The price of the antimalarial drug α/β arteether fell because it was discovered and developed through publicly funded research – something to keep in mind when funding for labs is cut.
The Central Drug Research Institute, Lucknow. Credit: CDRI/CSIR
Amit Misra is a senior principal scientist at CSIR-Central Drug Research Institute, Lucknow. The opinions expressed here are personal.
Public funding for research on discovering and developing new medicines in India, within and outside the Council of Scientific and Industrial Research (CSIR), has never been generous. Yet CSIR itself has developed 12 new drugs using public money. As we marched for science in Lucknow on August 9 under the leadership of Nitya Anand, we were conscious of people scrutinising our aspirations, achievements and failures. Indeed, a prominent philosopher stopped just short of inferring that we were clones of Nazi stormtroopers and demanded from us an account of “the returns for the cost (public funded science) has incurred.”
Rather than dismiss the invective for obvious lapses in rigour, it might be a better idea to try and count the cost and benefit of public-funded drug discovery and development. As an example, consider just one medicine developed by CSIR: the anti-malarial drug α/β arteether. It was developed during the late 1980s by CSIR’s Central Institute of Medicinal and Aromatic Plants and the Central Drug Research Institute (CDRI), Lucknow. The work was done largely by the kind of sarkari scientists whose “priority … was never a Nobel Prize, but food self-sufficiency, affordable drugs and low-cost satellite launches”, as Chetana Sachidanandan has proudly pointed out.
It was an unglamorous discovery, a “me-too” molecule, based on the (ultimately) Nobel-worthy Chinese discovery – artemisinin – and a member of a contemporary crowd of “me-too”s, with whom it compares quite favourably. To conform with ethical principles apropos protecting intellectual property (IP) acquired using public money, scientists acquired only process patents, for isolating and synthesising the molecule in different ways. Clinical trials in the mid-1990s established that it cured 93% of cases of complicated malaria. CSIR licensed it to Themis Chemicals (now Themis Medicare) and received official permission to market the drug in 1997. Post-marketing surveillance in 2003 confirmed its safety and 100% efficacy. In 1999, Prime Minister Atal Behari Vajpayee (re-)launched the drug under Themis’s brand name, E-mal.
The ensuing publicity alerted a large number of drug manufacturers to the commercial potential of α/β arteether. Within a few years, the lack of IP protection enabled dozens of firms to make and market the drug at competitive prices. By 2010, at least 87 formulations were in the market, with more than 50 firms selling it at prices significantly lower than those of the original licensee. (At the time of writing) There are at least 182 different formulations of arteether in the market, according to the Monthly Index of Medical Specialities, and the prices have fallen dramatically.
What could have been a credible ‘cost’ of developing of arteether? Pharmaceutical firms in the West spend astronomical sums of money in drug discovery, with the most parsimonious estimate being about Rs 380 crore ($59 million) for one new molecule (see below). I won’t discuss whether capital costs, advertising costs and revenue forgone should be added to such costing since we are here to discuss public-sector drug discovery. Clinical trials funded at public expense by the US National Institutes of Health have also been used to assess the cost side of drug discovery, but these are obviously underestimates as they ignore all the expenditure upstream of the clinical trial.
For the most generous estimate of input costs that went into the discovery of arteether, consider that the total amounts of money spent by CDRI during 1990-1999 were: 6.73, 6.64, 7.53, 8.41, 9.42, 12.23, 16.76 and 23.16 crore rupees, according to the corresponding annual reports – totally slightly less than Rs 100 crore. This period overlaps significantly with CDRI’s efforts with the contraceptive drug Centchroman and 44 other projects. Salaries, pensions, electricity, maintenance, etc. also take out a significant chunk. So it is reasonable to assume that a maximum of 5% of the total budgetary outlay, or Rs 4.5 crore (unadjusted), would have been spent on arteether. But say even 25% of the total 1990-1999 budgetary outlay was spent on discovering and developing this drug; that would be Rs 23 crore. (The likeliest amount falls between Rs 4.5 crore and Rs 9 crore.)
It is harder to solve the benefits side of the equation. As some assessments have pointed out (e.g. here and here), calculations of economic benefit rather than mere financial returns on investment on public-funded drug research are multi-sectoral and complex. Commercial activity is just a small proportion of the economic good, with the major proportion of economic benefit arising from cost-effective cure of patients in need of treatment. However, even within the limited scope of commercial activities, two points are worth reiterating:
First: ‘Protecting’ the IP on medicines, acquired using public money, is tantamount to denying the public the fruits of their own investment. Instead, ensuring that the know-how of making useful drugs is freely available to the public allows a truly free market to operate, even as it complies with legal and regulatory requirements related to making and selling medicines.
Second: Demand-driven production and distribution regulates the prices of medicines when the IP is free. This is a much greater public good than can be realised by protecting IP (which has its own costs) and selling monopolistic production/marketing rights to a single entity or a small number of companies.
Trends in retail prices have been widely used to obtain insights into economics and policy. In 1990, Santosh Goyal reported that the prices of ‘relatively non-essential commodities’, e.g. chocolates, did not rise as fast as the prices of essential commodities, e.g. food grains. This happened during the much-reviled ‘license raj’ and to commodities that were not produced by the public sector. After 1991, this general trend has not reversed, such that the economist Angus Deaton had to remove goods such as “fruit juice, cake or pastry, cold beverages” when calculating the Laspeyres index in 2008.
Thus, as is well known, inflation rates calculated from price indices do not apply uniformly to goods like chocolates, soft drinks and antimalarial medicines. Even more, the observation of a net decrease in retail prices of a medicine suggests that conventional price trend calculations are adequate to neither explain nor predict this trend.
The table below compares the retail price of the drug quoted by eight manufacturers and the original licensee in June 2010 with that in June 2016. For this analysis, the price was normalised to 100 mg of drug content per unit sold (because pack presentation differed across vendors). The change in price is presented in real terms, despite the caveats above, to indicate the cost of goods normalised for inflation. The average rate of inflation between 2010-2016 was taken as 7.37%, using figures released by the Ministry of Statistics and Programme Implementation (9.47%, 9.75%, 10.06%, 4.73%, 5.43%, and 4.79%) and using 2010 as the base year.
There was a marked decrease in prices in real terms, with reduction being higher among brands that were selling at higher MRP in 2010. (Our conclusions are line with those of a paper published in November 2013, which reported that the maximum and minimum prices of arteether in a sample of retail pharmacies across Cuddalore, Chidambaram, Neyveli and Panhauti were Rs 297 and Rs 90 rupees, respectively, in 2011.)
The original licensee seeking to have the drug included in the essential drugs list provided the data for the period 1997-2000 to the WHO. They represent sales figures for only a single manufacturer and in India alone.
Sales for the period January-November 2016 can be estimated in two steps. First, figures of quantities exported in 185-200 shipments of different pack sizes during the period January 1 to November 30 were compiled from two (different) internet resources, disaggregated into unit doses and cross-checked. This exercise yielded values of Rs 14,16,56,809 (Zauba) and Rs 16,29,20,570 (Eximpulse), suggesting that exports are likely to have been to the tune of Rs 1,500 crore in 2016 alone.
Assuming that domestic sales are equal to exports, the sales value of this single drug is likely to have been Rs 3,000 crore in 2016. The cumulative annual growth rate (CAGR) for α/β arteether injections quoted by different manufacturers and sales analysts varies widely – but can be conservatively estimated to lie between 36.6% (IPCA) and 13.4% (Themis) for the period 2010-2015. Retrospective sales can be calculated for a median CAGR of 25%. It appears that sales grew parabolically during the initial years and exponentially since 2010.
Sales of α/β arteether injections between 1997-2016. Source: Author provided
The apparent truism of free market competition driving prices down is just part of the story here. The pre-discovery and development phase on the one hand and the phase following the drug’s entry into the market offer more important lessons. CSIR justifiably cites the arteether experience as a technological success story. However, this experience also offers object lessons in pharmacoeconomics. It offers several pointers to developing cogent policy for equitable economic benefit realised through publicly funded research.
Among all external factors affecting a downward price trend in the cost and exponential growth of production and exports of α/β arteether, the single most significant factor is its discovery and development by public-funded research. And the ensuing dissemination of this research under a marketing paradigm that is free of the restraint of IP protection.
Scientists working to discover and develop drugs are being motivated to do several things that many find surprising. But subtle, as well as not-so-subtle, communiqués from the leadership have been emphasising that scientists and their research should ‘transform’ and ‘perform’. Such exhortations share two assumptions:
- Outcomes of research conducted in the past (no cut-off date specified) have little relevance to what needs to be done now, and
- Rapid and commercially profitable ‘translational research’ is the metric of performance
As a result, new drugs can be readily ‘transformed’ from public goods to commodities. Public-funded drug research can then similarly be evaluated as a ‘performance’ in rapid and profitable commercialisation, with or without the burden of assessing whether it addresses unmet medical needs of disadvantaged groups in India. This approach will ensure that the α/β-arteether success story will never be repeated.
No conflict of interest needs to be declared. This is CDRI Communication Number 9550. Work in the author’s lab is funded by the Council of Scientific and Industrial Research and the Department of Biotechnology.
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