“The mother of goodwill is free will, if untainted by evil.” ― Christian Hunt, The Dawn of Grace
Meet Professor DS
Prof DS and I work in the same hospital.
He is senior to me and I respect him for his quest for evidence based medicine. He retired nearly 12 years back from a Government Medical College as Senior Professor of Gastroenterology and was popular among his students as well as patients for his sincerity and forthrightness. These were also the qualities that drew me to him. After my retirement from Services when I came to work in this corporate hospital, I often used to turn to him for advice on various occasions.
Today I had gone to request him to cover my patients during 3-days casual leave that I had applied for. He was writing a prescription for his patient who was sitting on a stool. He motioned me to sit in the chair opposite him and continued writing. Within a few minutes, the patient collected his prescription, thanked the doctor and walked out.
“Yes, AC, what can I do for you? He looked up at me and smiled. I opened my mouth to make my request, “Sir, I………”
Before I could say anything more, the door to his chamber opened behind me and a smartly dressed man with a maroon tie peeped in and said, “Sir, there is no patient waiting for you and my CEO is waiting outside. Can I bring him in?”
CEO of Low Cost Pharma
From the look on Professor’s face, I knew that he was not happy with this intrusion. He was possibly going to ask them to wait outside. But before he could say anything, a giant fat person in his early 50s, pushed the door and walked in. He was in a blue lounge suit and brought with him a whiff of a smoky expensive perfume.
He loudly addressed Prof DS, “Good afternoon doctor!” Then that man glanced at me, hesitated for a second and decided to move in regardless. He pulled a chair alongside mine, and looked at me in my eyes and said, Good afternoon, Dr Anand.”
I was surprised that he knew my name too.
He extended his large hand towards me and took mine to give a firm handshake. He presented a visiting card and introduced himself, “I am RBA, owner and CEO of ‘Low Cost Pharma.” And I noticed that his subordinate who had walked in with him quietly slipped out of the door. I guess he was trained to do so when big boss talked to doctors.
Prof DS now laughed, “Ruchir is a ‘big’ man in more than one way, but I call him Adnan Sami of Delhi. He’s a crook of the highest order, beware of him.” Obviously, Prof DS knew him well enough to call him by his first name and to say all this on his face.
Ruchir retorted playfully, “Sir, have I ever caused you any harm?”
DS now changed his tone, “No, no. This man is extremely helpful and super resourceful. if you want anything done in Delhi, you just have to tell him and it will be done.” Turning to Ruchir, he added, “Happy?”
Ruchir looked at me and said, “Sir I was planning to see you in your chamber later if you will permit me. And apologies for barging in like this. Prof DS is my elder brother. I came in just to tell a story I heard today about a very hard-working Government servant – called Banwari Lal.”
He paused to look at both of us by turns. Both of us were Government servants till some time back.
Prof DS was smiling, tolerating his impertinence. I was very perplexed.
Banwari’s Award
Ruchir carried on regardless, “As a reward for his hard work, his boss presented him with him a gift on New Year, a bicycle.
Banwari was grateful but hesitatingly requested his boss – Sir I have a small daughter, I would like this cycle to be fitted with a carrier so that I can take her around for a ride. The boss said, of course it will be done as you say.
And in four hours’ time, he was handed over his gift once again- this time the bicycle with a carrier attached behind the seat. But now, Banwari Lal noted that the stand of the bicycle had been removed, which he had seen in the morning. So Banwari Lal went to his boss and said, Sir, I don’t understand- The carrier has been fitted, but the stand has been removed. Am I supposed to pay for that?”
He paused for effect and added, “The boss replied – Banwari Lal! In Government service, you can either take a stand or you can have a carrier. You can’t have both”
And then he laughed at the pun in the last sentence and he was abominably loud. After this he abruptly got up to go. Turning to Prof DS he said cryptically, “Sir, I will be waiting for your response. I will come back again next week.”
An Enigma
As he exited, Prof DS again laughed. He looked at my puzzled face and said. “This man is an enigma. Every time I have met him, I have regretted meeting him.”
I asked, “You didn’t like his jibe about Government service?”
DS replied, “No, that is just a harmless banter. In fact, he was trying to give me a message.”
“Message?” I was curious but not sure that DS will like to share such things with me.
But DS was, as usual, forthright, “AC, this is my third major business encounter with Ruchir.”
And then he added, “First one was about 35 years back, when I was an Associate Professor and was trying to establish a Gastroenterology section within our Medicine Department at our Government Medical College. Then I had seen him as a young medical representative with a multinational pharmaceutical company. Even then he was obese but smartly dressed. I was a hothead then.”
I kept looking expectantly at him.
Flashback One
He added, “One day he came to meet me late in the evening. Other medical reps had long gone. I was finishing some paperwork to initiate a demand for an endoscopic equipment for my department. Those days, my HOD was an old timer and was against my starting gastroenterology as a subspecialty and I was preoccupied with thoughts about options I had to convince him to recommend my requirements to the dean. That day Ruchir had patiently waited and politely requested for ‘just two minutes.’ When I called him in, he said – Sir I am carrying something that rightfully belongs to you.”
DS paused for a moment. Then continued, “Just two people know about this, you are the third. He opened his Medical Rep’s bag and took out something wrapped in an old newspaper. I asked him –what is this? In reply he said, sir, don’t open it here, open it at home. But I was very suspicious and I opened it there and then. It contained 20000 rupees in old 100-rupee notes.”
I was taken aback by Prof DS’s candid narration, “Did you shout at him?”
DS Answered, “Of course I did. I kept abusing him for good 5 minutes. And he quietly listened. Then in the end, he said – Sir, this is what my marketing department gives me to promote sale of human serum albumin. You have been instrumental in its purchase in this college hospital. It is on your demand that purchase department buys it. In my honest opinion, it is your share of the sale.”
I looked at Prof DS questioningly to know what he did.
Cash in Hand
DS narrated further, “After some time, my anger settled down and I was curious to know his modus operandi. I asked him – what if I do not take it?”
“And Ruchir had coolly replied – someone up the chain who recommends it will get it.”
I wanted to know more. “Then what happened?” I asked him.
DS Said, “I was too scared. I knew I was being bribed. And I refused it point-blank. I asked him to get out of my office. He quietly picked up the bundle put it back in his bag, and walked out with a pained expression. I remember he had turned after reaching the door and pleaded – sir, I was being honest by giving you your share, don’t punish me by stopping the purchase of this item. This is how business works. I was too angry at that time to say anything else. I told my wife about it later in the evening and she supported me.”
“Then what happened” I asked him.
DS said, “I saw him outside my HOD’s office the next day. I do not know what conspired between them, but my life changed after that day.”
I asked, “You must have felt good rejecting the temptation of this money, which was a huge amount then.”
Change in Fortunes
DS replied, “Feeling good was temporary. My life changed because from that day onwards, my HOD became my close friend and well-wisher. He strongly recommended every proposal of mine to buy new equipment and new drugs. I was able to get everything I wanted for my department.
In years that followed, my HOD became angry with me only once. That was when I had asked for a separate department. It was much later that I realised that the money or you may call it commissions from pharma companies and from equipment manufacturers had been indirectly facilitating my effort of building my department and I felt somewhat ashamed.”
“What about Ruchir?” I asked.
Prof DS again laughed. “He never met me after that for a few years. About six years later, he came to see me once – basically to thank me. He had now become Regional Sales Manager (North) and had put on another 20 Kg. He was now transferred to Chandigarh. I advised him loose weight by hook or by crook, the way he managed his sales. He told me a joke like he did today and buzzed off in no time.”
“And when did you see him again?” I had now got interested in the story.
Prof DS went ahead. “About 15 years back he again came to me. Now I was HOD of Gastroenterology and he was Head of marketing in another pharmaceutical company. Now he weighed 140 Kg and had come for professional advice. I suggested Bariatric surgery to him and directed him to the surgeon who was good at it. And this was much before the real Adnan Sami had his surgery.”
“But you called him Adnan Sami. How come?
Prof DS ignored my comment and said, “He listened to me carefully. Then, he told me a joke and vanished again.”
Flashback Two
He continued, “But I was to have second encounter with him one year later. That year, as HOD of Gastroenterology, I had organised a professional conference and had called 3 foreign speakers for the same. This was done on assurance of sponsorship by a MNC which had big presence in India. But just a month before CME, the MNC had some legal trouble in India and started thinking of withdrawing operations from this part of the world and also withdrew offer of sponsorship.”
“Must have been terrible!” I said.
“I was left with no option but to inform my foreign friends about this, cancel their talks and lose my face. But then I was informed that tickets and stay had already been booked by my residents by paying an advance. Even if I was to cancel all arrangements, it would still lead to a huge financial loss. I was extremely tense those days because I was not good at collecting sponsorships.”
“What did you do?” I asked.
“I discussed with my wife and she suggested that we pool in all our savings to get out of this situation.” He replied.
“Did you do that?” I asked.
“Thankfully no. It was during this time that Ruchir came to thank me again after a successful bariatric surgery. He had lost 40 kg weight. And during our two-minute talk he sensed my tension and asked me about the problem. And I went on to tell him everything.”
“What did he do?” I asked.
Another Joke
“He laughed out very loudly and told me another joke. And ended his discourse with – what are friends for?”
“Did he agree to sponsor the speakers?” I asked
Prof DS said, “He not only agree to sponsor the speakers, he insisted that he will organise the banquet in a hotel. I remember that I had protested, because I was not buying anything from his company now. He just said – sir, you don’t have to. My company is doing well and I am buying goodwill from some good people.”
“So, he bailed you out in difficulty.” I said.
“I think he did more than that. In that banquet, he arranged a musical evening and sang himself. That’s when I learnt that he sings very well.”
“That is why you called him Adnan Sami!” I now understood.
Prof DS went on, “And my conference was remembered for a long time for that banquet. I was even invited by my friends to Europe and USA in reciprocation.”
After a short pause he added, “Much later, when I retired and I was looking back at my career, I felt good about everything I did, except two occasions when I was helped by Ruchir. He somehow made me feel corrupt, where I accepted things that I did not deserve. He says he runs his business on goodwill, and I remember someone has said ‘Never underestimate the allure of the Goodwill. (Stacey Jay, Romeo Redeemed)’.”
I wanted to take him out of pensive mood. “You said third encounter, that means you kept in touch.”
Low Cost Pharma
“No, Not at all. I think he survived in industry by creating goodwill, like he did with me. About 5 years back he has started his own pharmaceutical company in Ahmedabad. He called it ‘Low Cost Pharma,’ keeping his MRP lower than some other companies. As an entrepreneur, he sold an idea to and borrowed money from 25 popular physicians and cardiologists. He made them his partner in this company, and gave them company shares. ‘Low Cost Pharma’ started marketing drugs that are commonly prescribed by physicians and cardiologists for hypertension, coronary artery disease and diabetes.”
I commented, “That’s an interesting idea. Those physicians and cardiologists will now be prescribing medicines only from his company.”
Prof DS said, “Yes. It is a win-win situation. Patients get cheaper medicines, doctors a share of sales and the company is growing by leaps and bounds.”
“And what was your third encounter?” I asked.
Prof DS laughed, “He is planning to meet you. You can hear it from the horse’s mouth.”
I could not wait, “Please let me know. I will be mentally prepared when he comes.”
DS relented, “He is now moving into gastroenterology drugs and has come out with low cost proton pump inhibitors (PPI), probiotics and new gastrointestinal drugs.”
I asked, “So a CEO is coming to market drugs?”
DS looked at me, “He is not here to promote his drugs. He is here to disrupt the market!”I had heard this word ‘disrupt’ in connection with two people. One was Swami Ramdev, who was making all FMCG companies nervous and second was Mukesh Ambani’s communication enterprise Jio, which had sent ripples in industry.”
I asked, “How can a late entrant disrupt the market, when there are about 25000 brands of PPI out there in market and everyone is doing everything to sell it?”
“Just hear him out!” said DS and pulled my leave application from my hand and signed on the dotted line above the space marked ‘locum.’
And sure enough, Ruchir came to see me after about an hour. Once he was seated opposite me, his medical representative slinked out quietly as he has done in Prof DS’s room.
He just gave 2-line introduction about his company, that it was created to provide low cost medicines to people.
I asked, “Then how do you earn profits?”
His answer was simple, “By selling more volumes. As Chinese businessmen do. I am supplying common medicines to all central and state Government medical departments and by God’s grace we are doing all right. Within six years of inception, we have entered the top 10 pharmaceutical companies of India.”
Having listened to the story from Prof DS, I could guess how he was bagging all medicine tenders from Government departments and how he was getting all quality tests cleared.
Business Proposition
I wanted to now close the discussion and politely said, “It was a pleasure to meet you and hear about your company.”
He said, “I knew it will be difficult with you. You see, when I go to meet a doctor, I go with all my homework.”
Then then he told me about my past work and my prescribing habits.
Before I could interrupt, he said, “I have seen that you are driving a seven years old Honda City. It is time to change your car.”
I said, “But I am quite happy with it. It doesn’t give me any trouble.”
He added, “It was okay when you were in services. But in private practice a doctor is known by the car he drives. Your colleagues here are driving Audi Q7, BMWs, Jaguars and Mercedes cars. Why don’t you buy a Jaguar?”
I was aghast at his attempt to pry into my private sphere but continued to be polite, “Thanks for your advice. I cannot afford these cars.”
He laughed loudly, “Sir, that is why I am here. These cars are available for a minimal down payment of about 35000 rupees, followed by EMIs spread over 3 years.”
I was now getting irritated, “I told you – I cannot afford to pay EMIs.”
He said, “Sir, what are we here for? You just make the down payment of 35000 rupees and get all car documents in your name and don’t worry about the EMIs. I will take care of that!”
Even though I had listened to DS for about 20 minutes, I wasn’t prepared for this offer. He had not introduced any of his drug brands. And he was offering me this bribe for no reason at all.
I asked him directly, “And what will I have to do for this favour?”
“Nothing at all.” He had a winner’s smile on his face. “Just adopt our Rabeprazole which you are so fond of prescribing. Just stick to our brand and you will not have to think of EMIs at all.”
So, he had done his maths. But he was not prepared for my answer, “Sorry, I would not like to feel pressured to prescribe one brand as you request. Tomorrow if I stop getting patients, you might just stop paying the EMIs.”
Ghar ayee laxmi ko thukra rahe ho!
Now he was business-like, “Sir, it will never happen. Besides, we have seven brands in Gastroenterology, just give us 50% share of all your prescriptions and you will be giving us more than EMIs.”
I was as scared now as DS was on his first encounter. “Sorry, I am happy with my Honda City. And I want my freedom to prescribe whatever I want.”
He persisted, “We have two more schemes if you do not want to buy a car. You can attend DDW, Annual ACG Meeting and Annual EASL meetings, which will be arranged by our travel agent.”
I told him, “It is punishable offence as per new MCI rules.”
He was exuberant again, “Come on sir, MCI will never be able to touch you. You will give the cheque of the whole amount spent to our travel agent and we get the amount reimbursed to you in cash through third party. Every famous doctor you can name is doing it even from Government Hospitals.”
I had made up my mind, “I am sorry, but no, thank you.” And I got up to go.
He also got up. “Sir, Ghar ayee laxmi ko thukra rahe ho! (You are insulting the Goddess of wealth). Any ways, these offers are open and my phone number is on my card. As DS had also said to you, I can be a great friend too. If you need any kind help at any time, just remember me.” And he walked out.
Within a span of an hour, I learnt how markets are disrupted. I also learnt that businesses are run on goodwill. And goodwill is created by investing money. The model was being sold to me as a win-win situation for everyone. I wonder if it really is. If quality tests are passed on goodwill, and medicine brands are selected on such goodwill, is the patient really a winner?
Tailpiece
Medicines are expensive. Most patented medicines today are the research products of Western countries and the problem of costs is much worse there. A recent paper reviewed thousands of studies from January 2005 through July 2016 to explain what has caused drug price crisis and how to solve it.1 Key findings of this study were:
(a) Drug manufacturers set their own prices, possibly, to recover the cost of research for other failed drugs.
(b) “Government-protected monopolies” were allowed for patented drugs, and the laws prevent generics from coming to market to reduce prices.
(c) FDA takes a long time to approve generic drugs. Thus, a hepatitis C drug marketed at 1000 US dollar per tablet does raise a lot of eyebrows, but from business point of view, this pricing policy is similar to price of any ‘object of desire’ such as iPhone X which may cost less than 300 dollars to manufacture.
Manufacturers often argue that developing a new pharmaceutical is an incredibly complex, extraordinarily expensive, and very risky endeavor.2 For a drug to reach the market it has to pass through the ordeal of stringent safety and efficacy tests which involve remarkably expensive clinical trials.
Only 0.10 percent of the drugs that begin preclinical testing ever make it to human testing. Out of these, only 20% ever get approved for human usage. Only 2 out of 10 of the marketed drugs are able to earn R&D costs. Average research and development (R&D) cost of developing a new drug is estimated to be about $5.5 billion over 15 years.
Eroom’s Law
Public wants pricing of drugs to be based on “Cost” of producing the end product.
Manufacturers base the price on:
(a) the “value” drug may have to the consumer, plus
(b) to earn enough to provide for incentives to shareholders to support its additional R&D programmes and plus
(c) profits to the tune that markets can bear.3
The outcome has been described as “Eroom’s Law” 4 (Moore’s Law:5,6 spelt backwards) suggesting that drug discovery is becoming slower and more expensive over time, despite improvements in technology (such as high throughput screening, biotechnology, combinatorial chemistry, and computational drug design).
Situation in India
Situation in India is more complex as successive Governments have had a policy to encourage indigenous medicines,7,8 which are less expensive, even though untested from scientific view point.9 Thus, a manufacturer can put his product in market stating that the indigenous preparation contains ‘some rare herbs’ as its ingredients, while in fact it may only have ‘cow dung’.
It sounds shocking but fact remains we have no way of finding out if the said herbs are there in the marketed product or not. Besides there is no supervision on how the manufacturing is done. Label of indigenous medicine is enough to bring it to market and promote it. It’s marketing is facilitated by the Government because it is cheap and indigenous.10,15,11
Western Drugs in India
Despite so much hue and cry about expensive medicine in India, Western drugs have been relatively cheap here as there was no patent protection in India before 2005.2 Once India joined World Trade Organization (WTO), Indian Patent Act of 1970 had to be amended to fulfil its obligations under TRIPS agreement.12
Modified Act also has some very interesting provisions such as “Compulsory Licence u/s 84” in transfer of patents. It allows an involuntary contract between a willing buyer (For example NATCO Pharma Ltd) and an unwilling seller (Example Bayer Corporation, USA as in case of Sorafenib) and it can be enforced by Government under some provisions. So, in India, Generics produced locally are being marketed with different brand names apart from original product.
Taking cue from indigenous medicines, some pharmaceutical companies partially or entirely outsource the basic chemicals to unreliable sources, relegating the quality of product to lowest priority. These companies may invest huge amount of money in marketing and promotion as Ruchir has done with ‘Low Cost Pharma’, with a view to outsell genuine products by lowering price. When drugs are tested in various regulatory labs, the outcomes can be influenced by dubious means to clear all tests.
Ultimate result is that, for unsuspecting poor public, scientific medicine has been reduced to the level of alternative medicine in many instances and one is unclear if People of India deserve that. While commenting on the cost of scientific medicines, we often ignore the real issue i.e. the purchasing power of an average Indian.13
Notes:
- The names of persons used in the anecdote are imaginary, but conversations and issues are real
- This paper was originally written in 2017 and published in National Medical Journal of India14. Only changes I have made in the blog are that subheadings & a figure have been added to make reading easier. The text has been reproduced with permission from the Editor of National Medical Journal of India and the Author is grateful to him for permissions.
References
| ↑1 | Kesselheim AS, Avorn J, Sarpatwari A. The High Cost of Prescription Drugs in the United States: Origins and Prospects for Reform. JAMA. 2016;316(8):858-871. doi:10.1001/jama.2016.11237 |
| ↑2 | Gulati A. Why are Medicines So Cheap in India? The Economics of Drug Pricing. Available at https://yourstory.com/read/67e8037322-why-are-medicines-so-cheap-in-india-the-economics-of-drug-pricing. Accessed on 23 Nov 2017. |
| ↑3 | Mathew H. Four Reasons Drugs Are Expensive, Of Which Two Are False. Available at https://www.forbes.com/sites/matthewherper/2015/10/13/four-reasons-drugs-are-expensive-of-which-two-are-false/#18eac08c4c3b. |
| ↑4 | Scannell JW, Blanckley A, Boldon H, Warrington B. Diagnosing the decline in pharmaceutical R&D efficiency. Nature Reviews Drug Discovery 2012; 11, 191–200 |
| ↑5 | See http://www.mooreslaw.org/. Accessed on 23 Nov 2017. |
| ↑6 | See http://ecorner.stanford.edu/videos/4224/Moores-Law-for-Pharma. Accessed on 23 Nov 2017. |
| ↑7 | http://pib.nic.in/newsite/PrintRelease.aspx?relid=159638. Accessed on 23 Nov 2017. |
| ↑8 | http://ayush.gov.in/sites/default/files/6701085845-Approved%20Final%20English%20version%20of%20PHI%20Scheme.pdf. Accessed on 23 Nov 2017. |
| ↑9 | https://thewire.in/120458/ayush-ministry-interview-ajit-sharan/. Accessed on 23 Nov 2017. |
| ↑10 | https://scroll.in/pulse/850680/theres-no-scientific-evidence-but-ayush-ministry-is-recommending-alternative-medicines-for-dengue. Accessed on 23 Nov 2017. |
| ↑11 | http://planningcommission.gov.in/aboutus/committee/strgrp12/st_ayush0903.pdf. |
| ↑12 | Mathur V. Patenting of Pharmaceuticals: An Indian Perspective. International Journal of Drug Development & Research 2012 ; 4 (30: 27-34. http://www.ijddr.in/drug-development/patenting-of-pharmaceuticals-an-indian-perspective.pdf. Accessed on 23 Nov 2017. |
| ↑13 | Roy V, Gupta U, Agarwal AK. Cost of medicines & their affordability in private pharmacies in Delhi (India). Indian J Med Res. 2012 Nov; 136(5): 827–835. |
| ↑14 | Anand AC. Low-Cost Pharma. Natl Med J India, 2018; 31: 176-9. It is available online from: http://www.nmji.in/text.asp?2018/31/3/176/255764 |
| ↑15 | http://www.livemint.com/Science/w8KCgR0QlEctwAnji8BaeK/Government-expects-Ayurvedic-products-market-to-rise-to-8-b.html. |
Again a very interesting reading. Faintly remember reading this earlier. My comments – we do prescribe medicines to our patients when probably they not absolutely necessary. We should drag our hand. The very last sentence of your article says all of it. I wish we physicians keep that in mind. Thanks again 👍
Very comprehensive article, well researched. Congratulations!
Very enlightening for the uninitiated!! The nexus is very well oiled and enjoys the patronage of politicians. Disruptive marketing strategies are today very popular. Corruption behind these disruptive practices is camouflaged. We all unconsciously promote it while trying to benefit our economically weak patients. It is difficult to get out the cludges of this practice in India. Such manufacturers also manage to win large tender orders from the government sector, which follows the lowest-quote dictum. Large private hospitals are no less as they willingly buy these doubtable drugs to improve their profit margins.
Nicely put sir.
Sir your write up touches every aspect of what makes pharmaceutical companies create such affordability gaps while pricing their drugs. Most pharmacy fields are actually indirectly subsidised by high government finance through incentives for their industry, and like this Pandemic, even earlier outbreaks of SARS & Ebola saw the investment of western governments in funding the research of companies. Another aspect is clinical trials, where it would be better to create a national body that would recruit and carry out such trials. The mRNA technology is a government funded one, now used to create the two candidate vaccines. Israel offered valuable clinical data in exchange for lowered cost for vaccination of its population by Pfizer. Ultimately sir, only governments can invest and create conditions that do not transfer the cost to the patient. Will this pandemic create such governmental will? I don’t think we can judge the businessman or the doctor who takes on ‘sponsorship’. It is demand supply situation arising from a society that doesn’t want to bring good governance but merely seeks a quick fix for a given situation!