From Express Pharma
January 8, 2014

Despite prominent declarations to the contrary India is hostile to innovation, a position confirmed by recent court decisions again and again. Recently, Nirupama Rao Indian ambassador to the US claimed, “India makes a priority of complying with international treaties such as the Trade Related Intellectual Property Rights (TRIPS) Agreement of the World Trade Organization” (Rao, 2013). Not only are recent decisions by the Indian Supreme Court an abuse of the global intellectual property (IP) framework, they represent a sacrifice of future industrial success for short-term current gain, and have the potential to significantly undermine public health advances. Through these legislative decisions, India is abolishing all incentives for innovation and simultaneously signalling that the foreign direct investment that fosters such innovation is no longer welcome.

Critics of the global IP system argue that the existing system is 'broken' and fails to provide access to medicines for the world’s poor and vulnerable. These claims fail to stand up to even the mildest scrutiny, as evidenced by the tremendous innovations that continue to improve public health and greatly enhance and extend life.

First, the existing system provides the incentives necessary to encourage the investment of time, talent and other resources to the development of breakthrough medical therapies. Without this the very development of these treatments, access is not an issue. Pharmaceutical innovation must take place before these drugs can be available to anyone, whether they be patients in industrialised nations or in the developing world. Contrary to the claims of critics, innovation will not happen without a strong IP system and the preservation of the incentives that motivate these discoveries.

Moreover, these discoveries are critical to the future and success of the Indian pharma industry. The Indian pharma industry is expected to grow from an estimated $21 billion in 2013 to $56 billion by 2020 (Tyer, 2013). As almost exclusive producers of generic drugs, the industry’s current success and future growth is contingent on the innovation of others. As such, any threat to the level of global innovation will have serious consequences for industries like those of India, who imitate rather than innovate. The shrinking of the blockbuster drug pipeline should concern Indian firms and provide tremendous cause to safeguard the incentives for future innovation and breakthroughs. The declining R&D productivity is clearly a concern for generic pharmas – eventually there would be fewer drugs to copy on patent expiry. This may lead to a potential long-term de-rating of India’s generic pharma sector.” (Bakhru and Park, 2013).

Recent decisions by the Indian Supreme Court are indicative of an undeniably shortsighted view of intellectual property rights, given the dependence of the Indian industry on the innovation of others. Nearly ten years after the amendment of the Indian Patent Act, thousands of process patents have been issued by promise of new chemical entities (NCEs) remains unfulfilled. The unmet health needs of patients around the world, especially those in developing nations such as India, remain unmet. Moreover, “analysts note that the lack of transparency in the Indian drug regulatory system and weak patent laws are a major challenge for foreign multinational companies attempting to enter or expand in the Indian healthcare market” (Tyer, 2013).

Specifically, Section 3(d) of the Indian Patent Act forbids the patenting of new forms of existing drugs unless the new form markedly improves efficacy and generates therapeutic benefits. Consequently, much of the incremental innovation that is done on existing treatments will no longer be patentable in India.

For public health practitioners, incremental innovation ensures an array of drugs are offered within a therapeutic class which gives physicians the ability to precisely treat the individual needs of diverse patients. In addition, incremental innovative improvements can potentially: increase the number of available dosing options, reveal new physiological interactions of existing medicines, allow for reformulations to encourage children’s compliance, increase the shelf-life or heat-stability of a given medicine to secure effectiveness in diverse environments, minimise or eliminate treatment-limiting drug reactions or side effects, and improve patient compliance (Wertheimer, Levy and O’Connor (2001) among others). These distinct characteristics increase a patient’s probability of finding a treatment that is both effective and tolerated.

Moreover, since first-in-class drugs are rarely optimal, incremental innovations may become best-in-class and first line therapies. Given this it is not surprising that a significant share of existing therapies resulted from incremental innovation. Cohen and Kaitin (2008) find that 63 per cent of the drugs on the World Health Organization’s Essential Drug Lists are follow-on drugs. Finally, incremental innovation is especially critical to developing world patients. Incremental innovations provide for more convenient extended-release dosing and formulations that are do not require refrigeration or are less temperature sensitive, valuable characteristics in developing country settings. These are innovations that should be encouraged and incentivised: something that Indian Patent Law does not do.

The picture of the Indian pharma industry becomes even bleaker when one considers the future of pharma research and profitability, biologics. A “biologic medicine is a large molecule typically derived from living cells and used in the treatment, diagnosis or prevention of disease. Biologic medicines include therapeutic proteins, DNA vaccines, monoclonal antibodies, and fusion proteins.” (Amgen, 2012). As opposed to small molecule drugs which are produced through chemical synthesis, biologics are primarily produced using recombinant DNA (rDNA) technology and are made by genetically engineering living cells to produce the required proteins. Given this, the complexity and sensitivity of these large proteins make them more difficult to characterise and to produce such that even minute differences in the production processes or cell lines may result in variations in the resulting protein. Fundamentally, this sensitivity makes quality control all the more important and production complications more disastrous. This does not bode well for India, a nation that faces serious challenges in regulating clinical trials with a drug regulatory system that falls far short of world standards.

Quality control and precision are essential for biologics and failures can be devastating. Beyond the disability and deaths resulting from 500 cases of fungal meningitis linked to contaminated injectable corticosteroids formulated by the New England Compounding Center and the 150 deaths resulting from tainted Chinese heparin, immunogenicity problems may even result from small changes made by the innovator company under the best of controlled conditions. An example is useful to illustrate the potential consequences of producing biologic medicines in an environment such as India’s. Consider the case of EPREX as described by BIO, the Biotechnology Industry Organization:

Immunogenicity is an important concern regarding the safety of biologics. This occurs when our bodies treat a protein as if it is a foreign substance and try to attack the protein with antibodies. Unlike chemical drugs, all biologics have the potential to stimulate antibody production in patients and such responses are highly unpredictable. Sometimes the antibodies produced in response to a biologic have no effect. Other times they bind and inactivate the biologic, causing disease progression. In still other cases, they can bind to and inactivate a patient's naturally occurring protein, which means that the patient may be left with no options other than regular blood transfusions. One example of immunogenicity occurred a few years ago when, at the request of the European Health Authorities, Johnson & Johnson made a change in the manufacturing process for its EPREX product, a product that had been marketed for a decade with no evidence of immunogenicity problems. The change caused a serious adverse reaction in a small number of patients. These patients lost their ability to make red blood cells because they produced an antibody (triggered by the EPREX) that inactivated both the administered protein (EPREX) and the body's natural protein that is essential for red blood cell production. Johnson & Johnson eventually was able to determine the cause of this adverse reaction and correct it, but only after a very lengthy and expensive investigation. The EPREX case shows that one protein can be different from another in ways that cannot be detected in the laboratory, but are seen only by the body's exquisitely sensitive immune system. If one change to a well-established complex manufacturing process, made by the manufacturer who has intimate knowledge of the process, can cause a problem with immunogenicity, surely the risk is even greater with an entirely new manufacturer and process - as will be the case with follow-on biologics. (BIO, 2012)

Biologic medicines are extraordinarily sensitive, which points to the challenges of defining the parameters of protection and the importance of safety. Considerations that are significant to the most technologically advanced nations and sorely absent in India. Biologics are the future of medicine and safety must be a priority in their development, production and protection. Since a minute alteration in the raw materials, temperature, pH, cell line, or manufacturing process can result in a significant change in the medicine’s quality, efficacy or safety, the interchangeability and substitutability of these products must be approached with extreme caution.

The Indian pharma industry is touted as the “pharmacy to the developing world”. While they do provide affordable drugs to developing nations, this market is not their “bread and butter”. This is clearly reflected in the fact that the Indian industry is globally the third largest in terms of volume, but 13th in terms of value. The Indian pharma industry’s profits come from industrialised nations, and these are their most important markets. There is no denying that these are profit-driven companies and that this is their true focus. Realistically, generic Indian producers focus on getting the six months of market exclusivity that is granted to “first to file” generics. Why? Because this exclusivity allows generic producers to sell their version at 90 per cent of the branded drug’s price. Not surprisingly, Indian companies currently hold 21 per cent of the US generic market for annual sales of close to $12 billion. The vast majority of patients served by Indian pharma companies are in the US, Europe and Japan. At the same time, the unmet need in their own backyard is staggering. “Currently, around 67 per cent of India’s population, or 742 million people live in rural areas, but rural markets contribute only 17 per cent of overall market’s sales.” (Shetty and Hiremath, 2013). The Indian pharma industry fails to address their own domestic needs. “India is an emerging healthcare market that has remained unsaturated due to the limited penetration of healthcare insurance and poor access to healthcare facilities, especially in rural areas.” (Tyer, 2013).

Moreover, the success of the industry has been built upon an industrial policy based on weak patent laws, a reliance on compulsory licenses and a lack of regulatory transparency. India’s use of compulsory licenses is an abuse of both the spirit and intent of the TRIPS Agreement provisions which were intended to help the most vulnerable and respond to genuine need. Rather than addressing public health crises and national emergencies, India has turned to issuing compulsory licenses as a deliberate strategy and tool of industrial policy.

The disease states and conditions for which India has recently issued compulsory licenses are for relatively small patient populations, not health emergencies as envisioned by the international trade agreement. One such example is Naxavar, a treatment for kidney cancer and the drug at the centre of Natco vs Bayer. Strikingly, in many countries the prevalence of kidney cancer is so low that it is classified as a rare disease. GLOBOCAN, the United Nation’s cancer project, estimates the total number of kidney cancer patients in India at less than 9,000. That constitutes less than 0.00073 per cent of the population.

Decisions by the Indian Supreme Court to weaken intellectual property protections fail to recognise that every innovation is valuable, both breakthrough discoveries as well as improvements to existing therapies. These decisions undermine the incentives to innovate, the foundations of India’s pharma industry success, and the potential for cures and treatments to the world’s most challenging ailments and afflictions. All innovation should be valued, protected and rewarded. By failing to do so, India turns her back on innovation, medical progress and patients.

- Dr Kristina M Lybecker, Associate Professor, Department of Economics & Business, The Colorado College