The premier position that India enjoys in the international pharma market is a result of the government support and the talent pool that the country possesses. With continuous government support, the pharma industry has the potential to achieve greater glories.
However, at the domestic level, the situation is not that glorious. This is shown recently when the National Medical Commission decided to put on hold its August 8 rule mandating doctors to prescribe only generic drugs. Indeed, that decision was based on some illusions about the availability of generic and branded medicines in India and not on facts per se. What are the facts? Let’s try to crack the code.
Growth of the Indian pharma industry
Initially, after independence, the main focus was twofold:
- Not to depend on MNCs for the manufacture and provision of all essential medicines, including antibiotics.
- So, the government shouldered the responsibility of manufacturing all basic essential antibiotics and medicines. This led to the establishment of Public Enterprises like Hindustan Antibiotics, I.D.P.L., Karnataka Antibiotics, and Bengal Immunity, etc. The main reason for this was that initially, private entrepreneurs were least interested in investing in this capital-intensive industry. This move unburdened the private pharma companies allowing them to concentrate and strengthen their base, and they succeeded in gaining a national as well as international market presence as “global generic medicine manufacturers.”
After shifting the focus to a “market-based economy,” the government’s medicine policies became more liberal, generous, and pro-industry. Though these one-sided pro-industry policies led to the creation of a strong base of around 11,000 pharma units in the country, it happened at the cost of lax regulation on the industry. The government literally showered private owners with all sorts of liberties in licensing, manufacturing standards, and marketing, without putting strong regulations in place. This can be seen from the following few incentives provided by the government, some of which are unique to India.
Various options for licensing manufacturing, marketing, and outsourcing
The industry is allowed to manufacture medicine either on its own license or can have a simple marketing license and get all products manufactured on an outsourcing or third-party basis. Various options for outsourcing have been made available as per the industry’s needs.
- Loan License – Using third-party premises on a loan and hire basis.
- P to P License – Using premises and manpower exclusively.
- Third-Party License – Open for all manufacturers.
As a result, presently, there are about 11,000 manufacturing units, out of which only 300 are actively marketing products, while the rest are being used as third-party manufacturing units.
Various options for manufacturing using different standards of GMP
The industry has a wide choice of options to manufacture a particular generic or brand medicine using the following three standards of manufacturing:
A) cGMP standards for strict regulatory markets – These are the highest standards of quality, where there is continuous up-gradation and stringent regulations. This is required to be adhered to if Indian manufacturers wish to export their generic/ brand medicines to Developed Countries such as the EU, US, Japan, Canada, Australia, etc.
B) WHO-GMP standards for soft-regulatory markets – These are good standards of quality, and standards are updated by WHO every two years. This is required for export to Developing Countries in South East Asia, Middle Eastern countries, and a few African countries.
C) Domestic GMP with accepted diluted standards of quality, as no regular upgradation to global standards is mandatory. This is needed for domestic marketing and for import to countries where there is a weak or absent regulation, e.g., underdeveloped countries like Gambia, Zambia, Yemen, Somalia, Nigeria, etc.
Various options to market medicines using brand names for generics
Once the patent has expired, medicines are marketed either by their generic names or by branded names given by the companies. With the various options for marketing provided above, currently, only 10 per cent of the drugs in the domestic market are unbranded/generic, mostly procured by Public Health care services. The rest, around 87 per cent of drugs dispensed in India, are so-called Branded, Branded generics, Mirror brands, etc. As a result, the market is flooded with the same medicines under thousands of brand names. 1
- Currently, as per a study done by Competition Commission of India, it was revealed that during 2011-2012, 47,478 brands were available with 2,871 formulations marketed in India, with an average of 17 brands for every formulation.
- Vitamins/minerals and sex stimulants display higher brand creation. Vitamin formulations have, on average, 37 brands, and sex stimulants have 19 brands per formulation.
- In the case of vaccines and anti-neoplastic medication, it requires high standards and more capital investments, resulting in the lowest brand creation, with only five and seven brands per formulation, respectively.1
Unrestrained merrymaking game of brand names
Surprisingly, even today, there is no central database of all brand names available in India. Companies only need to provide an undertaking to the drug regulatory authority stating that a particular brand is not used by any other company in India. As a result, during 2011—2012, approximately 235 drug brands were introduced monthly, with a total value of Rs. 318 crores. Annually, about 2,827 brands with a total value of Rs. 3,810 crores were introduced. The number of brands varies considerably even between different strengths and doses.
- In the anti-diabetes category, the popular combination of glimepiride + metformin (Tablet, 500 mg) remained the top, with about 137 brands from 120 companies.
- Rosuvastatin (Tablet, 10 mg), a cholesterol-lowering agent, was marketed through 127 brands by 105 companies.
Indian Jugaad – Mirror brands and interchangeability of brands of the same company
Normally, it is expected to have the same brand name for the same generic by the “Same Company.” However, in India, companies are allowed to have “Different brands for the same generic marketed by the same company.” This is called “Mirror Brand.”1
- There are five to six different brands of the same composition Amoxicillin and Clavulanic acid supplied by the same company for the same formulation of the same dose and strength.
- 15 companies produce each two different brands of Glimepiride + Metformin (Tablet, 500 mg).
- Four companies market Rosuvastatin (Tablet, 10 mg), with three different brands of the same formulation.1
Thus, in India’s pharma market, product differentiation is introduced through brand differentiation, even though they are ostensibly homogeneous commodities and functionally interchangeable.
FDCs – A tool to play with permutations and combinations
This is another area where brand names play a very important role. This provision allows Indian marketing companies to play with all possible permutations and combinations of medicines. To explain it using a common example, a single drug Dicyclomine is combined with various other drugs, and all combinations are permitted for sale. For instance:
- Dicyclomine + Paracetamol
- Dicyclomine + Paracetamol + Diclofenac
- Dicyclomine + Paracetamol + Domperidone
- Dicyclomine + Paracetamol + Clinidium + Dimethicone
- Dicyclomine + Chlordiazepoxide + Clinidium
- Dicyclomine + Mefenamic acid + Dimethylpolysiloxane
- Dicyclomine + Nimesulide
This results in more than 500 brands of FDCs under Cough preparations and 500 under Vitamin combinations.
Total number of brands for certain groups of FDCs during 2011-2012
- NSAIDs: 124 FDCs with 2739 brands
- Metformin combined with other medicines: 25 FDCs with 536 brands
- Anti-depressants / Benzodiazepines: 25 FDCs with 301 brands
- Anti-Psychotics: 10 FDCs with 211 brands
Current situation – Regulation of the Indian pharma industry
There is still lax coordination between Central-State Drug regulation and a near lack of total coordination between Inter-State Drug Authorities. There is no central database and monitoring of the award of brand names. This has been pointed out by the 59th Parliamentary Committee Report as well. This resulted in identical brands being licensed in different states containing different drugs. For example: 2
- Brand Lona was awarded for low sodium salt in one state and the same brand name Lona was awarded for Clonazepam in another state.2
- The same brand name AZ was awarded to three different contents – Azithromycin, Albendazole, and Alprazolam.
- Similarly, the same brand name Medzole was licensed for four different drugs – Metronidazole oral suspension, Itraconazole capsule, Pantoprazole injection 40 mg, and Midazolam injection.
Option to use the brand name of banned FDC
There is also the option to use the same old banned brand name for a new drug combination. For example, after the ban on the use of Dextropropoxyphene, the same trade name “Proxyvon,” which was awarded to the banned combination of Dextropropoxyphene and Paracetamol, is being allowed for a changed combination where Tramadol is replaced and combined with Paracetamol.
Before 2005, the industry was free to act as per its will and wish, as pharmacovigilance and post-marketing surveillance were not in force.
Before 2005, until 2016 when CDSCO came into the picture, many states had issued licenses to firms for the manufacture of FDCs without conducting any studies or counterchecks. In 2014, a Committee was constituted by the Government of India to study the issue of FDCs, both new and existing. In March 2016, based on its recommendations, 344 FDCs were immediately banned as being unsafe for use. However, in December 2016, the Delhi High Court put a stay on the ban, citing technical reasons. The industry pleaded in court that these FDCs had been used for many decades without any complaints from doctors or consumers on record. It is worth noting that it was the industry’s duty to keep records of all adverse drug reactions through proper post-marketing surveillance. In January 2017, the Government of India appealed to the Supreme Court of India against the Delhi High Court verdict. However, as of 2023, the issue is still pending in the court and is under active consideration by the Supreme Court. Meanwhile, most of these FDCs are still being marketed by the industry under the pretext of the court stay.
Paradox of generic medicines use in India
Following is the only reply received by one of the consumers from CDSCO on an RTI where the definition of Generic Medicine was asked.
Prices of brands are paradoxically high
Pharma contributes 43.2 per cent to the total out-of-pocket expenditure (OOPE) on health in India. This makes it the single largest contributor to OOPE, which accounts for an estimated 62.7 per cent of total health spending in the country. Thus, prices of pharma have a significant bearing on access to healthcare. While around only 17.7 per cent of the pharma market in India (in terms of value) is under price regulation, competition is expected to be the key source of price discipline for the rest of the market. However, unfortunately, that’s not the reality.
There is a significant price difference between brands of different companies for the same FDC. For example:
- The top-selling amoxicillin + clavulanic acid (Tablet, 500/125 mg) is sold by 217 companies under 292 brands, with substantial price variation, ranging from Rs. 40 to Rs. 336 for a pack of six tablets.
- Mirror brands & Price difference – One company that manufactures amoxicillin + clavulanic acid (500/125 mg, tablet) sells two brands at Rs. 18.27 and Rs. 73.17, resulting in a price variation of 120 per cent. The prices of glimepiride + metformin charged by a company for its two brands were Rs. 10 and Rs. 60 per pack of 10. Moreover, the industry is allowed to raise the price of branded medicines by 10 per cent each year.
Price difference between branded generics in private retail market and pure generics in public procurement market
The price variation between pure generics in public procurement and branded generics in the retail market across 54 molecules ranged from eight per cent to 190 per cent. In the case of 45 molecules, it is more than 100 per cent. The following table shows prices quoted in public procurement and the price charged in the private market:
- Atorvastatin (10 mg), Rs. 0.21 – Rs. 5.1 – 184 per cent
- Zinc tablet (10 mg), Rs- 0.19 – Rs. 3 per tablet – 180 per cent
- Ampicillin (500 mg) injection, Rs. 4.80 – Rs. 8 / vial (In case of 19 molecules, it is in the range of 50–100 per cent).
Contrary relationship in quality and names of medicines
From the above, it should be clear that with all the options available to the industry, brand names of generic drugs can hardly signal quality. Several firms that market their brands often get their products manufactured through third-party or contract manufacturing at the cheapest rate and are allowed to sell them at the highest price simply by attaching a brand name. Most of the time, the same third-party manufacturer makes the same medicine for multiple pharma companies. This flexibility of outsourcing manufacturing is also used as a loophole in the law and as a scapegoat. When a drug is found to be substandard, the third-party manufacturer is prosecuted under the law, and not the marketing company. Due to this, the big company escapes penalties by shifting the blame to another third-party manufacturer while continuing to enjoy its standard-quality brand status, even though it has lost it. Paradoxically, the trend of mirror brands being marketed by the same company at different prices runs counter to the proclaimed brand name-quality correlation.
Quality of generic medicines in the international market
The particular generic or brand medicine can have three different quality equivalents, namely:
- When it is merely having the same chemical, it is called a “chemical equivalent.” This generic/brand may not have the same efficacy as the original molecule, as many chemicals show different isomers, of which only a few have efficacy. For example, Omeprazole and Rifampicin.
- Bio-Equivalent: To exhibit its effect at the targeted organ, the medicine has to reach the organ through blood, where it is absorbed from the gastrointestinal tract after being taken orally. Generics/brands that have reached at least 80% of their concentration in the blood are called Bio-Equivalent.
- The generic/brand medicine that has the same onset and duration of action when compared with the original drug is termed Therapeutic Equivalent. In developed countries like the US, all these equivalents of marketed generics are displayed on the US FDA website, called the “Orange Book.”
US FDA – Orange Book
The Orange Book is an online list of Generic Equivalents available in the US. It’s a coding system introduced since the 1980s, where all generic medicines available in the US are displayed with the exact composition and names of all generic manufacturers. Ratings include:
- Rating A: Awarded to generic drug products that the FDA considers therapeutically equivalent.
- Rating AB: Awarded to generic products that are bioequivalent and are therefore considered therapeutically equivalent.
- Rating B Products: Awarded to generic products with actual or potential bioequivalence problems that have not been resolved.
- Rating BX: Awarded to generic products presumed to be therapeutically non-equivalent.
This online information helps practitioners identify a product’s equivalence for substitution with the original product. The Orange Book data on generics are updated every month.
Failure of government’s mantra to reduce prices and make medicines affordable
The Indian government puts a price tag on essential and life-saving medicines selected under the National List of Essential Medicines, published by the National Pharmaceutical Pricing Authority (NPPI). However, this policy has a dual impact on both the availability and affordability of essential medicines. Big companies find new ways to avoid this price war by introducing “me-too drugs,” different salts, or using FDCs. They may also suddenly stop manufacturing these low-cost, life-saving medicines and concentrate only on high-margin products. This has resulted in the non-availability of these life-saving medicines from reputable firms, leading to constant shortages of medicines like Injection Sodium Bicarbonate, Adrenaline Injection, Aminophylline Injection, Atropine, Injection CPM, Injection Calcium Gluconate, Injection Etiphylline + Theophylline, Injection Dexamethasone, Injection Digoxin, Injection Hydrocortisone, and more.
Where are we now?
This mismanagement and lousy policies have resulted in the Indian market being flooded with medicines containing various generics and various brand equivalents, all with a wide range of safety options, quality standards, and prices. As a result, there are around 200,000 different products:
- Having various standards of manufacturing
- Having various types of licenses
- Manufactured by around 10,000 small units for about 300 large marketing units on a third-party basis
- With 10 to 100 different generic equivalents for each patented medicine available, out of which a minimum of 10 to 15 are branded equivalents
- With prices ranging from the lowest costing generic at say Rs. 0.10 per tablet to the highest-priced branded generic at Rs. 2.00 per tablet (a 100 times difference in prices).
Actions needed at the national level
The recent incident in Gambia should be a wake-up call for Indian pharma companies. It is now necessary to improve the drug quality policy and raise the bar of quality standards to the global level. Some gaps need immediate attention:
- Global harmonisation of quality: Make it mandatory for all drug manufacturers to provide, manufacture, and import-export medicines of the same highest quality worldwide.
- Stop issuing licenses for companies engaged only in marketing medicines and abolish the “Outsourcing of Manufacturing” by big companies as well. Or enact a law holding marketing companies equally responsible for prosecution and conviction along with third-party manufacturers for the supply of substandard medicines under the Drugs and Cosmetics Act.
- Strengthen State Drug Control Organisations with proper funds and competent and trained personnel for effective drug regulation. Make “up-to-date training” mandatory for drug controllers to keep them updated with modern technology.
- Increase penalties for the sale and manufacture of spurious drugs causing grievous harm or death, from life imprisonment to the death penalty. Make offenses related to the manufacturing and sale of spurious drugs non-bailable.
- Ensure that prosecution under the Drugs and Cosmetics Act is immediately followed by filing an FIR by the police department. Provide social compensation in the form of economic help to families affected by the consumption of substandard medicine.
Immediate actions to address the chaos of branded vs. generic medicines
To immediately check the proliferation of branded medicines, consider the following:
- Stop issuing licenses to firms that are purely engaged in marketing. Issue licenses only to those with at least one “OWN manufacturing unit.”
- Issue brands only to those generic medicines that are manufactured under an “OWN license” and not on a third-party basis.
- Now with AI based technology it should be easy to have a central database of all brands at one site. This will put the use of same brand names at zero level.
These immediate solutions will help regulators address 80 per cent of the current problems created by the proliferation of brands versus generic medicines.
In summary, before implementing the compulsory order for doctors to use “Only generic names” while prescribing medicines, it is essential to have the pharma regulatory system in proper order.
1) MARKET STUDY ON THE PHARMACEUTICAL SECTOR IN INDIA-Key Findings and Observations-18-11-2021- Competition Commission of India,10th Floor, Office Block – 1, Kidwai Nagar (East), New Delhi – 110023, India
- 2) Fifty-ninth report on the functioning of the central drugs standard control organisation (CDSCO) (presented to the rajya sabha on 8th may, 2012)-(laid on the table of the lok sabha on 8th may, 2012)