We expect there to be an even stronger focus on generics and biosimilars
In line with the President elect’s campaign promise of lowering healthcare costs, we expect there to be an even stronger focus on generics and biosimilars to introduce material savings. Localising manufacturing in the US has also been a subject of focus, though with it would come an increase in cost compared with India-based production. However, we remain open to the discussion of localising manufacturing, should the new government offer relief on pricing or provide an indicative commitment on volumes. We would be well-positioned to meet this need from both a product portfolio and capability perspective.
– Vinita Gupta, CEO, Lupin
A dramatic change in immediate future on US domestic pharma policy is unlikely
Now that Joe Biden is taking over as the 46th President of US, it is important to analyse the impact of his proposed healthcare policy on Indian pharma industry because close to 40 per cent of generics valued at about $7.0 billion consumed in the US are imported from India. His campaign website promises to ‘build on the Affordable Care Act (ACA), by giving Americans more choice, reduce healthcare costs and making our healthcare less complex to navigate’.
Considering the fact that the US pharma and healthcare industry has made a generous donation of close to $6.0 million to Joe Biden`s presidential campaign, and the Senate is likely to be controlled by the Republicans, a dramatic change in immediate future on US domestic pharma policy is unlikely. He is likely to rein in high prices of prescription drugs for which there is no or little competition. Also, there are plans to reduce Medicare eligibility age from 65 years to 60 which translates into 20 million more patients. He has also indicated importing prescription drugs from Canada where drug prices are significantly lower.
There is also an issue of the Generalised System of Preference (GSP) which gives duty-free access to developing countries by developed countries for approximately 3500 products, many of them pharma. Hopefully, this exemption will continue. But, considering the fact that most US foreign policies are transactional, Biden is likely to review Indian price control on certain US-made devices like stents, knee replacement and other medical devices as well as India`s Intellectual Property Protection laws. The best strategy for the Indian pharma industry to benefit from the lucrative US market is to move up the value chain by focusing on biosimilars and complex generics and enter the emerging online pharmacy segment, now that the Amazons of the world have entered the fray, by supplying white label products.
– Dr Ajit Dangi, President & CEO, Danssen Consulting
The Indian manufacturers would expect that the US govt includes generics as a preferred tier
India has been playing a critical role in supplying safe, effective, high quality and more affordable drugs to the US patients. With Joe Biden’s win in the US presidential elections, the role for Indian pharma and healthcare companies will become more relevant considering there will an increased push for generic prescription drugs and access to affordable health insurance.
One of the factors that were emphasised on, during the campaign was about patients paying higher prices for prescription drugs. As a result of which, most patients are unable to afford branded medications pushing drug pricing.
The President’s proposal will focus on laws that allow Medicare to negotiate drug prices with manufacturers and install enforcement tools to limit prescription drug prices. He will also establish an independent panel to recommend prices post considering rates charged in other countries for new drugs that lack competition. In this context, Indian companies can be a crucial partner to achieve this goal and help lower prices due to increased competition. That said, in the year 2019, Indian pharma companies have secured 336 ANDA approvals out of total 837 approvals i.e. 40 per cent of the total approved applications at the USFDA to bring new generic drugs to the US market.
This is also true in the case of biosimilar drugs (another agenda on the President’s proposal), although it is clear from statements made by CMS, that these drugs represent a particular challenge due to their high prices. Hence, the Indian government will need to introduce policies that aid generic and biosimilar companies to contest anticompetitive practices.
Overall with a change of guard at the White House, the Indian pharma sector may see an increase in government spending. Besides, the fact that the newly elected President is in favour of pushing progressive policies towards better healthcare comes as welcome news.
The Indian manufacturers, however, would expect from the US govt that generics be included as a preferred tier in the ‘Medicare’ – the health insurance program and avoid MNCs filing frivolous lawsuits delaying the entry of generics in the Medicare program. This will give a boost to India’s exports and at the same time meet the promises made by President Joe Biden and Vice President Kamla Harris
– Shirish Ghoge, Ex-senior Director Government Affairs of Abbott and Ex-senior Director of Public Policy and Government Affairs, Sanofi India
The new administration may allow consumers to buy cheaper priced prescription drugs from other countries
Biden Administration will hold access to healthcare and a strong Medicare program as core values. However, his healthcare arrangement, to some extent, will be dictated by who has Senate majority and the outcome of the Supreme Court’s decision on ACA. Based on the court hearing, it is less likely that the ACA will be fully revoked. Depending on the court verdicts (expected in the second half of 2021), he may want to find some cheaper plan alternatives with quickly implementable operational changes in the ACA structure.
Due to reduced revenue during the pandemic-induced economic downturn, Medicare funding is under pressure. Trump had proposed most Favored Nation pricing index, but Biden’s drug pricing reform will be a bit worse for the life science industry as his plan goes one step further and may propose a legislative change allowing the government to negotiate lower prices with drug manufacturers. In October, Biden had spoken about the German negotiation system for setting drug prices, which ties prices in part to a measurement of their value. His plan will limit price increases for all brand, biotech and very high-priced generic drugs, which majorly will impact brand companies. The new administration may allow consumers to buy cheaper priced prescription drugs from other countries, with safeguards in place, mainly to mobilise price competition, however, this will be more pertinent for branded products.
Congress would need to develop and pass all multiple proposals for these competing priorities before they can be enacted. Medicare policies are unlikely to move quickly, and it is less likely that any regulatory actions Biden administration might pursue on generic medications can impact Indian drug manufacturers.
– BR Sikri, Chairman FOPE, and VP, BDMA
Plans to strengthen the Affordable Care Act implies more reliance on generic drugs, which is good news for Indian pharma
The victory of Joe Biden sends a clear signal about the full implementation of the ‘Patient Protection and Affordable Care Act’ of America, also known as ‘Obamacare’. It was launched by the then-President Barack Obama and then VP Joe Biden but has been under severe attack under President Donald Trump’s regime.
It is a well-known fact that the US President-elect Joe Biden plans to strengthen the Affordable Care Act, which ensures a substantial reduction in healthcare costs and access to health insurance for Americans. This implies more reliance on generic drugs, which is, of course, good news for Indian pharma. At the same time, there will be an impact on the profitability due to the speedier generic approvals which will increase competition.
A research study conducted by the ‘George Washington University School of Public Health and Health Services’ reported that as a part of the healthcare reform initiative in the US, if the health centres are expanded to cover from the current 19 million to 20 million patients, the country can save $212 billion from 2010 to 2019 against a cost of $ 38.8 billion that the government would have incurred to build the centres. This is happening because of the lower overall medical expenses for these patients.
‘Obamacare’ is likely to have a positive impact on India in general, and the domestic Indian pharma players in particular, because of many reasons, such as:
- The Act promoted the use of generic drugs, boosting growth opportunity
- India produces around 20 per cent of the global requirement for generic drugs by volume
- Indian companies account for over 40 per cent of the ANDAs as more and more branded drugs are going off-patent
However one must also look at the other side of the coin such as:
- Intense cost competition
- Severe pressure on margins
- Will attract more MNCs in generic business
- Increase in demand will attract more number of generic players to compete
In short, we can see the substantial spin-off benefits to India, not only for the generic drug manufacturers but also for biosimilar business and many US biotech companies will be looking for low-cost bio-manufacturing destinations like India.
– Vivek Padgaonkar, Independent Healthcare Consultant, Former-Director, OPPI (Project & Policy)
Pharma should be up on the priority list of strong areas for US-India relationship
India is a key global supplier of affordable generic medicines. India has exported almost $4.2 billion worth of pharma products to the US in the first six months of FY21. That is almost about 36 per cent of our total exports of drugs and pharma products. Our total exports to the US and the EU make up about 55 per cent of exports.
Over the years, the Indian pharma industry has greatly evolved. India has focused on its quality management systems-GMP and further enhanced her formulation development abilities. It has now seriously initiated efforts in bringing home the KSM and API sector. On the GMP front, India has the highest number of US FDA approved sites in the world outside of the US, over 660 sites. Indian companies have developed capabilities as CMRO, having expertise in complex generics and difficult-to-manufacture APIs and formulations. Now, a further push on API front will make India stronger and more formidable a force with end to end advantages in this sector.
During the last six months, at the peak of global disruption, Indian global exports of pharma have grown by +11 per cent in the first quarter (April-June) and +19 per cent in the second quarter (July-Sept). Growth of pharma exports to the US in the same period was about +15 per cent. Nine out of the top 25 global generic companies in the US markets are from India.
The world looks at India with a lot of optimism, more so in the pharma sector. As a vibrant democracy, and, as a stable and dependable nation, we are a natural ally to the US, as also to the world. Should the incoming US government look for strong areas for the US-India relationship, pharma should be up on the priority list. The US can utilise the capacity and competency of the Indian pharma sector, by not only outsourcing its current generic needs, but also by hand holding the Indian industry, and helping to strengthen mutual trust and respect. In the long term, this would be a win-win for both nations. India has ample strengths in being a hub for APIs, vaccines, biologics and generics for the US.
In this world shadowed by gloom, the Indian pharma industry comes with a ray of hope, as a potential torchbearer of the aspiration of modern India. An India equipped to be a global superpower, at least in the pharma sector.
– Dr Viranchi Shah, National VP, IDMA
Obamacare will be back in focus and this will help the Indian companies
The Indian pharma industry is waiting in anticipation for President-elect Joe Biden’s decisions with regards to the generic drug industry. Obamacare, aimed to provide affordable health insurance coverage for US Citizens, was one of the cornerstones under Obama regime and we expect that it will be back in focus, and if so, will help the Indian companies.
It would also depend on whether the outgoing President would bring any changes through any Executive order that would be difficult for the Biden regime to change on an immediate basis as they would have also other things that would be on priority, though healthcare is expected to be one of the pillars for Biden diplomacy.
As per various reports, Biden has always been in favour of patents and this could prevent generic launches which can be detrimental for the Indian companies. Making India as a Preference Country i.e. Generalized System of Preferences to supply generics to the US would also be a welcome step that would improve Indian companies’ charge into the US market and make it more profitable.
We would have to wait till the Biden administration takes charge of the affairs and we might see some traction only in the new fiscal 2021-22. However, keeping all aside, the US is a big market for Indian companies and most of them would try to improve their presence and gain a bigger foothold into the growing US pharma markets.
– Dr Hari Natarajan, Founder and Dr Karishma Shah, Director, Pronto Consult