Hyderabad: Drug multinationals are campaigning hard in New Zealand against cheaper generic alternatives supplied by Indian firms to that country’s state-funded health schemes.
Pharmaceutical Management Agency Ltd (Pharmac), the New Zealand government’s medicines procurement arm for its health schemes, recently decided to switch from an expensive, off-patent branded drug to a cheaper generic alternative from Dr Reddy’s Laboratories Ltd (DRL), India’s second largest drug maker, in line with its policy to save money.
Pharmac has decided to only fund DRL’s anti-gastric medication omeprazole from May 2009, prompting AstraZeneca Plc., the UK’s second largest drug maker, to launch a campaign to protect the market share of its branded version of more expensive omeprazole called Losec.
Safe alternative: Dr Reddy’s headquarters in Hyderabad. The firm is sole supplier of pantoprazole to New Zealand’s drug procurement body. Bharath Sai / Mint
“Over half a million older New Zealanders will soon face a stark medical choice—pay for a longstanding medicine that was previously funded, or accept a government-funded generic alternative produced in India,” AstraZeneca said in a public release on 24 November. “The decision will be forced on approximately 640,000 users of New Zealand’s most prescribed brand for acid indigestion and reflux—Losec.”
A 30 pack of 40mg Losec costs NZ$29 (about Rs810 today), compared with NZ$3.6 for DRL’s omeprazole.
Pharmac said the switch will enable it to save at least NZ$29 million in five years. It has a budget of NZ$653 million for 2008-09, up NZ$17 million from the previous year.
Pharmac has labelled AstraZeneca’s claims as “scaremongering, motivated by the company losing the market for its product. AstraZeneca is putting out incorrect information, including overstating the number of patients taking its product.”
Pharmac said some 370,000 New Zealanders use omeprazole, about half the number claimed by AstraZeneca.
“We felt a response to the AstraZeneca media release was justified because it went further than simply marketing a product; it suggested problems with the generic. This was, by implication, both a criticism of the Dr Reddy’s product and of the regulatory authority (Medsafe),” Pharmac medical director Peter Moodie told Mint by email. “It was also unfair on the patients who, in our view, can trust the Dr Reddy’s product, which has been assessed as safe and effective for New Zealanders,” he said.
DRL also supplies pantoprazole—used to treat ulcers—to Pharmac for which it gained sole supply status on 1 June.
Another company worried about losing market share to generics is GlaxoSmithKline Plc., the world’s second largest drug maker, which has launched a campaign in New Zealand—called Ask For It By Name—that seeks to protect market share of three of the company’s products—Lamictal (generic name lamotrigine), Ventolin (salbutamol) and Imigran (sumatriptan).
“Unless your prescription is endorsed ‘Do not substitute’, you may get an alternative (generic),” said the campaign’s website www.askforitbyname.co.nz.
Besides the US, New Zealand is one of the few countries where companies are allowed to advertise prescription drugs directly to consumers. Such advertising is not allowed in India.
Ironically, both AstraZeneca and GlaxoSmithKline source pharmaceutical ingredients from India and have their subsidiaries functioning in the country.
To be sure, coming close on the heels of Ranbaxy Laboratories Ltd’s run-in with the decision of US Food and Drug Administration (FDA) to ban 32 drugs produced by that company at two of its manufacturing plants in India, the reference to India as a manufacturing location of omperazole by AstraZeneca was an attempt to question the quality of the drug, Moodie said.
“There was some criticism of Indian-made products in the wake of the recent FDA Ranbaxy import ban. However, our view is that the country of origin is immaterial, provided the product satisfies the regulator about its quality, safety and efficacy,” he said. “Pharmac will continue to promote competition and the use of generics to achieve better value pharmaceuticals.”
“In cases like these, where aggressive marketing campaigns may lead to the issuance of unfair claims, misleading information, or wrongful advertising that aims to discredit Dr Reddy’s and AHL’s (Affordable Healthcare Ltd) efforts to make quality medicines accessible to consumers, we have a number of actions available to us. While we could make a formal complaint, we have chosen not to, but ensuring that the public have access to correct information,” said Lynne Lane, chief executive of DRL’s wholly owned subsidiary in New Zealand, Affordable Healthcare Ltd.
Besides DRL, Ranbaxy—India’s largest pharmaceuticals company—also supplies drugs such as antibiotics cefaclor and amoxicillin to Pharmac and has been at the receiving end of such anti-generics campaigns. However, a Ranbaxy spokesperson said: “We do not want to comment on the issue as it is has already become a controversial topic in that country.”
Earlier this year, Ranbaxy had settled a US market related lawsuit over AstraZeneca’s newer ulcer drug, Nexium, where as part of the agreement, Ranbaxy would be AstraZeneca’s US distributor for 40mg tablets of the omeprazole drug.
Neither AstraZeneca nor GlaxoSmithKline responded to Mint’s emailed queries sent on Wednesday evening seeking response on the matter.
Experts said these are typical strategies that innovator pharma companies adopt to maintain market share.
“Developed markets like the US is replete with examples of such attempts by innovator pharma companies trying to question the quality of generics drugs, and the latest Ranbaxy incident is a tool that they are using to bad mouth the entire Indian pharma industry,” said Hitesh Gajaria, executive director and sector head, pharmaceuticals, at the audit and consultancy firm KPMG.
“If such information campaigns don’t work, the last step is to launch their own generics company, like Novartis did when they started Sandoz, which makes and markets only generic drugs,” Gajaria said.
Sujay Shetty, associate director, pharmaceuticals and life sciences practice at the audit and consultancy firm PricewaterhouseCoopers, said that the value proposition and therapeutic equivalence offered by generics present a compelling case, capable of withstanding such information campaigns by innovator companies.
This, he said is especially true in the case of developed countries, where health-care expenses are becoming a significant cost burden to governments.
“Normally, generics counter such campaigns by lobbying through industry associations to influence policymakers to encourage generics as a means to contain the ballooning health care costs, especially in developed countries like the US, the UK and Germany,” Shetty said.
The outlook in New Zealand is looking good for India’s firms though.
“Over coming months, a number of very widely used medicines will be changing to generic brands through Pharmac’s tender. These include paracetamol and omeprazole. Changes will affect about half a million long-term users— nearly one in every eight New Zealanders, said Pharmac’s Moodie. “As medicines come off-patent, Pharmac is always keen to promote competition among pharmaceutical suppliers to encourage lower prices,”Moodie added.