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Medicine Government The Almighty Buck Science

Indian Gov't Uses Special Powers To Slash Cancer Drug Price By 97% 556

Posted by Soulskill
from the opening-a-can-of-worms dept.
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."
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Indian Gov't Uses Special Powers To Slash Cancer Drug Price By 97%

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  • Somewhat wrong. Research and development (R&D) is a relatively small part of the budgets of the big drug companies. Only a handful of truly important drugs have been brought to market in recent years, and they were mostly based on taxpayer-funded research at academic institutions, small biotechnology companies, or the National Institutes of Health (NIH). It sounds like you read the conservative cliff notes on the issue.
  • by Anonymous Coward on Tuesday March 13, 2012 @02:37PM (#39341787)

    Wow, so they make you pay almost 6 grand for a 3 month supply of a pill that can't actually keep you alive long enough to take all 120?

  • by tonywong (96839) on Tuesday March 13, 2012 @02:38PM (#39341807) Homepage
    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.
  • by punker (320575) on Tuesday March 13, 2012 @02:39PM (#39341823)

    While it's true that the big pharmaceutical companies don't develop most of their own drugs, they do pay for the R&D done by the small firms. More importantly though, they tend to be what takes the drugs out of the lab and into a usable form. They primarily handle the drug safety (i.e. drug trials), manuafacturing, and marketing (because it's no good if the doctors don't know about it). They're just later in the chain, but they have done their work to create the drugs. If the Indian people/government paid for the work done prior to it being acquired by Bayer, then maybe you can justify setting the price so low for the work they did. But if not, it's just a straight ripoff. They better hope they know everything about the drug, because Bayer certainly won't be looking to help them.

  • Re:Protections (Score:5, Informative)

    by betterunixthanunix (980855) on Tuesday March 13, 2012 @02:43PM (#39341885)

    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.

  • by sycodon (149926) on Tuesday March 13, 2012 @02:45PM (#39341913)

    I have a relative with a PhD working at a drug company doing drug development. We have had many conversations about her work and how it may eventually end up on the market. Her single department has a budget of over a millions dollars a year just for the people and facilities and supplies (yes, you have to buy all the shit to do the experiments with). They have about 20 different departments focusing on different kinds of drugs.

    Now add on top of that all the trials which are well known to require upwards of a hundred million to conduct, review, and have certified by the feds.

    So, your assertion that R&D for a new drug is a small part of budgets is misleading.

    But, I will say that the reformulating of a drug and making small changes is complete crap and should be disallowed.

  • by Anonymous Coward on Tuesday March 13, 2012 @02:51PM (#39342013)

    There you go:

    http://www.sciencedaily.com/releases/2008/01/080105140107.htm

    If you don't like it, demand they open their books and settle the question once and for all. Or ask the blondes going into doctors offices how much they make.

  • by nedlohs (1335013) on Tuesday March 13, 2012 @02:56PM (#39342105)

    http://www.sciencedaily.com/releases/2008/01/080105140107.htm [sciencedaily.com]

    of course 56% of those marketing dollars are "samples" according to http://www.medicine.mcgill.ca/MJM/issues/v08n01/orig_articles/barfett.pdf [mcgill.ca]. Which end up being drugs for uninsured poor people at the doctor's discretion, when I was uninsured and jobless in the US the doctor gave me samples of some antibiotics, for example.
     

  • by StandardDeviant (122674) on Tuesday March 13, 2012 @02:58PM (#39342137) Homepage Journal

    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 [edgar-online.com]

    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?).

  • by Anonymous Coward on Tuesday March 13, 2012 @03:03PM (#39342199)

    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.

  • by PraiseBob (1923958) on Tuesday March 13, 2012 @03:06PM (#39342249)
    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.
  • No amount of marketing can change the number of people who need a drug. That is fixed.

    Correct, Viagra is an exception to the rule (along with things like eyelash extending drugs, acne suppression drugs and other vanity shit) as you don't need it to survive. Savings only applies for drugs you don't need.

    Pharma is a lot like digital media in that production and distribution is dirt cheap, and all the costs are in development. You can pretty much look at any pill in a pharmacy and they all cost peanuts to actually produce, like software it's just a matter of pricing it so that the expected sales pay off. And like digital media if there are people who want it and can't afford it, there's a very good chance that the vendor is screwing themselves by pricing too high.

  • by zill (1690130) on Tuesday March 13, 2012 @03:18PM (#39342445)
    Here's Bayer's 2011 annual report. [bayer.com]

    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".
  • by bws111 (1216812) on Tuesday March 13, 2012 @03:20PM (#39342467)

    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?

  • by poity (465672) on Tuesday March 13, 2012 @03:25PM (#39342537)

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

    isn't that an argument AGAINST the initial (implied) claim that Bayer spends more on ads than research? It doesn't seem like Bayer would spend money on ads over research when obviously as you've pointed out cancer treatment demand doesn't increase just due to more awareness. So that's more of a rebuttal to the GP anon than to cpu5602

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

    which government would fund this, India? If the Indian government had funded the research in its totality, I wonder how it or the tax paying population would respond to another country taking the research without compensation. The solution then is a global fund, but who pays how much?

    As for points 3 and 4, it would seem that in a world where research is given away, the countries or companies which invest in their production capability will always win over those which invest their research capability. Just build your factories and wait for the other guys to publish the formulas.

  • by NormalVisual (565491) on Tuesday March 13, 2012 @03:29PM (#39342593)
    If you are capable of such research, you ARE a doctor.

    No, not really. You're assuming that the doctors are really researching every new thing the drug companies push on them, and that you have to have an M.D. to read and understand the available information. I recently had the doctor prescribe two rather expensive (and new) medications that also weren't covered under my insurance. I did a bit of research, found a couple of much less expensive alternatives, and spoke to him about it. He agreed that there likely would be no problem with the substitutions and wrote some new scripts, and after having been on the different meds for a little while, he says that the cheaper meds have done just as well as he would have expected the others to do. So, a little research by this non-M.D. is saving me a little over $250/month.
  • by Miamicanes (730264) on Tuesday March 13, 2012 @03:32PM (#39342643)

    > 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:Protections (Score:2, Informative)

    by wmelnick (411371) on Tuesday March 13, 2012 @03:43PM (#39342815)
    Since India is a signatory to the Berne convention, they could be sued in an international court, or even in a national court in Germany (I think Bayer is from Germany) and then the Indian government and/or the generic house could owe Bayer ALL of the money they would have made on every pill sold by this generic house plus potentially other damages.
  • by Canonical Coward (2057190) on Tuesday March 13, 2012 @04:02PM (#39343115)

    But consumers are not meant to have any say over their prescriptions, and by that I mean that the choice of what prescription you're walking out of the doctor's office with at the end of the day should still be the doctor's and not yours (obviously you should still have the right to refuse and the right to seek a second opinion, of course).

    If that is what your doctor is telling you, then you need to find a new doctor IMMEDIATELY. You've been hoodwinked by a power-tripper, or someone who is scared that you'll find out he's not as current or all-powerful as he's pretending to be.

    Every good doctor I've seen in the last decade has made it clear that I am an active participant in the process and what I need and want is an important part of the decision making process.I am not simply a robot showing up to be thumped and prodded and then swallow whatever pill he tells me to.

    And every BAD doctor I've been to in the past decade has told me exactly the opposite. I had the "pleasure" of a PA yelling at me over the phone that she was the one who knew best about what I needed to do and that if I did exactly what she told me to do that my life would be a hundred percent better. Yes, that's what she told me, and guess what? She lied. That's the same PA who informed me of one set of test results by having a medical equipment company salesman call me to find out when he could deliver the stuff the PA had prescribed. "Yeah, you got a bad case of X", the salesman told me.

    The "consumer" is called a "patient", and the patient is part of the process. Telling them they have no business being involved is just patently insane.

  • by TubeSteak (669689) on Tuesday March 13, 2012 @04:16PM (#39343327) Journal

    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 [wikipedia.org]
    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 [wikipedia.org] 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.

  • by punker (320575) on Tuesday March 13, 2012 @04:17PM (#39343335)

    Where are you coming up with this? Do you know any drug reps? Are you in the business? Getting white papers, case studies, etc to doctors is probably 70% of what drug reps do (I know more than a few of them). The other 30% is price negotiation. But all of that is drug marketing.
    And this is all just a matter of accounting, because the point was "Major pharmaceutical companies spend more on marketing than R&D". The accountants put these costs under marketing.

  • by next_ghost (1868792) on Tuesday March 13, 2012 @04:23PM (#39343427)
    And it's still not education. Actually, in places where medical care is run by the state, we call this corruption.
  • by chfriley (160627) on Tuesday March 13, 2012 @05:03PM (#39344053) Homepage

    Viagra and Cialis are NOT "COMPLETELY OPTIONAL."

    If you are a prostate cancer patient increasing blood flow to the area for up to 3 years will improve healing - for nerve damage and the like. They are only "optional" in the sense that physical therapy is optional or that statins are optional. You want healing for both continence and potency among other things.

    A little knowledge goes a long way, but to claim that it is completely optional ignores the studies showing the benefits for at least prostatectomy patients.

    The example still holds though: if Doctors and patients are not aware of the benefits of a drug, they won't prescribe it.

  • Re:Protections (Score:4, Informative)

    by Kalriath (849904) on Tuesday March 13, 2012 @06:43PM (#39345419)

    This is completely incorrect. India is a signatory to the TRIPS agreement, which explicitly permits compulsory licensing of medications where public health interests prevail such as in this case. Bayer has no legal remedy apart from appealing (in Indian courts) India's determination of what is a reasonable royalty rate.

  • by Shavano (2541114) on Wednesday March 14, 2012 @01:09AM (#39348977)

    Sending drug reps to persuade doctors to prescribe your expensive drug still ain't R&D.

    Let's put this in perspective:

    From Bayer's 2011 Annual Report
    (millions of Euros)
    Net sales 36,528
    Cost of goods sold (17,975)
    Gross profit 18,553
    Selling expenses (8,958)
    Research and development expenses (2,932)
    General administration expenses (1,713)
    Other operating income 859
    Other operating expenses (1,660)
    Operating result (EBIT) 4,149

    That's right. Bayer spent 3x as much on marketing as on R&D. Marketing was their biggest expense category, after COGS, by a wide margin.
    In contrast, R&D is only 8% of their net sales.

    But all of the marketing is related to new drug introduction. They could cut their research and it would directly increase their profit. But it would also put them in a situation where they'd lose sales of new drugs in a few years. The fact that their managers believe it's in their best interest to spend 2.9B per year on R&D implies that they make considerably more than that per year on patented drugs. Maybe 6B/year. Maybe more.

    Now let's get back to India. How many people in India do you think could have shelled out $5500 a month for a cancer drug -- even if it is life-saving? The per-capita GDP in India is only about $1500/year. Bayer can't be making a lot of sales on a drug that people simply can't afford to buy.

    They supposedly can make it locally for $175 per months' supply. This will results in a lot more sales, and India's apparently going to have a forced-licensing arrangement whereby Bayer will still get some money. Just not 97% profit. But 6% of the net sales on a drug that Indians WILL be able to buy may bring in more revenue than 97% on the Bayer-branded drug that Indian's WON'T be able to buy.

    I expect Bayer will complain for a while then quietly pocket the royalties and maybe in a couple years they'll figure out that they can make more money by licensing their patented drugs in poor countries than they can by selling them at the same prices they'd stick to USAnians.

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