Dealing with the cost of cancer treatment in India: Are patents the problem?

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Over the last several months, I’ve spent some time visiting some dear family friends who are undergoing treatment at a cancer hospital. This was the first time that I witnessed the disease and its treatment first-hand. Apart from putting life and the law in a new perspective, my occasional visits to the cancer hospital also served the purpose of researching the costs of cancer treatment in India, the manner in which Indians deal with the cost and the impact of patents on the overall cost of medical treatment. I thought it would be interesting to share some of the information/trends that I could identify/collect during my visits. 

A. Let’s start off with two case studies (What I remember from the conversations): 

(i) Male Patient, 65 years, diagnosed with lung cancer with metastasis to the brain i.e. the cancer had spread to the brain at the time of diagnosis. Just the cost of diagnostics for this patient i.e. CT Scans, PET Scans, MRIs for the brain, FNAC, biopsy and other diagnostics came up to almost Rs. 1,00,000 (Rs. 1. Lakh). Post the diagnosis, the oncologist prescribed the following treatment: 6 cycles of chemotherapy + radiation for about 27-28 days. Each chemotherapy session, consisting of only generic medicines, cost up to Rs. 57,000 (approx.) plus there was the supportive medicine which is necessary for chemotherapy patients who usually suffer from an extremely low count of white blood cells as a result of the chemo drugs. In order to boost the WBC count, the oncologist had prescribed a dose of generic medicine (Peg-Grafeel) manufactured by Dr. Reddy, which was priced at around Rs. 8,800 (approx.) per dose. Therefore, each cycle of chemotherapy along with supporting medicine and diagnostics used to cost approximately Rs. 65,800. Six cycles would cost Rs. 3,94,800. The radiation therapy comes in different ‘packages’ depending on the side-effects. Together, the two cycles of radiation for this particular patient cost approximately Rs. 2,47,000. Therefore the total cost of the first battle with cancer was thus in the neighbourhood of approximately Rs. 6,41,800. 

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(ii) Female patient, 60 years diagnosed with breast cancer confined to only one breast, with a previous history of breast cancer in the other breast. This time around the cancer was diagnosed as HER positive, a particular kind of cancer that can be treated quite effectively with Herceptin, a drug manufactured/marketed by Genetech/Roche and which has attained the reputation of a ‘wonder-drug’ in the field of cancer not only for its targeted action against cancer cells but also the lack of side-effects associated with conventional chemotherapy – namely lack of hair loss! Thanks to the invention of Herceptin, doctors predict that in the due course of events, HER+ breast cancer will witness a near cent percent success rate. That was the good news. The bad news is that Herceptin is probably one of the most expensive drugs in the world, costing approximately Rs. 1,10,000 for a vial of 440 mgs. Depending on the weight of the patient, the normal course prescribed is around 17-19 doses spread over a period of one year. Cumulatively that comes to around Rs.18,00,000-Rs.20,00,000 per patient. The first six doses of Herceptin are usually given in tandem with conventional chemotherapy – the TCH treatment – the conventional chemotherapy done with generic medicines is approximately Rs. 22,000. The six cycles of chemotherapy plus the peg-grafeel comes up to Rs. 1,80,000. Plus depending on the hospital that is treating you, there may be the added ‘chemotherapy charges’ which is levied by the hospital at rates ranging between 8% to 12% of the total cost of the pharmacy bill. When being treated with Herceptin, that 12% can add more than Rs. 10,000 to your bill. I think it is an unfair practice but then again who are you going to complain to? Added to the cost of chemotherapy is radiation, which can range between Rs. 150,000 to Rs. 275,000 depending on the package. Cumulatively therefore, the cost of the treatment can cost approximately Rs. 20,00,000 to Rs. 22,00,000. 

B. The Analysis: The reflex reaction of most people to the above figures will involve first cursing cancer, then cursing god & karma, followed by cursing the pharmaceutical companies and lastly the government. The ‘glass-is-half-full’ types are more likely to thank god, the doctors, the pharmaceutical companies etc. for helping them in fighting the disease and who knows, even winning against it. Moving on to some of the interesting trends/analysis that I could identify: 

(i) Patents & Biologics: Unlike the other anti-cancer drugs, such as Tarceva & Nexavar, which have recently been in the news for patent battles, Herceptin, to the best of my knowledge is not yet patented in India. You would think that without a patent and a promise of a huge margin even for a generic version, Indian pharmaceutical companies would be lining up to mass-produce Herceptin. Do you know how many generic versions of Herceptin are available in the market? None! Cipla has promised to come out with a generic version in a few years but what’s been holding back Indian companies for the last two decades. Given that the European patents on Herceptin are set to expire sometime around 2015, it would mean that the technology has been in the market for around 17-18 years. 

Herceptin, like Pegasus an earlier drug that we discussed on this blog, are both biologics, a class of drugs distinct from the conventional chemistry based drugs. Therefore despite Indian companies technically having the opportunity to manufacture both Herceptin and Pegasus (under CL provisions) not a single company has forayed into the field. I’m not sure whether this is happening because of a lack of a transparent regulatory structure for bio-similars or because of a lack of technical expertise in Indian companies. Companies like Dr. Reddy’s do manufacture some biologics like Reditux and peg-grafeel, so clearly, there is some expertise in the field but not enough to manufacture a more complicated drug like Herceptin. 

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What makes the matter even more interesting is the fact, that unlike Tarceva and Nexavar [both of which are patented and infringed (by Natco, Cipla) in India] Herceptin is a drug approved by the National Institute of Clinical Excellence (NICE) for purchase by the National Health Service (NHS) in the United Kingdom (U.K.). Any drug approved by NICE is worth its weight in gold and is indicative of the therapeutic potential of the drug vis-à-vis the cost of the drug. The estimated revenues of Roche from worldwide sales of Herceptin are in the neighbourhood of $ 3.4 billion dollars. 

(ii) ‘Per capita’ income: India’s per capita income for the last financial year was reportedly at around Rs. 50,000 per year (subject to certain riders). I’m not sure at how the government calculates the income of the ‘middle class’ but for the sake of this post let’s presume that it is 10 times the per-capita income at around Rs. 500,000. As I discussed above, the treatment of the male patient with lung cancer, even with generic medicines, came up to Rs. 6,41,800. Therefore, forget the poor citizen, even a middle class citizen of this country is unlikely to be able to fund his cancer treatment, even with generic medicines, just out of his pocket. The most certain retort to this argument would be that even developed countries are able to pay for expensive cancer treatment only through private insurance or public funded health programs. 

(iii) Insurance policies: In the last few years there has no doubt been an explosion in the health insurance market. The problem however, as I understand, is the near abysmal knowledge amongst Indians about the cost of modern medical treatment. Sample this – I just did a random survey, amongst people I met, on the insurance coverage that they had taken and the highest insurance coverage that I got was Rs. 4,00,000 and the lowest – Rs. 1,00,000. Even the maximum insurance coverage of Rs. 4,00,000, would not be able to meet the cancer costs of the first patient discussed in the beginning of this post. All the people that I spoke to were actually upper middle class and they had the financial capacity to subscribe for higher insurance premiums but didn’t do so because they simply had no idea of the cost of any potential treatment, not just cancer treatment. Apparently the insurance salesmen themselves had no clue. 

Therefore I’m very curious to know as to why exactly ‘big-pharma’ is under the impression that increasing insurance coverage and rising incomes in India make it a lucrative market for even patented drugs. From what I understand insurance coverage in India, in terms of value, is pathetic. At the very least pharmaceutical companies, be it generic of innovator, should seriously start educating insurance companies on the actual cost of treatment because as things stand now the insurance sector doesn’t seem to have a clue on actual costs. Ultimately it is pharma companies which have the most to benefit from such increased coverage. 

(iv) Differential pricing: One of the problems with new medicines introduced by big-pharma in the Indian market is that they are usually sold at the same cost through the world market. Therefore if the drug is sold at $40,000 dollars in the U.S., that same drug will be sold at the same price in the Indian market despite the huge difference in per-capita incomes in both countries. In the last few years several big-pharma companies have started a differential pricing scheme for the Indian market because it is quite clear that Indians simply cannot afford to pay the same rates as in developed markets. The only price-cuts I’ve heard of in the cancer segment are by Glaxo-Smith-Kline. Apparently the price-cuts were as steep as 70% when compared to the prices in the U.S. One such interesting product is Tykerb. For a year of treatment in India Tykerb costs Rs. 6,00,000. Contrast this to the cost in the U.K. which in 2009 was at 25,000 pounds. As noted by GSK in one of its investor documents, the price reduction of Tykerb in India literally doubled the sales of the product. Roche has promised to slash the cost of Herceptin in the next two years. 

What I found more interesting however was the competition between Herceptin & Tykerb. Like Herceptin, even Tykerb targets the HER mutation in breast cancer patients and although it not reported to be as effective as Herceptin, it does seem to have a decent success rate. Now although Herceptin is known to be more effective than Tykerb, when offered a choice by oncologists breast cancer patients with Stage I cancer (which is painless) will opt for Tykerb simply because of the huge price differential. After all it is Rs. 600,000 v. Rs. 18,00,000 for Herceptin. I’m not even sure whether Tykerb has received clinical approval for Stage I treatment but I’ve heard that it is being offered for even Stage I breast cancer patients. 

As far as I know, GSK has a patent for Tykerb in India and the patent has not yet been infringed by any of the generic companies which have otherwise busted every other patent for cancer drugs. As far as the reported news goes Cipla has only filed a post-grant opposition against the Tykerb patent. So are price-cuts the solution to competition from generic pharmaceuticals? 

(v) Government spending on cancer treatment: So far, most of this discussion has revolved around the middle class. What then happens to the poor? Honestly and I’m ashamed to say this – I just don’t know. I have heard of a story of poor patients being given excellent and more importantly free cancer treatment at one of the leading government hospitals in Chennai. I however have no idea of the remaining government hospitals. I’m guessing a lot of other government hospitals do offer cancer treatment. Apart from these hospitals and charitable organizations, I don’t think poor cancer patients have any other option for treatment in India. Some State Governments do offer insurance coverage even to the poor but it is unlikely that so schemes will suffice for cancer treatment. Unfortunately, the Central Government does not seem to have any strategy to deal with the rising cases of cancer treatment. At least for TB and HIV, the central government has some kind of public funded programs in place such as NACO etc. Cancer unfortunately has simply dropped off the map. Once again, it is the pharmaceutical company which should take the initiative to lobby with the Central Government for creating a public funded program to assist in the treatment of cancer. In terms of profits, these companies are sitting on a virtual goldmine. 

(vi) Price-Control: India’s experiment with price-control for drugs has been largely ineffectual either due to poorly drafted laws or due to poor implementation. Moreover patented drugs are not covered under the present price-control regime. In its 58th Report, the Parliamentary Standing Committee on Health and Family Welfare had this to say on price-control for patented medicines: 

The Committee notes that as of now there is no mechanism in place to regulate the prices of new patented drugs which are imported in the country and sold at supernormal profits, whereas prices of the same medicines are considerably lower in other countries. The Committee does not accept the submission made by the Secretary (Pharmaceuticals) that there is no price control of a patented drug for open market. The Committee would like to observe that India as a sovereign country has every right to decide the prices of a drugs which are sold in the open market. The Committee therefore recommends to evolve an effective mechanism to control prices of imported patented drugs being sold in Indian Market.

It would be interesting to see the government experiment with price-control on patented drugs. In many ways, such price-control measures will automatically resolve the ‘differential pricing’ dilemma being faced by innovator pharmaceutical companies. However given India’s history with price-control, I wouldn’t bet on this option. 

Conclusion: I’m aware that this post may seem to be a bit random but I thought it would be interesting to start a conversation on the more practical aspects of dealing with the cost of treating cancer. In 2010 alone, India lost a total of 556,400 citizens to cancer. A detailed study published in the Lancet, available over here, documents trends and patterns in these deaths. Later studies have estimated that by 2030, cancer cases will rise by 70% in India. Even in its peak years, the deaths from AIDS/HIV at 400,000 citizens were substantially lower than the present number of cancer deaths. In 2009 after years of sustained intervention the HIV/AIDS mortality figure dropped to 172,000. Thanks to the activism surrounding AIDS/HIV, the government at least created the National Aids Control Organization (NACO) to co-ordinate a response to the epidemic. Although the program does face its challenges, it has helped in curtailing the spread of the HIV virus. Unfortunately, there seems to be little in the way of a co-ordinated government strategy to deal with the issue of cancer treatment. There has been some talk of universal health coverage for all Indians but that plan is still only on paper. Regardless of universal health coverage, cancer is a disease very distinct from other diseases and it needs a separate solution. More often than not the healthcare debate gets completely hijacked by the issue pharma patents. It is time we begin to focus on the main issues at hand.