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Why are Indian generics under attack? One view from America

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Roger Bate,
Adjunct Scholar at the American Enterprise Institute

Indian generic drugs have helped millions access medicines around the world. Those suffering from diseases like malaria and tuberculosis, and increasingly non-infectious diseases like diabetes, have been able to afford treatment because of Indian companies. It has not been out of benevolence but considered self-interest that this has occurred. Western interests have admired Indian value for money and penetration of emerging markets, and decried India’s perceived lack of protection of intellectual property rights.

While it is debatable whether India should enforce IP rights more rigorously, IP debates have obviously consumed most of the interest of both Western companies and Western governments in Indian pharma issues. No doubt there have been poor IP decisions out of India; denying certain patents because drugs were expensive – an initial reason given in several cases (notably Glivec) – provides evidence to western interests that protectionism is at work (price is not an issue of law for patent decision making). But ultimately cases that made their way to higher courts (such as Glivec) probably have been correctly decided in terms of Indian law. In short, westerners may not like Indian decisions, but on the whole those decisions are defendable under World Trade Organization rules – if they weren’t by now some nation would have brought an action against India.

Western fixation on India’s IP rulings has led to massive distrust, lowered attention and undermined action in other critical areas of the pharma business. That is at least until last year’s US FDA felony conviction against Ranbaxy. Since then, and with FDA head Margaret Hamburg’s visit to India, Indian drug quality has been a centre of focus. Such focus was not driven by Western corporations who have paid little attention to the issue, but due to major Indian failings.

While India can be confident about its IP decisions, it is on far weaker ground over the quality of its products. But any foreigner, such as myself, pointing out such problems, is assumed to have a malign interest with the intent to destroy Indian generic sales. Regardless of my intent, it is vital for India to look inwardly or it risks losing the advantage it has worked hard to develop.

First, the laws overseeing drug production are not even Indian, they are colonial. Amendments to the 1940 Drug and Cosmetic Act have been made but oversight is at best fragmented and weak. The entire law needs to be rewritten to give the main regulator, the CDSCO, more status, funding and power. CDSCO’s own head acknowledges that the agency needs more resources to effectively regulate. CDSCO currently oversees ‘new’ products only, and after four years of market approval of a new product, it passes oversight to state regulators. In essence, the generic drugs for which India is famous have almost no federal oversight.

Additionally, the Indian Parliamentary Standing Committee on Health claims CDSCO is corrupt and colludes with local companies. Until CDSCO is better funded and run by an expert in drug quality and not a political functionary, it will continue to be viewed as insignificant, always trumped by commercial pressures.

Second, CDSCO data is highly suspect. When I investigated the problem of drug quality within India in 2008 and 2009, Vijay Karan, former Head of the Police in Delhi regaled me with stories for 90 minutes of corrupt acts at CDSCO and further afield. According to Karan, pharmacists being sampled by CDSCO often know the inspectors are government employees, and hence always give the best samples to them. This biases any results, and further undermines trust in the organisation.

Third, state regulators are poorly organised and funded. GL Singhal, Chief Regulator of Haryana, a drugs manufacturing hub, told Reuters recently that he needs double the number of inspectors if he is to properly scrutinise factories there. “We literally have skeletal services. We are struggling in the present system. Inspectors are so overburdened, and their nature of duty is very serious,” said Singhal.

Fourth, the quality of drugs India exports to Africa and other emerging markets is also coming under scrutiny. Most of the uterotonic medicines sampled in Ghana from India failed (while those from Switzerland did not). This reinforces the belief that Indian companies produce inferior products for poor markets. One also wonders if they always export good medicines to advanced nations.

Fifth and perhaps most damning of all, none of the Indian drug regulators, either at the state level or CDSCO, contacted the whistle-blower in the infamous Ranbaxy case to understand what really happened. It is one thing to think US FDA may be overzealous, it is another entirely to not even investigate matters with the key source.

Part of the fault for lack of consistent production lies with Western nations. Western drug agencies focus investigations on new products, and approving practices to assess whether a company can make a good product, not that it always does. For example, US FDA samples only a few hundred medicines from pharmacies every year – with three billion prescriptions filled annually across the country. It essentially operates on the honour system – trusting that companies which can make a good product always will.

Some companies, and not just Indian ones, appear to be taking advantage of this lack of oversight and are selling inferior products. Dr Preston Mason of Harvard Medical School found that 36 versions of atorvastatin (generic Lipitor), the world’s most valuable drug, bought in Asia, Europe and US had impurities that undermined the performance of the product. Quite a lot of the suspect samples were made by Indian firms.

This obviously irked Indian officials, but even US FDA tried to distance itself from the findings. FDA senior official Janet Woodcock issued hurried and illogical denials of Mason’s findings and even his methodology, which is the standard used by all scientists in the US. As one US drug expert put it to me, “FDA is acting like CDSCO, it denies there is a problem without doing a thorough investigation.” As if to bolster this impression, FDA has still to contact Dr Mason.

Indian concerns that there are vested interests opposing its generics are of course accurate. Western generic companies in particular are threatened by Indian exports and take advantage of any Indian misfortune. But India’s problems are not imaginary, denials do not make them disappear, they just allow them to fester and worsen.

Following ongoing elections, the new Indian government must rewrite the laws, and properly fund a well constituted drug regulator. Indian companies must move away from accepting different standards of medicine production, one for ‘export’ and another for ‘domestic consumption’. It is unfortunate that the recent revision to the Drugs and Cosmetics Act chose to exclude products made for ‘export’ from the remit of the Indian regulator under misguided reasoning (Section 31, Recommendations, http://164.100.47.5/newcommittee/reports/EnglishCommittees/Committee%20on%20Health%20and%20Family%20Welfare/79.pdf). Actions such as this help to proliferate two different standards of quality in the Indian industry.

Indian companies must also demonstrate intentions to improve quality of production. India needs to join the Pharmaceutical Inspection Cooperation Scheme and harmonise its standards with global health authorities.

If it does this it will find more willing buyers for its products, and provide those Western vested interests it is so ready to moan about, with little room for manoeuvre

(Roger Bate is the author of Phake, and an Adjunct Scholar at the American Enterprise Institute)

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