Increasing numbers of pharma companies are heading East to conduct R&D operations in India as globalisation makes it a small world. Just as a call to your bank might involve a long-distance connection to a call centre in India, pharma R&D is likely to have an Indian accent in the future. Attracted by a largely untapped, skilled and English-speaking workforce pharmaceutical companies are following suit, with more and more firms conducting clinical trials and setting up R&D facilities in India.

Research conducted last year by clinical research consultancy Oxygen Healthcare estimated that 1% of global clinical trials are currently conducted in India. This figure, the research suggested, could increase to 10% in the next five years and the country has the potential to be the premier destination for conducting global clinical trials.

Big pharma is already shifting eastwards according to Juerg Haelelfinger, deputy director of Roche's pharmaceutical division, reasoning that “no big pharmaceutical company can afford not to be present in India”. Roche has committed circa $20m to its Indian operations and Pfizer has doubled its R&D spending in India to $13m. Eli Lilly and Novartis are also expanding their R&D operations in the country.

Last month, AstraZeneca laid the foundations for an R&D facility in Bangalore. The facility forms part of AstraZeneca's $10m investment in India and the company hopes that its Indian operations will “play a crucial role in taking the discovery phase of research to bringing drugs to the market”.

GlaxoSmithKline is also eager to grab a piece of the action. Its vaccines business, GSK Biologicals, has vowed to make India its global hub for clinical R&D and plans to conduct four clinical trials in India this year. “We are now significantly increasing investments on clinical R&D and have every intention to make India a global centre for clinical trials,” confirms Sanjoy K Datta, South Asia director of clinical R&D and medical affairs at GSK Biologicals.

Pharma's attraction to India has been boosted by last year's confirmation from the Indian government that it would, for the first time, honour its pledge to the World Health Organisation and recognise the patents of foreign drugs. Previously, India had refused to recognise pharmaceutical patents and a number of its pharmaceutical companies have created profitable businesses by copying foreign drugs using a different manufacturing process to the original product.

However, concerns remain. Maxine Taylor, former director of corporate affairs at Eli Lilly admits that the main challenge pharma faces when operating in India is intellectual property protection. “This is being closely scrutinised and could hinder further investment by the industry unless progress continues to be made,” she reveals.

Beyond regulation, it is no surprise that India is such a mouth-watering prospect for pharma firms. Cost is, undoubtedly, a major factor. “The cost of trials continues to escalate in much of Europe, the US and Japan, whereas in India, as in many other areas of business, pricing is highly competitive,” says Taylor. Sunil Shah, director of Oxygen Healthcare, agrees: “Companies in India operate on about a third of the cost-base to Western companies.”

Recruiting patients for clinical trials is also a huge bonus, as India has a huge population with many untreated patients who are currently taking no other medication. “India provides access to patients with diseases common to Europe and North America, as well as tropical diseases,” says Alan Boyce, vice president of Europe for Kendle.

“In addition, the training and experience gained in Western countries by many investigators has resulted in closer alignment to international standards in clinical research.”

India will undoubtedly become a world leader in global research for pharma and this sector is likely to follow the massive success the country has had with regards to information technology. The logic of Globalisation should result in lower cost R&D for new drugs leading to worldwide benefits.

Reuters reports that an antipsychotic drug frequently given to Alzheimer's patients actually worsens their illness, researchers say. Patients given AstraZeneca's Seroquel had a marked deterioration of memory and other higher brain functions compared to those on placebo, according to Professor Clive Ballard of the Institute of Psychiatry and colleagues. AstraZeneca, Europe's third largest drugmaker, disputed the findings.

Drugs such as Seroquel, which was originally developed to tackle schizophrenia, are increasingly used to treat the personality changes and aggression often associated with Alzheimer's disease.

They are not approved by regulators for dementia but are often prescribed by doctors on an "off-label" basis for patients who develop serious behavioural problems. In one form or another, antipsychotics are used in up to 45 percent of British nursing homes, experts estimate.

"It's a big potential threat to patient health," Ballard told Reuters.

There have been concerns that the two most commonly used antipyschotics, Eli Lilly and Co's Zyprexa and Johnson & Johnson's Risperdal, may increase the risk of stroke -- something British healthcare regulators warned about last year. But, writing in the British Medical Journal, Ballard said Seroquel was not a viable alternative.

His team studied 93 patients with dementia in the northeast of England over six months and found those taking Seroquel experienced a doubling in cognitive decline compared with patients given a dummy pill

The UK government is set to examine how regulations imposed on the pharmaceutical industry affect how it conducts business. The Cabinet Office's business regulation team revealed that it has earmarked pharma as one of three industries to investigate this year, with an in-depth study expected to start this summer.

Although the Team is still to decide which areas of pharma regulation to examine, the Team has revealed on its website that two of the main areas which are currently being considered for more detailed investigation are the regulation of animal scientific procedures, under the Animals (Scientific Procedures) Act 1986 and the regulation of clinical trials, under the Clinical Trials Directive which came into force on May 1, 2004.

The Cabinet Office's Scoping Report 2005, lists seven further issues including: Control of Entry Regulations 1987, data exclusivity and the ten-year rule, GP software, generic substitution, the NHS drug tariff, NHS procurement of medicines and braille medicine labelling.

“No decisions have been taken at this stage about which of the issues might be most appropriate for shortlisting for further review,” the report states. “Further discussions are likely to be needed with interested parties in industry and government before decisions are taken.

“Relevant factors affecting the choice of issues for the shortlist are likely to include the potential benefit to industry from resolving the issue and whether there are good prospects for taking remedial action,” it adds.

Last year the Canadian health minister passed legislation restricting the "evergreening" of supposedly innovative drug patents. "Evergreening", the tactical extension of monopoly rights over "innovative" medicines that have large sales, costs millions of dollars each year. The Australian Government has made similar efforts, through legislative amendment and policies such as the 12.5% automatic discount once a brand-name patent expires.

Dr Tom Faunce writing in the Sydney Morning Herald says;

These efforts will soon be tested as US drug companies claim that generic or copy drugs nominated to be included in the Pharmaceutical Benefits Scheme infringe their "innovative" drug patents, thereby breaching the Australia-US Free Trade Agreement.

The arm-twisting between Australia and the US over pharmaceuticals, and their prices, will be carried out in private, through select committees on pharmaceutical policy set up under the trade agreement. The US is likely to be well advanced in its nominees for these committees. Hopefully, the Australian Government is taking its appointments equally seriously.

Under the agreement, a medicines working group is to be established with membership restricted to federal government officials of both countries. This committee is limited to discussing transparency issues under the Pharmaceutical Benefits Scheme, including the nature of the "independent review process" of PBS decisions.

It is permitted to weigh the relative public health importance of pharmaceutical research and development against cheaper, quality generic medicines. But this committee cannot define "innovation" in pharmaceuticals, or consider how to make drugs available in a more "timely" or "expeditious" fashion.

This task has been left to talks between Australia's Therapeutic Goods Administration and the US Food and Drug Administration. Defining just what is "innovation" in medicines is fundamental, and on it may hang decisions to spend hundreds of millions of dollars on drugs whose comparative therapeutic significance has yet to be proven.

In the US, drug companies can claim that medicines are innovative if they perform better than a placebo, that is, a tablet with no pharmacological effect, or have minor molecular variations without necessarily adding value to community health.

Yet, under the trade agreement, drug innovation is linked with the concepts of "affordability" and "objectively demonstrated therapeutic significance" - concepts which may require comparison with existing therapies.

Concern over drug innovation has been spurred by the recent Vioxx and Celebrex debacles. These drugs, though possessing minor variations over competitors, were aggressively marketed as "innovative".

The former federal health minister Michael Wooldridge mentioned Celebrex's "dramatically lower side effects" when including it in the PBS, a listing that cost taxpayers $140 million over the following nine months alone. More was spent on advertising these "me-too" drugs than on their research and development yet manufacturers continued to promote them long after they were known to cause fatal heart attacks.

Their claim to be innovative appears to have been too readily accepted by government officials; public safety suffered as a result.

Perhaps most important for Australian drug policy is the joint committee which is to "supervise" the implementation of the trade deal. It will comprise government officials of both parties and be chaired by the US Trade Representative and the Australian Minister for Trade.

This committee may delegate its functions to other committees, including the medicines working group. It may interpret any ambiguities in the agreement, including the definition of pharmaceutical innovation.

This committee may, but is not required to, seek advice from non-governmental persons or groups. If the Australian officials aren't careful, this could result in the input of Australian community groups with a stake in seeing a continuing important role for cheap, quality generic medicines under the PBS being sidelined. These include organisations of pensioners and retirees similar to those who fought brand-name drug patent "evergreening" in Canada and the US.

In the final exchange of letters for the free trade agreement, the US reserved its right to challenge Australian amendments protecting the role of generic drugs under the PBS. If a dispute arises, the US can threaten dispute resolution proceedings, including seeking damages and retaliation in trade areas such as agriculture or manufacturing, if its "legitimate expectations", such as those about drugs, are not achieved.

With what is at stake, it is crucial that Australian officials on these committees be experienced and dedicated to implementing PBS policy. If the Australian Government succeeds in achieving a balance between our emphasis on generic and the US focus on innovative medicines, if it succeeds in demanding research about "objective therapeutic significance" to back up claims of drug innovation, it will have defused a future political issue and gone a long way to assuring a healthier future for our ageing population.

Dr Tom Faunce is a senior lecturer in the medical school and lecturer in the law faculty at the ANU.

In a study of bankrupts in the U.S. half cited medical causes, which indicates that 1.9-2.2 million Americans (filers plus dependents) experienced medical bankruptcy. Among those whose illnesses led to bankruptcy, out-of-pocket costs average $11,854 since the start of illness; 75.7 percent had insurance at the onset of illness. Medical debtors were 42 percent more likely than other debtors to experience lapses in coverage. Even middle-class insured families often fall prey to financial catastrophe when sick.

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