World CAB 4: The Future of Indian Generic Antiretrovirals
By Bob Huff
The Indian generic pharmaceutical industry, operating under Indian patent laws that permitted liberal copying of medicines, made possible the revolution in antiretroviral treatment access that has occurred in Africa since 2001.
In April, 25 treatment activists from 16 countries met in New Delhi, India, with representatives of three Indian manufacturers of generic antiretroviral (ARV) drugs. The Indian generic drug industry is a major supplier of affordable ARVs to HIV treatment programs in Africa, and its impact has facilitated placing nearly two million people on lifesaving treatment.
Aurobindo and Matrix are each producers of bulk quantities of ARVs and are relatively new to the production of finished formulations. Ranbaxy does not manufacture bulk drugs, but purchases bulk supply from Matrix. It has been producing individual and combination ARV formulations since 2001.
The Next Generation of Drugs
Despite success with the common initial drug regimen, international treatment guidelines now call for switching to newer, safer drugs. But these drugs, such as tenofovir and efavirenz, are more costly to make and deliver. The activists of the International Treatment Preparedness Coalition’s World Community Advisory Board (ITPC’s 2008 World CAB) were keen to understand how the generic drug makers were planning to respond to the need for tenofovir and more affordable second-line drugs.
Q: How are you planning to handle the transition to tenofovir?
Aurobindo: There are 1.89 million people currently on treatment. The target is 10 million by 2010. It will take three or four years for the shift to happen. You can’t shift them all at once, especially when the current drugs are working for them.
There are not many generic manufacturers of tenofovir currently; it is a costly product. But we don’t do this on a small scale; we don’t just buy the bulk drug from China and make pills.
Ranbaxy: We have several formulations of tenofovir under development. We are filing for everything you can think of—multiple, creative combinations. They should all be filed by later this year.
Q: Do you have licenses with major pharmaceutical companies?
Matrix: We have a license with Gilead and use that license to make all of the tenofovir combinations. We are negotiating to get a license with BMS to make atazanavir. We have developed atazanavir-based products and should soon have a fixed-dose combination, boosted atazanavir tablet.
Developing the drug is one thing, but developing in volume is another. All of our bulk drug manufacture is done inhouse. Volumes have grown enormously. We are looking to scale up tenofovir in a big way, going to ten tons a month.
Although protease inhibitors are used as first-line therapy in the United States and Europe, they are strictly reserved for secondline treatment in the developing world. One problem with drugs that require “boosting” with ritonavir is that Abbott Laboratories, the original producer of ritonavir, only makes a soft gel capsule, which tends to melt in tropical heat. However, the Indian generics have leapfrogged this problem and are the first to offer heat-stable ritonavir.
Q: Are you planning to produce other second-line drugs?
Aurobindo: FDA approval of lopinavir/ ritonavir is expected by June. We have also filed for a pediatric formulation. We have ddI in a chewable tablet and in an enteric coated tablet.
Q: What process is used to make the lopinavir/ritonavir tablets heat stable?
Aurobindo: We use the melt-extrusion process (Meltrex) to make heat-stable lopinavir/ritonavir. It is the same process as in Abbott’s Aluvia/Kaletra. We buy the equipment from the same supplier.
Q: How about atazanavir and darunavir?
Aurobindo: We will do atazanavir alone first, but copackage it with ritonavir. We will be the first with heat-stable ritonavir. A fixed-dose combination of atazanavir/ ritonavir will come later. The shift to second line is not creating a big market yet. We will finish this wave of secondline products before making newer drugs like darunavir.
Matrix: The pressure to make heatstable ritonavir is that you cannot give atazanavir without ritonavir. And everybody knows why Abbott is not selling heat-stable ritonavir. [According to recently unsealed documents in a court case, Abbott planned to restrict access to ritonavir in order to protect Kaletra in the market.—ed.]
Q: Have you talked with Merck about integrase inhibitors?
Matrix: Not yet. We are taking the stand that we are going to develop them. It will take a year or two.
Q: What about drugs for OIs and TB?
Aurobindo: We do TMP/SMX for HIV; however, there are restrictions in manufacturing it because a lot of pollution occurs as a by-product of production. We manufacturer it for Health Canada and they give it to Zambia. We have nothing for hepatitis C. We are not doing TB drugs because they require a separate facility for manufacture.
Ranbaxy: We might consider something for TB in the future when we move in this direction. We would be interested in a good lead compound in this market. We would work with a public/private-funded project and we might be a good partner for a global company. Our research people are looking for leads, too.
The low prices on drugs offered by the Indian generic makers are the enabling factor that has allowed the drive to universal access to ARVs. However, in order for the planned expansion of ARV access to take place, prices must fall even farther.
Q: How do you set prices and how do they vary from region to region?
Aurobindo: The Clinton Foundation comes and negotiates with us. PEPFAR negotiates with us. The market drives the price. If there is a choice between two suppliers of the same product, and they are both prequalified by the WHO or by the FDA, the buyer will go with the lower price.
Ranbaxy: Everything these days is tender-based. It is more like a commodity. Whatever the price of the last sale was determines the price of the next sale. The key determinants for setting prices are initially cost recovery and making a little margin to keep the project going. But then the prices come down and we can no longer do that. These days prices have come way down and there is very little margin.
It is all economy of scale. The bulk drug cost is the prime driver of price, and that does not come down until you have large demand and economy of scale. Up the supply chain there are people who make chemicals that go into many products, and they won’t lower their price unless you buy in quantity.
Q: If you find an acceptable partner in Africa will you sell them bulk drug?
Aurobindo: We would, or we would sell tablets and let them package it, but we have not found anyone yet. We will help in planning the plant if we can count on having a long-term relationship. But prices will not come down if you produce locally; the volume is too limited and it is too costly to hire the right people.
The Indian patent system has been the key that allows the generic drug industry there to copy and distribute affordable but high quality versions of drugs that are patented in the United States. Until recently, Indian patents could only cover the process by which a drug is made, not the final product.
This allowed the generic makers to copy drugs as long as a different manufacturing process was used. But recent changes in the law may grant patent protection to drugs invented after 1995, which could limit the availability of affordable, newer drugs. Activists in India are fighting the changes.
Q: What is your intellectual property (IP) policy?
Matrix: We don’t have a standard IP policy. We would advocate—especially for HIV—that it should be more lenient. We think there should be protections where necessary and freedom where it is possible. It is necessary for research to be done; you need money to do research, and you need protections to make money.
Q: Do you think about challenging patents to get around evergreening [extension of market protection beyond the life of the original patent]?
Aurobindo: No, it is a waste of money.
Q: But a lot of patents are weak.
Aurobindo: That is a different department. We have an IP division. The penalties for violations are huge. Under Indian law, we have to make the drug using a different process. If we can do that, we will go for it. If we are not confident we can, we will not. If not we have to wait for patents to expire.
Ranbaxy: We opposed the tenofovir patent but then we got the license. We will file oppositions—sometimes the business group files and we don’t even know. It helped in negotiations for the tenofovir license that we had an opposition filed.
Finally, the companies were asked to speculate about the future of their business in ARVs and to describe some of the challenges they face.
Q: What expectations do you have for the ARV market in the future?
Aurobindo: Funding will double in a few years. PEPFAR was $15 billion but will go to $30 billion.
Matrix: The challenges we saw three to four years ago were in enrollment and infrastructure. Now critical mass has been achieved and things have improved a lot. We are now ready to scale-up much faster than we were a year or two ago. Secondline drug prices will be coming down significantly and will come down further in the coming years—the shift will begin happening seriously then.
Ranbaxy: We are investing significant time and effort in developing ARVs within the Indian patent situation. We are early in some areas and late in others, but we are not abandoning ARVs.
Q: What are some of the problems facing your business?
Aurobindo: Having to manufacturer so many regimens is confusing. We make regimens that no one wants. We went with emtricitabine (FTC) because people said they wanted it, so we produced it. Now they say lamivudine will be just as good. I wish they would settle on fewer regimens and not change them every year. It would be easier for us.
Ranbaxy: In the past there has been a lot of focus on access. Most of the focus was on prices, which was good at that time. But we can see a shake-up coming. If prices and margins continue to fall, we could be headed in the direction of TB, where there were once a lot of good companies manufacturing products, but after the margins fell, the big ones left and now there are only small companies, and one big one left in TB.
We have been thinking about the TB market because it is synergistic with our HIV business—but we cannot compete with the prices offered. In HIV you may see a few big players getting out and once they go it would be too difficult to get them back.
Intellectual property protection is another risk. Newer products coming along would be patent protected, and as they replaced the older ones the big generic companies would be under pressure. The market would shrink and that would push up costs.