

Indian drug company slashes crucial medicine prices by 76% - heroic
http://medicalxpress.com/news/2012-05-indian-drug-giant-cipla-slashes.html

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melling
I'm not really sure how I should feel about this. I'd like medicine to be
affordable by everyone. However, what I mainly get out of the article is that
a company with little or no R&D is simply reducing the price on drugs, which
for them is mostly profit anyway. The drugs themselves are cheap to produce,
right?

Somehow, I think we'd all benefit if we could get these companies involved in
developing better medicines. Maybe reduce the price by 50% then take that
additional pool of money and invest it into research within India, for
example.

Another idea...We always hear how great the IIT's are, which I believe they
are. Let's turn them into great research universities.

[Update]

It's interesting to see my post get upvoted and downvoted, which most won't
see. My suggestions don't really seem that divisive. I simply think getting
more people working on the problem with funding from existing sales seems like
a better idea than just reducing drug costs. Additionally, I think involving
other institutions rather than sending the money back to Big Pharma, might
provide different insights into solving the problems.

~~~
mnazim
IITs have failed to deliver in research and development. In my very humble
opinion, they have transformed in glorified employment exchanges main emphasis
being on fetching a 7 figure paycheck after 4 years.

~~~
mayanksinghal
[A current Dual Degree Student (5 year UG+PG program) here, will be graduating
in June] To be fair you are talking about Undergraduate students here, the
very best of these go for post graduation in US universities. I know this,
because I couldn't get it and a lot of my friends are _currently_ there. And
as far as I have been told undergraduate programs in US universities face a
similar challenge when a significant chunk of bright students go for Financial
and Consulting jobs (There was an article on HN that I am quoting; can dig it
up if you want).

As much as I would have want to do research with full rigor and motivation, I
find myself not as bright as those who I have seen being very successful. I
still try to do as much as I can, hoping that my efforts will be enough. And I
know that there are many many others who don't have a zeal for their research
projects at all and I can give their point of view as well. IITs are the best
place to for Undergraduate programs, they are very popular among parents and
high-school students alike. If a student is not 100% sure about what he/she
wants to do in life or if the parents are not open enough to let him try
extreme things (in the Indian sense of occupation) like acting, fine arts etc,
you give JEE and you go to IITs if you can. A lot of students find engineering
to be just what they were looking for, a lot of others don't and do something
else. As of research work, keeping aside the fact that IITs do lack the
infinite resources that US universities have, we lack industrial connections
and a research oriented culture for undergraduates. Not sure if US
universities face the same kind of issues with their UG students or not, but I
think it is unfair to expect a lot from UG students.

Now coming to PG curriculum and research there: I like my research project. I
feel proud whenever the simulation ends and when my modeling results match my
simulation results, and sad when they don't. Proper PG students (ie not DD
students like me) in IITs work harder, much harder, than UG students. The lack
of research output may be because the brightest of UG students get into US
universities where there are better research groups and opportunities. Or may
be because other engineering colleges from where the PG students have
completed their Undergraduate programs didn't offer as much as IITs (or US
universities do).

It is unfair to compare IITs with other institutes, there are a lot of factors
at play. Sure, we want high paying jobs - but if they are available who won't?
Think about the socio-economic pressure on the students as well. For a middle
income family most salaries that are offered to IIT graduates will bring about
a significant change in lives of these students as well as their families. It
might be a different case in US (and other countries) but a lot of us face
these issues. I was lucky that I don't, but I know many students with parents
who will feel happier if their child settles down with a high paying job and
not pursue higher education for another 2 - 5 years.

If you really feel so strongly about the issue, I really suggest you give back
to an IIT (or your own alma-mater) in some way - donations (you can decide
where exactly is your money spent), visits to share experiences and even
research projects. I just did 2 Research and development projects in last two
semesters - one was in collaboration with an external company. They were great
fun!

~~~
sravfeyn
>>but I think it is unfair to expect a lot from UG students

Each year almost 7000 teenagers are filtered out in India to be sent to IIT,
the best place of all in India. At least 10% of these are supposed (or 'have
the potential') to drive scientific, technical innovation in India. The
present conditions at IIT are not at all encouraging in Research except
Computer Science and Electrical mostly. The problems are many fold. One
important problem is the faculty, except that of CS, lack a vision and passion
for research. While CS, Elec profs have undergrad experience at IITs, it is
not at all true for other departments like Physics. [Yup, I am from EP]. The
profs are ones who had a B.Sc at some regional university and MTech and Phd at
IIT. And I say CS students are not the ones who can contribute to the core
Scientific Research. They drive Technological Innovations. But the research in
CS is very 'volatile'. There is no sharing of Ideas in other departments as in
CS. Ideas quickly spread in CS and give rise to better solutions to problems.
But not so in medicine or physics. India already has a great 'research'
contributions in CS. I myself has lost all the passion taking Physics as my
professional career after coming here, and I am pursuing CS (which I was
naturally able to connect, given it's mathematical nature, the first fav subj
for any IITian). And I regret for loosing Physics. And there are so many
friends in Physics, BioTech who had taken the dept in spite of good chances in
other departments. And it is very essential to make use of these bright
students for research. The IIT is the only bet for good research. Even if
research is not directly produced at IIT, at least the conditions should be
encouraging to instill the passion in students, before pumping money.

~~~
mayanksinghal
> conditions should be encouraging to instill the passion in students

There are attempts already being made to do this. In past 5 years at IITB I
have seen: Student Satellite Project, RaceCar (BAJA) Project, Some very neat
summer projects for freshmen, BioFuel project and others. Enthusiastic faculty
is now trying on their own time to reach out to students and motivate them.
And this was across departments not just CSE or Electrical Engineering.

~~~
sravfeyn
Oh well, without all those projects IIT is not just IIT. There is no lack of
projects at IITs. It is the passion and research attitude that is lacking.
Most (not all) students involve and finish those projects, essentially to get
their CVs pretty. In my BTP presentations half of the Physics Panel sleeps in
the presentations! The way of teaching is so narrow, it is about exams, CGP.
The professor's towards teaching is so materialistic. There are exceptions. We
have only 3 professors who makes subject exciting of around 30 professors.

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nhebb
From Times of India [1]:

 _"Cipla, which has 23 oncology drugs in its portfolio, has been able to offer
the price advantage because of backward integration and reverse engineering,
its chairman Y K Hamied told TOI"_

I'm not sure what backward integration means, but the part about reverse
engineering implies these are not drugs that they spent a large sum on R&D. It
makes the moral hazard of capitalism vs compassion less hazardous when you
copy someone else's product.

[1] [http://timesofindia.indiatimes.com/business/india-
business/C...](http://timesofindia.indiatimes.com/business/india-
business/Cipla-may-cut-prices-of-other-cancer-drugs-
too/articleshow/13004180.cms)

~~~
jandrewrogers
Reverse engineering drugs is straightforward and relatively trivial. There is
no correlation between ease of reverse engineering and R&D cost.

The very high cost comes from development of a drug candidate, not the initial
discovery of a candidate. If you skip the part where they demonstrate that the
chemical is effective, efficient, and safe for its intended purpose in large
human populations then you are correct. At that point it is just a moderately
low-cost chemical manufacturing problem.

However, I only see them copying drugs where someone else spent billions of
dollars demonstrating safety and effectiveness. There are myriad drug
candidates that no one has proven safe and effective that they are not copying
because that would require real investment on their part.

~~~
medstudent
Uhm, "Reverse engineering drugs is straightforward and relatively trivial".
Any proof to backup your claim?

"spent billions of dollars demonstrating safety and effectiveness". Really?
How much of the corporate koolaid have you drunk? Have you heard of Vioxx?
Numerous other drugs being recalled. <http://en.wikipedia.org/wiki/Rofecoxib>
Have you heard of how intertwined the FDA and lobbyists are? Sheesh.

~~~
jandrewrogers
Reverse engineering a drug is simple for a couple reasons. First, the compound
is clearly described in the patent. Second, chemical analysis of so-called
"small molecule" compounds is a basic skill every chemistry undergrad learns.

The most difficult part is probably designing the production synthesis process
but even that is routine for people who do that kind of thing (chemical
engineers).

------
pmr_
I think one of the failings of the pharma industry is to incorporate both,
production and R&D. If R&D would be done in the public sector and its results
freely available industrial pharma could compete on an even level
concentrating on churning out medication in huge numbers at the lowest price
possible and piggy-backing on companies that actively do R&D based on national
laws that allow you do produce generica wouldn't be possible.

Of course, this is no silver bullet. There is no guarantee that research in
the public sector is going to be as effective as in the private sector. Which
makes me wonder why medical research is so unevenly distributed between the
academic world and the industry in the first place.

~~~
aggronn
pharmaceutical research is an extremely expensive, long term process. it could
never get the same kind of funding in a public 'open source'-like setting that
it could get in a setting where its treated as IP and is given the opportunity
to create economic profits.

society is notoriously bad as innovating when there is no profit motive. the
pace of the 'march of science' due to curiosity and dedication to the
betterment of mankind is, unfortunately, glacial. thats not to say there isn't
somewhere in between, but when we have this discussion, we have to appreciate
the role that money plays in innovation--something people at HN might be able
to appreciate.

~~~
njs12345
Total pharmaceutical R&D costs by the big 20 in 2010 were $96bn. That doesn't
seem too much to raise globally, given that the NHS alone spends £10bn on
branded drugs each year.

It's also worth noting that there are ways of splitting up the
research/production integration that exists at the moment while preserving the
profit motive for research. I have seen prize funds touted as one way of doing
this. There are some other interesting systems as well - see the proposal by
Kremer in this article: [http://cdn.intechopen.com/pdfs/24647/InTech-
Innovative_propo...](http://cdn.intechopen.com/pdfs/24647/InTech-
Innovative_proposals_for_incentivizing_drug_development.pdf)

~~~
ajays
Studies have shown that Big Pharma spends more on advertising than on R&D:
[http://www.sciencedaily.com/releases/2008/01/080105140107.ht...](http://www.sciencedaily.com/releases/2008/01/080105140107.htm)

~~~
jandrewrogers
This makes sense in the same way it makes sense in every other industry. They
need to recover all of their sunk costs within a few years and marketing
greatly increases rate of uptake and overall sales. Marketing frequently
provides a positive return on investment, and in cases where the window to
make a profit is short it is essential.

It would be silly to invest marketing dollars in R&D if none of the developed
products were able to return the cost of R&D within the patent window due to
slow market uptake. The idea that these are independent or that marketing is a
waste of money relative to R&D is pernicious and incorrect.

~~~
ajays
It may apply in other industries, but medicines are different. You have the
whole medical school system to do your "marketing". There are scientific
publications galore.

For life-saving drugs, customers aren't swayed by "marketing" at all: if they
have a condition that can be helped by the drug, they will go for it,
marketing be damned.

I know we like to jump to analogies in these forums ("digital music" ==
physical stuff; "no password" == unlocked door; etc.), but some situations are
unique. I would like to think that the pharma industry, particularly the
critical drugs section, is unique.

~~~
vidarh
The medical school system and journals is too slow for a new drug. By the time
new doctors have enough influence, the drug is out of patent, and you can't
count on every doctor to follow up journal articles about every new drug.

------
option_greek
The pharma and media industries are so similar. Both lobby governments for
passing bills to support their business models. Both rely on questionable
extensions to IP rights and make loud noises about how much money they lose on
piracy and generics.

There has to be something fundamentally screwed up to have this much conflict
of interest between public good and IP rights.

~~~
gaius
Where's the public good if these drugs are never developed in the first place?

~~~
option_greek
Whether they would be developed if industry margins go down is a contentious
issue. They seem to do just fine despite the competition from generics.

In general everything related to biology seem to suffer from the problem of
high cost . There got to be a lot of inefficiency some where to sustain such
high cost. It need not necessarily be human inefficiency. Just like computers
moved from being as big and costly as big buildings to being very affordable
(raspberry pi) - thanks to the invention of transistor, there must be some
kind of bottle neck that can be targeted first to advance the whole field. You
can't do that by simply throwing more money at it. You have to create
incentives to attack the inefficiencies.

~~~
gaius
Generics are not directly competing with newly-discovered drugs, but they do
reduce the funding available for that discovery.

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checoivan
Even when some of these drugs are very expensive to produce and R&D is
expensive, some retail prices are in one word greedy.

Looking up a chemotherapy compound priced bulk online will show you how big of
a markup these drugs are being sold at. For example: a quick search shows
Everolimus costing USD1341.27 per gram to the public bulk, and one retail box
of 30 - 0.010 gram tablets costing around 5,000 usd. And I honestly doubt the
bulk chemical is being sold at a loss.

Now mind these aren't aspirins, but the only option to a slim chance of living
for many people. Ideal for drugs companies since whoever can afford it will
pay any outrageous price.

The problem has gotten big enough that now there are counterfeit chemo drugs
being sold, and given this chemo compounds may or may not work for everybody
it's hard to track them. That is another problem which may be solved by these
companies by selling affordable drugs.

~~~
anusinha
This is not _entirely_ relevant, but I would like to illustrate the complexity
and cost of the problem. Many large pharmaceutical companies have completely
pulled out of the market for developing drugs in one of the three main classes
of diseases that affect most Americans: Neurodegenerative diseases (the other
two classes being cancer and cardiovascular disease). This is because the cost
of drug development is incredibly expensive.

First, suppose we have a drug candidate. Great. This would take many, many
years of study of neurons/brain tissue cultures using in vitro techniques
(petri dish, etc. out of the native environment). These are great and
relatively cheap, but it's difficult to isolate good drug candidates.
Eventually, after high throughput screening or whatever other research method
is used, a candidate is found. This would (realistically) take many years and
require many millions in funding.

Then, once you have this in vitro drug candidate, you have to start testing it
in animal systems, starting with simple mice. Animal studies are expensive,
because the organisms are essentially disposable. These sorts of studies for
neural problems are even more expensive because the animals need to be
observed carefully using various research techniques for very extended periods
of time, on the order of months to years (since this is the timescale on which
most neural disease work). This is obviously both expensive timewise and
monetarily.

So our theoretical candidate works in simple animal and in vitro systems.
Great! There a lot of drugs that get this far and then utterly fail on human
subjects. Assuming that it passes FDA standards for human testing (which, at
this point, seems fairly reasonable), human testing will start. The main
purpose of Phase I trials is to determine toxicity of the drug in human
systems, and to see if it has any significant effect. Let's say ~40 patients
are being tested. These 40 (lucky? unlucky?) patients will take the drug, and
then be investigated using a variety of techniques to judge the efficiency.
One of the standard techniques in neural imaging is the MRI scan. The typical
cost to the company carrying out the test is around $3000+ USD per scan
carried out. Each patient will need to be scanned many times (let's say 10)
over a period of time to determine whether or not the drug had any affect.
Compared to other techniques where simpler blood tests or post-mortem tissue
analyses can tell the story, this is very expensive. And this is just phase I.
Phases II and III expand the number of patients into the several thousands.
The cost of drug development for one potential compound for so long (the
timeframe can be order of 15+ years) for a very, very small chance (due to the
complexity of the field and the few successes so far) of a huge earning is
simply unjustified for many companies. Earning back hundreds of millions of
dollars of losses back must be done by passing the cost along to the customer.

Note that the patent lifetime on drugs is very short. Nominally, the compound
is protected for 20 years. But this is applied for before any clinical trials
start, so the effective lifetime is significantly shorter. For a
neurodegenerative disease, the effective lifetime of the patent could very
well be much sorter than the more "usual" effective lifetime of 7-12 years
[1].

Also, as an extra. Organic synthesis is hard. I mean, really, really hard. You
have to design a good synthetic pathway, then make sure it works, then scale
it up from working in a fume hood, to working in large chemical reactors that
can produce it on an industrial scale. I'd like to point people at the
synthesis of Tamiflu, the antiviral used against various influenza strains
[2]. These are long pathways and accordingly tend to have lower total yields.
Drug synthesis is really hard, regardless of the cost of R&D of the drug.

TL;DR: Finding drug candidates is really difficult. FDA clinical trials is
really difficult. Making the drugs themselves is really difficult.

[1]: <http://en.wikipedia.org/wiki/Generic_drug> [2]:
<http://en.wikipedia.org/wiki/Oseltamivir_total_synthesis>

~~~
checoivan
Yes. it's very,very difficult, expensive, and takes a long time to develop
drugs. Though I still don't believe a hard problem justifies those sale
prices.

R&D is expensive but what % of the pharma company income goes to it? Let's
take the largest one Pfizer: ~9 billion total out of 67 billion income in
FY11.

Even for medical expenses it's not that much of a COST. A Top of the line MRI
machine costs 1 to 3 mil Usd. Let's say a hospital scans 5 to 10 people a day.
The machine pays itself in 2 to 4 months at that 3K pricepoint.

Drugs also don't have to be made in the US and go through the whole FDA loop
jumping.

What I'm saying is pricing seem very wrong to me. There's people with deseases
all around the world and supply of drugs is being limited to a very slim
percentage of people from 1st world countries due to pricing, because there's
people willing to pay those price. Maybe if these cheap drugs companies get to
be some sort of "the walmart of pharmaceuticals". Earning way more than
current pharmas on mass sales rather than steep prices might turn the balance.

------
DanI-S
For me, issues like this raise the question: Does capitalism still make moral
sense in a world where a large proportion of the population is so poor as to
be unlikely to participate in the free market during their lifetime? Even at
$150 per month, those drugs aren't in any way affordable for most without
government funding.

~~~
dcesiel
I think capitalism overall is a good system. Unfortunately, it doesn't work
very well with health care due in large part to information asymmetries and
moral hazard.

~~~
ashleyw
As somebody who's lived in the UK all their life, I can honestly say I'm
flabbergasted every time I read something about the US healthcare system. It's
like how Japanese cities don't have street names (<http://sivers.org/jadr>),
that completely astonished me too. It's just so outside of the reality I've
known all my life, it makes no sense.

(Granted, the US system is still better than that of third-world countries
like India. At least you _might_ get some assistance.)

~~~
rational_indian
> US system is still better than that of third-world countries like India

I have never been to the US but from what I have been reading about it I have
no question in my mind we are in a much better position. Please note I am
mostly talking about the privately owned hospitals and clinics here. The
government owned free clinics and hospitals are not used by anybody else
except the poorest of poor in India.

> At least you might get some assistance.

This statement just reeks of ignorance and prejudice. There is a very good
chance that people facing an expensive medical procedure will have higher
chance of survival in India due to the abundance of advanced medical
facilities throughout the country.

~~~
adiM
As an Indian who grew up in a medium sized town in India and who has lived in
a medium sized town in the US, I would argue that the US health system is much
much superior to the Indian heath system. If you want to talk about private
clinics in India, compare them with the treatment that you will get in the US
if you are paying out of pocket (as you'd do in private clinics in India), or
at least with what you'd get if you have a good insurance plan in the US. The
quality of treatment in the US is much better.

People facing an expensive medical procedure may have higher chance of
survival in India, but people facing emergency medical procedure certainly do
not. Have you ever faced a medical emergency outside of the big metropolitan
cities in India? My father had a cardiac arrest and he lost his life because
neither the ambulance nor the hospital had a working defibrillator. And could
not find one for the three hours that he was in the hospital (This incident
took place in a state capital and not some tiny town). In contrast, the
emergency response system in the US is amazing. Even the ambulances are well
equipped with emergency care equipment.

~~~
rational_indian
Please accept my condolences on the sad demise of your father.

I totally agree with you on the state of emergency medical services. We still
have a lot to improve on here but things are getting better with time.

------
exim
I don't think that this will affect original (western) company. Most people
who will choose Indian drug over original, simply can't afford it, even in
their dreams. On the other hand, those who can easily afford it, will go for
it over "fake" Indian one.

------
Freestyler_3
Good news, but over here it wont help. Third parties will turn 76% of the
price drop into extra profit for themselves. The downside of a closed market
where everyone is obligated to have health insurance and the health insurance
companies have all the power they need.

------
iamgopal
A nice idea to get something back from such companies is to have them collect
data of the patients and gave back to the original company/copyright owner
etc.

~~~
carbocation
What you are describing is postmarketing surveillance ('phase IV clinical
trial'). In the US, this is overseen by the FDA.

~~~
iamgopal
India's huge market could give lots of data point for analysis. My opinion was
to look for other opportunities to take advantage of such situation.

