Govt will protect interests of drug industry: Scindia
NEW DELHI: Amid concerns expressed by the Indian industry, the government today said in Parliament that it will protect the interest of the domestic drug industry while finalising the free trade pact with European Union.
“Public health concerns and interests of domestic drug industry will guide our negotiating position,” Minister of State for Commerce and Industry Jyotiraditya Scindia said in a written reply to Lok Sabha .
The two sides have already completed 12 round of talks since June 2007 for the Bilateral Trade and Investment Agreement (BTIA) for opening up commerce in goods, services and investment, he said.
The talks had hit roadblocks as there was pressure from EU members that social issues like environment, labour standards and TRIPS plus should be covered in the agreement. However, India has been resisting these efforts.
“India has clarified to the EU that it cannot accept provisions in the agreement, which are beyond TRIPS (Trade Related aspects of Intellectual Property Rights) and domestic law,” he said.
The TRIPS agreement was signed as part of the multilateral trade pact of the WTO during the Uruguay Round in 1994. Under this, developing countries including India made several important changes in their domestic IPR regime to make it more stringent.
However, India is strongly opposing going beyond TRIPS in any bilateral free-trade pact, as the move could render a lot of genuine products like generic medicines and software illegal. It can restrict the ability of Indian pharmaceutical firms to produce and export generic or off-patent drugs.
Indian pharma industry and several NGOs have been strongly opposing the proposed bilateral pact on the grounds that it will require India to make TRIPS-plus commitment.
The EU and other developed countries believe a TRIPS-plus pact is a must for tackling the problem of counterfeit drugs.
The EU is India’s largest trading partner. The bilateral trade in 2009-10 aggregated to USD 75 billion. Both the sides are expected to conclude the negotiations by the end of this year.
Real R&D cost much lower than what pharma cos claim
NEW DELHI: Talk to a drug industry executive about high medicine prices and they throw back the $1.3 billion the industry spends on average on research and development (R&D) of a single drug. In a recent analysis bound to deflate this justification for high pricing, two health economists have demonstrated how the real R&D cost for a new drug could be just 5-15% of the touted $1.3 billion.
The analysis concludes that the real R&D cost for a drug borne by a pharmaceutical company is probably about $60 million. This latest analysis has been done by Donald W Light of Stanford University and Rebecca Warburton of the University of Victoria in Canada. The analysis has been published as an article, ‘Demythologizing the high costs of pharmaceutical research’ in the latest issue of Biosocieties, a quarterly social sciences journal of the London School of Economics and Political Science.
How can there be such a huge difference between the earlier estimated R&D cost and the new calculation? For a start, in the $1.3 billion, the tax exemptions the companies avail for investing in R&D have not been accounted for. Tax write-offs could amount to taxpayers paying almost 40% of the R&D cost. The industry also does not count the cost of basic research, which often takes decades and is mostly done in public funded universities or labs. Yet, industry’s R&D cost includes a substantial amount as cost of discovery despite the fact that there are no credible figures on what exactly those costs are.
Further, half the R&D cost of the industry is not real costs but exaggerated estimates of profits that companies could have made if they had invested in the stock market instead of R&D. The R&D cost has been further padded by showing inflated spending on clinical trials. “Clinical trials were shown to last longer, spending per clinical trial subject was inflated and the average number of participants in a trial was almost doubled,” the analysis found.
So how did the industry arrive at the $1.3 billion figure? This figure was worked out through studies done by the Tuft Center for the Study of Drug Development in Boston, Massachusetts, in 2003. Their figure of $802 million to bring a new drug (not a reformulation of existing drugs) to the market became the figure most widely cited by government officials, the industry’s trade associations and the media. By 2006, this figure was updated by 64% to $1.32 billion. What was not mentioned was that the Tuft Center received substantial pharma industry funding.
Light and Warburton write in their article that such a low estimate as $60 million might seems unbelievable until one learns that the audited cost of all clinical trials submitted by pharmaceutical companies in the late 1990s to the Internal Revenue Service averaged only $22.5 million. Moreover, the median cost to company per approved drug in 2000 varied between $14 million and $204 million depending on the kind of drug being considered.
“Pharmaceutical companies have a strong vested interest in maximizing figures for R&D as high R&D costs have been the industry’s excuse for charging high prices. It has also helped generate political capital worth billions in tax concessions and price protection in the form of increasing patent terms and extending data exclusivity,” stated the article.
Asia is Key to Driving Innovation in Drug Development, Overcoming Industry Challenges
Asia is rapidly becoming a new frontier for drug development as Western companies seek to develop and register their products, while emerging Asian companies seek new capabilities to globalize products.
However, to fully capitalize on the opportunities, the industry will have to abandon its current model and move to a new model of drug discovery and development which embraces multiple strategic partnerships.
This is the conclusion of a new white paper, published by Quintiles, the world’s leading biopharmaceutical company, and authored by Dr. Amar Kureishi, M.D., Head of Strategic Drug Development Asia.
“The rapid ascent of Asia, with its access to fresh capital and willingness to discard old assumptions is injecting new life into global drug discovery and development,” writes Dr. Kureishi and he predicts, “Within the changing landscape, we call the New Health, patient empowerment and market access considerations will be the drivers of innovation and a rebalancing of medical need and commercial considerations will occur.”
However, Dr. Kureishi makes the case that for this to take place; the industry has to radically change its business model.
“This new model will transform from a linear structure, in which one firm owns all of the pieces, to one of multiple partnerships, with a focus on collaboration instead of control,” says Dr. Kureishi. “The model can be represented by a ‘wheel and spokes’ with companies such as a full-service CRO or a large biopharma at the center of the wheel, outsourcing many of the tasks it previously performed in house. In this model, the biopharma company and CRO will play a more strategic role in clinical drug development and help foster innovation.”
Service firms, specializing in clinical research, will become more important in clinical drug development, not only from a contract service provider prospective, but also as experts with deep global experience in strategic drug development. With a cross-industry view of trends, these service companies will be ideally positioned to evaluate risks and make informed decisions within partnerships.
This collaborative model has potential to drive drug development forward in an entirely new way. By reimagining roles and relationships within the larger value chain, companies that focus on their strengths while partnering in other areas are very likely to thrive in this new landscape.