In today’s Finshots, we talk about the costs of dealing with Type-2 diabetes in India and how a single event can make treatment more affordable

The Story

“I have sugar.”

It’s a catchphrase. And it sounds so familiar because 1 in 10 Indians suffer from diabetes. So every time you offer someone sweet chai, they’ll go — “I have sugar.”

It’s their way of conveying that they have diabetes and they should be mindful of what they eat and drink. And here’s the thing — Diabetes is a silent epidemic in this country. India alone hosts nearly 17% of the world’s diabetic population. And while we could sit here and argue how India came to be the diabetic capital of the world, there is a larger crisis brewing here — “This disease imposes a massive cost on the Indian population.”

Depending on who you ask, the costs can range anywhere between ₹11,000 to ₹25,000 a year. This cost typically includes total medications, insulin, frequent blood checkups, and visits to the doctors. And if you tack on the indirect cost, then the number can look extremely prohibitive. Diabetes affects other bodily functions too. It can affect your kidney. It can affect your liver and it can increase your risk of suffering a stroke. And it mostly affects those who already struggling to make a living. Over a third of reported diabetics in India earn less than ₹20,000 per month and a low-income family with 1 adult diabetic can spend up to 20% of their income on treatments alone.

It’s ridiculous.

So what’s the government doing about this? Well, they’ve been trying to alleviate some of the burden. But... it isn’t enough.

Sure, you could pick up anti-diabetes drugs at government hospitals, but you can’t always rely on them. Oftentimes you won’t find them at the dispensary or even worse you may be asked to pay a bribe. There are reports of free insulin being sold with a price tag. And substandard medicine being sold to people with no recourse.

Inevitably, over 70% of a person’s healthcare expenses are met out of their own pockets. For context, the world average is below 20%.

So, how do we reduce the burden?

Well, there’s nothing we can do about it per se. But occasionally the cost of treatment can take a tumble when patents expire.

Yes, patents.

Take for instance the highly popular diabetic drug Sitagliptin, marketed under the brand name Januvia. It’s a miracle drug of sorts and Merck — the company that manufactures the drug has sold nearly $5.3 billion to $6.1 billion worth of Januvia (and Janumet, its counterpart) each year since 2012.

In India, the market for Sitagliptin and its combinations makes up about 10% of the oral anti-diabetes drug market. However, Merck has a patent on the molecule. Which means you can’t market the drug under your own brand name unless you strike a bargain with Merck.

This explains why Sitagliptin is on the expensive side.

Now, most people will argue that Merck should be sympathetic to people’s cause. That they should reduce the price on their own accord. But there is a problem with this assessment.

Pharma companies tread on perilous waters. It takes anywhere between 10–15 years to develop a product. Close to 95% of all projects fail. Some molecules turn out toxic. Even others fail to establish efficacy. A successful project can cost $1 billion in investments. And if you fail to push out at least 2–3 products each year, you may go under.

So pharma companies will argue that they have every right to extract decent value from their products. But there is another caveat. They can only continue extracting this sum when they can enforce their patent. But once the patent expires, then other manufacturers can churn out the same molecule. They can optimize on many accounts and sell it at a steep discount.

In fact, this is what’s happening with Januvia right now. At the end of July, the patent will expire and close to 50 Indian drug makers will be gearing up to launch their own generic versions of this popular drug. And according to some reports, this alone could make the drug more accessible. While the original drug would have cost you around ₹450 a day, the generic versions could be priced as low as ₹18 a day. Think about that for a moment.

Almost magically, millions of Indians will now have better health outcomes thanks to this patent expiry. And no, we aren’t just shooting in the dark here.

In 2015, another popular diabetic compound — Teneligliptin lost its patent. Naturally, many pharma companies launched generic versions of the drug (122 formulations at least) and sold it at a substantial discount. And guess what happened? Over 1.85 million Indians switched to Teneligliptin — mostly the generic variant. In fact, with the rise in demand, sales soared by 250% in its first-year post-launch. And with at least 4 more such patents on diabetic compounds set to expire by 2025, the looming entry of generics could provide much-needed relief.

It can single-handedly make diabetes therapy more affordable for millions of Indians.

Ditto Insights

Most people don’t account for this. But lifestyle diseases like Diabetes and Hypertension can have a massive impact on your insurance premiums. When we are talking about Type-2 diabetes, for instance, insurance companies may ask you to shell out 20–30% more than healthy individuals. If it’s advanced diabetes or Type-1 diabetes, the insurance company won’t even extend a policy. And even when they do, they impose waiting periods that can last up to 3 years, during which the company won’t cover diabetes and diabetes-related complications.

So what do you do in such an instance?

Well, there isn’t a lot you can do. You can do away with the waiting periods if you buy a diabetic-specific plan. However, considering these are expensive, most people don’t go for them. So your best option, (and I know this sounds ridiculous), is to buy a plan when you’re healthy. Buy it when you’re healthy. Because once you have your policy in force, insurance companies can’t renegotiate if you develop a lifestyle disease. They can’t force you to pay more once you’re diagnosed with diabetes and they can’t impose waiting periods either.

But if you have a very specific query and want to know how to best navigate these situations, just talk to us at Ditto. We'll sort you out.

Until then…

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