Express Pharma

NLEM 2020: Should patented drugs be included in it?

At the National Consultation Stakeholders meeting held in August for the revision of NLEM 2015, industry stakeholders requested the government authorities to delay the release of National Essential List of Medicines (NLEM) 2020 by one year. Another issue which was raised is the inclusion of 'patented medicines in NLEM 2020? Some industry experts present their views on this subject

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Innovation is the lifeline of any economy and it needs to be encouraged

The basic purpose of NLEM is to guide the safe and effective treatment of priority disease conditions of a population and to promote the rational use of medicines.

Therefore, in order to maintain relevance, the NLEM needs revisions regularly due to

  • Changing disease burden profile: The disease burden in a population does not remain static and keeps on changing
  • Antimicrobial resistance: Emergence of resistant pathogens necessitate the inclusion of newer antimicrobials for the treatment of such infectious conditions
  • Development of newer and better medicines: The approval of newer and better medicines results in a change in treatment guidelines for various disease conditions

In India, the entire NLEM is becoming a part of schedule I to the DPCO 2013, (whether it is NLEM 2011 or NLEM 2015) hence become the scheduled formulations and therefore come under the price-controlled mechanism of NPPA.

The COVID-19 pandemic has exposed some structural challenges that our pharma industry faces across the value chain. A severe impact is being experienced on account of:

  • An unprecedented increase in API prices (around 25-30 per cent) primarily on account of China dependence and excipients; sharp rupee depreciation against dollar has further made the imports costlier
  • The increased cost of operation due to new requirements regarding safety norms for COVID 19
  • Increase in ancillary and domestic transportation cost. Currently, approximately 17 per cent of the Indian pharma market is under price control, (Source: AIOCD AWACS Data) rest is regulated by the NPPA. So from the price control perspective, one can propose selective formulations from NLEM in the schedule I to the DPCO 2013 and not the entire NLEM to substitute current one.

Due to these challenges of COVID-19, and as per NPPP 2012, to provide sufficient opportunity for innovation and competition to support the growth of the industry, as well as meet the goals of employment and shared economic well-being for all, the schedule I and revised NLEM should be discussed with all the stakeholders by the Standing National Medicine Committee (SNMC) before implementation.

Patented drugs in NLEM 2020

The DoP had a vision of developing India as a drug discovery and pharma innovation hub by 2020. The basis of the vision was a white paper shared by McKinsey and Company with the DoP, containing a rapid assessment of India’s opportunity in global pharma R&D. This whitepaper outlined the potential aspiration for 2020, describing opportunity areas for developing excellence and outlining the key imperatives for the Indian government. Almost all the patented pharma products have come from the global Big Pharma. Their R&D spend as a percentage of sales is around 20 per cent of their sales turnover (Ref Fierce Pharma)

In fact, this is part of a larger question on R&D and pharma innovation in India hence should be looked at from a larger perspective. Innovation is the lifeline of any economy and it needs to be encouraged.

We need to balance access to medicines and innovation, encouraging and ushering new products for ailing patients and foster a climate of innovation for the future of India. A control on pricing can be achieved nevertheless by making payment outcome-oriented so that the public pays for the outcomes and not for the drug. This brings in accountability and Rx norms for prescribing and radically change procurement and point-of-care decisions. This is difficult to achieve but can be given an abbreviated approval for use at least in government and quasi-government setups as a start. Further, this would encourage research-oriented pharma companies to consider India as a market rather than overlooking it. One of the major concerns is that India would be closed out for innovative products and Big Pharma overtime.

This must be followed up with newer initiatives that encourage innovation setups in India. Doing through startups is one but also encouraging investment in innovation infrastructure. Creating a welcoming position for innovation is key.

Looking into the aspects of the patent is not a requisite for fixation of the retail price of drug formulations as per the provisions of DPCO 2013.

Pricing negotiation for the patented products can be used in combination with other pricing approaches (e.g. reference pricing and value-based pricing), with a view to reaching a final arrangement that would, ideally, present benefits to all parties involved.

There is a well laid down principle for the inclusion of drugs, with exemption to patented drugs for a period of five years, which is covered under para 32 to the DPCO 2013. Hence even if the revised NLEM includes the patented drug, it will always be exempted from the price control. In fact, the self-invocation of para 32 should not be regarded as a willful violation of the DPCO 2013.

The government can invoke para 19 to the DPCO 2013, for bringing patented product under price control for a national emergency. Unless there is a dire need of the patented product, during emergency ceiling price could be clamped as happened during the pandemic and then price ceiling removed as soon as supply is resumed.

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Patented medicines should be part of NLEM

The purpose of NLEM is to guide safe and effective treatment of priority disease conditions of a population, promote the rational use of medicines, optimise the available health resources of a country.

It can also be a guiding document for; state governments to prepare their list of essential medicines /procurement and supply of medicines in the public sector /reimbursement of the cost of medicines by organisations to its employees /reimbursement by insurance companies / identifying the ‘MUST KNOW’ domain for the teaching and training of health care professionals.

As of January 2019, the Indian Government has allowed importers and manufacturers of patented new drugs to price their product freely for a period of five years. They said the five-year window will begin from the date of the product’s commercial marketing in India. Prior to this development, patented new drugs which were not developed in India were subject to certain price restrictions depending on whether the drugs were part of the National Essential Medicine List (NLEM) or not. Where the drugs were part of NLEM, the government prescribed a price ceiling above which the drugs could not be sold. Where the drugs were not part of NLEM, the importers/manufacturers of the product were not permitted to increase their price by more than 10 per cent in any 12 month period. These restrictions will not be applicable to patented new drugs any longer until the expiry of the said five-year window.

In the present scenario, when patent provisions in accordance with the TRIPS agreement are firmly in place in India, innovators are largely resorting to the practice of entering into voluntary licence agreements directly with generic manufacturers or through NGO like Medicines Patent Pool. Under the purview of these licences, the generic companies sell the product within the country, as well as export to low and middle-income countries, as is seen in the case of Gilead Science’s Sofosbuvir, Remdesivir and Viiv Dolutegravir through Medicines Patent Pool.

A move to bring in any form of price regulation of patented medicines may not go down well with the pharma industry, as they may fear an imminent dip in their revenues while market forces will work on the same. However, economies of scale would aid the industry in increasing sales and, hence, regaining lost profits. Moreover, the patients would stand to gain financially and in clinical outcome levels. Any governmental measure signalling a compulsory licence will indirectly facilitate a lowering of the price for the patient, while at the same time widening the reach of the medicine. Price regulation of patented medicines in some form would be a win-win solution for both, patients and the pharma industry.

NLEM should be used as a tool for access like WHO and patented medicines should be included as they provide safe and effective treatment of priority disease conditions and are essential. Patients have the right to access such medicines and therefore Government of India, the pharma industry and others should facilitate the mandate of NLEM and ensure that patented medicines are part of the NLEM.

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Selection of medicines for the NLEM should not be based on patent status

In India, after decades of neglect, a process to review and update the National List of Essential Medicines (NLEM) started in 2015. Several rounds of review, focusing on different diseases have been announced to ensure the list is relevant for the evolving public health context in the country.

The recent review and consultations held by the Standing National Committee on Medicines (SNCM) have attracted the giants of the pharma industry as they are keen to discourage the addition of their new lucrative pharma products to the NLEM. The list attracts National Pharmaceutical Pricing Authority’s (NPPA) attention as it is legally required to regulate the prices of drugs added to the NLEM under the Drug Price Control Order (DPCO). This is a bitter pill for the industry and the private healthcare sector to swallow, as the business model is to make millions with huge profit margins built into the price of new drugs from patients and their families.

The current round of the review focuses on cancer and diabetes. One of the issues that the National Committee on Medicines faces is the issue of inclusion of patented medicines on the list. Fifteen years into the World Trade Organisation’s (WTO) mandated product patent regime in India, new essential medicines are being patented in India every year and are priced out of reach for individual patients.

To illustrate, the cancer drug pembrolizumab on the WHO’s Model List of Essential Medicines for advanced melanoma is patented in India and is priced at over $10,000 per month.

At the Stakeholders’ National Consultation for revision of the NLEM, the representative of the Organisation of Pharmaceutical Producers of India (OPPI) pushed for the exclusion of patented drugs from the NLEM as they serve only a small proportion of the patient population. However, the unwritten policy of excluding patented medicines as a category/class from the NLEM may have a detrimental impact on the right to health. The selection of medicine for inclusion in the EML cannot be determined by its patent status and there is no legal co-relation (linkage) between the two.

The SNCM should look at the selection of medicines for the NLEM not based on their patent status but whether they lead to better management, treatment outcomes, address unmet medical needs, and are those that meet the priority healthcare needs of the population.

If we take the case of the World Health Organisation’s Model EML, it includes several patented medicines for hepatitis C, several cancers, and DR-TB. As a matter of fact, governments should use the inclusion of patented medicines in the WHO EML and their national EML as a tool to implement flexibilities and health safeguards available under the WTO and patent laws, to regulate prices, and introduce automatic licenses for generic manufacture and supply to patients and the health system.

However, the Indian Ministry of Health faces a formidable challenge. The Department of Pharmaceuticals stealthily and without inter-ministerial consultations are introducing amendments to Para 32 of the DPCO (2013) in 2019, preventing the NPPA from setting price caps on patented medicines for five years from the da