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Drug Quality Imbroglio And ‘Culture of Bending Rules’ in India

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“Bottle Of Lies Exposes The Dark Side Of The Generic-Drug Boom” – re-emphasized the book, released in May 2019.  This confirms, the raging debate on the questionable quality of many generic drugs manufactured in India and involving several top domestic pharma companies, is a never-ending one. Numerous articles also ascribe many different reasons to this saga, leaving an overall impression – as if, blindfolded persons are trying to describe an elephant, touching and feeling different parts of the animal’s body, each at a time.

Let me illustrate the point with the Bloomberg article of January 31, 2019. It reported, “Culture of ‘Bending Rules’ in India Challenges U.S. Drug Agency.” And further commented: ‘The FDA confronts creative improvisation in the world’s largest generic-drug exporter.’ Curiously, according to the above report it seems to be a general belief among many, even within India.

This article will take into account the above apprehension – specifically raised against Indian drug manufacturers of both branded and non-branded generics. Accordingly, my focus will be on just three points – as possible causative factors for this critical issue:

  • Is it an India specific concern – thus related to ‘Indian cultural mindset’? or it’s a global issue, involving both Indian multinational drug manufacturers.
  • Is it a systematic attempt to create a perception bias against low-cost generic drugs, worldwide?
  • Are generic drug makers resorting to such unacceptable shortcuts due to increasing margin pressure?

Having deliberated these points, I shall try to outline a set possible remedial measures to address this issue in a holistic way, ensuring a win-win outcome. Let me first explore, whether or not this issue is specific to India, involving Indian drug manufacturers.

Is the issue India specific?

Is the issue of questionable quality of generic drugs, irrespective of whether they carry a brand name or not restricted to the shores of India? One can find its answer in the same report, as quoted above. A yearlong investigation by Bloomberg News into the generic-drug industry concluded, ‘FDA inspections at factories from West Virginia to China have found reason to doubt the data meant to prove drugs are safe and effective.’

One possible reason for such perception could be, since India is predominantly a branded generic market, voices decrying ‘questionable’ safety and efficacy of cheaper non-branded generic drugs, are too loud. Nevertheless, amidst all this, who’s who of branded generic manufacturers continue getting caught on the wrong foot by overseas regulators in the quality quagmire. Ironically, multinationals are also included in it.

Multinationals are also included in such quality quagmire:

There are several examples of non-compliance to requisite drug quality standards by multinational drug companies. Let me illustrate the point with an example that involves a top global pharma player.

The March 04, 2019 ‘Warning Letter’ of US-FDA for the Irungattukottai (Tamil Nadu) plant of Pfizer in India, clearly said: “Your quality system does not adequately ensure the accuracy and integrity of data to support the safety, effectiveness, and quality of the drugs you manufacture.”

This is not a solitary example of Pfizer’s generic hospital injectables manufactured in this plant. According to a media report dated July 17, 2018, twice before US-FDA had cited manufacturing and testing issues in this facility, containing 11 observations of the regulator, such as, workers “manipulated test sample weights to obtain passing results” for both batches of raw materials and finished product. It is a different matter that the company, later on, decided to close this plant for commercial reasons. Be that as it may, negative perception of generic drug quality is indeed an issue that needs to be addressed without further delay, holistically.

Studies have captured negative perception of generic drugs:

That this is a perception, has been well – elucidated along with its implications, in several studies. A few of which are as below:

A BMJ article concluded: “A significant proportion of doctors, pharmacists and lay people hold negative perceptions of generic medicines. It is likely these attitudes present barriers to the wider use of generics.” It further added, “Negative perceptions of medicine quality along with other drivers contribute towards choosing more expensive medicines in the private sector.”

Endorsing this point, yet another BMJ article inferred: “Negative perceptions of generic medicines and preferential promotion of branded medicines over generics by pharmaceutical companies could influence prescriber behavior and affect trust in healthcare provided in public services. To succeed, access to medicine programs need to systematically invest in information on the quality of medicines and develop strategies to build trust in healthcare offered in government health services.”

Again, in a separate survey of over 2700 physicians on perceptions of generic drugs, more than 23 percent of respondents expressed negative perceptions about their efficacy and nearly 50 percent. reported negative perceptions of generic drug quality. In the same survey, patients also expressed concerns that the lower cost of generics is associated with reduced medication quality.

Although, the above survey was conducted in the United States, the current situation in India, I reckon, is no different, but with one caveat. Here, preferential promotion of branded generic medicines over cheaper non-branded equivalents, by the respective drug manufacturers, could significantly influence prescriber behavior. Therefore, the question that follows: Is this perception-creation based on facts?

Is the negative perception fact-based?

Although, even the US-FDA clearly states that: ‘A generic medicine works in the same way and provides the same clinical benefit as its brand-name version”, I did try to find some conclusive evidence depicting brand name drugs are superior to their cheaper generic equivalents. While doing literature searches, two types of results emerged – there are studies that do not find any significant difference between generic drugs and their branded equivalents. At the same time, a few other studies do suggest that there is a difference between these two, but admitting that these studies are not conclusive. Let me give below examples of each.

No quality difference found between generic drugs and the branded variants: 

I shall quote here three studies, out of which one is India specific. The analysis reported in the above BMJ article, found that ‘the generic and branded variants of the medicines tested were of comparable quality.’

Another study, published by PLOS Medicine on March 13, 2019 also said, “In this study of 8 drug products conducted using 2 large US commercial insurance databases, we observed that use of generics provided comparable clinical outcomes as the brand products.”

An India specific researchon the same also reported, most generic and branded drug users believed that their drugs were effective in controlling their ailments with no significant difference in reported adverse effects and drug adherence.

Slightly different results were also reported with generics, but not conclusive:

One such study questioned, whether generic drugs are truly equivalent to the brand-name versions.This article was published on January 2019 by Harvard Health Publishing with the title, “Do generic drugs compromise on quality?”

This article quoted a Canadian study, published in the October 2017 issue of ‘Circulation: Cardiovascular Quality and Outcomes’, which found that patients who took generic versions of three different blood pressure medications in the months after the generic drugs became available saw increased rates of drug-related side effects.

Was it due to a perception bias?

To ascertain whether or not there is a perception bias, let us look into the following details of the same study along with its conclusion.

In this study, the researchers ‘looked at the numbers of emergency room visits and hospitalizations for 136,177 individuals ages 66 and over (60% of them women) who used any of three blood pressure medications: losartan (U.S. brand name Cozaar), valsartan (Diovan), and candesartan (Atacand). The investigators examined data for the periods 24 months before and 12 months after the generic versions of these medications went on the market. And found that before the generic versions became available, about one in 10 people taking the blood pressure drugs had to go to the emergency room or be hospitalized each month. In the month after each of the generics went into use, the rates of these adverse events went up: 8% for losartan, almost 12% for valsartan, and 14% for candesartan.’ The study authors commented, this might suggest performance differences between the brand-name and generic drugs.

However, analyzing this study, the Harvard article suggested further probe on the question: Did it result from quality problems with the generic versions of these medications or were there other factors that occurred in this time frame?

Another research, aimed at finding, whether patients are more adherent to generic statins than brand-name statins (lovastatin, pravastatin, or simvastatin) and whether greater adherence improves health outcomes, also concluded, “An 8% reduction in the rate of the clinical outcome was observed among patients in the generic group versus those in the brand-name group.” This also wasn’t a conclusive one, either.

Nevertheless, the key point of a ‘perception bias’, is captured in a separate study, where the researchers did find higher rates of psychiatric hospitalization for patients taking generic and AG escitalopram and sertraline, compared with those who initiated the brand-name product. Importantly, they noted that these outcomes were likely due to either residual confounding or generic perception bias.

No quality difference also found between branded and non-branded generics in India:

There are studies, which captured no quality difference between branded generics and non-branded generics in the country. One such India specific study concluded: “Quality of branded-generics is same as for their branded version. The study highlights the need to modify the drug price policy, regulate the markups in the generic supply chain, conduct and widely publicize the quality testing of generics for awareness of all stakeholders.”

Thus, so far, we have seen in this article that concern on quality of generic drugs is neither India specific, nor is it related to ‘Indian cultural mindset.’ And this is, undoubtedly, a global issue, involving both Indian and multinational drug manufacturers. There are also ample evidences available that a systematic attempt is being made to create a perception bias against low-cost generic drugs, worldwide. Let us now look at the third possible causative factor, as I listed above.

Is it due to margin pressure on generic drugs?

The answer to this question was deliberated in an article titled, ‘Generic drug makers feel pinch as prices crumble,’ published in the Financial Times on August 17, 2017. Quoting a top global financial analyst, it reported – global generic drug industry, where Indian manufacturers are major players,has maintained roughly 30 per cent operating margins over a long period of time, with improvements year on year. But, since last few years, there has been a margin degradation, which may possibly further go down – even lower than what it is today.

The article further highlighted, a round of consolidation among their main customers in the US: the wholesalers, have escalated the problem.  Many of these groups have clubbed together to form “mega buyers”, known as general purchasing organizations, that can command large discounts. Moreover, for the US market, another area of ‘concern’ is that the US-FDA has identified boosting competition in the generics market as one of its main priorities. As this reform opens up, it could squeeze the generic drug margins further.

Many envisage that intense cost cutting measures, could have transgressed in the drug quality assurance area, aggravating this issue. Although, it needs to be verified through credible studies, curiously, some signs of improvement in this area has recently been reported.

That said, there appears to be a strange coincidence between recent reports on Indian drug makers showing improvement in USFDA inspection outcomes and attempts to increase generic drug companies and some of their top executives slapped with price-fixing lawsuits in the U.S.This needs to be studied further.

The way forward:

The negative perception of generic drugs, in general, and non-branded generic drugs, in particular, is most likely a well-crafted business issue, rather than a genuine patient safety concern. It calls for an immediate two-pronged approach:

  • Vigorous awareness and educational campaigns on safety and efficacy of generic drugs targeted to patients, medical and paramedical professionals.
  • New regulatory measures, especially the following five:

- No pricing pressure or price control in any form of generic drugs

- Abolish brand names for generic drugs

- Make generic prescription compulsory to boost intense competition and thereby     reducing the price.

- Restrict the number of ingredients in FDC not more than two or three

- Make Uniform Code of Pharmaceutical Marketing Practices (UCPMP) mandatory.

Conclusion:

Thus, the questionable quality of generic drugs is not an India specific concern and involves both Indian multinational drug manufacturers. This is also evident from the analysis, as quoted above, that underscores, ‘FDA inspections at factories from West Virginia to China have found reason to doubt the data meant to prove drugs are safe and effective.’ Many studies have revealed that there is a systematic attempt to create a perception bias against low-cost generic drugs, worldwide.

A sequence of remedial measures, as described above, also include fostering competition, instead of introducing government controls on prices of generic drugs with stringent regulatory oversight being in place.

Thus, the so called ‘belief’ that the ‘culture of bending Rules’ is culpable for dubious generic drug quality in India, is more akin to a strong perception, prevailing in India, rather than based on any scientific analysis related to this issue. This ought to change with a well-coordinated intervention – for patients’ health interest sake.

By: Tapan J. Ray  

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Big Pharma’s Windfall Gain From Indian Pharma’s Loss, Costs American Patients Dear

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According to US-FDA, its ‘Import Bans’ on quality grounds of the drugs manufactured at various Indian facilities, such as, Ranbaxy’s Paonta Sahib, Dewas and Mohali and Toansa plants, were reportedly solely directed at negating the health safety risks of American patients consuming those medicines.

US Media now raises a critical question:

Interestingly, the Wall Street Journal (WSJ) has now flagged a very valid question, whether such US-FDA drug ‘Import Bans’ have really worked in the best interest of American patients, as it has cost the US consumers millions of dollars.

Vindicates past apprehensions:

I also had raised similar apprehensions, at least twice, in my blog posts, one in March 17, 2014 in an article titled, “Loss of Ranbaxy, Gain of Big Pharma…And Two Intriguing Coincidences” and the other on June 9, 2014 in another article titled, “Drugs From The Same Indian Plant: Safe For Europe, Unsafe For America, Why?”

Cheaper generic launches got interrupted:

The report states that the ‘Import Bans’ of products manufactured in the above four plants of Ranbaxy kept the Indian company away from its ‘first to launch’ opportunities of at least two blockbuster drugs, namely, Diovan of Novartis and Nexium of AstraZeneca, besides Valcyte of Roche.

As a result of these ‘Import Bans’ of the US-FDA, the concerned global pharma majors were able to continue selling their high priced brands even long after the respective patent expiries, causing hardship to many patients.

Caused windfall gain to Big Pharma:

WSJ reports, these ‘Import Bans’ hugely helped the Big Pharma, as the combined sales of those three drugs in the US totaled US$ 8 billion in 2013. It also states that unavailability of those three generic equivalents would cost US$125 million annually just in 39 counties of upstate New York. This is mainly because once generics are available, patented drug prices usually fall by 80 percent or more.

Thus, the net losers became the purchasers and patients, along with the federal government, the report says.

A serious question to ponder even for the US:

Quoting Columbia Law School professor Scott Hemphill, the report highlights a serious question over whether the US-FDA rules are too complex to manage, or to anticipate strange, unusual and unfortunate consequences that result from them. It also expresses concern over how such delays in generic entry raising the drug treatment costs in the United States.

A repetitive saga:

The saga of losing ‘first to launch’ opportunities, seems to be repetitive in nature for Ranbaxy.

As I stated earlier in my above blog posts, it is also worth noting from another report that:

“Nexium is the third drug for which a Ranbaxy generic has been delayed. Novartis’ heart drug Diovan went off patent in September of 2012. Instead of seeing its sales of the drug plunge last year, the Swiss drug maker earned US $1.7 billion from it, according to the drug maker’s annual report. Roche’s antiviral Valcyte has also escaped competition after going off patent last year. Roche doesn’t break down U.S. sales but reported global revenues of $ 672 million last year, up 10%.”

The same plant meets drug safety standards of Europe, but ‘unsafe’ for America!

In this context it is worth noting, according to another recent media report, quite contrary to the stern actions by US-FDA, European drug regulators have commented as follows on a plant that has been banned by the american regulator:

“The inspection team concluded that there was no evidence that any medicines on the EU market that have an active pharmaceutical ingredient manufactured in Toansa were of unacceptable quality or presented a risk to the health of patients taking them.”

They further added, “This conclusion was supported by tests of samples of these medicines, all of which met the correct quality specifications.”

Isn’t this indeed intriguing?

Conclusion:

The USFDA quagmire in India raises more questions than answes, but one critical trend, where the ultimate gainer is the Big Pharma and the net losers are the American patients and the Indian pharma industry.

Be that as it may, it is about time to for the Modi Government to take up this important issue at the highest level in the United States, as the losers would continue to be the domestic pharma manufacturers in India and in the American patients, Big Pharma being the main beneficiary.

Considering all these, doesn’t this jigsaw puzzle require to be resolved once and for all, without any further dilly-dally?

By: Tapan J. Ray 

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

In the quagmire of Pharmaceutical Pricing

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Pricing of Pharmaceutical Products has now become one of the most complex and sensitive areas of the business, like never before. This is mainly because of the concern on the impact of medicine prices to access of medicines, especially, in the developing markets, like India and the cost containment pressure of the governments as well as the healthcare providers in the developed markets of the world.

It is widely believed that invaluable pharmaceuticals products, which play a central role in keeping the population of a nation healthy and disease free to the extent possible, should not be exploited in efforts to make unreasonable profits by anyone.

Pharmaceutical companies are often criticized in this area by those stakeholders who are concerned with the well-being of ailing poor and underprivileged population globally. The debate of access to medicines continues to revolve round pharmaceutical pricing in almost all countries of the world. India is no exception.

Current scenario in some major countries:

Early April, 2009, China, a nation of 1.3 billion people, unfolded a plan for a new healthcare reform process for the next decade to provide safe, effective, convenient and affordable healthcare services to all its citizens. A budgetary allocation of U.S $124 billion was made for the next three years for this purpose.

Similarly, 2010 is also be remembered as yet another significant year in recent times to improve access to medicines to a large number of population by encouraging usage of low cost generics. In this year:

- With contentious new healthcare reform, President Obama expanded access to Health Insurance to additional around 40 million Americans and encouraged prescription of low cost generic medicines.

- The Governments in UK and European Union, including the largest market in the EU – Germany, introduced stringent cost containment measures for pharmaceutical products.

India and Japan signed a Comprehensive Economic Partnership Agreement (CEPA) in February 2011 where Japan will gain access to low cost Indian generic medicines by extending similar facilities, like Japanese, for drug registration and release to the Indian pharmaceutical players.

How much to charge for a brand of medicine?

While there is no single or right way to arrive at the price of a medicine, how much the pharmaceutical manufacturers will charge for a pharmaceutical brand still remains an important yet complex and difficult task, both locally and globally.

Pharmaceutical pricing model is changing: Pharmaceutical pricing mechanism has undergone significant changes across the world. The old concept of pharmaceutical price being treated as almost given and usually determined only by the market forces with very less regulatory scrutiny is gradually but surely giving away to a new regime.

Currently in many cases, the prices of even patented medicines differ significantly from country to country across the globe, reflecting mainly the differences in healthcare systems and delivery along with income status and conditions.

Global pharmaceutical majors, like GSK and Merck (MSD) have already started following the differential pricing model, based primarily on the size of GDP and income status of the people of those countries. This strategy includes India.

If this trend continues, a win-win situation could be created, when unmet needs of a large number of patient groups could be met with innovative medicines, paving the way for the innovator companies to register a healthy, both top and bottom line, business growth in these emerging markets of the world to effectively fund their R&D projects, besides other areas of business. 

Four common pharmaceutical pricing models:

Following are the four common methods, which are usually followed to decide prices of medicines.

  • Cost-plus pricing (CPP):  This is a method of arriving at a selling price where a pre-determined percentage is added to the cost price to cover profit.
  • Target return pricing (TRP): This method of pricing estimates the desired return on investment to be achieved from the fixed and working capital investment and includes the same in the price of a product.
  • Reference Pricing:  In this method a product is sold at a price close to its main competing brand. The idea behind “reference pricing” is that certain drugs are interchangeable in terms of their therapeutic effectiveness within a disease group and reimbursement is based on the least expensive option. The concept started taking hold in Europe and has driven down pharmaceutical prices significantly in Germany.

Both the governments and patients save money in ‘Reference Pricing’ mechanism. However, all patients are free to choose a more expensive brand within the therapeutic group by paying the difference between the cost of those two drugs for reimbursement purpose.

  • Pharmacoeconomics based or Value-based pricing (PBP/VBP): Pharmacoeconomics, as we know, is a scientific model of setting price of a medicine commensurate to the economic value of the drug therapy.  Pharmacoeconomics principles, therefore, intend to maximize the value obtained from expenditures towards medicines through a structured evaluation of products costs and disease outcomes.

PBP/VBP basically offers the best value for money spent. It ‘is the costs and consequences of one treatment compared with the costs and consequences of alternative treatments’.

Let me hasten to add that some shortcomings in PBP/VBP system have already been highlighted by some experts and are being debated. The key question that is being asked now is how to quantify the value of saved life or relief of intense agony of patients while arriving at a price of a drug based on PBP/VBP model.

PBP/VBP concept is gaining ground: The concept of ‘evidence-based medicine’, is gaining ground in the developed markets of the world, prompting the pharmaceutical companies generate requisite ‘health outcome’ data using similar or equivalent products. Cost of incremental value that a product will deliver is of key significance. Some independent organizations like, the National Institute for Health and Clinical Excellence (NICE) in the UK have taken a leading role in this area. PBP/VBP could help in ‘freeing-up’ resources to go to front-line healthcare: On November 11, 2010 ‘Pharma Times’ in a news item titled, “Government (UK) to consult on drug pricing in December” reported that newly-published business plan of the Department of Health for 2011-15 sets out the coalition government’s structural reform priorities for healthcare as follows:

  • Create a patient-led NHS
  • Promote better healthcare outcomes
  • Revolutionize NHS accountability
  • Promote public health
  • Reform social care

As per the Department of Health, UK, these reforms ‘will help to create a world-class NHS that saves thousands more lives every year by freeing up resources to go to the front line, giving professionals power and patients choice, and maintaining the principle that healthcare should be delivered to patients on the basis of need, not their ability to pay’. Global pharmaceutical companies using more ‘health outcomes’ data to set pricing strategies: Some global pharmaceutical companies have already taken pro-active measures on the subject. In early 2009, reported agreements between Sanofi-Aventis, Procter & Gamble and Health Alliance, as well as between Merck and Cigna, vindicate this point. These agreements signify a major shift in the approach of the global pharmaceutical industry to gather and use ‘health outcomes’ data.

In the Sanofi-Aventis/Procter & Gamble-Health Alliance agreement, concerned companies reported to have agreed to reimburse the expenses incurred by the Health Insurance companies for patients suffering from non-spinal bone fracture, while undergoing treatment with their drug Actonel.

In the Merck/Cigna agreement, Cigna will have the flexibility to price two diabetes drugs based on ‘health outcomes’ data. ‘Outcomes-based’ pricing strategies are expected to become the order of the day, in not too distant future, across the world.

The ground realities in India are very different: Medicines are very important and constitute a significant cost component of modern healthcare systems, globally. In India, overall healthcare system is fundamentally different from many other countries, including China. In many of those countries around 80% of expenses towards healthcare including medicines are reimbursed either by the Governments or through Health Insurance or similar other mechanisms.

However, in India the situation is just the reverse, about 80% of overall healthcare costs including medicines are private or out of pocket expenses incurred by the individuals/families. The corresponding figures for the same in China is 61%,  Sri Lanka 53%, Thailand 31% and Bhutan 29% (Source: TOI, May 8, 2011).

What’s happening in India now?

Currently in India CPP is being followed by the Government for all those pharmaceutical products which are under ‘Price Control’. However, for products which are outside price control, pharmaceutical manufacturers, by and large, follow the TRP model.

National Pharmaceutical Pricing Authority (NPPA) of the country still remains far behind in this respect and is almost groping in the dark to appropriately address this critical issue.

Many believe that NPPA has been taking arbitrary, non-pragmatic, non-transparent and populist pricing decisions since decades and has not been able to improve access to medicines significantly to a vast majority of population of the country even today. A pragmatic and modern approach in this area is the crying need of the time.

Conclusion:

PBP/VBP pricing models will be able to help yielding true benefits to the civil society only when its healthcare system and pharmaceutical coverage are integrated and made universally available to all, without any exception.

In India, before considering this approach, long overdue healthcare reform process should first be initiated to ensure universal healthcare coverage, together with a robust and comprehensive health insurance model for all strata of society, without further delay.

It is widely believed, without universal coverage of healthcare supported by clearly assigned, organized and well-integrated healthcare providers, the use of PBP/VBP models could prove to be counterproductive with further aggravation of inequities and inefficiencies in the healthcare system of the country.

By: Tapan J Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.