From the medicine cabinet

The Financial Express brings us another development in the battle between big pharma companies and the generic industry. What really stood out for me was the generic industry’s indignant stand re-affirming their status as the “consumer’s best friend.” In my opinion both the generic industry as well as developing countries need to push much harder for cheaper medicines, A. 31 bis and take advantage of compulsory licensing provisions where available. I always end up looking at these situations from an Indian perspective and I cannot understand why this debate is becoming increasingly complex. If the generic industry is our best friend why are medicines getting more expensive? Similarly the statements we hear from the Ministry of Health on occasion. We have compulsory licensing provisions. Why are we not using them? Brazil did it, Thailand did it. We are a poor country. We have many people suffering. We need cheaper medicines. Now is that so hard?
Also, I realize that companies launching authorized versions of their own drugs will lead to the profit margins of the generic industry being slashed but what price range will these generic versions be sold at? Are these medicines going to be cheaper and if so then maybe it was the big pharma companies that ended up doing the consumer a service in the end.

As reported in

The bitterest pill

Posted online: Monday, January 28, 2008 at 2212 hrs

“If we have the feeling that something is rotten in the state, then let’s take the opportunity to find out.” So said Neelie Kroes, the European Commission’s competition commissioner seeking to justify a spectacular raid recently on big pharmaceutical companies. Officials are investigating whether sellers of expensive branded pills conspired together to delay the launch of cheap generic rivals. America’s Federal Trade Commission (FTC) is also looking into it.
Many of Big Pharma’s biggest blockbusters will soon lose their patent protection. Deloitte, a consultancy, estimates that $55 billion of products will go off patent in 2009 and will then face competition. At the same time, pharma bosses are being asked to defend patents in costly legal battles against an increasingly confident and litigious generics industry. As generics firms evolve from mere copycats into innovators in their own right, many such firms led by Israel’s Teva, India’s Ranbaxy and Dr Reddy’s Laboratories are vigorously challenging patents.The best way out for the established drugs industry would be to find lots of clever new blockbusters to replace the ones going off-patent. But as the industry’s sagging share valuations suggest, the new-drugs pipelines at big firms have run dry. So their managers are relying on two controversial new strategies. First, they are settling the lawsuits brought by generics firms, sometimes paying them to delay launching cheap pills. Novartis, a big Swiss firm, recently made a private settlement for Dr Reddy’s to drop a lawsuit in return for the Indian firm delaying the launch of a generic rival to Exelon, its Alzheimer’s remedy. This month it emerged that GlaxoSmithKline (GSK), a big British pharmaceutical firm, has also settled a patent lawsuit with Ranbaxy concerning the generics firm’s launch of a cheap version of Imitrex, GSK’s migraine reliever.
Under American laws designed to encourage generic drugs, which save money for patients, the first generic maker to win regulatory approval for its version of any given branded drug is supposed to enjoy a six-month monopoly. This promised pot of gold was designed to support small generics firms but Big Pharma has found a loophole. It is pre-emptively launching generic versions of its own branded pills, which wipes out those six months of monopoly profits and undermines the economics of generics firms.
Merck, a big American pharmaceuticals firm, is soon expected to launch an authorised generic version of Fosamax, an osteoporosis drug that is due to lose patent protection in February. A recent survey of globalbranded-drugs firms by Cutting Edge Information, a consultancy, found that a third of them had launched authorised generics between 2005 and 2007 and the number will grow to 44% between 2008 and 2010. Pfizerhas set up an in-house division to handle such generics.
The recent steps taken by regulators in America and Europe to investigate Big Pharma looks like good news for generics firms unless, that is, some of them turn out to have been complicit in the alleged dirty tricks. Earlier this month, America’s FTC extended its probe to include generics companies. And during last week’s raid by European investigators, one of the firms targeted was Teva, a generics pioneer. The generics industry is defiant, arguing that it remains the consumer’s best friend despite its settlements with the enemy. Kathleen Jaeger, head of the Generic Pharmaceutical Association, insists that officials must avoid taking action that “sweeps the bad settlements in with the good settlements”. It remains to be seen whether the upstart pillmakers have been playing for time or selling out.


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2 thoughts on “From the medicine cabinet”

  1. similar links:

    1. Mr.Singvi compared the prices of Tarceva as sold by Roche and CIPLA. His contention being that inspite of Roche paying an import duty on its product the price difference between the two products is not significant. CIPLA is not even paying import duty but still sells its version at a price comparable to Roche’s with import duty. Further, the price set by various pharma’s varies over a range (even a small price difference can be significant on a cumulative calculation)
    Roche = Rs. 4800 CIPLA = Rs. 1600 and NATCO = Rs.1000

    2. Generic companies are causing a lot of pharmas a run for their money:
    Wyeth sees lower 2008 profit, hurt by generics
    “This company is already spending below many of its competitors” on research as a percentage of sales, said Leerink Swann analyst Seamus Fernandez, expressing concern about the trend.”
    So, while the tussle between the company and the generic causes fluctuation in prices of drugs, the pharma companies would reduce their R&D budgets to compensate for lost profits.

    3. Even when a drug maker is given a Compulsory Licenses there would be some form of export/import duties – which would add to the net price of the drug being imported into the country? (unless they have manufacturing capabilities)

    4. Then => there are instances of Pharmaceuticals and Generics coming to compromise deals.

    to me it looks like running in circles.

    Patent->monopoly and high price->generic enters/contemplates generic product->fluctuations in prices->talks of settlement between the parties -> back to monopolies

    how are any of these things helping as instruments to promote public health or a mechanism to ensure affordable prices for drugs?

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