Challenges in procurement of “Quality Assured” generics

Dr Suresh Saravdekar,Ex-Assistant Director, Ministry of Medical Education and Health, State of Maharashtra and Ex-honorary consultant, Institute of Medical Sciences, Banaras Hindu University (BHU), analyses why procuring quality generic medicines is a challenge even in the 'pharmacy of the world' and suggests some policy changes to rectify this

Having worked as a medical supplies procurement head for more than three decades at the national and international level in public healthcare services, my responsibility was provision of generic medicines at the lowest price.

To obtain generic medicines at the lowest price is not a big task in India which is called the ‘Pharmacy of the World of Generic Medicine.” However, the main difficulty was finding a ‘Quality Assured’ generic medicine from a market flooded with ‘Quality Assumed’ generic medicines.

Believe me, this was a definitely a Herculean task. But, this quote of Kenneth Arrow, Nobel laureate in Economics kept guiding me: “If buyers know less about goods than the seller does, then the buyer suffers from Information Asymmetry or Handicap.’

I found this handicap very prominently in healthcare services, and to remove it, I had to constantly keep myself updated with changes in the national and the international market.

This led me to the study of the global pharma market which revealed that besides domestic market forces, global drivers also control the availability, accessibility and affordability of generic medicines within the domestic market in India.

Thus, there are direct as well as indirect challenges which need to be faced by providers of generic medicine. Indirect market drivers constitute international policies that also affect the domestic availability and accessibility of generic medicines.

Global challenges

Skewed research priorities: Globally, technology has revolutionised all aspects of medical treatment with the adoption of Artificial Intelligence (AI), Machine Learning (ML) and Deep Learning (DL). Technology has revolutionised all concepts of medical treatment and health needs.

While there is an increased adoption of technology in healthcare, a lot needs to be done in the area of monitoring of essential drugs. As per WHO studies, there are many product gaps and delivery challenges. This is because the priorities in research are not ‘need-based’ but ‘market-based.’ The reality is that there are about 10,000 diseases, world over, including orphan diseases, which are left untreated as medicines are unavailable.

Consequently, medicines are available only for 500 diseases which are prevalent mainly in rich and developed countries. Unfortunately, the present scale of technology development does not match the scale of people’s need for better access to medicine, particularly in Low-Income Countries (LICs) and low-income groups in Middle-Income Countries (MICs).

Hardly any new drug is targeted for diseases prevalent in LICs except for infectious diseases, because they are common in both worlds. For example, COVID infections have shown us that for infections, there are no economic boundaries.

However, if we look at the list of new approvals in the pipeline in 2020, the number of new drugs being invented for cancer are the highest (44), followed by 29 for neurological disorders like Alzheimer’s, Parkinson’s etc., 18 for diseases associated with endocrine disorders like diabetes.

But, there are no new drugs in the pipeline for old infectious diseases like tuberculosis, leprosy, leptospirosis. Artemether is the only new drug invented for drug-resistant malaria and that is by China. Thousands of children are dying each year in Bihar and few other parts of India, but there are still no effective medicines invented for diseases like Kala Azar, sickle cell anemia and Japanese Encephalitis, etc. In India, still we have around 450 orphan diseases without medicines.

IPR blocks

Diseases cross all economic borders and spread equally in rich and poor countries. However, the entry of medicines for some diseases is blocked by an international visa called Intellectual Patent Rights (IPR). The price of such patented medicines is governed by Trade- Related Aspects of Intellectual Property Rights (TRIPS) formulated by the World Trade Organization (WTO) under the influence of “few international companies.”

The only recent exception is COVID vaccine, as the vaccine was simultaneously developed in India and not exclusively by the MNCs. The only way to break the IPR and make essential and life-saving patented drugs available at low price is if the LICs and MICs have the capacity to manufacture generic versions of patented drugs.

However, under current situations, these countries have to operate compulsory and voluntary licensing procedures. But there is a strong resistance to these licenses by the companies and countries owning such patented medicines.

Till now, India has approved one compulsory licence to drug maker Natco Pharma on cancer drug Nexavar patented by Bayer. In 2011, Gilead offered voluntary licences for its patented hepatitis drug to local generic manufacturers of India, Malaysia and many more countries.

Natco Pharma got a compulsory licence for the sale of generic combination of valsartan and Secubitril, but, in November 2021, Novartis got a Delhi HC stay order on it. The price of this Novartis medicine is Rs 1,100 for 14 tablets, whereas Natco’s generic version costs Rs 630 for 14 tablets.

Medicine research is, thus, globally dominated by ‘few companies’ from ‘few countries’ and done for ‘few diseases’ prevalent in rich countries.

Consider these statistics:

◆ ‘WHO Findings – 2021-Access to Medicines and Report on Disproportionate use of medicines 2020’ report reveals that the world over, unequal and disproportionate expenditure/ consumption continues.

◆ 16 per cent of the world’s population living in high-income countries accounts for over 80 per cent of global use on medicines.

◆ Remaining 84 per cent of world population accounts for only 20 per cent of pharma use/consumption.

◆ Globally, two billion people worldwide still live on very low incomes without access to medicine or robust health systems. (WHO Findings – 2021-Access to Medicines and Report on Disproportionate use of medicines 2020).

It should be, therefore, clear from the above discussion that accessibility, availability and affordability of medicines are not dependent only on domestic factors, but are also challenged by global market drivers.

Domestic challenges

Inadequate fund allocation in public healthcare: There is always inadequate public fund allocation for procurement of generic medicines by the state, forcing poor patients to buy essential medicines out of pocket. Secondly, due to unregulated promotion of non-essential generic medicines by the industry, they have to buy non-essential medicines at the cost of essential medicines.

Dichotomy in policies: There is a strong dichotomy between industrial policies for pharma and health policies for medicines in India. It is not decided by the same ministry. The National Pharmaceutical Policy is developed by the Ministry of Chemicals and Petrochemicals (now Ministry of Pharmaceuticals) and the National Health Policy is designed by the Ministry of Health and Family Welfare.

Ideally, both policies should be under the domain of the Ministry of Health. This dichotomy has created a total disconnect between these two policies and has greatly affected availability and affordability of essential medicines in India.

Lax regulation

One of the important aims of regulation is ‘public interest.’ This type of regulation arises from the need to rein in the free exercise of market forces and consumer and producer impulses in cases where such a display can act as an obstacle to the maximisation of societal wellbeing or to remove externally applied obstacles to market forces when their play is desirable.’ (As quoted in Regulatory Management and Reform in India 1. Background Paper for OECD-This paper was prepared by Vijay Vir Singh, Fellow, CUTS International and Siddhartha Mitra, Director (Research), CUTS International).

However, Indian drug regulatory authorities have miserably failed to achieve this aim. Over the years, lack of ‘public interest’ and a ‘callous approach’ have resulted in regulators being too inclined towards liberalisation of industrial policies. This approach is now showing negative effects.

There is lack of complete coordination between Central and State FDA. The 59th Report of the Parliamentary Committee on working of CDSCO submitted on 08th May, 2012, has clearly pointed out these lapses. It had pointed out that the callous and casual approach of the Indian drug regulators and lack of central database of trade names has resulted in approving the same trade name to different medicines. (See Box: Examples of Lax Regulation on brand names of medicines).


Moreover, this lack of cen tral database means a drug declared substandard in one state can still get free access in another state.

Indian “Game of Brand Names” – One Medicine, 100 names

Currently, in India, the same medicine is sold by at least 100 companies masking its identity and labelling it with thousands of different names like branded, branded generics, mirror brands and combination of medicines called as Fixed Dose Combinations (FDC). Consequently, the market is flooded with lakhs of medicines and the same medicine is available at 100 per cent higher price and also at one tenth price of the other company’s rate to the patients. (See Box: Branded Generics in India’s Pharma Market).

Prices of brands are paradoxical: The top selling brand, amoxicillin + clavulanic acid (Tablet, 125/500 mg), is currently sold by 217 companies under 292 brands, with substantial price variation, ranging from Rs 40 to Rs 336 for a pack of six tablets.


Source: MARKET STUDY ON THE PHARMACEUTICAL SECTOR IN INDIA – (Key Findings and Observations: A Report by Competition Commission of India-18-11-2021)

Mirror brands: One company which manufactures amoxicillin + clavulanic acid (Rs125/500 mg tablet), sells two different brands at substantially lower prices; one at Rs18.27 and another at Rs 73.17, resulting in a price variation of 120 per cent. Another company has a glimepiride + metformin formulation, with one brand at Rs10 and the second at Rs 60 per pack of 10.

Fixed Dose Combinations (FDCs): A single drug is combined with other drugs and sold under different brand names. For example, the NSAIDs – pain killers and antiinflammatory medicines – are available in various permutations and combinations with 124 different combinations, sold by using 2,739 brand names. The diabetic medicine metformin is available in various 25 combinations with other medicines and sold under 536 brand names.

Paradoxically, before the Dr Kokate Committee was constituted in 2014, most marketed FDCs were not approved by FDA. In 2016, the committee after studying the data on available FDCs, declared 344 FDCs as unsafe for human use. However, most of these FDCs are still in use as the decision is pending in Supreme Court.

Price variation between pure generics and branded generics: In the retail market, price variation across 54 molecules ranged from eight per cent to 190 per cent. In case of 45 molecules, it is more than 100 per cent. For example, the price received in public procurement for atorvastatin (10 mg) is Rs 0.21 and the lowest price in open market is Rs 5.1, a difference of 184 per cent. In the case of 19 molecules, it is in the range of 50-100 per cent.

Total failure of capitalistic economy: The main principle of a capitalistic economy is to make products available without restrictions, so that it will build strong competition, which, in turn, will reduce prices and make products affordable for the common man. However, this theory has totally failed in the case of healthcare services and medicines. Currently, around 2,00,000 medicines are available in the market, marketed by around 10,000 firms, but the prices of most medicines are still unaffordable to poor people. Thus, the competition principle of capitalistic economy has totally failed in controlling prices of medicines.

Moreover, the market has turned more, not less, monopolistic. This is mainly because the customer in healthcare is blindfolded and the decision on which medicine to use is a ”third-party decision.”

In such a situation, if the decision maker (in this case, a doctor and pharmacist) is suffering from ‘information handicap,’ (as mentioned above) the seller rules the market.

Therefore, the role of regulator is crucial to control and make such a market favourable to consumers. But, the current situation shows that the regulator has totally failed. Or else, in a market where the prices of most medicines are already 50 to 100 per cent higher, how can one allow a 10 per cent price hike every year, based on hike in Wholesale Price Index? This is like giving a rise in salary to a fat salaried government servant to mitigate inflation.

Incomplete information on proper and rational use of medicines

This situation is further aggravated by the fact that there is disproportionate and incomplete dissemination of information on the proper and rational use of medicines in LICs and MICs.

It has been observed that in developing and under-developed countries, only 30 to 40 per cent of information is disclosed on proper use of medicines. In India, package inserts giving information on proper use are not compulsory. All generic medicines are supplied without package inserts.

As a result, the abundance of medicines has resulted in ‘over prescribing’ and ‘poly pharmacy.’ This callous approach was recently seen during the COVID pandemic when irrational use and promotion of non-essential medicines was at its highest level.

Quality of generic medicines available in Indian market

The quality of medicine, irrespective of branded or generic, differs depending on the licence under which it is manufactured. India has around 10,000 manufacturers, but only around 4,000 are in active marketing and have their “own” manufacturing units.

Most companies get their medicines (branded as well generic branded) manufactured either on Loan Licence, or P2P (Peer to Peer) licence or on Third Party Licence from around 6,000 Small Scale Manufacturing units (SSI) at very low price and market it under their brand name at higher price.

Similarly, there are around 1,000 firms that do not manufacture any medicines at all, but only market it. They too get it manufactured from these SSIs at the lowest cost. Apart from zero capital investment on manufacturing, the main advantage of getting products manufactured from third parties is that the third party, being the actual manufacturer, gets prosecuted and the marketing firm escapes the net of drug laws if the medicine is declared of sub-standard quality. It is then free to get it manufactured from another third party.

Secondly, as India gets half of its market share from exports, exporting Indian firms have to abide by international standards of Good Manufacturing Practices (GMPs).

There are three types of global regulatory standards. If a manufacturer wishes to export generic medicines to strict regulatory markets like the US, EU, Japan, Australia, etc, the firm has to abide by cGMP standards. The WHO/GMP standards are compulsory for exporting to developing and most Asian and African countries.

However, these strict standards are not mandatory for the domestic market. So, a particular firm could manufacture medicines of the highest standards for export to developed countries, middle standards for export to developing countries and the lowest or not updated standards for domestic and non-regulatory markets like Nigeria, Yemen, etc. Thus, the challenges in providing generic medicines of assured quality at the most affordable price are complex in nature and are affected at different levels and by many factors.

But, if we are able to remove the information handicap of a buyer, these issues can be sorted out effectively. For example, the issue of ‘assurance of quality’ of generic medicines was tackled effectively in Maharashtra during 2003, when I was procurement head of the state. We introduced pre-qualification criterion of ”WHO/GMP certification” and ”own licence” for participation in government supply. This helped us to make available export quality medicines at the most economic prices.

However, this was not without hurdles. This decision was challenged by SSI firms in high court, but the court ruled in favour of the government stating that providing the best quality medicines is in public interest.

Limited list of essential medicines: During the 1960s, the WHO observed that there was dumping of non-essential medicines in third-world countries. Based on the experience of Norway during 1970s, where use of medicines was needbased and not market-based, WHO introduced and propagated the concept of using ”only essential medicines” by preparing a list of essential medicines.

In 1996, India introduced its National List of Essential Medicines (NLEM) based on priority healthcare needs of the country. All Indian states and public hospitals are supposed to prepare their list of essential medicines based on their health priorities. All state-run hospitals should pool their requirements to take advantages of bulk procurement. However, barring a few, most states have not yet even prepared their state list of essential medicines. They are still continuing with procurement of non-essential medicines with essential ones.

Price control on essential medicines: A failed concept?

The central government formed a separate agency called National Pharmaceutical Pricing Authority (NPPA). In May 2013, NPPA brought 348 medicines under price control. However, this policy has not succeeded fully.

The analysis of total pharma sales shows that price control covers only 18 per cent of annual sales, while 82 per cent is still not captured by price control.

It is not only price control, but based on the Wholesale Price Index (WPI), NPPA gives price rise too. Consequently, in July 2021, it allowed a one-time price hike of 50 per cent for three key drugs: ibuprofen, ranitidine and carbamezapine and recently, the NPPA has given a blanket price hike of 10 per cent for all 348 drugs in NLEM.

If this is not enough, the annual blanket rise of 10 per cent is legally allowed for all branded medicines, and FDCs, which don’t come under price control, are already high priced, as discussed above.

Price control at one end has successfully controlled the prices of scheduled medicines, but, at the other end, it has affected the availability of many life-saving essential medicines as big companies stop manufacturing these medicines once the drug is brought under price control.

This has, and still is, resulting in scarcity and dependence of procurement of many life-saving medicines from small firms whose capacity and standards of quality are many time, doubtful. As a result, there are very few quality-conscious manufacturers who make life-saving and emergency injections like soda bicab, amonophylline, adrenaline, oxytocin, streptomycin, calcium carbonate, etiopylline + theophyline, all sulphonamides, penicillin, etc.

Making medicines affordable through Pradhan Mantri Jan Aushadhi Pariyojna

The aim of these generic stores is making quality generic medicines affordable to all, creating awareness about generic medicines and generating employment by providing individual entrepreneurships.

This programme started in November 2008. And, as on 6.8.2021, 8,012 stores have been opened across India. The scheme is implemented by the Bureau of Pharmaceutical PSUs of India (BPPI).

The programme is well-accepted across India. However, there are a few gaps which need to be addressed. The list of medicines made available through generic stores is not integrated with NLEM. Consequently, it contains around 125 FDCs in the total list of 699 medicines. Fancy FDCs like Diclo + linseed oil + methylsalycilate cream, enzyme syrup mixed fruit flavour and appetite-enhancing syrups have also been included.

The main challenge to the pharmacist is the identification and substitution with the right generic when prescriptions are written in so many names of the medicines – original, branded, branded generic, pure generic and mirror brands and in multiple FDCs. In such a situation, incorrect brand substitution due to information handicap can result in dispensing wrong medicines.

Secondly, in the absence of proper regulation, in favour of substitution of generics by pharmacist, it is always a threat to the pharmacist to attract law of negligence and prosecution. The message is clear: the current concept of promotion of generic stores is not to promote essential generic medicines, but only to make both essential and nonessential medicines affordable.


Globally, the market drives the need, and it is not driven by real health needs of a country and patients. Hence, challenges to provide essential generic medicines exists not only at the domestic level, but are also at global level, which directly and indirectly influences the use of medicines by all stakeholders, namely, state, manufacturer, regulator, doctor and pharmacist.

At the domestic level, there is a ‘total disconnect’ between what is prioritised by the Ministry of Health (MOH) in its National Health Policy through NLEM and what is prioritised by the Ministry of Pharmaceuticals (MOP) in its National Drug Policy through promotion of industry and generic stores.

Consequently, the driving forces behind availability, accessibility and affordability of generic medicines at global and domestic levels are more or less the same.

To conclude, if we really wish to make all medicines available and affordable to all citizens, we need to adopt the following policies:

Integration of national policies under MOH and MOP for the promotion of concept of essential medicines by all Indian states and also by all stakeholders’ adequate fund allocation to public healthcare services for provision of all essential medicines free of charge. The firms should not be allowed to escape from price control by using various names for the same medicine and should not be allowed to stop manufacturing of essential drugs placed under price control. There should not be double standards of quality of generic medicine like higher standards for export and diluted standards for domestic use. Generic stores should be allowed to sell only essential medicines from NLEM.

branded medicinesDr Suresh Saravdekargenericsprice controlWHO
Comments (0)
Add Comment