The current churn within healthcare ecosystems will require all stakeholders to work more closely to achieve better patient outcomes at lower costs. According to a recent KPMG report, “More than medicine”, pharma companies which can demonstrate the value their products (and increasingly services) bring to emerging healthcare systems, will be able to access broader patient populations in both developed and emerging markets. Utkarsh Palnitkar, Partner & Head, Transactions & Restructuring & National Leader – Life sciences practice at KPMG India reveals more in an interview with Shalini Gupta
Pharmaceutical companies need to be more engaged with the rapidly changing healthcare system. How far have pharmaceutical companies in India adapted to this?
| Utkarsh Palnitkar |
The healthcare landscape in India has evolved with a renewed focus on primary care coupled with rural healthcare. A shift in disease patterns from infectious to lifestyle related has also led to a treatment based approach to disease management: wherein a patient is not addressed only during an ailment but is taken through the entire care life cycle, from education of a disease to monitoring post treatment. This along with a thrust from the government on preventive healthcare in terms of budgetary allocation of funds have led companies to diversify their portfolios to include focus on drugs that address NCDs. These include CVS drugs, ant diabetics, anti-obesity drugs etc.
With the thrust on rural areas and hinterlands, companies have partnered with NGOs or initiated their own programmes to address the healthcare needs of the population with limited access to healthcare. Novartis’ Arogya Parivar, a social initiative that offers education on diseases, treatment options and prevention as well as increased access to affordable medicines to the rural poor. Indian biotech players are continually investing in the development of new generation vaccines.
How much do medicines contribute to healthcare bills in India vis-a-vis (US and Europe at 10 and 9 per cent respectively)? Also in the absence of a suitable reimbursement system as in developed countries, how can the pharma industry deliver value to the patient?
The per capita spending on drugs in India increased from 29.77 per cent (2005) to 46.86 per cent (2010), while hospitalisation costs went up from 11.20 per cent to 22.47 per cent during the same period. In the absence of a robust reimbursement scheme (where a primary portion of healthcare spending is out-of-pocket), it is imperative the pharma companies deliver value to the patient.
Value can be defined by the following metrics: availability, quality, improved efficacy and increased effectiveness/superior delivery. Indian companies should strategise their business models to ensure that quality products are on the shelf at right time, right place and price. Strict measures against counterfeits to prevent the market being flooded with ineffective products and commissioning drug development organisations to cater to the unmet needs of the patients are also important. They are taking measures to streamline supply chains and manage costs so that the end customer doesn’t bear the brunt of these expenses. Also, players are embracing innovation as is indicated by the shifting focus of R&D towards Super Generics (DRL’s Fondaparinux, Cadila’s Diclofenac etc.) physico-chemical properties etc and eventually gain better patient acceptability.
Unlike developed countries what is the status of Health Technology Assessments (HTA) in India and other Asian countries? How can such assessments help pharma companies deliver better?
HTA is directly linked with Health Economic Outcome Research (HEOR) and enables maintenance of real time health data that can be used by pharma companies to arrive at a number of strategic decisions. It would also eliminate the need and cost involved in conducting heavy pilot group studies to gather patient health data. As is seen in developed countries – HTA is still unstructured and nascent in the Indian context. In China, the Ministry of Health expressed interest in HTA and established the Division of Technology Administration in 2002. The Department of Hospital Administration uses HTA in conjunction with a growing licensing mechanism (assisted reproduction, prenatal care, joint implants, organ implants, etc.). Some Asian countries focus on HTA through insurance, for example, South Korea, Philippines, Taiwan. In Malaysia, the Ministry of Health decided to establish an HTA unit – an experienced civil servant assigned to the task (quality assurance, equipment acquisition) in 1995.
How does India with its new pricing policy compare to the US and the UK, which have a value-based pricing mechanism? How does this impact innovation and encourage investment in areas with unmet needs?
In India, pricing policies are devised from an affordability perspective to ensure that a larger part of the population has the means to access healthcare and medications. However, they are evolving as we are moving towards a per capita income-linked reference pricing mechanism for drugs. There is a huge challenge in terms balancing affordability, availability and access. The other area where novel pricing mechanisms are needed are in the case of pricing of patented drugs. The challenge of affording a reasonable return to innovators in a manner that does deprive the masses of essential drugs is a key issue. The Government has invoked compulsory licensing in the recent past. However, this should be an exception and not a rule. In the long run, incentivising domestic innovation and encouraging collaborative R&D is the only way out.
What sort of risk-sharing agreements and patient registries in particular do we have in India? How have these helped restructure the approach of pharma companies?
Risk-sharing agreements, under which payers and pharma manufacturers agree to link payment for drugs to health outcomes achieved, rather than the volume of products used offer an appealing payment model for pharmaceuticals. The concept is likely to gain traction in the US as payers and product manufacturers acquire experience with the concept and as measurement techniques and information systems improve. In addition networked patient registries also act as evidence for the concept.
But for the foreseeable future, the concept in India is likely to remain an exception as India doesn’t have reimbursement model for pharma and more importantly has disjointed registries.
In India, only two registries exist at a National/Central level: The National Cancer Registry Programme (NCRP) started by the Indian Council of Medical Research (ICMR) in 1981 and a stroke registry at National Centre for Disease Informatics and Research, Bangalore this year. At the state-level, registries exist in pockets and data may not be equally comprehensive. In developed economies, patient registries are more structured and maintained for a large spectrum of diseases. These registries are a rich mine for knowledge on patient histories, disease epidemiology, drug reactions and responses etc.
How are Indian companies reshaping their R&D to deliver better shareholder value while also ensuring better outcomes to patients?
Indian companies are reorganising their R&D structures to increase efficiency, cost effectiveness and better coherency. The main objective being to deliver better shareholder value and consequently deliver better outcomes to patients.
From a process point of view players are seeking out best practises from MNCs and establishing autonomous but accountable R&D units with integrated information flow and sharing of best practices.
They are organising R&D units so they are aligned with market developments and can focus on developing products that are of most need/ have maximum demand.
Companies have also begun to realise the importance of effective project management and are therefore establishing overlay management structures for the same purpose
Companies are also focusing on managing R&D interfaces and also increasingly leveraging analytics & ICT as enablers in R&D to make processes more efficient. Some tech-enabled tools aid companies in lead identification and other stages of drug development.
The objective is to gain maximum return on investment with risk assessment at the outset. R&D in India is evolving in the field of develop new drug delivery systems, varied dosages and diverse formulations that provide quality and effective healthcare to the patient.
Finally, how do you see the adoption of big data and mobile health as a game changer for the pharma industry?
Reportedly, 44 million health-related smartphone apps were downloaded worldwide in 2011 – indicating the rampant presence of technology and its use in healthcare and pharma. With the challenges that healthcare faces globally such as accessibility, affordability and quality – technology intervention as a plausible solution cannot be discounted. Be it telemedicine networks, telediagnosis, call centres that aid healthcare service or mobile apps – technology intervention has helped aid accessibility and convenience by leap and bounds. In India especially, where access in hinterlands is limited to a greater extent: the possible reach of tele networks cannot be underestimated. In the global context mobile health has other interpretations: the combination of transformative technology trends like smart mobility, social networking, and cloud computing and big data analytics lay the basis by which patients will get access to healthcare not only in hospitals and clinics but in their very own micro-environment.
The adoption of Big Data in healthcare cannot only revolutionise the delivery of healthcare but impact pharma research and drug development. In the present scenario, healthcare entities around the world have started using big data analytics for analysing the claims and clinical data they have about patients to arrive at conclusions on the risk exposure to patients and the drug of choice subsequently. Taken to another level this analysis could be extrapolated to arrive at conclusions on personalised medicine and customised care.
Big Data on healthcare and the insights generated therein can help pharma companies with marketing insights, commercial pointers to guide R&D decisions, real time evidence to gain better access to healthcare outcomes that will aid in the improving the development strategies, identify unmet medical needs and limitations of current therapies and positioning an evidence based value proposition and in enhancing lifecycle value and enhancing asset maximisation. But the power of data, lies in how it is used. Amidst the current ambiguity over transparency, compliance and apprehensions over big data in pharma industry, the players need to ensure strong coordination between commercial and R&D entities, develop analytical rigour and formulate critical hypotheses that need to be tested systematically. Else big data might lead to erroneous conclusions that may have detrimental effects on a product or an entire portfolio.