Indian Gov't Uses Special Powers To Slash Cancer Drug Price By 97%

suraj.sun sends this quote from the Times of India: "In a landmark decision that could set a precedent on how life-saving drugs under patents can be made affordable, the government has allowed a domestic company, Natco Pharma, to manufacture a copycat version of Bayer's patented anti-cancer drug, Nexavar, bringing down its price by 97%. In the first-ever case of compulsory licensing approval, the Indian Patent Office on Monday cleared the application of Hyderabad's Natco Pharma to sell generic drug Nexavar, used for renal and liver cancer, at Rs 8,880 (around $175) for a 120-capsule pack for a month's therapy. Bayer offers it for over Rs 2.8 lakh (roughly $5,500) per 120 capsules. The order provides hope for patients who cannot afford these drugs. The approval paves the way for the launch of Natco's drug in the market, a company official told TOI, adding that it will pay a 6% royalty on net sales every quarter to Bayer."

Comments

Just keep in mind the tradeoff

[elrous0]

I know I'm going to burn karma for saying this (wouldn't be the first time), but do keep in mind that the R&D costs for developing these drugs is paid from the profits these companies make. Now, maybe governments themselves should be doing the development instead of for-profit companies, maybe the drug company profits are too high, and maybe Bayer were dicks to charge that much for a drug in a poor country. But if you're going to keep the system as-is, you had think long and hard before you just start ripping patents left-and-right. It may be politically popular, but you can't have your cake and eat it too.

If you're going to say "X company doesn't get to patent its drugs" you need to come up with a replacement for the money that X company put into its research and development. If the government wants to serve its people this way, that's fine, but they also have an obligation to pony up the money for their own R&D program (and not one that just does knockoffs of existing drugs). Because without that profit motive from those patents, the drug companies sure aren't going to be developing anything new.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

1. Most drug company expenditure is on marketing;
2. Most drug research is academic;
3. They can settle for less profit;
4. If they won't settle for less profit, someone else will be prepared to take their position in the market.

Problems solved.

Re:Just keep in mind the tradeoff

[elrous0]

Well apparently the academic institutions, small biotechnology companies, and NIH are motivated by profit too, or they would be putting the drugs into the public domain, wouldn't they?

Re:Just keep in mind the tradeoff

[tonywong]

If you read the article it does give the circumstances of the ruling. I would be inclined to agree with you on principle, but from the article:

Economist and intellectual property expert James Love said, "The Bayer price of Rs 34,11,898 per year ($69,000) is more than 41 times the projected average per capita income for India in 2012, shattering any measure of affordability. Bayer tried to justify its high price by making claims of high R&D costs, but refused to provide any details of its actual outlays on the research for Sorafenib, a cancer drug that was partly subsidized by the US Orphan Drug tax credit, and jointly developed with Onyx Pharmaceuticals. Bayer has made billions from Sorafenib, and made little effort to sell the product in India where its price is far beyond the means of all but a few persons."

This is in direct contravention to the WTO TRIPS agreement:

Under Section 84, a compulsory licence to manufacture a drug can be issued after three years of the grant of patent on the product, which is not available at an affordable price. Under the World Trade Organisation TRIPS Agreement, compulsory licences are legally-recognized means to overcome barriers in accessing affordable medicines. This is the first time in the history of the Indian Patents Act, 1970, that the provision under Section 84 has been invoked.

Re:Just keep in mind the tradeoff

[Microlith]

1. Advertising actually save money because it encourages more sales.

Thus, advertising gives you cancer. QED.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

1. Yes, because advertising for cancer drugs increases demand. In what universe?

2. And at a pittance compared to government funding. Plus they demand tax cuts for doing it, so...net loss.

3. Because that kind of comparison is valid, even if it were true.

4. So let's see, Bayer is going to pursue profits from medicine by sitting on their hands instead of taking a lesser cut? At what price? The lives of human beings? You're not defending them, you're indicting them for gross indifference manslaughter. You've made them criminals.

Re:Just keep in mind the tradeoff

[StandardDeviant]

The public drug companies are required to file financial reports with the SEC, which generally detail their budgets (at least to a sufficient level of granularity for this discussion). EDGAR is one avenue of getting at them (10-Q for example for quarterly reporting). But yeah, he's not lying, R&D expenditures are not the majority line item for most large pharmaceutical companies. If anything, Big Pharma has been on the whole aggressively cutting R&D over the past few years.

Just for one concrete example, here's Pfizer's 10-Q from late last year:
http://yahoo.brand.edgar-online.com/DisplayFiling.aspx?TabIndex=2&FilingID=8236559&companyid=5709&ppu=%252fDefault.aspx%253fcompanyid%253d5709%2526amp%253bformtypeID%253d13

Click into "Financial Statements" there. I think the given figures are in units of "millions," so they spent about $2.1Bn on R&D during the given quarter, compared to $4.6Bn for "Selling, informational and administrative expenses" (which probably includes marketing) and $3.7Bn for "Cost of sales" (not sure, might be raw materials and manufacturing?).

Re:Just keep in mind the tradeoff

[Anonymous Coward]

1.) Most R&D medicine is taken by volunteers who don't get paid for being part of the clinical trials.

2.) Most of the scientists and others conducting the clinical trials don't get paid

3.) The government pays for a ton of R&D and contributes a lot to R&D.

4.) Pharmaceutical corporations don't get independently audited to ensure that their government established monopoly prices are justified.

5.) Advancements in medicine will occur, and have occurred, perfectly fine without patents. There is absolutely no evidence, whatsoever, that patents facilitate drug advancements. Most of the evidence suggests otherwise.

http://levine.sscnet.ucla.edu/general/intellectual/against.htm

the pharmaceutical cartel gets all the free work of others and it gets to charge monopoly prices for it and keep the profits to itself.

Re:Just keep in mind the tradeoff

[Wain13001]

Popularity of a product doesn't lower the price...it results in a raised price or more production which lowers the cost for the company, but it doesn't necessarily lower the price.

Viagra is currently $8-12 dollars per pill *with insurance* under most plans in the US...and you only get 8 or 9 pills (forget how many) for what is supposed to be a 3 month supply.

Only when there is a legal generic in the US will that price drop (mass production/increased availability lowers price). Did the advertising impact the cost? yes it did, it made everyone on earth aware of the product's availability which greatly increased the potential market value, which in turn means the price the market is willing to bear in fact can often go *up*...not saying it did with V or not, just saying that it's not as simple as you're making it.

Re:Just keep in mind the tradeoff

[glop]

If you compare a country where advertisement for drugs is illegal, you can see that:
- new drugs are used just as well (as long as the doctors and patients see the value proposition)
- drugs are actually cheaper in countries where said advertisement is illegal (and we are talking expensive countries here, where most stuff is selling at prices similar to those of the US except for know ripoffs such as Verizon cell phone service or internet).

In such countries the doctors are usually determining what your ailments are and offering what they think are the best corresponding drugs. So drug companies just have to convince these experts that you need the drugs and they will be used. That seems quite reasonable, efficient and reasonably respectful of individual freedom, although there is some abuse (drug companies sometimes offer free seminars in tropical islands for instance).

In the US, advertising to end users also increases some risks that people will ask for drugs they don't really need. When you see the list of side effects, it's easy how to see how this could be quite dangerous and 'give cancer' as was said...

Example: Lovaza is refined Omega3 with some testing done (basically filtered fish oil...). They have ads on TV all the time and the drug is very expensive. You can buy Omega3 for much less from all kinds of supplement manufacturers. That seems to contradict your theory.

Re:Just keep in mind the tradeoff

[Xtravar]

Yeah, his example only works on things like Viagra, which are completely optional.

Re:Just keep in mind the tradeoff

[PraiseBob]

3. They don't make that much profit. I don't see Bayer in the top 100.
You must've missed Pfizer at 31, and Johnson & Johnson at 40. Those two make more than Target, Kraft Foods, Goldman Sachs, Morgan Stanley, Dow Chemical, and obviously most other companies on the planet.

They can take a 97% decrease in price and still remain profitable? What other industry can possibly have that level of markup and keep customers? It is only possible because of patent restrictions, and a "captive market" where people die or have horrible illnesses when they don't take your product.

Re:Just keep in mind the tradeoff

[zill]

Here's Bayer's 2011 annual report.

Last year they spent 17.975 billion euros on manufacturing, and 2.932 billion on R&D. "Selling expenses", which I assume are mostly advertising costs, was 8.958 billion. Note though that these data also include Bayer's GM food and material science divisions. Medical R&D only accounts for 66.4% of their total R&D expenses. I'm too lazy to tabulate how much of their manufacturing and advertising costs are from the medicinal division.

No offense, but all I had to do was type in bayer.com and click on the "annual report" link on their front page. All that probably took less time than typing "can anyone show me the stats".

Re:Just keep in mind the tradeoff

[bws111]

Guess what category 'educating doctors' falls under? That's right, marketing. How do they educate doctors? By buying ads, and sending reps to talk to the doctors. How does a busy doctor have time to talk to a rep? The rep buys him lunch. How does the rep convince the doctor that his meds are right for the doctor's patients? By giving him samples. All of the above costs money (lots of it) and it all comes out of the marketing budget.

As for consumer level advertising: you are assuming that everyone for whom a medicine is appropriate will go to the doctor and tell them about the problem, even if they don't know anything can be done about it. This is nonsense. Before Viagra (and its widespread advertsing), how many men went to their doctor and complained about ED? Almost none, first because it was embarassing, and second because every man knew there was nothing that could be done anyway. Do people with joint pain go to the doctor, or do they just assume it is part of aging and put up with it (or worse, self medicate)? Is constantly feeling sad normal, or is there something wrong that can be fixed?

Re:Just keep in mind the tradeoff

[dkleinsc]

No amount of marketing can change the number of people who need a drug. That is fixed.

Actually, it isn't. For instance, there are endless TV ads describing a list of symptoms and instructing the viewers to diagnose themselves with a disorder X and ask their doctor for a prescription for treatment Y. This may motivate somebody to seek out medical aid for a real problem, but what the drug companies are really hoping for is that a layperson will be convinced they have X (even if their regular doctor tells them they don't) and shop around until they get a prescription for Y. And since it's a treatment rather than a cure, this same person will get treated with Y for years regardless of whether they really need it, so long as the side effects aren't too bad.

This is part of what's wrong with for-profit health care: It's profitable to create demand that's not only useless but actually counterproductive and sometimes dangerous.

Re:Just keep in mind the tradeoff

[Miamicanes]

> Bayer would just avoid India completely, and not release their patented drugs until 10-20 years later

To a large part, this tactic is why most countries grant compulsory licensing in at least some instances -- to make it impossible for a company to metaphorically "take its ball and go home". Most countries besides the US take the attitude, "If the IP owner isn't interested in selling it here, and won't allow anybody else to sell it here by granting them a license under reasonable terms, we aren't going to stand in the way of somebody else independently taking the initiative to do an end run around them, make it themselves and sell it here anyway." India just happens to be notorious (within the pharmaceutical industry) for doing it openly, loudly, and proudly when lifesaving drugs are priced out of reach for most Indians by rent-seeking drug companies.

India is also somewhat unique in that it doesn't grant or recognize patents for "method of use" or "molecules", only manufacturing processes. So when finasteride was repurposed in lower-dose form as Propecia for baldness, it wasn't eligible for a new patent in India. That's why Propecia is patented and expensive in the US, but costs next to nothing when purchased from India. Likewise, when Indian companies came up with new ways to manufacture atomoxetine (the ingredient in Strattera), they were able to get their own patents and begin selling it, even though the original patent for Strattera was still in effect and valid in India. In the US, you can combine two old drugs in new doses into a new drug, and get it patented for another 17 years. In India, you'd be laughed at (unless you somehow came up with an innovative new manufacturing process that did something differently than just making the two original drugs by their original processes, mixing them together, and pressing them into tablets containing both).

Re:Just keep in mind the tradeoff

[Hatta]

Guess what category 'educating doctors' falls under? That's right, marketing.

Not a chance. Education and marketing are mutually exclusive.

How do they educate doctors? By buying ads, and sending reps to talk to the doctors

That's not education.

How does a busy doctor have time to talk to a rep? The rep buys him lunch.

Also not education.

How does the rep convince the doctor that his meds are right for the doctor's patients? By giving him samples.

Still not education.

Re:Just keep in mind the tradeoff

[TubeSteak]

As for consumer level advertising: you are assuming that everyone for whom a medicine is appropriate will go to the doctor and tell them about the problem, even if they don't know anything can be done about it. This is nonsense.

http://en.wikipedia.org/wiki/Direct-to-consumer_advertising
5 of the top 10 Big Pharma companies are from Europe.
The USA and New Zealand are the only two western countries that have legalized direct to consumer (DTC) advertising of pharmaceuticals

You should read more about ethnocentrism and try to reconsider some of your views.
Especially light of the fact that Europe has cheaper health care costs and better outcomes than the USA and its perscription happy marketplace.

Re:Just keep in mind the tradeoff

[P-niiice]

Since when does less profit = loss? Less profit (even a little less) and putting the money to good use elsewhere would be the cure for so many of our problems today, it's uncanny.

Domestic use only, I presume

[OldGunner]

The issue with compulsory licensing would get very muddy if Natco Pharma is allowed to export the medication outside of India's borders.

there's a reason they're overpricing this drug

[ruebarb]

average life expectancy according to an article on the BBC is extended by only 3 months -

http://news.bbc.co.uk/2/hi/health/8367614.stm

with results like that, you have to overcharge like hell to get your money cause the patients will only be around three more months than usual if they weren't taking the drug -

but if you're desperate and dying anyways, why not blow 2 months salary on a 120 day supply, right? And yet, I have no sympathy for the drug companies - I wonder why....could it be their way of using lawsuits to keep generics off the market for a few extra years while they re-release a "timed" version of their product?

Drug companies are vultures - and I'd love to see more university/public funding of this research for the public interest and less for the profit motive - especially when lives are at stake

That argument is empirically false in this case.

[langelgjm]

That argument does not work in this situation. Bayer had priced the drug so high in India that it was clear they had no interest in serving the Indian market. I'm on a listserv for this type of information, and someone close to the issue noted that "Last year Bayer sold 493 boxes of 120 tabs of Sorafenib in India. That was enough for about 49 people, in a country with a population of 1,210,193,422."

Any money Bayer was making in India off this drug was a rounding error compared to the lucrative North American and European markets. Furthermore, Bayer argued to the Indian court that the Indian population did have access to the drug through an infringing version produced by Cipla, while at the same time Bayer was suing Cipla for patent infringement, trying to get their product off the market.

Given the 6% royalty rate that NATCO has to pay to Bayer, I wouldn't be suprised if Bayer ends up making more money with the compulsory license than before.

Re:Protections

[betterunixthanunix]

Realistically what are Bayer's options, how do you combat something like this?

Buy off some Indian politicians and get that government back in-line: get that government to stop working for the benefit of its citizens, and to start working for the benefit of foreign corporations.

Nonsense! Capital will flee

[unassimilatible]

If they won't settle for less profit, someone else will be prepared to take their position in the market.

Who is "they"? Spoken like a guy who doesn't own stocks. Scare investment capital from drug companies, and it won't go elsewhere in the market - it will go to Exxon and Apple! Buh-bye, private R&D!

Government will never give out free gas and iPhones, so my investment dollars will go there.