A little over ten years ago, Cipla promoter YK Hamied’s decision to manufacture generic anti-HIV drugs single-handedly changed the equations of the AIDS-medication game in the world and rewrote the history of the epidemic.
It also dramatically transformed the lives of millions of affected people in poor countries across all the continents. AIDS became a chronic manageable condition than a death sentence.
His decision on Thursday to cut by three-fourth the prices of certain cancer drugs looks like a similar game changer. Modern cancer drugs are prohibitively expensive and are unaffordable even for the rich in India. By slashing his prices, Yusuf Hamied is likely to change the demand-supply equation, tipping it towards large volumes and cheaper prices as in the case of AIDS-drugs.
Cheaper prices will put more people on treatment, not only in India, but also in other poor countries and create sufficient demand that will justify the cost-compromises by the generic manufacturers.
The immediate provocation seems to be the recent compulsory license awarded to Natco Pharma for its cancer drug Nexavar, originally produced by Bayer and the resultant price reduction in the Indian market. With the license, Natco could sell the generic version of the drug at Rs. 8, 800 a month as against Rs. 2.8 lakhs that the Bayer product cost.
Cipla also had been manufacturing the generic version of the same drug and had been selling it at a much higher price of Rs. 28,000. With Natco reducing it to Rs. 8,800, Cipla had been compelled to at least match it.
But Hamid has done it in his game-changing style. He reduced its price to Rs. 6,600 and slashed prices for a few other cancer drugs as well.
Another important generic cancer drug that Cipla produce is Soranib, the price of which has been brought down to Rs.1,776 from Rs. 6, 990.This is the same drug that Bayer dragged Cipla to Court for patent infringement. Instead of taking the compulsory license route, the company decided to fight it out.
To match the prices of Cipla and to stay competitive, Natco and other generic manufactures, will have to cut their prices as well. This is likely to lead to a chain reaction of cuts and counter-cuts that will finally lead to the most competitive prices.
“This will certainly lead to competition and further price fall. This also shows how exploitative the pharma industry is, particularly the MNCs,” says KM Gopa Kumar, legal advisor and senior IPR researcher at Third World Network, a global think tank on development issues.
Cascading drug prices will be a tremendous relief to cancer patients in India since new drugs are extremely expensive. Breast and cervical cancer together account for 60 per cent of India’s cancer burden and all the new drugs, which are much more effective than the previous drugs, are hugely expensive.
“If the same cascading effect continues in this realm, it will be a tremendous shot in the arm for cancer treatment in the country,” says Gopa Kumar.
In the coming years, the generic intervention and similar price cuts will have considerable impact on non-communicable illnesses as well as infections such as hepatitis-C.
At present the MNC drug for treating hepatitis-C costs about Rs 6 lakh per course and Indian biotech companies are trying to generically replicate it. Any breakthrough on this front can be a life-saving help for tens of thousands of people in the country.
Generic manufacture of potent MNC drugs against HIV and multi drug resistant TB and their dramatic price falls are the inspiring success stories of the last decade.
In the case of HIV and TB, the visionary pursuit by pioneers such as Dr Paul Farmer, Dr. Jim Yong Kim (the present WB president) and the Clinton Foundation to generate a critical volume of demand for generic drugs that satisfied the economics of people like Hamied was the formula for success.
It required an audacious decision to treat more people, when it appeared impossible, and a subsequent process to match the scale.
The key threat to this process, however, is the tie-ups that Indian generic manufacturers enter into with multinational pharmaceutical companies. Sometimes, respectability, cash and access-to-other markets together form a bait that local manufacturers fall for. Some times, the bigger MNCs snuff out the generic game but buy-outs.
Anyway, the trigger that Hamid has set off in cancer drugs will have a lasting effect on expensive life saving drugs. He had done it with AIDS and bird flu pandemics.
And now in cancer drugs too. As he said in an interview with the Wired magazine in 2006, “the third world cannot afford the prices of medications that are prevailing in the first world…So don’t talk about patents in isolation. Talk about access to medicine at affordable prices.”
Add to this what Dr. Jim Kim once told the WHO mandarins in Geneva when the multi drug resistant TB cases were untreatable because of the steep prices: “We can drive down the prices by 90 to 95 per cent.”
He was proved right sooner than later.