Civil society sounds the war cry for affordable Herceptin – Roche’s worst nightmare comes true

A coalition of NGOs, breast-cancer-survivors and academics have shot off a letter to the Prime Minister of India demanding measures to ensure that Herceptin, the breast cancer drug sold by Roche is made more affordable for Indian women. The letter dated 5^th of November, 2012 can be found here and does not appear to have been picked up by the mainstream media as of yet. You can join the Facebook group over here.

The letter provides the Prime Minister with details about breast cancer, Herceptin and the cost of treatment with Herceptin in India. Readers may remember that we had previously described the cost of Herceptin in an earlier post available over here. In my opinion, this letter to the PM is actually quite kind to Roche and for reasons unknown it eschews the rhetoric that is common in such letters.

Most of you may already know that Herceptin, is a breakthrough cancer drug, which was taken to the market by Genentech Inc., a company later taken over by Hoffman La’ Roche. Herceptin can be used to treat only a particular kind of breast cancer known as the HER2+ mutation. I had blogged about it over here. Although this kind of cancer is quite aggressive, Herceptin is known to be particularly effective against it. What makes Herceptin all the more attractive (for the lack of a better word) to cancer patients is the fact that it has virtually no side-effects save for a runny nose. Conventional chemotherapy can be quite painful to the patient, since it is associated with hair-loss, vomiting amongst other severe side-effects. Not to mention that it is also relatively ineffective.

In India, Herceptin was originally priced at Rs. 1,10,000 per vial. This was later reduced to Rs. 75,000 per vial when Roche entered into a marketing arrangement with the Pune based Emcure Pharmaceuticals Ltd. Although the letter to the PM mentions that the price is now Rs. 72,000 and that the number of doses is limited to 12 doses over a year, I have information, on good authority, that the revised price is actually Rs. 75,000 and the required number of doses, if administered at a three week interval are between 18-20 doses. This would mean that at the original cost of Rs. 1,10,000 an entire cycle of treatment with Herceptin would have cost close to Rs. 20,00,000 (Rs. 20 lakhs). With the reduced cost of Rs. 75,000 per dose, the entire cycle of treatment now costs Rs 13,50,000 (Rs. 13.5 lakhs). Does it make Herceptin more affordable? Hardly! Like I had stated before most middle class Indians cannot afford this drug even if they have insurance. We are talking about a country with an annual per capita income of about US $ 1000.

To give you some perspective on the issue let me give you an example: An Indian Supreme Court judge earns a salary of Rs. 90,000 per month. Even a judge of the highest court in the country will not be able to afford Herceptin on his or her salary. It is a different matter that government employees and judges are covered under a very generous government insurance scheme but the example is illustrative of the obnoxious pricing strategy followed by Roche in India.

Like I discussed earlier with respect to Pegasys, the Hepatitis C drug sold by Roche, at around Rs. 4.5 lakhs for the entire cycle – it was selling the drug to a mere 0.01% of its target market. Clearly there are no takers for even life-saving medicine if it is priced at such a high price. Drugs like Herceptin have a huge market and companies like Roche can make a ton of money even if they slash the prices further. For example, the letter mentions that 100,000 Indian women are diagnosed with cancer every year – I think the numbers are higher. Given that Herceptin is slowly being approved for other kinds of cancer too it is possible that its market will only increase.  

Commenting on the price cuts by Roche the letter states that the cuts “are defensive and pre-emptive measures to preserve its monopoly in India against the issuance of compulsory licensing and price control measures by the Indian government.” The letter also alleged that “The agreement between Roche and Emcure does not involve any transfer of technology or create any possibility for the entry of other players into the market - Roche will continue to produce the drug at its plants in the US, Singapore and Germany and ship vials to Emcure for packaging.”

The unique aspect of Herceptin in the Indian market is the fact that despite not being patented as of yet (I think!), there is not a single generic manufacturer in the country. This is all poised to change. According to various sources like Vikas Dandekar & Joshua Berlin of Elsevier and Divya Rajagopal of the ET, the Indian company – Biocon has a biosimilar of Herceptin in Stage III clinical trials and is looking to enter the market by next year. I wouldn’t be surprised if other Indian companies forayed into this area.

Just a few years ago, Dr. Reddy’s forayed into the bio-similar space with its version of another Roche drug called MabThera. The generic version marketed by Dr. Reddy is called Reditux and it was targeted at non-Hodgkin’s lymphoma. Despite Dr. Reddy entering the market at almost half the price as Roche’s drug, the latter did not slash prices for MabThera till 5 years later. For a more detailed analysis of the market dynamics of these products I would recommend reading the story by Dandekar and Berlin.

Since there are not yet any generic manufacturers in the market, the letter to the PM requests measures to ensure quick entry of generics in the market to ensure competition with Roche’s product.

While generic competition is always welcome, it will be interesting to see whether Herceptin can be put under price control. If anything this would be the perfect test case. So far the litigation before the Supreme Court between health activists and the government has been limited to 348 essential drugs – as far as I know, none of them pertain to cancer. Why is cancer medication not contained in this list? According to Lancet, India lost a total of 556 400 national cancer deaths in India in 2010 and the Health Ministry has not even made cancer a ‘notifiable disease’. Read this excellent piece in the Hindu by Dr. V. Shanta.

It would be interesting to see a PIL before the Supreme Court, informing them that a cancer drug costing almost Rs. 14 lakhs, is not even mentioned on the list essential drugs – how would the Supreme Court react to this petition?

Parliament and price control: Traditionally, the Central Government has kept patented drugs outside the purview of patented drugs. This may change. In one of its report earlier this year, the Parliamentary Standing Committee virtually roasted the Health Ministry for keeping patented drugs out of price control. The report can be accessed over here. In pertinent part, the Committee stated “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.”

The report further states “The Committee also takes note of the submissions of the Secretary (Pharmaceuticals) to the effect that the issue of price regulation of imported molecules being sold in the country at high prices will be taken care of in the New Pharmaceutical Policy which is currently under finalization. The Committee feels that the issue at hand is too urgent to be left open-ended and, therefore, recommends that Department of Pharmaceuticals resolve this issue within a period of six months. The Committee would also like the Department to put in place an effective mechanism to enable the use of international price benchmarks in such cases and limit the price of an imported drug by comparison with the price of the same drug in other countries and thus check windfall profits made by importers on selling imported molecules at exorbitant prices in the country.”

Is price control alien to Western pharmaceutical companies? Not at all – they experience pricing pressures from insurance companies and in some instances like the U.K. even the government, since the National Health Service drives a strong bargain before approving the purchase of any drug. All of this serves as de-facto price controls. Collective actions by insurers and governments are the only way to keep patent monopolies in check. It is only in India that cancer patients are left literally at the mercy of pharmaceutical companies.

Conclusion: Will Roche drop the prices of Herceptin in response to this petition? Not likely. It can still make money but in all likelihood they will not want to be ‘seen’ as caving into pressure. Western pharmaceutical companies tend to react poorly under pressure. They get combative and more likely than not trip over their egos into a PR disaster. The market dynamics will eventually play out and sooner rather than later generic companies will displace Roche from the market.

Personally, and this is only my opinion, I have been relatively sympathetic to the cause of pharmaceutical patents. I believe in innovation and the wonders of modern science which have resulted in life-saving inventions like Herceptin. So much so, that I walked into a scholarship interview this year trying to defend the cause of pharmaceutical patents. No prizes for guessing who is staring down the wrong side of a pretty expensive education loan. The pricing debate however is distinct from the patenting debate. This particular case of pricing in the Herceptin case just strikes me as utterly obnoxious if not downright stupid. When Ranjit Shahni and Novartis were trying to make their case, at the height of the Novartis litigation, for patenting Glivec they argued that the newly prosperous middle class in India could afford patented drugs with their insurance policies. That may be true for Glivec but the average insurance policy in India will not cover the entire cost of Herceptin and I say this from reliable first-hand sources.

In such a case what is the ordinary Indian supposed to do? Beg and grovel at the feet of Roche?