Industry awaits final word on ‘brand ban’

In mid-October, the Union health ministry’s directive to states to cease issuing licences for the manufacture or sale of drugs on the basis of their brand name stirred up a hornet’s nest. The ministry was only re-stating the law under the Drugs & Cosmetics Act, but industry representatives, already reeling under the government’s initiatives in the past few months to promote generics and control prices of medicines, saw red.

In hind sight it all seems like a “storm in the tea cup”, as Ranjit Shahani, Country President, Novartis India puts it. Shahani, also President of the Organisation of Pharmaceutical Producers of India, (OPPI) mentions that they got a clarification from the Government that manufacturing licenses will be given in the generic name to the manufacturers but companies can market those products with brand names. “It is clear that GX GX prescription is just not practical for India for a variety of reasons oft repeated,” he avers.

It is clear that in a fragmented Indian pharmaceutical industry, with over 64,000 formulations across therapeutic segments, where about six to 200 brands per molecule compete for the attention of doctors, brands are all important.

Debatable issue

“It is note worthy that the direction issued u/s 33P of the ‘Act’ has not been addressed to Central Licensing and Approving Authority which is the licensing authority for certain categories of drugs.” Jagmohan Rai Agarwal Ex President Indian Pharmaceutical Association, Indore

But some experts feel that the hue and cry was unwarranted. Jagmohan Rai Agarwal, Ex President, Indian Pharmaceutical Association, Indore says, “I feel that the direction is perfectly in order when read with provisions of Drugs and Cosmetics Act 1940. In fact there was no need for such a direction since the ‘Act’ itself is amply clear that licence of a formulation cannot be given under any brand or trade name as the subject is concerned with the Trade and Merchandise Act. Therefore, it was incorrect on the part of state licensing authorities (SLAs) to issue licences of formulations under trade or brand name till now.”

As per the notice issued by the Ministry of Health and Family Welfare, the States and Union Territories have been informed to stop issuing licenses for the manufacture and sale of drugs on the basis of companies’ brand name.

It mentioned that it has been observed that at the time of the grant of the license, the manufacturer is also endorsed by the licensing authority along with proper name of the product thereby giving legitimacy to market the drug under the brand or the trade name.

Under the provisions of the Drugs and Cosmetic Rules 1945, applications in various forms for grant/renewal of a license to manufacture for sale or distribution of various categories of drugs, as well as various forms for grant/renewal of such license require the name of the drug to be specified. Such forms for application as well as grant/renewal of the licenses do not require mentioning of any trade name /brand name. In view to these, the grant of drugs manufacturing licenses under a trade or brand name is not in accordance to the spirit of the legislation.

Therefore, manufacturing licenses for the drug formulation should be granted in proper/generic name only. In case of drug formulation containing multiple ingredients the licence should be granted under the name of categories of product viz, multivitamin tablet/capsule/syrup, antioxidants and multi-minerals tablets/capsules/ syrup etc. However, the composition of such product shall mention the name of active ingredients as well as its strength.

Raising the voice

“It is a myth that generic drugs are cheaper than branded drugs, as the generic drugs procured through tenders cannot be compared to prices prevalent in the open market.’ Daara Patel Secretary General Indian Drug Manufacturers’ Association (IDMA)

Commenting on the above notice, Daara Patel, Secretary General, Indian Drug Manufacturers Association (IDMA) opines, “The directions issued by the Central Government are not in accordance with the object of the Drugs and Cosmetics Act, 1940 which is to ensure the availability of safe, standard and efficacious medicines. The Act has nothing to do with brand names. Also, the directions are contrary to the provisions of Trade Mark Act and therefore such directions cannot be issued taking recourse to the provisions of Section 33(P). Section 28 of the Indian Trade Mark Act, 1999, which is a valid law and in force, gives exclusive right to the registered proprietor of the trade mark to the use of the trade mark in relation to the goods or services in respect of which the trade mark is registered.”

“Drug regulators have a responsibility and duty to safe guard the quality of the drugs placed in the market. When they are not aware whether the specific brand name is issued to a company or not, how can they control the movement of spurious drugs, if any.” NR Munjal Chairman – Pharmexcil, VC & Mng. Director- Ind-Swift Laboratories

NR Munjal, Chairman – Pharmexcil, VC and Managing Director- Ind-Swift Laboratories expresses his views and says, “This is a hasty decision by the Ministry of Health and Family Welfare without consulting with the stakeholders like Bulk Drug Manufacturers Association (India) (BDMA), Indian Drug Manufacturers’ Association (IDMA), Organisation of Pharmaceutical Producers of India (OPPI), Pharmexcil etc. This has created a lot of confusion in the industry and in regulatory net work.”

However, Jayant Singh, Associate Director, Medical Technology, Healthcare Practice, Frost & Sullivan, South Asia and Middle East feels, “This is one of the long awaited moves in the right direction to make medicines more affordable and thus increase accessibility. It is also going to help the Government in fulfilling its objective of free medicine to general public. A cursory glance at any of the branded generics medicines will show a wide differential in pricing which is minimum to the tune of three to four times of pure generics. Assuming the input costs, quality norms to be similar for all manufacturing companies, no rationale can be attributed to the wide disparity in prices of branded generics and pure generics. Branded generics were creating a distortion in the market by not allowing a level playing field to all players and also an asymmetry in terms of limiting the patients’ choice as retailers/pharmacists seldom stock and sell pure generic drugs due to the low price and low margins.”

“Certainly, this move is promoting affordable medicine with easy accessibility and it is pushing for end to sale of branded drugs.” Dr RB Smarta Managing Director, Interlink

Dr RB Smarta, Managing Director, Interlink also agrees and mentions, ”Certainly, this move will promote affordable medicine with easy accessibility as it pushes for end to sale of branded drugs.”

Hit to exports?

The Government is trying to benefit patients by making medicines affordable in the market by issuing these notifications. However, industry experts are concerned that it may be a big huge set back for pharma exports.

Munjal raises his points, “Pharma manufacturing is a complex process and every company has to develop their formulation, standardise the same and establish in the market. Each and every drug of individual company has its own identity. To establish the company’s image in the market is a big task in pharma field. Brand names are necessary to identify the product by the company. It is the long practice in the country to get the permission of drugs with brand names. Brands are the only assets of the industry and by removing brands we are putting the assets of lakhs of crores on stake.”

Chirag Doshi, Chairman, IDMA-GSB shares his insights and says, “Jointly IDMA, Confederation of Indian Pharmaceutical Industry (CIPI), OPPI, Federation of Pharma Entrepreneurs (FOPE) and Gujarat Small Drug Manufacturing Association have sent a letter to the Ministry of Health and Family Welfare on the notification asking for clarification. We firmly believe that this move will extremely hit the export business. How can the Centre issue such notification without consulting the industry stakeholders before acting on it?”

“Exports of formulations will be seriously effected. Most of the formulations are registered in foreign countries with brand names and the registering authorities in the foreign countries always ask for the permission of the product from the local licensing authorities with full particulars including brand name etc. Any changes in the registered product need to be informed and approval has to be taken once again after paying high registration charges. It will force the industry to spend hundreds of crores on re-registrations and in some cases the buyers may not be interested to buy generics. This is definitely going to give exports a major setback,“ stresses Munjal.

Regulatory crack down …

“We have clarification from the Government that manufacturing licenses will be given in the generic name to manufacturers but companies can market those products with brand names.” Ranjit Shahani Country President, Novartis India

Rules’ 71 (6) and 76 (7) of Drugs and Cosmetics Rules 1945 require the applicant to furnish to the licensing authority evidence and data justifying that the patent or proprietary medicines applied for grant or renewal of licence for such category of drugs. Rule 96 (1) (i) (A), substituted vide GSR 27(E) dated 17.01.1981, and mandates that as far as labelling is concerned, it requires printing of the proper name of the drug in a more conspicuous manner than the trade name, if any, which shall be shown immediately after or under the proper name.

Rule 103 of ‘Rules’ requires in case of patent or proprietary medicine the name and address of the manufacturer and true formula or list of ingredients shall be printed or written in indelible ink on the container label. “Drug regulators have a responsibility and duty to safeguard the quality of the drugs placed in the market. When they are not aware whether the specific brand name is issued to a company or not, how can they control the movement of spurious drugs, if any,” feels Munjal.

… could spell loss of identity?

Globally, Indian pharma companies are known as leading generics players. The Government’s recent move on anti-branding of pharma drugs is portraying an altogether different stand.

Today, in the Indian market many pharma drugs has multiple version of the same drugs with wide price variation. Patel gives an example that Ciprofloxacin has over 180 brands and Atorvastatin has about 96 brands competing in the market.

Expanding on the point, he says, “We must also understand that it is a myth that generic drugs are cheaper than branded drugs, as the generic drugs procured through tenders cannot be compared to prices prevalent in the open market. The cost of a product after manufacture increases due to various factors such as trade margin to retailers, wholesalers, super stockists, excise duty, additional expenses on freight, insurance etc. Whereas, in procuring through tenders in bulk volumes, mostly excess production capacities are utilised because prices quoted tend to be based on marginal costing covering only the costs incurred on raw materials and packing materials.”

“This is one of the long awaited moves in the right direction to make medicines more affordable and thus increase accessibility. It is also going to help the Government in fulfilling its objective of free medicine to general public.” Jayant Singh Asso. Director, Medical Technology, Healthcare Practice, Frost & Sullivan, South Asia & Middle East

Singh of Frost & Sullivan predicts that, “This move will have an impact on all pharma companies operating in India, most significantly impacted will be the multinationals companies which made significant acquisitions in India, eyeing the lucrative branded generics market. These companies might have to rethink their strategy for India, as this decision taken by the Government is expected to significantly lower the prices of the drugs thus impacting the profitability. To summarise, ‘A good move for patients, but a slightly bitter pill for the pharma companies.’”

Need a balanced view

The industry feels that only one side of the picture today is shown to the general public: that medicines are very expensive. Protesting this perception, Munjal emphasises, “We forget that we are the cheapest drug manufacturer in the world, we forget that these new medicines in the last 20 years have saved many lives, normal life expectancy has gone up. These medicines are the biggest tool for the health community. We want cheap medicines available in the country but if the Government wants to take away the right of doing business in this country then what we are seeing now may not always be the case. One can go to another market, flourish, invest in R&D etc then there should be good margins to the operators. Now, who will decide about the definition of good margins? There we need a balance. This can be created by good governance. The industry and the Government have to talk one-to-one, instead of only one-sided working.”

Munjal says, “No MNC would launch or introduce the new research products in our country if they cannot create their brand value. Now with product patent, we will not be able to control the price of the new patented molecules and prices will go very high. Only if Indian manufacturers exist and flourish can they keep a tab on the activities as in the past efforts by many Indian companies resulted in lot of products being sold at very less MRPs and prices coming down subsequently.”

Clearing the confusion

Rai Agarwal raises his point that it is note worthy that the direction issued u/s 33P of the ‘Act’ has not been addressed to Central Licensing and Approving Authority which is licensing authority for certain categories of drugs. Media reports seem to suggest that manufacturers as individuals and their Associations are confused and have misconstrued the said direction.

The direction no where seems to have intended to convey elimination of trade or brand name. It simply says licence of a formulation should be issued under only generic name and not with any brand name. After obtaining the licence in generic name the manufacturer is free to assign trade or brand name to the formulation subject to the provisions of Trade and Merchandise Act and to be on the safer side inform the SLA about the trade or brand name under which the licensed generic medicine is intended to be manufactured and marketed. It also means that there is no restriction on the manufactures to market already licensed generic medicine in more than one trade or brand names.”

Certainly, this move seems to be in favour of the end users (patients) but it is also assumed that if this happens then there will be insufficient/unavailability of the medicines in the market. Though all the key associations have come together and asked the Centre to roll back the notification and clarify its stance, we need to wait and watch whether the Centre does justice keeping in mind both the industry as well as patients.

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