Cipla has become an NPPA magnet given the number of times it has run into trouble with the latter which has yet again issued notices on alleged overpricing by Cipla of two drugs Salbutamol (prescribed for asthma) and Norfloxacin (prescribed for infections). According to the Economic Times, based on a filing by Cipla at the Bombay Stock Exchange, the company has received two demand notices, one for Rs 64.39 crore, which includes Rs 43.29 crore, allegedly overcharged, and interest of Rs 21.10 crore up to June 2009 in respect of Salbutamol; and the other for Rs 2.19 crore comprising an allegedly overcharged amount of Rs 1.45 crore for the period October 2005 to March 2006 and an interest component of Rs 74 lakh for the drug Norfloxacin.
The company’s response has been to refute the allegation citing a Supreme Court ruling according to which the NPPA’s claim is “untenable and not sustainable”. Until such time the details of the ruling and the notices are known, it would be imprudent to comment on the issue. But that said, this is not the first time Cipla has locked horns with NPPA; in 2003, a fine of Rs. 180.37 crore was slapped on the company for alleged overpricing of five drugs, but the notice was held invalid by the Allahabad High Court and subsequently, this order of the High Court was challenged in the Supreme Court by NPPA. Again in April 2007, a demand notice for Rs.748.27 crore was sent. So it is clear that there is a certain pattern to these things…
In a thought-provoking post earlier, Mr.Basheer had drawn attention to the fact of Cipla charging Indian patients 150% more than its South African consumers and yet claiming to speak for public interest on certain occasions…In fact, in an earlier post, I had referred to a statement made by Dr.Yusuf Hamied, Chairman of Cipla, who was of the opinion that “only generics-makers like his firm provide genuine competition to Big Pharma, which he insists should have no patent rights in poor countries.” (More than the post, the comments to the post make for an interesting read thanks to some brilliant points raised by a well-wisher of SpicyIP and a dear friend of mine).
I am not sure how does one reconcile Cipla’s professed claims of representing public interest and notices of overpricing such as these nor am I sure if one can draw a conclusion which is generally applicable to all generic manufacturers, but the fact remains that entities like Ranbaxy and Cipla have often found themselves falling within the NPPA’s scanner. Here I would like to reproduce my thoughts which I had shared with Mr.Basheer during the Roche-Cipla imbroglio where “public interest” was sought to be factored as part of the analysis for grant of temporary injunctions.
Before I proceed, I disclaim harbouring prejudices against any entity or group/class of entities; my sole intention is to convey that when a particular person/entity puts forth a particular proposition, in public or private, he/it must ensure that he/it has the moral authority to act as proponent of such proposition. With specific regard to the issue on hand, what this means is that purveyors of public interest must ensure that their hands are clean before they don the mantles of self-proclaimed ombudsmen, more so when the presence of a vested commercial interest cannot be denied in entirety. What has this got to do with the generics v. Big Pharma debate or drug (over)pricing? Let me explain myself better…
Almost a year ago I had a free-wheeling discussion on pricing of drugs with a brilliant colleague and friend of mine who (un)fortunately has first-hand knowledge of how things work on the ground and who could not help being cynical at the thought of generic manufacturers taking a high moral ground on the issue of public interest. In the course of the discussion, both of us agreed that ideally the stage of the disease and the costs already incurred by the patient at the stage when a drug is prescribed, too must be factored when Courts consider the price of the drug. To support this, he cited a live example of a person with chronic renal problems who needed a transplant.
Apparently, the transplant in itself has become an established procedure with high success rates, but the actual problem starts after the transplant because the body starts acting against itself, to counter which immunosuppressants are given. These have to be continued for close to 12-13 years after the surgery (which in most cases is the period the patient lives after the operation; in other words, he has to take this medication for the rest of his life). It is not unusual to find that the patient has stopped taking such medication after 5-6 years, but usually he survives. Some of the transplant patients do not respond favourably and their bodies slowly work against themselves and at some point, the immune system declares an all out war against every organ and the whole body is on fire; this is called septic shock.
Only a shot of a particular drug (my memory fails me here and my apologies to the readers for the same) which could either save the patient or could be fatal, is the way out. At this point the doctor says, “Look, there’s an injection which might work and is our only hope; it costs Rs.1, 75, 000 (this is the true figure), do you want to go for it?” How does one answer this question? Depends on what you value more, money or the patient. What if the patient is someone very close, but you cannot afford it though the doctor is actually quoting the price of the generic version and not a branded version!
If the person is resourceful and lucky, his best option is to run straight to the manufacturer and not the retailer where he can buy the injection at probably 60-70% of the original cost of the generic drug. This means that even at such prices, the manufacturer makes pretty decent profit. Here’s where one is tempted to ask, where’s the public interest factor here which generic manufacturers claim to fight for?
My friend reflected that all said and done, the cruel irony today is that some manufacturers have become self-styled protectors of “public interest” making a total mockery of the concept and intent behind the law- which, I personally believe, is to ensure that at the most crucial and vulnerable juncture in the patient’s and/or his relative’s life, when they have to choose between life and death (rather dispensability or otherwise of the patient in some cases), they are not fleeced, literally and figuratively, to death.
The point is when fixing what amounts to a reasonable price of the drug, factors such as the costs incurred by the patient when he has to opt for the drug have to be taken into account. In certain cases, the cost of the transplant and follow-up medication are to be considered, but Courts, as far as I know, restrict themselves to a relativistic approach where only the price of the generic drug and the branded version are compared. Such an approach suffers from a huge factual vacuum for the Court has a truncated, if I may use Jinnah’s infamous phrase, “moth-eaten” version of the picture.
The point to be borne in the big picture is that pharmaceutical companies are certainly not expected to run businesses at the expense of hurting themselves nor are we naïve enough to forget that they do have profits to make, which is perfectly fine. However, not every kind of business can be treated the same way nor are the standards of behaviour the same; such being the case, where an issue as critical and as sensitive as public health is the very field of enterprise, it is not wrong to expect and set higher benchmarks for behaviour, more importantly, which are equally applicable to generic manufacturers and so-called “Big Pharma”…..
On the issue of overpricing by manufacturers, we would like to hear from some of our better informed and articulate readers who have enlightened us time and again with their insights. Also, not being a person from the health sciences background, if I have erred on the technical aspects or the science, I shall be delighted to stand corrected.
