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Putting all patients first

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In a speech on May 12, US President Donald Trump put one of his most populist election promises — to make medicines more affordable for the US citizens — into action. Launching an initiative called American Patients First, he unveiled a list of 50 proposals.

But the irony is that pharmaceutical companies who were expected to be the hardest hit, saw stock prices on an upswing post the presidential address.

Analysts point out that President Trump does not seemed to have walked his talk about forcing pharma companies to lower their prices. But while US-based pharma companies like Pfizer could heave a sigh of relief, the news may not be as good for companies from outside the US.

President Trump’s speech made a reference to governments that “extort unreasonably low prices from the US drugmakers” using price controls, which is being seen as a reference to countries like India who are increasing the span of price control.

The US President’s speech follows the end April release of US Trade Representative’s (US TR) Special 301 report, which retained many countries, including India, on the Priority Watch List for not meeting the US’ standards of protection of the intellectual property rights of its corporate citizens. As Robert Lighthizer, US Trade Representative warned, “This report sends a clear signal to our trading partners that the protection of Americans’ intellectual property rights is a top priority of the Trump Administration.” (See detailed report: While sceptics scoff at how many larger countries would bend to such trade pressures, there is no doubt that individual companies exporting to the US will face a backlash.

The pharma sector in India, especially companies like Sun Pharma, Lupin and Glenmark Pharma, which count on the US as a major source of export revenues, say that they are already operating on shrinking margins thanks to channel consolidation in the US. The faster rate of approvals is creating more competition, resulting in further price erosion. A PTI report quoted an Edelweiss research analyst estimating that the pharma sector in India will report weak Q4FY18 numbers — while revenue is likely to grow at 3 per cent y-o-y, PAT is expected to decline 9 per cent y-o-y. US revenue is expected to dip 2 per cent y-o-y in constant currency (cc), which will be the fifth consecutive quarter of decline.

While President Trump’s speech did not have too many details on how these steps would be implemented, the salient points include the disclosure of the cost of medicines in TV ads, (a clear attempt to prevent profiteering) as well as ensuring more OTC medications get approved so that patients are not dependent on prescriptions. A key expectation was that the President would use the buying (bullying?) power of Medicare to make pharma companies reduce the cost of medicines. A watered down version made its way to the President’s May 11 speech, merely referring to a reconsideration of how the scheme covering US senior citizens would pay for some high-priced drugs. The Trump administration is expected to reveal more details of how it intends to implement these proposals in the coming days.

While exports to the US are expected to continue to shrink, India’s policy makers at the CDSCO, headed by the DCG(I)’s office, continue to plug gaps in the regulatory framework in the domestic market. The final minutes for the 79th Drug Technical Advisory Board (DTAB) meeting held on May 16, reveal that the Board passed important proposals that could change the way pharma companies conduct their business in the domestic market.

Regulators across geographies are making laudable attempts to put the patient first but will pharma companies fall in line?

For instance, one of the proposals passed by the DTAB makes companies marketing medicines responsible for the quality of the medicines, not just the manufacturers listed on the medicine pack. This is significant because most big pharma companies in India contract out the manufacturing to third party manufacturers. This provision will force them to be more diligent about their contract manufacturing facilities, as they can no longer pass on the responsibility for quality. Probably anticipating that there could be a disruption in supply of some medicines the Board clarified that persons involved in any distribution channel should not be affected and that the marketing firm should be treated as an agent of the manufacturer.

Another significant proposal passed by the DTAB along the same lines was that as a test trial, the DCG(I) would ask companies to voluntarily include a trace and track mechanism on the packs of the top 300 pharma brands. For now, this is a test trial, but it gives a good indication of how serious authorities are about safeguarding the patient’s life as well as the pharma supply chain.

Like in the US, industry stakeholders in India are awaiting further details on how these noble intentions will be implemented. The devil lies, as always, in the details.

Viveka Roychowdhury

[email protected]

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