Napm 2014 review

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inside

Linking our members to industry news and views

NAPM Review


key trends

sPeCiaL rePort

inside

1 Challenging perceptions

4 From the Chairman’s desk, generic trends

5 bio-similars: the next Frontier

6 Private healthcare under the spotlight 7 intellectual property on the state’s agenda 8 Fair pricing vs prescribed formulas

10 the naPm committee update

10 making our mark

11 international connections

13 important dates

12 naPm serving our members in 2014 key areas where the naPm is making a difference

our visionto champion affordable and accessible healthcare, by promoting generic medicines and supporting

the development of the south african pharmaceutical industry as a national asset.

our missionto ensure that the healthcare sector plays a constructive role in our country’s economic growth,

through development and transformation, thereby creating an environment that can thrive ,

expand, and be competitive , with the ultimate aim to enhance access of medicines to all of our

country’s citizens.

objectives• to promote the use of generics medicines

• to be the voice of the generic pharmaceutical industry in south africa

• to respond to regulations and represent members with government agencies

• to provide information and facilitate trade opportunities for members

CONTeNTS

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key trends

Challenging perceptions

a recent editorial in the Journal of Pharmaceutical Policy and Practice (JoPPP) advocated

research into the access of affordable of medicines. the article describes some of the barriers

that generic medicine manufacturers face in gaining greater usage of their products.

one of the arguments put forward are that funders do not actively promote the use of generic

medicines. this is not valid in the south african context as the medical aid administrators

in this country give great support to the dispensing of generic medicines through their

reimbursement policies and formularies. another barrier JoPPP discusses is the non-alignment

of the medicines value change where incentives for distribution, wholesaling, prescribing and

dispensing can be contradictory.

in a presentation by the naPm Ceo at the conference on market access and Pricing held in

april 2014 the challenges facing generic medicine suppliers in south africa was the topic. some

of the barriers identified by JoPPP are relevant, but the others are pertinent only to our local

market. some of those discussed were:

in our communication to the media and public the association tries to emphasize that generic medicines are subject to the same

registration and manufacturing regulations as the originators.


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1. Prescriber Attitudes informal research has shown that physicians feel that funders impinge on their decisions

when formularies defined by Pharmaceutical benefit managers (Pbm) are imposed on

them. specialists especially feel that they have little or no say in how the formularies are

compiled and in most cases consideration for the particular drugs are based on price alone.

Consequently there is an aversion to prescribing generic medicines which comprise the

major portion of the formularies.

2. Consumer Perceptions with regard to medicines, patients rely on their doctors in forming attitudes about generic

medicines. if the physician is not averse there is general acceptance by the consumer.

However it is a known consumer perception in marketing circles that the average person

equates quality to price. it is hard for a patient to believe that a medicine costing a third

of the price of an originator could have the same quality and efficacy as the higher priced

medicine.

3. Intellectual Property the naPm is in agreement with JoPPP in highlighting the challenges provided by

intellectual property legislation. the concept of “ever greening” where for trivial changes to

the manufacturing processes, patent periods are extended. in the majority of cases there

is no extra benefit to patients as the finished product remains unchanged. the naPm has

supported the sa government in its publication of the draft iP policy to ensure patients are

only granted for novel inventions through an examinations office.

4. Regulatory Delays an element which affects every one of the naPm members. the lengthy registration times

for generic medicines affect the patients, businesses, and industry. our members alone

have a backlog of more than 1000 dossiers to be evaluated. the members report that on

average it is taking about four years to achieve a registration, but because of the long lead

times, manufacturing processes have changed and post registration changes can take a

further eighteen months.

5. Pricing Factors input costs are of concern to any business, but in the generics industry the room to

manoeuvre is limited. the regulations’ pertaining to medicines preclude the easy change of

suppliers for active ingredients. this prevents shopping around for cheaper alternatives in

the short term.

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even locally manufactured generic medicines have at least a 60% imported content, which

makes the industry very susceptible to volatility in foreign exchange rates. the dramatic

changes in the value of the rand against the currencies of our trading partners since november

last year create a hardship for generic suppliers due to the slim gross profit margins.

medical aid driven formularies force generic marketers to be “price takers”. if a medicine is

priced higher than the reimbursement level set by the medical aid administrator, the consumer

would have to make a contribution towards the purchase price. medical aid members in general

are averse to paying a co-payment on a generic medicine.

with the expansion of pharmacy chain stores the concept of formulary tendering has crept in.

the generic medicine space is very competitive and choice is wide. this gives the pharmacy

buyers the opportunity to stock those generic medicines which provide the greatest financial

benefits in the form of advertising and the controversial “data fees”.

most telling of all in this debate is that many consumers are quite continent to pay over r200 for an unregistered, untested complementary or so called “natural “medicine, rather than r50

for a proven generic anti- inflammatory medicine.

key trends


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From the Chairman’s DeskGeneric Trendsthis last year has seen the generic market continue to grow at double digits, recording

a year end growth rate (mat) of 10.3% with a unit growth of 4.2%. this implies that most

generic companies took advantage of the price increase granted by the doH and also

reflects the growth of newly launched, off patent generics.

the ethical market on the other hand recorded a much slower growth rate of 2.3%

(mat), the bulk of which was due to volume growth (2.1%). the market share of generics

(mat) has grown to 35.7% while the volume market share is now as high as 63%.

there has been much debate recently about the pricing of generics relative to that of

the originators, with some role players suggesting that the discount of generics could be

greater than it currently achieves.

the march ims data suggests an average price for the ethical market of r5.28 per

counting unit while the average price of generics is just r1.49, a 67% difference. while

these figures are not comparing equivalent molecules, it does demonstrate the role that

generics play in expanding access to medication.

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key trends

Bio-similars: the Next Frontier

in november 2013 the medicines Control Council issued guidelines for comment on the

registration of bio-similar medicines. a bio-similar medicine is a follow on biological

medicine product whose active substance is made by or derived from a living organism

by means of recombinant dna or controlled gene expression.

the term bio-similar was created by marketers to describe a subsequent version of

innovator biopharmaceutical products developed following patent expiry.

generally, the difference between a small molecule generic medicine and a “follow-on

biologic” is the complexity of manufacture and the imitator manufacturer does not have

access to the originator’s cell bank.

with substantial assistance from our member, Cipla, the naPm submitted comments on

31st January 2014 broaching three main aspects which we believe are pertinent to the

south african market.

Firstly, given that safety, efficacy and quality should be the prime considerations in the

registration of all medicines, guidelines for bio-similars need to be formulated in such a

way as to abide by these tenets but also promote access to these advanced medicines

by the greater population.

Promoting access involves providing biological drugs at substantially lower prices than

the originators’ versions. access can either be promoted or prevented through the

registration process.

the proposed guidelines require local clinical trials to be conducted in each indication

claimed by a bio-similar.

in our submission we made a case for the utilization of clinical trials carried out in

other regulated jurisdiction as evidence for registration of the indications. in addition

to this some form of extrapolation of indication should be permitted. included in our

submission was a request for a right by healthcare practitioners to substitute originator

medicines with a bio-similar as is allowed for generic medicines.


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Private healthcare under the spotlight

the five person committee of the Competition Commission delving into the private healthcare

market is led by former Chief Justice sandile ngcobo, was supposed to have started

deliberations in February this year. this has seemingly been delayed by a court application from

netcare Hospital group to oblige the consulting company, kPmg, to return all documents they

hold pertaining to netcare Hospital group.

kPmg, has acted as an advisor to netcare in the past and allegedly hold 30 000 documents

pertaining to netcare in their it system. the reason for netcare’s application is that kPmg

has been appointed as a support for the Competition Commission Committee probe into the

Private Healthcare market.

the matter was set down for hearing in the High Court on 21st and 22nd may. the outcome of

the application is still awaited at time of printing. the enquiry into the private healthcare market

was announced on 13th may 2013 by the then minister of economic development mr ebrahim

Patel.

the enquiry was the first to be undertaken after the amendment to the Competition

Commission act came into effect on 1st april 2013.

unlike the market enquiry into the banking sector where the participants cooperated on a

voluntary basis, participation into this one is no longer voluntary. the committee has wide

ranging powers such as to summons persons to appear and to provide documents. the

Commission now also has the power to initiate a complaint against a firm based on information

obtained in the inquiry. under the amendment act, the commission is able to apply criminal

sanction to the results of a complaint.

the original terms of reference of the committee excluded the pharmaceutical sector from the

inquiry. this is the only part of the healthcare sector subject to price controls. despite this the

Ceo’s of both mediclinic and netcare called for the pharmaceutical sector to be included into

the probe. the minister acceded.

subsequent to this decision the then deputy Commissioner of the CC, trudi makhaya with a

panel, interviewed the Ceo of the naPm as a preliminary investigation. ms makhaya has since

resigned from the CC. as the association we can expect further contact when the inquiry

committee starts their probe.

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sPeCiaL rePort

intellectual property on the State’s agenda

the naPm supported the draft intellectual property policy document which was issued earlier

this year. the publishing of the policy precipitated a row between the originator association,

iPasa, and the minister of Health dr aaron motsoaledi. the naPm cooperated with the

civil society organizations, msF, section 27 and taC in formulating our response which is

summarised below.

1. Patent terms relating to medicine should be limited to a maximum of 20 years as authorised

by article 33 of the triPPs agreement

2. the policy should clarify subject matter that is not considered patentable. (e.g. new uses,

treatment of diseases, known processes applied to new pharmaceutical entities.)

3. the policy should define what is meant by novelty and inventiveness and require significant

technical advances from the state of the art relating to pharmaceuticals.

4. the naPm supports the draft policy in Chapter 1a) i) for the establishment of a substantive

search and examination facility.

5. we support Chapter1 a) v) for the establishment of a Pre- and Post- grant opposition

mechanism utilizing digital media and time lines for opposition. we further recommend that

post grant to existing patents be allowed with a cut-off date in the region of the past 10

years. if this process was overseen by a competent authority the need to up skill Judges on

patent aspects would be reduced.

6. we insist that although data ( such as clinical test data) be protected from commercial

abuse, the data submitted to a government agency such as the mCC or its successor, may

be utilised by that agency to evaluate generic medicines, for the benefit of the south african

nation. Chapter 1a) vii)

7. under the heading disclosure of information in patents, we concur that sufficient

information be disclosed in the lodging of a patent that would enable a technical evaluation

of the patent.

8. the naPm recommends that legislation under the jurisdiction of other government

departments be brought into line to take advantage of triPPs flexibilities. e.g. regulations

from the doH impede parallel importation.

9. the patent act should supersede any bilateral or multilateral agreement between countries

and these agreements should not be allowed to alter any provisions of the act or its

regulations

10. Patents granted in other jurisdictions should not become a prima facie basis for granting

patents in south africa.

11. we support the bolar provisions allowing development of generic versions prior to the

expiry of the originators patent.

12. we concur with the recommendations in Chapter 2 to simplify compulsory licensing.


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Fair pricing vs prescribed formulas

the most active committee in the naPm has been the pricing sub-committee. Headed by

graham Holt of Pharma dynamics, the committee has dealt with various pricing regulations in

the past year with much of the effort surrounding the annual price adjustment.

the guidelines for the 2014 price adjustment were issued in september 2013. after evaluation

the sub-committee, using the ndoH price adjustment formula, calculated that the price

increase on the seP should be at least 8,7%. in fact if there was an equal split between the

consumer price index and the producer price index, the increase would be 9%.

the naPm submitted the information on the 11th november 2013, giving what we believe

were justifications for the calculations based on the published formula; the high component of

medicines that are imported; the cross subsidization of state tender products by the private

market and the fact that an average forex rates based on the previous year has no relevance to

the current rates at which medicines are procured.

alas, in February 2014, the industry was granted a 5,82% increase with effect from 1st april.

this amount was the consumer price index, which has little bearing on the input costs of

medicine.

after submitting a letter to the ndoH expressing dismay at the price adjustment rate,

considering the steep and dramatic deterioration of the rand /dollar and rand/ euro

exchange rates. Following the letter, the exco of the naPm met with the deputy director

general of the ndoH, dr anban Pillay.

at the meeting dr Pillay indicated that the department would call for recommendations on

how the formula should be derived. He further said that they were intending to have three

levels of adjustment relating to originator products, imported generic medicines and locally

produced medicines, respectively.

we indicated to dr Pillay that there was an immediate problem with the pricing and he made

the offer that our member companies could approach his department directly to seek relief on

individual products.

when the “change in formula” documents were released the naPm consulted with its

members. after evaluation the consensus was that the current formula was adequate, but it

needed further engagement. if the formula had been used and not overridden by ”political”

expediency, the industry would have gained about 5% over the past two years which would

have helped to stabilise the exchange rate volatility. after all according to the Council for

medical schemes, the rate of increase in medicines was in single digits as opposed to that of

specialists, Private Hospitals and medical aid administrators.

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sPeCiaL rePort

The NAPM met with the Minister of Health Dr Aaron Motsoaledi at his office in Pretoria, to

discuss the future of the generic medicine industry in south africa.

at the time the intellectual Property Policy was a discussion item, dr motsoaledi indicated

that the government would double the treatment of Hiv/aids patients within the next couple

of years and also provide intensive treatment for tuberculosis. access could only be achieved

through the promotion of generic medicines.

IN ATTENDANCE from Left to Right: Dr Anban Pillay Deputy Director General (DOH). Tommy Scott (Pharma Dynamics) Gaurav Jain (Zydus), Herman Grobler (Cipla), Vivian Frittelli (NAPM), Dr Skhumbuzo Ngozwana (independent Consultant) Dr Aaron Motsoaledi, Minister of Health, Nihar Patnaik (Dr Reddys), Muhamad Bodhania (Medreich), Anita Smal (Abex).

generic medicines are subject to price dampening through the competitive nature of the

market, so any price adjustment allows a breathing space for medicines with exceptional

increases in input costs.

the naPm submitted its recommendations before the deadline on 28th march 2014 and

requested that the exchange rate utilised should be based on the current situation. we heard

afterwards that Pharmisa and iPasa have requested an extension, which was granted for

another three months.

the naPm, having left membership of the Pricing task group (Ptg) some three years

previously was invited to attend a meeting with the group and dr Pillay. this meeting, to

discuss the formula, was cancelled a few hours prior to the start. Cynically, we believe this was

cancelled to allow publication of the international benchmarking regulations, for comment. the

ibr may negate the concept of an annual price increase as a cursory look at them indicates that

the prices in the benchmark basket countries should be evaluated annually. the impression had

been created in the past that the ib would be a once off process.

the naPm pricing committee is meeting early in may to evaluate the impact the regulations will

have on generic medicines.


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The NAPM committee update

the new executive Committee of the naPm will be elected at the 37th annual general meeting

on 11th June 2014.05.29 we thank the outgoing Committee for their contributions during the

past year.

this work was on a voluntary basis to benefit all members. during the year kevin grant was

replaced by Herman grobler, Coo of Cipla and skhumbuza ngozwana (Consultant), suhail

gani Ceo of austell and kingsley tloubatla Ceo of the bliss group were co-opted onto the

committee. the good news is that all have agreed to nomination on the 2014/2015 committee.

Making our mark

we are pleased and proud to report that ms anita smal, a member of the naPm exco, was

nominated and elected as secretary with the itg which is representative of the industry in

meetings with the registrar and management of the mCC.

anita, who has performed the function before is very efficient in providing and supplying

minutes of the meetings and disseminating valuable information concerning the regulatory

body. in addition anita heads our scientific committee and single-handedly has been

responsible for countless submissions on technical guidelines from the mCC and ndoH.

we thank anita for her valuable contribution to the naPm.

From Left to Right: Vivian Frittelli, CEO, Gaurav Jain, Muhammad Bodhania, Vice Chair, Desmond Brothers, Kevin Grant, Paul Anley, Chair, and Anita Smal.

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international connections

the naPm is a member of the management committee of the international generic

Pharmaceutical alliance (igPa). Co members on the committee are the us generic association

(gPha), the Canadian generics association (CgPa), the european generics association (ega),

the Jordanian association of Pharmaceutical manufacturers (JaPm) and the Japanese generic

association (Jga). the igPa is in its 17th year of existence.

the benefits of belonging to the international alliance enable us to share information

on intellectual property, trade and scientific aspects affecting the generic medicine and

biopharmaceutical medicine industries.

the igPa has three subcommittees to which members of the various associations belong.

there is opportunity for members of the naPm companies to serve on these sub-committees.

these sub-committees are coordinated by members of the management committees. senior

members from our own members’ head offices participate such as teva and mylan. the sub-

committees comprise scientific, trade, and intellectual Property. a fourth committee under

the lead of suzette kok of the ega is being established to cover bio-similars. the igPa with

its committees develops and provides position papers on aspects such as benchmark pricing;

generic medicines in trade agreements and in relation to triPs and Patent Protection.

the igPa holds an annual meeting with the wHo, wiPo and wto in geneva. this year the

meetings are on 10th and 11th June and conflict with our agm. the members of the igPa are

able to gain information on the future policies and strategies from these un committees as

well as provide input from a generic medicine point of view.

in the past the igPa relationships were governed by a formal agreement to which each

member complied. mechanisms are in motion to register the igPa as an association in

switzerland as a legal enterprise. this will afford official recognition by the committees of the

united nations. the igPa is currently lobbying for a place on the international Committee for

Harmonization (iCH),

the igPa holds an annual conference to highlight issues pertaining to generic and bio-similar

medicines around the world. the 2011 conference was hosted in south africa. in 2014 the

conference is being hosted from 19th to 21st november by the us generic association in key

biscayne, miami, Florida. details can be found at www.gphaonline.org/events/upcoming-

events/17th-annual-igpa-conference

19 – 21 Nov Key Biscayne


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important dates11 June NAPM Annual General Meeting

28 June Deadline for comments into alternate formulae for SEP adjustments

12 August Deadline for comments on International Benchmarking

28 August Deadline for comments on Foodstuff labelling

19-21 November International Generic Pharmaceutical Alliance (IGPA) annual conference, Miami.

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NAPM serving our members in 2014Key Areas where the NAPM is making a difference:

STAKEHOLDER ENGAGEMENT

WORKSHOPS ADVOCACY & LOBBYING & POLICY ADVICE

INTERNATIONAL REACH

HEAD OFFICE

interviews and comment in trade publications/ radio/ televisionissue of press releases to media

invited and participated in 7 government workshops

evaluation, distribution and or comment on 27 regulations issued by departments of Health and trade and industry. including submissions on pricing, intellectual Property and bio-similars

Participation in sagma meet-ings

refurbishment and input into naPm website

Presentations at various health conferences

CPd for doctors on ethics and generic medi-cines

represent naPm at reg-ulatory discus-sion group on Cams

executive mem-bership of igPa

Conversion of naPm articles of association to memorandum of incorporation

Presentation and motiva-tion to unido on project for eCtd skills training

workshop on new bbeee legislation

Participation in the mCa pro-cesses

Participation in igPa trade and intellectual Property sub- committee

Participation in student re-search projects

workshop on sales models

Participation in industry task group (itg) with the mCC

workshop on Cams legisla-tion


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To stay in touch with the NAPM office and keep yourself informed of the latest developments and points of interest we invite you to go to the NAPM’s website www.napm.co.za and get connected.

NAPM Member Companiesabex Pharmaceuticals (Pty) Ltd

activo Health (Pty) Ltd

aurobindo Pharma sa (Pty) Ltd

austell Laboratories (Pty) Ltd

bliss Pharmaceuticals

Cipla medpro

di medicine reg. Consultants (Pty) Ltd

dr. reddy’s Laboratories (Pty)

execu regulatory services

mc Pharma (Pty) Ltd

medreich (Pty) Ltd

mylan Ltd

mra-regulatory Pty) Ltd

Pharma dynamics (Pty) Ltd

Primapharma (Pty) Ltd

ranbaxy sa (Pty) Ltd

teva Pharmaceuticals (Pty) Ltd

watson Pharma (Pty) Ltd

Zydus (Pty) Ltd

Contact Us:Email: [email protected]

Website: www.napm.co.zaTel: 011 312 6966

Fax: 086 529 4245


Napm 2014 review

Health & Medicine

Transcript of Napm 2014 review