to the poor at all. So at least they're saving lives that the developed world wasn't interested in saving.

Secondly: historically, Indian pharma growth was stunted due to old British laws. Once the industry was unshackled, it grew at a breathtaking rate, mostly by building generic variants of well-known drugs. This has allowed the Indian pharma industry to develop enough local expertise about formulation, manufacturing and distribution. Now they're moving up the food chain by patenting new drugs. Ranbaxy Labs, for example, is busy filing patents[1].

You can't expect the domestic industry to just sprout up organically. The Indian government never spent much money on R&D, so there wasn't much local drug research. But now that they're under the same patent regime, the Indian industries will have to figure out a way to survive.

Having said all this: please don't assume that Western drug companies' hands are clean. They are busy trawling the jungles of Amazon (among other places) to find new compounds, often taking knowledge from local shamans, etc. without any respect for their "IP".

[1] http://www.financialexpress.com/news/ranbaxy-tops-third-worl...

_juof• 14 years ago

What cipla is doing can be considered as a legal innovation .And it seems like a legal practice that does very little damage to drug companies , and great benefit to consumers.

In a world rich with technology innovation, marketing innovation, distribution innovation(amazon fulfillment services, etc),organizational innovations(open source,etc) and manufacturing innovation the biggest barriers left in many industries are legal and regulatory issues.

There's immense value to be unlocked using regulatory innovation in education(khan academy in k-12 schools), healthcare(almost everything about it), energy(new nuclear power tech), hotels(the whole airBNB legal questions) and other fields.

Shouldn't we even try ?

kamaal4• 14 years ago

I've lost two People from my Family to Cancer. One a elder cousin sister of mine and another an Uncle. I was in my teens back then when it happened.

There are huge obstacles to getting quality affordable health care in India. Costly drugs is one of them. But costly drugs isn't the problem, the problem is health insurance is an unknown aspect here even now to many ordinary middle class crowd.

In case of my relatives, despite being in a urban city like Bangalore. We had trouble getting right doctors. Both patients, and relatives like us around them are hugely ignorant of what to do in case of big health problems. And this plays to the doctors advantage.

The problem is there is a huge problem of capitation fee here. Students shell out ridiculous sums of money for even entry level MBBS courses. The net result is need to go for higher studies again to get a job in a god hospital or start their own clinic. By the time they do MBBS + Specialization course + Investments on clinics, they only way they can earn back that kind of money is by charging their patients ridiculously.

There a lot of doctors who ask patients to undergo needless tests, even for some very simple things like fever these days. Doctors and Test labs both get commissions for tests they do. Doctors and Pharmacy shops get commissions for selling drugs what the Drug companies ask them to sell. Its like a huge nexus which acts as a burden on our contry's medical spending. So you will see a lot of tests and drugs prescribed for no reason.

I have seen many Pharmacy Shops sell banned drugs. For example only recently did we know that a drug called Rosicon MF is a banned diabetic drug(http://en.wikipedia.org/wiki/Rosiglitazone), but my mom was taking it even 6 months after the ban. Blame this both on Ignorant doctors and Pharmacy shops. Although by God's grace nothing has happened so far.

Another colleague of mine needs to his wife operated for Avascular Necrosis. It seems doctors here shouted on them when they discovered them doing pre research before the operation. And it turns out the doctors advised them a mode of operation, which requires a lot of post operative expenses, compared to other types which are better. Its things like this. I have myself faced the doctors wrath when they figure I am pre reading something about the disease while trying to help out a relative. Its almost like suffer at our hands or get lost kind of attitude.

Healthcare is like a huge business, where doctors look to maximize their profits by hook or crook. Patients are largely very anxious and ignorant of what is happening to them. Drugs are costly, Every one in the business is out there to make money at without much regard to the patient. Pharmacy shops, surgeons, physicians, specialist, Test Labs its all mad rush for money.

So drugs aren't really the only problem.

ajays2• 14 years ago

An article that provides more background on the whole Indian drug patent stuff: http://www.medicusmundi.ch/mms/services/bulletin/bulletin200... It's about 10 years old, but still has good information for those interested.

India firm shakes up cancer drug market with price cuts

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