The pricing of drugs in India continues to be a highly contentious issue. Believing that the prices of lifesaving drugs shouldn’t be set by market forces, the Indian government has taken a variety of measures to keep drug prices low. For example, a provision of the Indian Patents Act allows for a compulsory license to be awarded after three years of the grant of a patent on drugs thought to be too costly. Earlier this year, the Indian Supreme Court refused to prevent an Indian generic manufacturer from making and selling Merck’s diabetes drug, Januvia.
These actions rankle major pharmaceutical companies. Novartis has said that it will not launch any new products in India after its difficulties in getting intellectual property protection for Glivec in this country. Bayer AG CEO, Marijn Dekkers, also decried the Indian situation with respect to its cancer drug, Nexavar, saying: “India is becoming very reluctant to respect IP for western companies and that’s a challenge for us. Most eloquent has been Pfizer’s CEO Ian Read who has made a number of comments on this subject.
Given this stance by some of the pharma industry’s leaders, it was pretty surprising to read comments by the GSK CEO, Sir Andrew Witty in an interview given to The Times of India last week during a visit to India. His words seem to represent a shift from his fellow PhRMA colleagues.
“If we have to find a way of bringing innovation to India you should prices {sic} which are affordable. And the key to that isn’t getting rid of patents, the key to that is to fix the R&D process, manufacturing process to make it more efficient. And that’s what we have got to realize in the world we are going to be living in next {sic} 30 or 40 years companies cannot turn up and have any prices they want. Companies have to come with a competitive and efficient business model, which brings real innovation to people.”
As the authors of the article stated, Witty’s words must be music to the ears of Indian government officials “who have been vocal about the need to cut prices of drugs for the poor and the dispossessed despite trenchant criticism from multinational companies and officials of foreign governments.” Witty on his visit seemed to be advocating that GSK can weather the Indian pricing situation and that India was justified in the actions that were being taken as evidenced by the following.
“We as a company feel very comfortable in India. We feel very Indian. It is not hard for a Brit to say that. But as a company we are very much at home in India. Would I rather not have price cuts, obviously, yes, but in a world where there are so many tradeoffs and in a country like India I am not so worried.”
Well, I for one, have a lot of issues with Witty’s comments. For one thing, I feel that his comments that improving R&D and manufacturing processes will lead to cheaper drugs are entirely misplaced. Drugs are priced on the value that they bring to patients and the healthcare system, not to the costs of bringing a medicine to market. But he has clearly gone in a different direction from his peers with his comments on pricing. It is not as if his competitors have been price gouging in India. Novartis, for example, said that they were providing Glivec free of charge to 16,000 patients in India, roughly 95% of those who were prescribed it, via its “Glivec International Patient Assistance Program”. The remaining 5% were either reimbursed, insured or participated in a generous co-pay program. Despite this, Glivec has no patent protection in India. Also, Witty must realize that pharmaceutical companies can no longer “turn up and have any prices they want.” Drug pricing is now negotiated in most of the world.
So what motivated Witty to make these comments? Maybe it was a calculated move to ingratiate GSK into the good graces of the Indian government. GSK operates in India through two businesses: GSK Pharmaceuticals and GSK Consumer Healthcare. Perhaps price concessions on the pharmaceutical side can enhance business opportunities for the healthcare business.
Regardless of his motives, I think Witty is wrong in appeasing the Indian government. Pfizer's Read is more on the mark when he states that there is a growing part of the Indian population that can afford to pay for innovative drugs. India needs to develop a system whereby it begins to contribute its share for drug innovation.
