Roche will only help itself by making drugs affordable

An otherwise media-shy or almost off-media company, Roche India, is suddenly vocal about its efforts to reduce prices of its key life-saving drugs. Media reports last week said the company is passing on the benefit of the recent customs duty cut announced in the union budget to patients, particularly referring to its stocks-in-trade.

Good gesture, as Roche will be taking the hit of the extra duty it paid for stocks that had already been brought into the country. But associations representing patients are unimpressed and dismissed those moves saying that the price differential between Roche’s drug prices and generic drugs from Indian companies like Cipla simply remained very high to become affordable. Patient groups may be screaming hoarse for everything, but this argument about cheaper generic options is very true.

If Roche is really aiming for a more patient-friendly image in India that it did not speak of for a long time, it might do well to bring down the prices of the drugs imported into India while the government does a fair job in reducing the duties on complicated life-saving medicines.

For a market that is developing at a tremendous rate, it may be a good policy to create an image of a company that cares more for the patients than for small amount of profits.

Not that multinational drug firms are not adapting to the realities of drug pricing in India. MSD, the Indian arm of US-headquartered Merck, has seen spectacular performance with its top-selling anti-diabetes brand Januvia. Januvia is one of the fastest growing brands in the world as also in India, primarily because of its customised marketing approach. Gardasil, its preventive vaccine for cervical cancer has also been positioned with the Indian pocket in mind and is reported to be doing very well.

That same policy has been the secret of Glaxo’s success in India for nearly six decades. Glaxo has behaved as an Indian company and rivalled well with the aggressive pricing strategies of Indian companies.

There are compelling reasons for that plan. Unlike most developed countries, India does not have a comprehensive health insurance for its citizens and a majority of the health and hospital expenses are borne out-of-pocket by the patients. Indian government’s healthcare plans are terribly below the mark and do not seem to get better anytime soon.

Therefore, expensive drugs from multinational companies generally end up being taken only by the richer classes of people, while the poorer sections remain at the mercy of patient support groups or the very few access programmes of companies. Rural population suffers the most.

Logically, there is no point pricing a drug so high that the needy patients cannot afford it and then turn back to claim that the company is trying to increase access just because the government had cut the import duties. It is ridiculous to conclude that the patients can afford to take the cost of Rs 3.2 lakh against Rs 4.5 lakh that was being charged earlier. There is no substitute to slashing prices of drugs drastically in the Indian context.
Internationally too, Roche has approached its emerging markets strategy differently from the Big Pharma pack. While volume has been key for top drug makers such as Pfizer, GSK and Merck, Roche has said it will still go for value-based marketing in those markets.

The head of a large multinational company in India was quoted by a business magazine on “responsible pricing” and that approach closely aligns top drug makers with the Indian market.

Though the government has been tough on drug companies with rigid price control mechanisms, it is in cases of life-saving drugs like cancer and AIDS that one feels its need more than ever. Agreed that some times price controls are beyond acceptable levels, but we are also aware of the times when companies had arbitrarily increased the prices of popular drugs.

In a recent judgment by the Intellectual Property Appellate Board on Novartis’ Glivec, the need to make the drug affordable was emphasised. Even if patents and drug prices are unrelated issues, Roche may have felt the need to speak more about its support programmes to avoid a negative image.

Remember, Novartis has been facing wide criticism because of the controversies surrounding its Glivec patents in India.

It becomes imperative therefore for Roche to maintain a cleaner image while projecting that it has done everything to make its products available and affordable. A more productive way to build a good image is to reach out to the masses with drugs with an affordable price tag.

Pillman is an executive closely linked to the global pharma industry