Access to Essential Medicines and Intellectual Property - Evidence from Indian Cancer Drug Markets
Pengfei Liu @UConn
(w/ Chirantan Chatterjee @IIM and Jian Ni @JHU)
2014 China India Insights Conference
Cancer around the world (male)
Souce: http://www.pfizer.com/files/products/cancer_in_asia.pdf
Souce: http://www.pfizer.com/files/products/cancer_in_asia.pdf
Cancer around the world (female)
Drug Accessibility vs. Patent Protection
• Cancer drugs Expensive to develop: importance of intellectual rights
High rate of patent expirations beginning in 2008
Increasing global demand: incentive to develop drugs Rising cancer rate Improvement of healthcare (and income)
Accessibility by (still disadvantaged) customers in the emerging markets
• Zero-sum Tradeoff?
Patent rights are important to incentivize innovation. inaccessible for poor patients: affordability vs. availability.
Accessibility: affordability vs. availability
• Impact of Patent litigation on drug companies Price: affordability.
Product: availability?
• Price: average price and price dispersion
Domestic vs. international
• Product: variety and mere presence injectable vs. non-injectable branded vs. generic
• Firms’ pricing power and strategic allocation of manufacturing
capacity with/without patent Entry (or exit) in short/long run
What did we do?
• Compare the difference between treated and non-treated molecules using detailed sale data from 2007 to 2013
Price (average price and price dispersion)
Product (brand vs. generic)
Variety (injectable vs. non-injectable)
• Explore the potential source of the difference (if any)
Across categories
Patent litigation matters
Sub-national?
Patent Litigation in India
• Government regulators advocate offering essential, unbranded drugs at discounted rates.
• In April 2013, Novartis’s cancer drug Glivec (Imatinib), fails to receive product patent protection in India.
• These are markets where big innovator firms with their patent protected products will co-exist with the smaller generic versions of their products being sold by smaller firms, many times even before patents expire.
• Our study: document patterns (of price and product) that emerges from the co-existence of patented and generic drugs in India.
Drug Distribution in India
Indian anti-cancer drug market was Rs 20 billion in 2012-2013, our data captures 7.86 billion (about 40%) of total sale information.
Overview of the Data
• Newly available data: 104 cancer molecule sales across 1365 cancer drug brands, sold across 23 Indian state-regions from April 2007 to February 2013, over 71 months. Source of data: India’s largest association of 0.75 million chemists
and druggists.
• The data resolution is (alternative usage: disaggregated) at the molecule-firm-state-month-sku (stock keeping unit) level, including information such as monthly revenue (both price to retailer and suggested retail price).
• India operates an MRP (Maximum Retail Price) model. All retail products sold are marked with MRP. Shops cannot charge customers above the MRP.
Data Construction
• Type of drugs (in terms of number): Injectable: 51.3%; Capsules: 12.7%; Tablet: 30.5% Others: 5.5% (such as syringe, solvent, solution and etc)
• We impute the prices at per-milligram level and normalize the
quantities of all 1365 cancer drug-brands in milligram, by coding the strength information after consulting pharmacists.
• Allows us to do meaningful comparison of the IP-treated cohort of molecules with the rest of the molecules on various dimensions.
Number of Firms Number of Domestic
Companies
Number of Foreign
Companies
84 68 16
Number of Brands Number of Domestic
Brands
Number of Foreign
Brands
736 651 85
Number of SKU Number of Domestic
SKU
Number of Foreign
SKU
Number of Injectable
SKU by MNC
Number of Injectable
SKU by Domestic Firms
1348 1197 151 80 619
Class Number of SKUs Number of
Domestic SKUs
Number of Foreign
SKUs
ANTI-NEOPLASTICS 934 842 92
CYTOSTATIC
HORMONE THERAPY 142 133 9
IMMUNOSTIMULATING
AGENTS 77 53 24
IMMUNOSUPPRESSIVE
AGENTS 195 169 26
Some Basic Characteristics of the Data
Market Definition
• According to the usage of each molecule, we restrict our attentions to three separate sub-markets: Breast cancer, Lung cancer and Blood/Leukemia cancer.
• In each sub-market, we are able to identify at least one molecule that went through patent litigation (IP) treatment. Breast cancer: Imatinib mesylate, Lapatinib, Trastuzumab Lung cancer: Erlotinib Blood cancer: Sunitinib
• Following www.drugs.com, www.webmd.com & www.wikipedia.com we
also classify 23 molecules into the breast cancer market, 14 molecules into the lung cancer market and 21 molecules into the blood cancer market.
More on the IP-treated molecules
• IMATINIB MESYLATE: Patent application filed in 1998 by Novartis, and the patent application was rejected by India supreme court in 2013.
• LAPATINIB: Patent revoked in 2013.
• TRASTUZUMAB: Roche lost patent since “Roche does not follow correct filling procedure”, in August 2013.
• ERLOTINIB: Infringement first filed in Jan, 2008; Medication (first of its kind?) ordered in June 2014.
• SUNITINIB: Sugen generical drug firm granted a patent for utent in 2007, Cipla filed a post-grant opposition in 2008. The patent was revoked in Sep 2013
• Summary: The India government is protecting generic drug firms, increasing the cancer drug availability through a loose patent enforcement policy.
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Average Price of Breast Cancer Drug Sold in
India (Rupee/mg), non-treated
MNC_NonInjectable
MNC_Injectable
INDIA_NonInjectable
INDIA_Injectable
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Average Price of Lung Cancer Drug Sold in
India, non-treated
MNC_Injectable
MNC_NonInjectable
INDIA_Injectable
INDIA_NonInjectable
• PMNC>PINDIA
• Price variation between injectable and non-inject bales
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Total Quantity of Breast Cancer Drug Sold in
India (mg), non-treated
MNC_NonInjectable
MNC_Injectable
INDIA_NonInjectable
INDIA_Injectable
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Total Quantity of Lung Cancer Drug Sold in
India, non-treated
MNC_Injectable
MNC_NonInjectable
INDIA_Injectable
INDIA_NonInjectable
• Increase in the market demand. • Demand for MNC products
increase faster in the Breast Cancer Drug Market.
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Average Price of Lung Cancer Drug Sold in
India, IP-treated
MNC_NonInjectable
INDIA_NonInjectable
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1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69
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Average Price of Breast Cancer Drug Sold
in India (Rupee/mg), IP-treated
MNC_NonInjectable
MNC_Injectable
INDIA_NonInjectable
MNC_Injectable
• We observe market entry and exit for the treated, injectable drug in the breast cancer market.
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Total Quantity of Lung Drug Sold in India (mg), IP-
treated
MNC_NonInjectable
MNC_Injectable
INDIA_NonInjectable
INDIA_Injectable
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Total Quantity of Lung Drug Sold in India
(mg), IP-treated
MNC_NonInjectable
MNC_Injectable
• Demand for the treated molecule increase as well.
• Demand for the treated molecule increase significantly for INDIAN firms.
Empirical Model
• Fixed-effects model to see how the patent litigation/treated molecule will influence the average price and sale quantity.
• yijt is the average price (rupee/mg) or sale quantity of molecule i in state j at month t.
• SkuNoijt is the number of SKUs valuable for molecule i in state j at month t, which measure the product variability (competition).
• Treatedi is a dummy variable, which equals 1 if a molecule is under patent litigation.
• Injectablei is a dummy variable, equals 1 if molecule i contains injectable SKU.
• Control for time fixed effects (deltat) and molecule fixed (phij) effects.
Empirical Results: Overall (The Cancer Drug Market in India)
PTR MRP Quantity(inmg) log_avg_ptr log_avg_mrp log_quantityNoSku 0.00285 0.00253 0.287*** (0.00319) (0.00320) (0.00507)NoSku*Treated -0.0781*** -0.0763*** 0.266*** (0.00616) (0.00616) (0.00994)Injectable 2.578*** 2.559*** -2.131*** (0.0338) (0.0338) (0.0396)Injectable*NoSku -0.104*** -0.103*** -0.0482*** (0.00352) (0.00351) (0.00573)Injectable*NoSku*Treated 2.693*** 2.676*** -1.768*** (0.0461) (0.0460) (0.0530)_cons 7.482*** 7.699*** 5.804*** (0.147) (0.147) (0.167)
TimeFixedEffects yes yes yesMoleculeFixedEffects yes yes yesN 47864 47864 47920adj.R-sq 0.241 0.239 0.302
Standarderrorsinparentheses.*p<0.10,**p<0.05,***p<0.01
Empirical Results: Breast Cancer
Empirical Results: Lung Cancer
Empirical Results: Blood Cancer
Conclusion and Future work
• We explore how the patent litigation/treated molecule will influence the average price and sale quantity. Explore sub-national variations in the baseline national result since
the development in India is unbalanced. Institutional changes that might have changed the market structure in
cancer drugs in India to use an instrument for identification in our story.
• Policy implications: Accessibility is not just a price/quantity story. There
are important nuances coming from dosage, forms and assortment from the moderation of IP.
• Welfare impact? Not straightforward!
