Prashant bemoans the fact that we had witnessed more “balanced” debates during the time of the Satwant Committee report. Unless age is getting the better of me and taking its toll on the grey cells meant to retain information, I didn’t see much of a debate during the Satwant Reddy time…at least not any debates worth mentioning….. and certainly no debates that are anywhere near close to the level of sophistication that Prashant himself has offered in his thought provoking post.
What I recall are widely rehashed arguments from both camps (innovators and generics) that had already been done to death several times in several earlier contexts. In fact, the Satwant Reddy report itself contains many of these truisms that are waiting to be busted with simple empirical data. But I will come back to this badly researched and drafted report in a later post.
For the moment, let me focus on the key thesis of my post, namely that of “context”. Where is the demand for data exclusivity coming from at this stage? Are any of the Indian companies advocating for this?
Certainly not! This is a European demand….made for and in the interests of European companies. However, much to their credit, the EU has not faked any false interest in the future of Indian companies this time and tantalized us with the magical notion that a simple flick of a legal pen would convert Indian companies to innovation powerhouses! On the contrary, they appear to implicitly acknowledge that the future of innovation would continue to vest with European companies… and are seeking India’s active co-operation to help them retain their supremacy in this regard. Needless to mention, they are also aware of the fact that once we help them, the benefits would automatically flow to US, Japan and all other WTO members including the troubled Arab states…for this is what the TRIPS concept of “most favoured nation” is all about and we have to mandatorily grant data exclusivity to all countries. Its a win win game for all…..but what about India? Does it also win?
Woeful Drug Regulatory Oversight:
Prashant’s post helps us address this to some extent. He triggers the discussion by rightly pointing to the pathetic state of drug regulation in India….and helps focus our attention on one of the most under debated areas in Indian public health. I had lamented this lack of attention to regulatory oversight in an earlier post.
Our Drugs and Cosmetics Act (DCA) mandates that any drug that has already been approved by a foreign regulator can be introduced in the Indian market, only after “bridging trials” have confirmed that the drug is likely to work reasonably well (in terms of efficacy and lack of toxicity) in India too. And that there is nothing special in the Indian constitution that would warrant the opposite conclusion.
Such bridging trials can be derogated from only under exceptional circumstances, where there are good reasons to suggest that even in the absence of such trial data, the drug is safe and effective for Indians.
(For those not in the know, bridging trials are trials that are done on around 100 volunteers or so to demonstrate that there are no special reasons to suspect that a drug already approved abroad wouldn’t work well in an Indian body ……these trials are not as intensive as regular clinical trials and can at best, be seen as an abridged version of phase III of clinical trials.)
Most industry insiders that I have spoken with confirm what Prashant rues about and admits that there is considerable regulatory laxity and abysmal compliance of norms by both generics and foreign multinationals….with many of them effectively circumventing the bridging trial requirements. However, it takes two hands to clap and one cannot blame the companies by themselves. Our drug regulator does not offer much in terms of guidance on this count….it does not stipulate detailed norms pertaining to the kinds of patient populations to be recruited for such trials, the types of protocols to be followed etc. In effect, a sub-optimal regulatory radar encourages pharmaceutical companies to avoid meaningful trials and effectively compromises our state of public health.
So our first priority really ought to be towards restructuring the regulatory framework and making it more credible. And not worrying about data exclusivity incentives!
From Rhetoric to Empirical Data:
Assuming we do formulate and enforce regulatory norms in a meaningful manner (including by devising trial protocols that represent Indian diversity of all kinds, including race, ethnicity, age, gender and even socio-economic status), what costs are we really speaking about? Unless we know this, there is no point discussing incentives and assuming that a western style data exclusivity model is the right answer.
A rough estimate suggested by an industry insider is that, given the prevalence of low cost and effective CRO’s in India, meaningful bridging trials are likely to cost anywhere between 50,000 to 2 crores. Assuming this to be true, how much of an incentive do firms really need to conduct such trials in India. A 6 month exclusivty? One year? Or can we dispense with legal protection altogether and simply ask firms to rely on lead times i.e. the time difference between their approval (after bridging trials) and those of their competitors (who have to merely demonstrate “bio-equivalence” and are saved the effort of generating any data whatsoever). Assuming the costs of data generation are not that significant, would pharma firms worry about free riders, even in the absence of any protection or market advantage?
And if some form of legal incentive is necessary, does an exclusivity regime necessarily constitute the best option? What about a compensatory liability (or compulsory licensing) model, where there is no exclusivity, but the originator company has the right to be compensated by any follow on market entrant. In other words, assuming the originator spends 2 crores to generate bridging trial data, that cost is to be shared by all generic companies that wish to enter the market. This is a model that I am personally fond of and had advocated in an earlier paper.
These are empirical questions that need to be investigated and answered prior to jumping to the conclusion that western style data exclusivity is the best panacea to our problems. Indeed, our empirical investigations ought to begin with an examination of those cases where the drugs had been approved in India, but only after some “real” regulatory compliance costs had been incurred.
Regulatory “Costs” and “Context”:
All of this however leaves us with a more pertinent question that lies at the heart of the debate, provided we are sensitive to “context”: what about the costs of data generation in the US and EU? Should India pay for this? For the Indian approval does rely (indirectly) on this data as well. And if Di Masi et al’s estimates are to believed, this process of data generation through a full fledged clinical trial process in the US accounts for the most significant portion of an intensively expensive innovation pipeline.
More specifically, the Di Masi study claims that of the total 802 US million that is slated to be the average cost associated with drug discovery and development, the costs associated with only the “clinical” trial phase amounts to US$ 467 million.
Had it not been for this foreign approval, the Indian regulator would surely have insisted on full fledged clinical trials in India. And although the regulator may not be privy to the data itself, the very fact that a regulator such as the US FDA has approved the drug is good enough for regulatory “reliance” in India.
Should India pay for this cost of data generation in the West? And if we continued to free ride on these costs (in much the same way that most other developed countries did in the pre-TRIPS era), would we be sounding the death knell of these fine engines of innovation that we now call Big Pharma? I doubt it.
Our national interest will likely dictate that we need to only pay for the cost of additional data generation for India (i.e. the bridging trials). I say “might”, since we are yet to undertake any empirical studies to determine whether the costs of data generation are significant enough to warrant legal protection against free riders. And it is “national” interest that ought to guide us here…..and not some abstract and a-contextual “balancing” concern.
So, is the EU demand for data exclusivity really a nuanced one and does it take account of Indian national interest as articulated above? Even if I were to fall several notches short of the man on the clapham omnibus (someone that whimsical common law judges crowned with the epithet of “reasonable” many decades ago), I’d say no. The EU simply wants that their cost of data generation in the EU or US be compensated for by market exclusivities in India. I’m also guessing that their companies are not overly concerned with improving drug regulatory norms in India through this FTA: for that would only increase their costs of compliance in a country that is anyway seen as ripping them off.
Given this contextual background, I’d argue that it is a national priority for all of us to stand together in opposing this demand for data exclusivity as articulated by the EU. However, we need to initiate the process of closely examining our own regulatory structures and ramping up our norms. And we can then begin discussing incentive structures within that specific context.
In order to ward off the EU clarion call at this moment (I understand that the EU is keen to have the FTA signed within the next couple of months), my recommendation to the Indian government would be to inform the EU that India is keen on making the following changes to its legal/regulatory regime:
1. Ramping up its regulatory norms and insisting on adequate bridging trials in India prior to the approval of drugs that have already been approved in foreign countries.
2. Assuming that the costs of such bridging trials are significant, India will take steps towards granting some legal protection against free riders. However, such costs would only be protected through a “compensatory” mechanism and not through “data exclusivity”. The recoverable costs will only include the specific “bridging trial” costs incurred in India, and not any cost incurred for the purpose of procuring approval from the EU or any other country abroad.
3. In order to be entitled to compensation from follow on market entrants, firms have to reveal their detailed (and audited) costs to the drug regulator or other government agency. Data generated through bridging trials would be mandatorily published and accessible by any member of the public.
My bet is that once this proposal comes on the table, the clamour for data exclusivity, as articulated in the FTA context, is likely to die a natural death. I’m no gifted octagonal seer…… but to the extent that this debate is “contextualised”, and one sees the EU demand as one triggered by the desire to have India compensate a foreign regulatory cost, any proposal to strengthen regulatory compliance in India and compensate only to the extent of this cost, will likely dampen the fires that are stoking the current data exclusivity embers……
And once we have this EU pressure off our backs, we can begin to seriously think through our regulatory framework and the kind of incentives that will help procure the desired compliance levels, whilst at the same time, yielding drugs that are largely affordable to the vast majority of Indian consumers.