|Wednesday, 14 March 2012 01:58|
New R&D model needed, compulsory license no help
With the US importing anti-cancer drug LipoDox from Sun Pharma in India to tide over shortages in Johnson and Johnson’s production, it is obvious the issue of spiralling drug prices—and dealing with this by granting production rights to lower cost producers—is a complex one. While the grant of a compulsory licence of Bayer’s liver and kidney cancer drug Nexavar to Indian firm Natco Pharma will dramatically lower treatment costs for around 36,000 patients—from R2.8 lakh per month to R8,800 per month—the other side has an equally compelling argument. Drug discovery is a complicated and expensive business where maybe 1 in 10-15 molecules succeeds—loading the costs of 9-14 failures on to 1 success jacks up costs. Allowing a newcomer to use information from the 1 success and replicate this slashes costs if R&D costs of the failures don’t have to be amortised, but what does that do for innovation expenditure in the future? Given that several Indian firms are now also banking on R&D in a big way, this means Indian firms—shares of most pharma firms rose on Tuesday, following Monday’s ruling as investors felt they would gain from more such orders—can also get hit in the future. The interests of patients are clearly paramount, but if R&D takes a hit, the reprieve can at best be temporary.
A court solution—Patent Controller gives a ruling which either of the affected parties challenges in court—is the easy way out, but is too long-drawn to offer a serious solution. Both sides need to talk and move away from their rigid stance—the government can’t threaten compulsory licensing just because it thinks the price is high and if pharma firms refuse to negotiate and settle for more reasonable returns, more compulsory licensing of the Bayer-Natco type is almost certain. Once the two sides talk, government can find ways to lower R&D costs of pharma majors, in India and overseas, by offering partnerships with government laboratories, by granting easier permissions for clinical trials (usually this accounts for a large portion of costs) and even defraying part of the costs of supplying medicines to less well-off patients. The current approach where, apart from the threat of compulsory licensing, there are rigid price controls only gives India a bad name, and it’s not just global MNCs, home-grown firms are increasingly facing the heat.