Cross-subsidy is one solution to make medicines affordable: Novartis MD
A day after losing in the Supreme Court its seven-year battle over patent protection for anti-cancer drug, Glivec, Novartis India’s Vice Chairman and Managing Director, Ranjit Shahani, said that destroying the patent model is not the solution to make medicines affordable to the poor.
“The solution is either a cross-subsidy model where the rich pay full price and the poor pay a subsidised price or the government purchases for the poor and supplies through government hospitals,” Mr. Shahani told The Hindu in an interview.
“If you see a child without clothes on the road do you blame the textile industry for it? So please don’t blame the pharma industry for access. While access has many dimensions, the least of all that is price. You can have solutions such as tiered pricing, donation programmes, public-private partnerships and so on to make access easier for the poor,” he said. Tiered pricing is an approach where pharma companies price their drugs differently for the developed market and India.
According to him, the cause of rural indebtedness due to health care costs is not pharma but hospitalisation. “Pharmaceutical prices account for only 6 per cent of the health care costs. So even if you parachute free medicines, you save only 6 per cent,” he added.
He denied that pharma companies make big profits by selling drugs at high prices. “It’s a fallacy to say you are making obnoxious profits. You have to make enough profits to invest in research. Today, it takes $3-4 billion to get a new molecule out. After a hundred thousand leads and 15 years you get one product and that gets outdated in 6 months because competitors come out with a similar product.”
In his view, the way to ease the burden of high medication costs for the middle class is by liberalising the insurance sector. “Insurance companies don’t reimburse medicine costs. Insurance companies are least interested in health care because they don’t make any money there,” he said.
Mr. Shahani also denied that the industry practices “ever-greening” of patents, a practice where a patent granted years ago is kept alive through minor innovations that extend the patent period. “I think it is pretty outrageous to say that. There is only ever-delaying of patents in India. There might have been one or two cases of evergreening. In any business, there will always be black-sheep but to use them to brand the whole industry is wrong.” According to him, lack of data protection is a major reason why multinational pharma companies don’t invest in research in India. The absence of a law for data protection is a hurdle.
Asked why they cannot adopt tiered pricing for critical drugs, Mr. Shahani came up with the explanation that it leads to a system of parallel trade in drugs where the cheaper drugs are smuggled to the developed world where they are priced higher.