Stephen Leeder: Generic costs

IN 2010, I was invited to speak at a conference in Hyderabad, India, about strategies for the prevention of diabetes as I have a longstanding interest in chronic disease and its human and economic consequences in middle- and low-income countries.

The conference was attended principally by Indian physicians with an interest in diabetes, almost all from the private sector.

My session was sparsely populated but a stampede followed as attendees filled the lecture hall to hear the next presentation on new insulins and how they may be used as adjuncts in the management of type 2 diabetes. As you can imagine, the potential market in India is vast.

Most Indian patients, even those with insulin-dependent diabetes, struggle or are unable to pay for insulin. But the doctors at this conference would not see many of these patients. Instead, Indian colleagues in Delhi told me, their practices largely treated wealthy, fee-paying patients enthusiastic to have the latest medications irrespective of efficacy or cost.

It was in January 1922 that Canadian orthopaedic surgeon Frederick Banting, his medical colleague Charles Best and biochemist Bertram Collip, used an animal pancreatic extract they called insulin to revive Leonard Thompson, a 14-year-old with diabetes.

Insulin was a smart discovery but hardly a feat of the imagination. It was patented soon after discovery to maintain its quality.

Nearly a century later it still remains locked up inside the pharmaceutical industry as though it came from another galaxy or was a major intellectual breakthrough. No generic form is available.

It is true that insulin has been modified in many creative ways including brewing it from Escherichia coli carrying a genetic implant to produce human insulin. Other modifications allow for delayed release and metabolic effects.

These technological advances, not all recent and not all expensive, still carry proprietorial labels and are not available in generic form. This was the subject of a recent article published in the New England Journal of Medicine, titled “Why is there no generic insulin? Historical origins of a modern problem”.

“Viewed in historical perspective, insulin is not a single entity but a family of related products that has evolved through incremental improvements”, the authors write. “Subsequent iterations of insulin represented actual innovations, each one being safer, more effective, or more convenient than its predecessor. And yet after generations of incremental innovation, insulin may be no more affordable than it was when the original patent holders sold their stake for $1 to ensure access to this essential medicine.”

Facts. First, almost all pharmaceutical development occurs in the private sector. The huge investment, many hundreds of millions for today's drugs, needs to be recouped and a profit made.

Second, despite strong commercial drive, many ethical pharmaceutical companies are motivated by a humane concern, not just profits, and do not engage in gouging.

Third, there are many people at the table, including the wholesalers and retailers, who make a handsome profit from the sale of pharmaceuticals.

So the ultimate cost of medications is not solely a reflection of what drug manufacturers charge. The rules of commerce are tough, but blockbuster drugs do not emerge from non-capitalist societies, so “you pay the price and take your ticket”.

Hence pharmaceutical companies strive to modify their products when expiry of the patent looms. Whatever the wording of the patent law, the parents of an effective new drug seek to keep their child at home for as long as they can especially if they receive generous payment for board. Therefore, minor changes are made to drugs to support claims that the modified form should, in turn, be patented.

The machinations of international law, including those concerning intellectual property and patents, determine the availability and price of pharmaceuticals. International agreements, such as the Trade-Related Aspects of Intellectual Property Rights, protect patents for products including pharmaceuticals for 20 years.

However, the rules are interpreted loosely as low- and middle-income countries develop generic drugs for their home markets outside the agreement. The complex history of antiretroviral drugs and the changing fortunes of those with HIV, who need them, especially in sub-Saharan Africa, is a case in point.

In Australia, while we enjoy the fruits of pharmaceutical research, we pay far more than other comparable nations for many drugs including statins. This is partly because we do not prescribe generics and partly because wholesale and dispensing costs remain high.

But back in India, where there are about 62 million people with diabetes and where many could benefit from insulin, there is a lot of ground to make up. A widely available generic version would be good to have, especially for the desperately poor.

The NEJM authors conclude that insulin “demonstrates that the generics market is like other markets” — in other words it will not automatically meet health care needs. They write: “The history of insulin highlights the limits of generic competition as a public health framework. Nearly a century after its discovery, there is still no inexpensive supply of insulin for people living with diabetes in North America, and Americans are paying a steep price for the continued rejuvenation of this oldest of modern medicines.”

Even more so in Australia.

Professor Stephen Leeder is the editor-in-chief of the MJA and emeritus professor of public health and community medicine at the University of Sydney.

Jane McCredie is on leave.