[Ip-health] Wall Street Journal: Drug Firms See Poorer Nations as Sales Cure

[Kevin Outterson]

The WHO should speak out even more forcefully against the use of this
spurious "30% counterfeit" figure as a tool to scare people away from
generic drugs.

The "estimate" did not originate wholly from WHO, but with substantial
self-interested input from industry.  Nor has any of the supporting data
been published in a peer reviewed journal.  As noted previously on this
list, the term "counterfeit" is being overused by industry to include
unlicensed generic drugs, parallel imports, and cross-border labeling issue=
s
in addition to true counterfeits (intentionally false representation as to
source).  See my ACTA paper at ssrn.com.

It is interesting to note that Pfizer can make a solid profit in Venezuela
despite the lack of effective drug patents.

Kevin Outterson
--
Associate Professor of Law
Boston University
617 353 3103
www.ssrn.com/author=3D340746




On 7/7/09 1:55 AM, "Thiru Balasubramaniam" <thiru@keionline.org> wrote:

> <SNIP>
>
> Pfizer is benefiting from a belief in Venezuela and in much of the
> developing world that branded medicines are worth paying a premium for
> because they're safer and more effective than generics. Pfizer's
> prices in Venezuela tend to be about 30% under U.S. prices, but are
> still 40% to 50% more than generics, which are widely available here
> since patents aren't usually enforced. In some cases, the spread is
> even wider. In a few Petare pharmacies, for example, Pfizer's
> cholesterol-lowering drug Lipitor costs between $100 and $125 a month
> for a standard dose, compared with less than $50 for a generic.
>
> That can add up in a place where the monthly minimum wage is roughly
> $450. Some public-health officials question whether Pfizer is
> promoting what they say is an unfounded perception that generic drugs
> aren't trustworthy. "The quality of a product has nothing to do with
> the brand name," says Hans Hogerzeil, the World Health Organization's
> director of essential medicines and pharmaceutical policies.
>
> Pfizer says the problem with generics in Venezuela is that laws
> requiring them to be equivalent to brand-name versions aren't
> uniformly enforced. Pfizer's Mr. Mendoza also cites data from the WHO
> that up to 30% of drugs sold in the developing world are counterfeit
> and may not be effective. To help with cost, Pfizer says it offers
> doctors in Petare discount coupons that knock the price for its drugs
> down another 10% to 20%. Lipitor is part of a separate buy-two-get-one-
> free promotion. Those deals reduce but don't eliminate the price gap.
>
> "We are Pfizer and we sell BMWs, so we won't put our products at the
> price of the Chinese car," says Mr. Mendoza.
>
> --------------
>
>
>
>      * JULY 7, 2009
>
> Drug Firms See Poorer Nations as Sales Cure
>
>
> By AVERY JOHNSON
>
> PETARE, Venezuela -- Julio Rodriguez was on a sales call at a clinic
> in this slum overlooking Caracas recently when he heard four gunshots
> go off nearby.
>
> It was business as usual for Mr. Rodriguez. As a representative in
> Venezuela for U.S. pharmaceutical giant Pfizer Inc., his sales route
> takes him through one of Latin America's most dangerous neighborhoods.
> To avoid attracting attention, he wears a polo shirt with a red logo,
> the color worn by supporters of President Hugo Ch=E1vez.
>
> Mr. Rodriguez is part of a strategic shift in the $770 billion
> pharmaceutical industry to target the working poor in the developing
> world.
>
> Julio Rodriguez holds his 3-month-old niece in the kitchen of the
> small house he shares the house with his wife, mother, sister and niece.
>
> For the first time in a half-century, sales of prescription drugs are
> forecast to decline this year in the U.S., historically the industry's
> biggest and most profitable market. The Obama administration and
> Congress's attempt to pass legislation overhauling the health-care
> system, including provisions that could lower the cost of medicine,
> could put drug makers' U.S. businesses under further pressure.
>
> As a result, developing countries like Venezuela have begun to look
> more attractive to the industry. Sales of prescription drugs in
> emerging markets reached $152.7 billion in 2008, up from $67.2 billion
> in 2003, according to IMS Health, which tracks the industry. IMS
> forecasts sales will climb to $265 billion by 2013.
>
> With a handful of other drug makers, including the U.K.'s
> GlaxoSmithKline PLC, Switzerland's Novartis AG and France's Sanofi-
> Aventis SA, Pfizer is making a big push into the developing world. In
> addition to Venezuela, the company is expanding in China, India,
> Brazil, Russia and Turkey. Pfizer brought in $1.4 billion in sales
> from emerging markets in the first quarter of this year. That's a
> fraction of its $10.8 billion in overall sales in the same quarter,
> but a slice Pfizer says it's determined to expand.
>
> Until recently, drug companies doing business in emerging economies
> have catered mostly to the wealthy and middle class. Now, Pfizer is
> turning to what it calls, in internal marketing discussions, the
> "bottom of the pyramid." Its program in Venezuela is an exercise in
> how to reduce prices enough to attract poorer customers while still
> turning a profit.
>
> "There's an economy in the barrios," says Rafael Mendoza, the man
> Pfizer has put in charge of the strategy in Venezuela, as he gestures
> toward the satellite dishes and air conditioners that dot Petare.
>
> Two years ago, Mr. Mendoza began laying plans for a program that would
> involve sending sales representatives into Petare. Caracas's largest
> shantytown is home to more than one million people who live in
> colorful houses clinging to the side of a mountain overlooking the
> capital's downtown.
> video
> Pfizer's New Market: Venezuela's Working Poor
> 3:12
>
> As U.S. drug sales start to slow, pharmaceutical companies are turning
> to the developing world for growth. In Venezuela, Pfizer is pitching
> its brand-name drugs over local no-name competitors. Avery Johnson
> reports from Venezuela.
>
> Mr. Mendoza decided to hire someone from the slum who would know his
> way around and possibly be less of a target for theft. One of the
> office assistants in Pfizer's Caracas office persuaded her cousin, Mr.
> Rodriguez, to apply.
>
> Initially reluctant, Mr. Rodriguez, 35 years old, recalls thinking
> that pharmaceutical sales reps were "snobs" who brushed airily past
> patients in busy doctors' offices. He was also intimidated by all the
> science and worried he wouldn't fit in at a big multinational company.
>
> But the opportunity was hard to pass up. One of five children, Mr.
> Rodriguez was raised in Petare by a single mother who needed to stop
> working because of a shoulder injury. He started peddling women's
> undergarments in street stalls at age 15. By 2006, Mr. Rodriguez was
> working as a security guard in the Caracas subway system at night and
> selling Canon office supplies by day. He enrolled in college, and
> expects to finish an accounting degree in February.
>
> For the Pfizer job, Mr. Rodriguez underwent a three-month training
> program he found grueling. He had trouble memorizing the medical
> terminology. He recalls being given a binder on the cardiovascular
> system on a Monday and being tested on it the next Wednesday. One
> night, he said to his mother in exasperation, "I'm not studying to be
> a doctor!"
>
> But the work paid off. His job brings in between $930 and $1,800 a
> month, depending on commissions, up to 60% more than his previous two
> jobs combined. Mr. Rodriguez drives a new Chevrolet Aveo that he can
> buy from Pfizer cheaply at the end of its lease.
>
> When Mr. Rodriguez started knocking on clinic doors in late 2007,
> Petare's doctors were surprised to see a drug-company sales rep in a
> slum. The first question many asked was how he managed to reach their
> offices without getting his expensive samples ripped off, Mr.
> Rodriguez says. (The answer: He changes his route every day and
> sometimes carries a rolling bag, other times, a shoulder bag.) The
> second question he usually fielded had to do with the price of
> Pfizer's drugs.
>
> Pfizer is benefiting from a belief in Venezuela and in much of the
> developing world that branded medicines are worth paying a premium for
> because they're safer and more effective than generics. Pfizer's
> prices in Venezuela tend to be about 30% under U.S. prices, but are
> still 40% to 50% more than generics, which are widely available here
> since patents aren't usually enforced. In some cases, the spread is
> even wider. In a few Petare pharmacies, for example, Pfizer's
> cholesterol-lowering drug Lipitor costs between $100 and $125 a month
> for a standard dose, compared with less than $50 for a generic.
>
> That can add up in a place where the monthly minimum wage is roughly
> $450. Some public-health officials question whether Pfizer is
> promoting what they say is an unfounded perception that generic drugs
> aren't trustworthy. "The quality of a product has nothing to do with
> the brand name," says Hans Hogerzeil, the World Health Organization's
> director of essential medicines and pharmaceutical policies.
>
> Pfizer says the problem with generics in Venezuela is that laws
> requiring them to be equivalent to brand-name versions aren't
> uniformly enforced. Pfizer's Mr. Mendoza also cites data from the WHO
> that up to 30% of drugs sold in the developing world are counterfeit
> and may not be effective. To help with cost, Pfizer says it offers
> doctors in Petare discount coupons that knock the price for its drugs
> down another 10% to 20%. Lipitor is part of a separate buy-two-get-one-
> free promotion. Those deals reduce but don't eliminate the price gap.
>
> "We are Pfizer and we sell BMWs, so we won't put our products at the
> price of the Chinese car," says Mr. Mendoza.
>
> Mr. Ch=E1vez's Socialist regime was elected with a mandate to increase
> access to health care for the poor. But 80% of drugs in Venezuela are
> still paid for by patients out of pocket, according to IMS Health.
> Only a small percentage of well-off Venezuelans have private health
> insurance to cover doctors and drugs.
>
> The Ch=E1vez government declined to comment about Pfizer's program in
> Petare, but Pfizer says the government has expressed interest in
> learning more about it. Gustavo Villasmil, the health minister for
> Miranda state, where Petare is located and where the opposition took
> power last year, says he welcomes pharmaceutical sales reps.
> "Governments, including mine, are not doing well at eliminating
> barriers to access" to drugs, he says.
>
> Mr. Rodriguez's main approach in persuading Petare's doctors to
> prescribe Pfizer drugs is to emphasize the brand's quality over
> generics. He tells doctors that Norvasc, Pfizer's hypertension
> medicine, for example, stays in patients' blood for 56 hours, making
> it more reliable for older patients who might forget to take their
> medicines. Generic drugs, says Mr. Rodriguez, can't guarantee the same
> longevity.
>
> He says patients in Petare will follow orders even if it means
> spending more. "If their doctor tells them -- their doctor from birth,
> the doctor they have had all their life -- 'Look, this is what is
> going to cure you, this is what will guarantee your health,' that's
> what the patient buys."
>
> Pfizer also woos doctors by giving them computers and Internet access
> for use at their offices. In the U.S., the practice of drug maker
> "giveaways," even of items as small as pens and coffee cups with
> logos, has drawn fire for influencing doctors' prescribing, and the
> industry has voluntarily done away with most freebies.
>
> In Venezuela and much of the developing world where doctors don't earn
> as much, the practice is more common, and it sometimes can benefit
> patients. At one of the clinics Mr. Rodriguez visited recently, for
> example, Carlos Serrano beamed about the computer and free Internet
> access Pfizer has given him. Dr. Serrano, who has practiced medicine
> in Petare for 30 years, uses the computer and a Pfizer "telemedicine"
> Web page to help diagnose patients online by communicating in real
> time with doctors in downtown Caracas.
>
> Pfizer says the computers start out as loans and become permanent
> gifts once the doctors have shown that they are using them for medical
> purposes and have signed a waiver stating they understand they're not
> intended to influence their prescribing.
> [Drug Firms See Poorer Nations as Sales Cure]
>
> Dr. Serrano says he's increased by 40% the number of Pfizer drugs he
> prescribes since Mr. Rodriguez started calling on him in late 2007.
> The aid doesn't sway him, he adds. "There are some illnesses that have
> to be treated with a good product, no matter what the cost," Dr.
> Serrano says.
>
> In the coming weeks, Pfizer plans to refurbish the crumbling exterior
> of Dr. Serrano's office and paint it with the logo of its program in
> Petare, called "Healthier Community," which combines "Pfizer blue" and
> Ch=E1vez red.
>
> Mr. Rodriguez visits between eight and 10 of Petare's roughly 560
> doctors a day. One group he says he's had less success with are Cuban
> doctors who staff the several dozen government-run clinics -- part of
> an oil-for-medicines swap between oil-rich Venezuela and the Castro
> regime. The clinics give away free drugs.
>
> Mr. Rodriguez says he courted them for a year by passing them Pfizer-
> branded prescription pads, free samples and educational materials
> through the gates outside their buildings. At first skeptical, some
> doctors finally agreed to talk to him, says Mr. Rodriguez. He says
> he's now able to call on 17 of Petare's roughly 40 Cuban-staffed
> clinics.
>
> The Venezuelan office that oversees the clinics couldn't be reached
> for comment. The Venezuelan Embassy in Washington declined to comment.
>
> Maximo Lobato, a 62-year-old resident of Petare who helps support his
> daughter and grandson on a carpenter's salary of about $750 a month,
> says he would rather pay for branded drugs than take free drugs handed
> out at clinics, or pay for cheaper generics.
>
> Mr. Lobato has been diagnosed with high cholesterol and also has had
> prostate surgery. He has been taking Lipitor and several other
> medications. Before buying the drugs in June, he said he would
> allocate money to other pressing bills: $240 to get his phone turned
> back on; $51 for his monthly satellite-TV subscription; and $23 a week
> for his grandson's day care. With what is left over, he said he'd buy
> a supply of Lipitor and one of the other drugs. Referring to branded
> drugs, Mr. Lobato says, "According to the price, they probably work
> better."
>
> In part because of this view, drugs like Lipitor continue to sell well
> in Venezuela. The Venezuelan market has six generic versions of
> Lipitor. Yet the brand is still the second-biggest seller among all
> drugs, with $37.5 million in 2008 sales, up 44% from 2007. In Petare
> alone, Pfizer has tripled its market share to 18% from 6% in late
> 2007, when the program launched. Pfizer has hired three reps to work
> other slums around Caracas and hopes to roll the program out
> nationwide by the end of the year. It also has plans to expand it to
> other countries in Latin America.
>
> Not all patients want to splurge for branded drugs. Luis Osuna, 54,
> needed an antibiotic for his wife's leg infection, and was happy when
> the pharmacist gave him a generic version of Pfizer's Zithromax that
> cost $12. "I don't think there was too much of a difference," he says.
> "It had the same effect. It worked on her."
>
> Alexis Quijada, who dispenses drugs at the pharmacy where Mr. Osuna
> was shopping, says he routinely recommends generics to patients. He
> recently suggested a generic alternative to a patient who came in
> asking for Lipitor because, he says, "Petare is a humble area."
> =8BJuan Carlos Lagorio contributed to this article.
>
> Write to Avery Johnson at avery.johnson@WSJ.com
>
> ------------------------------------------------------------
>
>
> Thiru Balasubramaniam
> Geneva Representative
> Knowledge Ecology International (KEI)
> thiru@keionline.org
>
>
> Tel: +41 22 791 6727
> Mobile: +41 76 508 0997
>
>
>
>
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