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Pharma Horizon: Cloud, Rainbow And Smear

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Some recent papers contemplated that the patent cliff for blockbuster drugs has already reached the zenith and early signs of recovery should be visible from 2013 onwards. However, from analysis of the currently available data, contrary to the above belief, I reckon, the downtrend in global pharma is far from over, not just yet.

One of the telltale signs of this slump is near-term patent expiry of today’s blockbuster drugs, the impact of which will continue to keep the global pharma sky overcast with clouds for some more time, especially in absence of replaceable equivalents. Interestingly, on the flip side, a beautiful rainbow, as it were, also takes shape in the horizon, ushering-in a hope to a large number of patients for improved access to newer drugs, just as it does to the generic players for accelerating business growth.

That’s the good part of it, though for the generic drug industry. However, the bad part of the emerging scenario gives rise to a lurking fear of gloom and doom, emanating from self-created evitable smears and taints, blended in vessels of despicable mindsets.

Clouds:

While having a glimpse at that following table, the underlying impact of the dark clouds looming large on the global pharma horizon cannot just be wished away:

Total Patent Expiry:

Year Value US$ Billion
2015 66
2014 34
2013 28
2012 55
Total 183 

(Compiled from FiercePharma data)

Thus, the negative impact from sales lost to patent expiry of blockbuster drugs of today, though declined from US$ 55 billion in 2012 to US$ 28 billion in 2013, the same would start climbing-up again to US$ 66 billion in 2015.

If we take a look at the product-wise details, the picture pans out as under:

Top 10 ‘Patent Expiry’ in 2014:

No. Brand Company Disease Sales 2012   US$ Million Expiry
1. Copaxone Teva MultipleSclerosis 3996 May 2014
2. Nexium AstraZeneca Acid peptic 3994 May 2014
3. Micardis/HCT BoehringerIngelheim Hypertension 2217 Jan 2014
4. Sandostatin LAR Novartis Cancer 1512 June 2014
5. Exforge/HCT Novartis Hypertension 1352 Oct 2014
6. Nasonex Merck Resp. Allergy 1268 Jan 2014
7. Trilipix Abbvie Anti-lipid 1098 Jan 2014
8. Evista Eli Lilly Osteoporosis 1010 Mar 2014
9. Renagel Sanofi Chronic Kidney Disease  861 Sep. 2014
10. Restasis Allergan Chronic Dry Eye  792 May 2014

(Compiled from FiercePharma data)

The above figures, therefore, do reinforce the hypothesis that the following factors would continue to make the best brains of global pharma burning the midnight oil in search of sustainable strategic blueprints, at least, for some more time:

-       Mostly, high growth emerging markets of the world are generic drugs driven

-       Increasing cost containment pressure of Governments and/or other payor

-       Challenges from Intellectual Property (IP) and Market Access related  issues

-       Declining R&D productivity

-       Shift in overall focus for new drugs on expensive biologics

-       Markets turning more Volatile, Uncertain, Complex and Ambiguous (VUCA)

Current strategy to deliver shareholder-value not sustainable:

Since last several years, one has witnessed, despite slowing down of sales growth, big pharma players, by and large, have not failed in delivering impressive shareholder returns. This has been possible mainly due to ruthless cost cutting across the board, restructuring of operational framework and taking measures like, increase in dividends and share repurchases.

These strategic measures, though laudable to keep the head above water, are just not sustainable over a period of time sans strong cashflow.

Thus, for a long haul, robust and consistent business growth with commensurate impact on the bottom-line generating smooth cashflow, is imperative for all these companies.

In this difficult ball game of developing sustainable cutting-edge strategies at an equally challenging time, the consolidation process within the industry would gain further momentum, where only the fittest corporations, led by great corporate brains, would manage to survive and thrive.

However, who all would successfully be able to squarely face the moments of truth, triumphantly seizing the opportunities frozen in time, in the fast changing paradigm of a seemingly VUCA world, is not more than a matter of speculation now.

The Rainbow:

As stated above, while this canopy formed with dark clouds keeps looming large at the global pharma horizon, a beautiful rainbow is simultaneously seen taking shape for the domestic Indian drug manufacturers to cash-on with well-orchestrated strategic measures. One of the critical success requirements for this sprint, is touching the tape in the finishing line to become first to introduce generic versions of the patent expired drugs, especially in the US market.

Indian pharma players have already demonstrated in the past that they do have the wherewithal of making such rare opportunities meaningful by offering affordable new drugs of high quality standards to a large number of patients, while simultaneously accelerating growth of their respective business operations.

Proven acumen even in biologics:

India has recently proven its acumen in the area of biologics too, by developing a biosimilar version of the complex biologic drug – Trastuzumab (Herceptin) of Roche, used for the treatment of breast cancer, and that too in a record time.

As is known to many, earlier in 2013 Roche decided not to defend its patents on Herceptin in India, which reportedly recorded local sales of about US$ 21 million in 2012. Many people opined at that time, it would not be easy for any company to develop biosimilar version of Trastuzumab, mainly due to the complexity involved in its clinical development. Hence, some diehards kept arguing, Roche would not be commercially impacted much for taking the above decision, at least in the near to mid term.

Surprising almost everybody, Biocon and its MNC partner Mylan not only developed an affordable biosimilar version of Trastuzumab successfully, but also got its marketing approval from the Drug Controller General of India (DCGI), thereby immensely benefitting a large number of breast cancer patients in India and hopefully even beyond.

Keeping ‘Eye on the ball’?

Details of ANDA status from the USFDA source probably indicate that several Indian players have started gearing up to move in that direction at a brisk pace, keeping their eyes well fixed on the ball.

The following table further indicates that in 2012 India ranked second, after the United States (US) in terms of number of ANDA approvals and in 2013 till October India ranks number one, overtaking the United States (US):

ANDA’s Granted in 2012 and upto October 2013):

Country ANDA 2012 ANDA (October 2013) Total Since 2007
United States 183 119 1191
India 196 138 993
Switzerland 20 12 134
Israel 28 13 133
Canada 27 13 116
Germany 20 6 107
UK 11 15 95
China 7 10 29

Smears:

Unfortunately, just out side the frame of the above kaleidoscope, one can see large spots of self created slimy smears, which can make the ‘Rainbow’ irrelevant, maintaining the horizon as cloudy even for the Indian generic players.

Continuous reports from US-FDA and UK-MHRA on fraudulent regulatory acts, lying and falsification of drug quality data by some otherwise quite capable Indian players, have just not invited disgrace for the country in this area, but also reportedly prompted regulators from other nations trying to assess whether such bans might suggest issues for drugs manufactured for their respective countries, as well.

Such despicable mindsets of the concerned key players, if remain unleashed, could make Indian Pharma gravitating down, stampeding all hopes of harvesting the incoming opportunities. 

We have one such ready example before us and that too is not an old one. The ‘Import Alert’ of the USFDA against Mohali plant of Ranbaxy, has already caused inordinate delay in the introduction of a cheaper generic version of Diovan, the blockbuster antihypertensive drug of Novartis AG, after it went off patent. It is worth noting that Ranbaxy had the exclusive right to sell a generic version of Diovan from September 21, 2012.

Another report of November 2013 states, “The Drug Controller General of India has ordered Sun Pharmaceutical, the country’s largest drug maker by market capitalization to suspend clinical research activities at its Mumbai based bio-analytical laboratory, a move that could slow down the company’s regulatory filings in India and possibly overseas as well.”

The outcome of such malpractices may go beyond the drug regulatory areas, affecting even the valuations of concerned Indian pharma companies. According to a recent report Strides Arcolab will not get US$ 250 million of the US$ 1.75 billion anticipated from the sale of its injectable drugs unit to Mylan Inc unless regulatory concerns at Agila Specialities in Bangalore are resolved.

Thus the smears though for now are confined to a few large manufacturing units of Indian Pharma, including some located overseas, may eventually play the spoil sport, trashing all hopes seen through the rainbow in the bins of shame.

Conclusion:

In the balance of probability, I believe, the clouds of uncertainty would continue to loom large over the global pharma, at least, till 2015.

However, in the midst of it, heralds a ‘never before opportunity’ for Indian pharma to cash on the early fruits of forthcoming patent expiries of today’s blockbuster drugs, not just for them, but for patients at large.

Already demonstrated capabilities of the homegrown players, trigger expectations of making it happen. The encouraging trend of grant of ANDAs in the US further reinforces this belief.

Despite all these, a lurking fear does creep in. This evitable fear finds its root in repeated fraudulent behavior of some Indian drug manufacturers, seriously compromising with cGMP standards of global drug regulators, including lying and falsification of data generated, thus playing a spoil sport by ‘snatching defeat from the jaws of victory’, as it were.

That said, the question to ponder now is: In the ‘Pharma Horizon’ what would ultimately prevail in the short to medium term, especially in the Indian context – Clouds, The Rainbow or Smears?

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.

Are We Taking Safe and Effective Medicines?

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The above headline is in no way intended to mean that this discussion is on spurious or counterfeit drugs.

Today’s deliberation is on the licensed drugs, which are manufactured in India, for the patients of the country, by the manufacturers holding valid drug licenses from the Indian regulators.

Close on the heels of my article titled, “USFDA ‘Import Bans’: The Malady Calls For Strong Bitter Pills “, another equally serious incident related to drug safety, came to the fore.

Fabricated data from the Contract Manufacturer of large companies:

On November 12, 2013, the Drug Controller General of India (DCGI) was quoted saying that the investigative team of the drug regulator concluded that all the data submitted by Puducherry-based contract drug manufacturer GuruFcure, while seeking approval for manufacturing seven fixed dose combination drugs, are ‘fabricated’ and not ‘authentic’.

GuruFcure, which started operations in 2007 and calls itself “one of the leading pharmaceutical formulation manufacturers in India”, reportedly manufacture drugs for the leading pharma MNC and Indian companies and Indian companies such as:

  • Abbott
  • Alkem
  • Glenmark
  • Wockhardt
  • Unichem
  • Intas Pharma, among others.

Though, as per media report, Wockhardt and Glenmark said that these two companies are not currently associated with GuruFcure, the fact remains that they did market drugs produced by this contract manufacture in the past and the patients consumed those drugs against doctors’ precriptions.

 Large players need to set examples:

The largest pharmaceutical company in India with highest share of the Indian Pharmaceutical Market – Abbott, has also been reported to get some of their drugs manufactured by this contract manufacturer.

 Not a solitary example:

Just prior to this incident, in November 8, 2013, the DCGI reportedly ordered the Indian pharma major Sun Pharmaceuticals to suspend clinical research activities at its Mumbai based bio-analytical laboratory, after discovering that the company does not have the requisite approval from the central government for operating the laboratory. The DCGI has decided not to accept future applications and will not process existing new drug filings that Sun Pharma has made from the Mumbai laboratory until the company gets an approval.

Tardy regulatory system fuels apprehensions:

In India, many large, medium and small units get their products from the contract drug manufacturers. As compared to the USFDA inspection data, there are virtually no public data available on the details of inspections carried out at these plants by the drug regulators indicating the level of cGMP compliance.

Health being a state subject in India, State Drug Controllers should play a critical role in ensuring drug safety for patients through regular inspection of these manufacturing facilities on cGMP compliance.

Conclusion:

If cGMP violations can take place for drug exports, despite rigorous compliance checks by the foreign drug regulators, what could possibly happen when the same system is so tardy in India?

While the MNCs boast on their highest drug regulatory compliance standards, even for contract manufacturers, why do they keep relationships with those getting caught for fraudulent practices, is equally difficult to fathom.

One may possibly describe such incidents as just aberrations. However, that conclusion can only be drawn, when we have Drug Controllers’ cGMP inspection data for a large number of drug manufacturing units in India with details. Unfortunately, that is not the case, in any way.

In such an environment in India, the moot question that comes at the top of mind, “Are we taking safe and effective drugs, whenever required?”

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.

 

USFDA ‘Import Bans’: The Malady Calls For Strong Bitter Pills

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It is a matter of pride that Indian pharmaceutical industry is the second largest exporter of drugs and pharmaceuticals globally, generating revenue of around US$ 13 billion in 2012 with a growth of 30 percent (Source: Pharmexcil).

Though sounds awkward, it is a reality that India is a country where ‘export quality’ attracts a premium. Unintentionally though, with this attitude, we indirectly accept that Indian product quality for domestic consumption is not as good.

‘Export quality’ being questioned seriously:

Unfortunately today, increasing number of even ‘export quality’ drug manufacturing units in India are being seriously questioned by the regulators of mainly United States (US) and the United Kingdom (UK) on the current Good Manufacturing Practices (cGMP) being followed by these companies. In many instances their inspections are culminating into ‘Import Bans’ by the respective countries to ensure dug safety for the patients.

Are drugs for domestic consumption safe?

Despite intense local and global furore on this subject, Indian drug regulators at the Central Drugs Standard Control Organization (CDSCO), very strangely, do not seem to be much concerned on this critical issue, at least, not just yet. Our drug regulators seem to act only when they are specifically directed by the Supreme Court of the country.

A recent major incident is yet another example to vindicate the point. In this case, according to media reports of November 2013, the Drug Controller General of India (DCGI) has ordered the Indian pharma major Sun Pharmaceuticals to suspend clinical research activities at its Mumbai based bio-analytical laboratory, after discovering that the company does not have the requisite approval from the central government for operating the laboratory. The DCGI has decided not to accept future applications and will not process existing new drug filings that Sun Pharma has made from the Mumbai laboratory until the company gets an approval.

Considering the blatant violations of cGMP standards that are increasingly coming to the fore related to ‘export quality’ of drugs in India, after inspections by the foreign drug regulators, one perhaps would shudder to think, what could possibly be the level of conformance to cGMP for the drugs manufactured in India solely for the local patients.

This question comes up as the record of scrutiny on adherence to cGMP by the Indian drug regulators is rather lackadaisical. The fact that no such warnings, as are being issued by the foreign regulators, came from their local counterpart, reinforces this doubt.

USFDA ‘Import Bans’:

Be that as it may, in this article let me deliberate on this particular drug regulatory issue as is being raised by the USFDA and others.

It is important to note that in 2013 till date, USFDA issued ‘Import Alerts/Bans’ against 20 manufacturing facilities of the Indian pharmaceutical exporters, sowing seeds of serious doubts about the overall drug manufacturing standards in India.

The sequence of events post USFDA inspection: 

Let us now very briefly deliberate on the different steps that are usually followed by the USFDA before the outcomes of the inspections culminate into ‘Import Alerts’ or bans.

After inspections, depending on the nature of findings, following steps are usually taken by the USFDA:

  • Issue of ‘Form 483’
  • The ‘Warning letter’
  • ‘Import Alert’

Revisiting the steps: 

Let me now quickly re-visit each of the above action steps of the USFDA.

‘Form 483’: 

At the conclusion of any USFDA inspection, if the inspecting team observes any conditions that in their judgment may constitute violations of the Food, Drug and Cosmetic (FD&C) and other related Acts, a Form 483 is issued to the concerned company, notifying the firm management of objectionable conditions found during inspection.

Companies are encouraged to respond to the Form 483 in writing with their corrective action plan and then implement those corrective measures expeditiously. USFDA considers all these information appropriately and then determines what further action, if any, is appropriate to protect public health in their country.

The ‘Warning Letter’:

The ‘Warning Letter’ is a document usually originating from the Form 483 observations and results from multiple lacking responses to Form 483 requiring quick attention and action. It may be noted that higher-level USFDA agency officials and not the investigator issue the ‘Warning Letters’.

‘Import Alert/ Ban’:

‘Import Alerts’ are issued whenever USFDA determines that it already has sufficient evidence to conclude that concerned products appear to be adulterated, misbranded, or unapproved. As a result, USFDA automatically detains these products at the border, costing the related companies a lot of money. The concerned company’s manufacturing unit remains on the import alert till it complies with USFDA cGMP.

What happens normally?

Most of the USFDA plant inspections are restricted to issue of Form 483 observations and the concerned company’s taking appropriate measures accordingly. However, at times, ‘Warning Letters’ are issued,  which are also mostly addressed by companies to the regulator’s satisfaction.

Import Bans are avoidable: 

Considering the above steps, it is worth noting that there is a significant window of opportunity available to any manufacturing facility to conform to the USFDA requirements by taking appropriate steps, as necessary, unless otherwise the practices are basically fraudulent in nature.

The concern:

Currently, there is a great concern in the country due to increasing frequency of ‘Import Alerts’.  As per USFDA data, in 2013 to date, about 20 drug manufacturing facilities across India attracted ‘Import Alerts’ as against seven from China, two each from Australian, Canadian and Japanese units and one each from South African and German facilities.

The matter assumes greater significance, as India is the second-largest supplier of pharmaceuticals to the United States. In 2012, pharmaceutical exports from India to the US reportedly rose 32 percent to US$ 4.2 billion. Today, India accounts for about 40 percent of generic and Over-The-Counter (OTC) drugs and 10 percent of finished dosages used in the US.

Ranbaxy cases: ‘Lying’ and ‘fraud’ allegations: 

In September 2013, after the latest USFDA action on the Mohali manufacturing facility of Ranbaxy, all three plants in India of the company that are dedicated to the US market have been barred from shipping drugs to the United States. The magnitude of this import ban reportedly impacts more than 40 percent of the company’s sales. However, Ranbaxy has a total of eight production facilities across India.

This ‘Import Alert’ was prompted by the inspection findings of the USFDA that the Mohali factory of Ranbaxy had not met with the cGMP.

Other two plants of Ranbaxy’s located at Dewas and Paonta Sahib faced the same import alerts in 2008, and are still barred from making drug shipments to the US.

The import ban on he Mohali manufacturing facility of Ranbaxy comes after the company pleaded guilty in May 2013 to the felony (criminal) charges in the US related to drug safety and agreed to pay a record US$ 500 million in fines.

In addition, the company also faced federal criminal charges that it sold batches of drugs that were improperly manufactured, stored and tested. Ranbaxy also admitted to lying to the USFDA about how it tested drugs at the above two Indian manufacturing facilities.

Heavy consequential damages with delayed launch of generic Diovan:

The ‘Import Alert’ of the USFDA against Mohali plant of Ranbaxy, has resulted in delayed introduction of a cheaper generic version of Diovan, the blockbuster antihypertensive drug of Novartis AG, after it went off patent.

It is worth noting that Ranbaxy had the exclusive right to sell a generic version of Diovan from September 21, 2012. 

Gain of Novartis:

This delay will help Novartis AG to generate an extra one-year’s sales for Diovan. This is expected to be around US$ 1 billion, only in the US. This development prompted Novartis in July this year to raise its profit and sales forecasts accordingly.

Wockhardt cases: Non-compliance of cGMP

Following Ranbaxy saga, USFDA inspection of Chikalthana plant of Wockhardt in Maharashtra detected major quality violations. Second time this year USFDA noted 16 violations of cGMP in the company’s facility. Earlier, in July 2013, the Agency issued a ‘Warning Letter’ and ‘Import Alert’ banning the products manufactured at the company’s Waluj pharmaceutical production facility.

Moreover, in September 2013, Medicines and Healthcare Products Regulatory Agency (MHRA) had pulled the GMP certificate of the company’s unit based in Nani Daman, after an inspection conducted by the UK regulator showed poor manufacturing standards. 

Again, in October 2013, the MHRA withdrew its cGMP certificate for the Chikalthana plant of Wockhardt. This move would ban import of drugs into the UK, manufactured in this particular plant of the company.

However, MHRA has now decided to issue a restricted certificate, meaning Wockhardt will be able to supply only “critical” products from these facilities. This was reportedly done, as the UK health regulator wants to avert shortage of certain drugs essential for maintaining public health. The impact of the withdrawal of cGMP certificate on existing business of the company can only be ascertained once Wockhardt receives further communications from the MHRA.

Earlier in July 2013, MHRA had reportedly also imposed an import alert on the company’s plant at Waluj in Maharashtra and issued a precautionary recall for sixteen medicines made in this unit.

RPG Life Sciences cases: allegedly ‘Adulterated’ products: 

In June 2013, USFDA reportedly issued a ‘Warning Letter’ to RPG Life Sciences for serious violation of cGMP in their manufacturing plants located at Ankleshwar and Navi Mumbai.

USFDA investigators had mentioned that “These violations cause your Active Pharmaceutical Ingredients (APIs) and drug products to be adulterated …the methods used in, or the facilities or controls used for, their manufacture, processing, packing, or holding do not conform to, or are not operated or administered in conformity with cGMP.”

Strides Arcolab case: Non Compliance of cGMP

In September 2013, Strides Arcolab announced that its sterile injectable drug unit – Agila Specialties (now with Mylan) had received a warning letter from the USFDA after its inspection by the regulator in June 2013. However, Strides Arcolab management said, “the company was committed to work collaboratively and expeditiously with the USFDA to resolve concerns cited in the warning letter in the shortest possible time.”

USV case: allegation of ‘data fudging’: 

Recently, USFDA reportedly accused Mumbai-based drug major USV of fudging the data.

After an inspection of USV’s Mumbai laboratory in June 2013, the US drug regulator said the company’s “drug product test method validation data is falsified”. The USFDA has also reprimanded USV for not training its staff in cGMP.

Probable consequences: 

USFDA import bans and a similar measure by the UKMHRA would lead to the following consequences:

  • Significant revenue losses by the companies involved, till the concerned regulators accept their remedial actions related to cGMP.
  • Increasing global apprehensions about the quality of Indian drugs.
  • Possibility of other foreign drug regulators tightening their belts to be absolutely sure about cGMP followed by the Indian drug manufacturers, making drug exports from India more difficult.
  • Huge opportunity cost for not being able to take advantage from ‘first to launch’ generic versions of off patent blockbuster drugs, such as from Diovan of Novartis AG.
  • Indian patients, including doctors and hospitals, may also become apprehensive about the general quality of drugs made by Indian Pharma Industry, as has already happened in a smaller dimension in the past.
  • Opposition groups of Indian Pharma may use this opportunity to further their vested interests and try to marginalize the Indian drug exporters. 
  • MNCs operating in India could indirectly campaign on such drug quality issues to reap a rich harvest out of the prevailing situation.
  • Unfounded ‘foreign conspiracy theory’ may start gaining ground, prompting the Indian companies moaning much, rather than taking tangible remedial measures on the ground to effectively come out of this self created mess.

Conclusion: 

Repeated cGMP violations made by the Indian drug exporters, as enunciated by the USFDA, have now become a malady, as it were. This can be corrected, only if the reality is accepted without attempting for justifications and then swallowing strong bitter pills, sooner.

Thereafter, the domestic pharma industry, which has globally demonstrated its proven capability of manufacturing quality medicines at affordable prices for a large number of patients around the world and for a long time, will require to tighten belts for strict conformance to cGMP norms, as prescribed by the regulators. This will require great tenacity and unrelenting mindset of the Indian Pharma to tide over the crisis.

Any attempt to trivialize the situation, as indicated above, could meet with grave consequences, jeopardizing the thriving pharma exports business of India.

That said, any fraud or negligence in the drug quality standards, for whatever reasons or wherever these may take place, should be considered as fraud on patients and the perpetrators must be brought to justice forthwith by the DCGI, with exemplary punitive measures.

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 Demands Transparency, Keeping their ‘Black-Boxes’ Tight and Safe?

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Pharmaceutical Industry across the globe wants absolute transparency in all government laws, policies, guidelines, transactions and overall governance. They also expect the trade environment should be predictable, non-manipulative and business-friendly. These expectations are indeed well justified and deserve whole-hearted support from all concerned.

However, when similar expectations of transparency are voiced by stakeholders in the Big Pharma business operations, that will have direct or indirect impact on public health interests, one would mostly encounter a well guarded, mammoth and impregnable ‘Black Box’, wearing a ‘Top Secret’ label, with all relevant information kept inside.

Such areas of stakeholders’ interests on Big Pharma could well be related to details, like for example:

  • Actual break-up of R&D expense details,
  • Transparency in all clinical trials data for experts review,
  • Patented products’ pricing rationale,
  • Enormous total costs of lobbying and related expenses at the global level,
  • Marketing spend on doctors and other decision makers, directly or indirectly, just to name a few.

Mounting curiosity:

Continuation of such opaque practices for a long time, in turn, sparks the curiosity of the intelligentsia to know more in details, especially, about the areas as stated above.

Various research studies are now coming up, with huge revelations and strong findings in these areas. All of these together indicate, it is about time for the global pharma to also demonstrate transparency in their respective business practices and corporate governances, without further delay.

If it does not happen, probably respective governments in various countries will start acting on these areas of opaque self-serving pharma business practices, with the enactment and more importantly, stricter enforcement of requisite laws and policies. President Obama Administration in the United States has already initiated some important actions in these areas with proposals and laws, like for example,  the “Physicians Payment Sunshine Act’ .

The ‘Power Game’:

An interesting article of May 3, 2013 highlighted that the global pharmaceutical industry exerts incredible influence over the prescription medicines across the globe. This power, as many will know, flows from robust political contacts and influences over various important government agencies administrating the entire healthcare system, executed immaculately by expensive lobbying and PR campaigns by their globally integrated trade bodies.

Similar powerful influences also get extended to doctors and the people who matter to further their interests. These well crafted plans are reportedly executed through sponsored or paid opinion-modifying articles, ‘advertorials’, DTC advertisements (wherever legally permitted) and well-organized, seemingly third party, speeches to push the envelopes further.

Most probably, keeping such ongoing practices in mind and coming under intense media pressure, the Medical Council of India (MCI) on December 10, 2009 amended the “Indian Medical Council (Professional Conduct, Etiquette and Ethics), Regulations 2002″ for the doctors in India. Unfortunately, its implementation on the ground is rather tardy.

The above article also stated, “In fact, in the United States the industry contributes heavily to the annual budget of the U.S. Food and Drug Administration (FDA), which is charged with regulating drugs and devices made by those same companies.”

Avoidable Expenditures:

The paper indicates that in the United States alone the industry associations:

  • Have 1,100-plus paid lobbyists on Capitol Hill,
  • Allocated US$ 188 million annual lobbying budget
  • Doles out around US$ 14 million to political candidates every year

The report also comments, ‘Drug companies spend substantially more on marketing than they do on research and development.’

Influencing opinion against patients’ interest?

The article in the ‘drugwatch’ also states:

“Doctors are persuaded by the pharma companies to attach their names (ghost writing), against financial considerations, to favorable article on a particular drug ensuring that it is published in a well reputable medical journal.”

The author continues that ‘Ghost writings’ are being used to promote numerous drugs to influence concerned stakeholders.

In 1998, a study of the prestigious New England Journal of Medicine found that ‘out of 75 published articles, nearly half were written by authors with financial conflicts. And, worse than this, only two of the articles disclosed interests.’

Richard Smith, former editor of the British Medical Journal, was quoted saying, “All journals are bought – or at least cleverly used – by the pharmaceutical industry.”

Striking facts:

Following are some striking facts as reported in the article, as mentioned above:

“Advertising instead of research: For every US$ 1 spent on “basic research,” Big Pharma spends US$ 19 on promotions and advertising.

Distribution of free drug samples: The United States has 1 pharmaceutical sales representative for every 5 office-based physicians.

Sponsorship of symposiums and medical conventions: Drug and medical device makers spend lavishly on doctors, including covering meals, travel, seminars and conventions that may look more like vacations.”

Pressure on publications:

The paper highlights that large global pharma majors may even pull its advertisements out, if the concerned medical journal will question the accuracy of an ad. Such types of threats have very serious effects on these journals in running their businesses without getting lucrative advertisement dollars from the drug manufacturers.

Making drugs looking good:

The same article highlights:

“Quite often the academics and scientists are hired hands who supply human subjects and collect data according to the instructions from their corporate employers. Sponsors keep the data, analyze, write the papers and decide whether and when and where to submit them for publication. Drug companies have discovered ways to stage-manage trials to produce predetermined outcomes that will put their products in the best light.”

With this strategy even a bad drug can allegedly be made looking good by doing many things, like for example:

  • Comparing them to a placebo
  • Comparing them to a competitor’s medication in the wrong strength
  • Pairing them with a drug that is known to work well
  • Shortening a trial before any bad results surface
  • Testing in groups too small to provide valid evidence

Pay-for-delay deals:

A recent report titled, “Top twenty pay-for-delay drugs: How Industry pay-off delay generics” highlights that ‘Pay-for-delay deals’ have forced patients in the United States to pay an average of 10 times more than necessary for at least 20 blockbuster drugs.

Key findings of the analysis on the impact of pay-for-delay deals are as follows:

  • This practice has held back generic medicines used by patients with a wide range of serious or chronic conditions, ranging from cancer and heart disease, to depression and bacterial infection.
  • These payoffs have delayed generic drugs for five years, on average, and as long as nine years.
  • These brand-name drugs cost 10 times more than their generic equivalents, on average, and as much as 33 times more.
  • These patented drug companies have made an estimated US$ 98 billion in total sales of these drugs while the generic versions were delayed.

Citing example, the paper says, a pay-for-delay deal kept a generic version of the breast cancer drug Tamoxifen off the US market for nine years, while Pfizer made $7.4 billion in sales of its cholesterol-lowering drug Lipitor (atorvastatin) in 2012 alone.

The point to ponder yet again is, why such practices are being surreptitiously carried out for years sacrificing patients’ interest and without the regulators’ strong interventions, in general?

French Government has initiated a probe:

The French Competition Authority is reportedly expected to publish a report on the findings of its inquiry, initiated in February 2013, into the costs and pricing of medicines in France. The report will also look at whether industry practices are interfering with the market entry of generic drugs, including distribution arrangements between drug manufacturers, wholesalers and pharmacists.

An appreciable initiative in America, but why not in India?

There is still a simmering hope. As indicated above, President Obama’s Affordable Care Act reportedly requires that from September 2013, pharmaceutical companies will need to collect data and openly report information on payments, investment interests, ownership and items of value given to doctors and hospitals. Very unfortunately, the Department of Pharmaceuticals of the Government of India has not taken any such steps, as yet, despite the situation turning grave in the country.

The power of pharma lobby in the US:

According to a recent NYT report, in the United States, government health programs are forbidden from rejecting new drugs on cost grounds.

When the issue of drug prices came up as part of President Obama’s ‘Affordable Care Act’ debate, it was summarily rejected in Congress. Simultaneously, a move toward comparative-effectiveness studies, putting rival drugs or treatments through trials to determine which work better, was also decried.

The report highlights, the mere suggestion of the US government throwing its weight around on drug prices stirs up talk of ‘socialism’. The pharma lobby doesn’t have to look far for support in fighting that idea. In the US, the so-called ‘free market’ is trusted to regulate drug prices, despite the reality that the healthcare market is far from transparent, ‘with byzantine pricing mechanisms and costs that vary wildly region-by-region, pharmacy by pharmacy and even patient-by-patient’.

The usual supply/demand/pricing relationships do not apply to drug prices at the consumer level in the US too, just as it has been proved in India. 

A large part of creation of this environment is attributed to pharmaceutical and other health-products firms, who reportedly spent a total of US$ 250 million on lobbying last year. 

Big Pharma keeps failing credibility tests:

This happened very recently, when The Guardian in July 2013 reported, the pharmaceutical industry has “mobilized” an army of patient groups to lobby against plans to force companies to publish secret documents on drug trials. This is related to the news that the European Medicines Agency (EMA) could force drug companies to publish all Clinical Trial (CT) results in a public database.

The above report says, while some pharma players agreed to share data, important global pharma industry associations have resisted this plan of the EMA. The report continues, a leaked letter from two large pharma trade associations, the Pharmaceutical Research and Manufacturers of America (PhRMA) of the United States and the European Federation of Pharmaceutical Industries and Associations (EFPIA), have drawn out a strategy to combat calls by drug regulators to force companies to publish all CT results.

The strategy reportedly shows how patient groups, many of which receive some or all of their funding from drugs companies, have been drawn into this battle by these Big Pharma lobby groups.

The e-mail reportedly seen by ‘The Guardian’ was from Richard Bergström, Director General of EFPIA, addressed to directors and legal counsel at Roche, Merck, Pfizer, GSK, AstraZeneca, Eli Lilly, Novartis and many smaller companies.

The e-mail leaked by an employee of a pharma company describes a four-pronged campaign that starts with “mobilizing patient groups to express concern about the risk to public health by non-scientific re-use of data”.

Translated, as ‘The Guardian’ reported, “that means patient groups go into bat for the industry by raising fears that if full results from drug trials are published, the information might be misinterpreted and cause a health scare.”

This appears to be another classic case of vested interests working against patients’ interests.

Global lobbying started taking the center stage in India too:

With the above back-drop and lobbying scandals reportedly being surfaced in many other countries, it is about time that India puts its acts together with India-specific stricter disclosure policies, including R&D, Clinical Trials (CTs), Patented Products Pricing, Marketing Practices and Trade Lobbying.

Interestingly, to influence Government policies India’s top lobbying spenders in 2012 (US$ million) were reported as follows:

1 US Chamber of Commerce

136.3
2 National Association of Realtors

41.5
3 Blue Cross / Blue Shield

22.5
4 General Electric

21.1
5 American Hospital Association

19.2
6 National Cable & Telecom. Association

18.9
7 Pharmaceutical Research & Mfrs. of America (PhRMA)

18.5
8 Google

18.2
9 Northrop Grumman

17.5
10 AT&T

17.4
11 American Medical Association

16.5
12 Boeing

15.6

Source: The Center for Responsive Politics (Economic Times, June 4, 2013)

According to the latest lobbying disclosure reports filed with the US Senate and the House of Representatives, at least two dozen American companies and industry associations are reportedly lobbying hard with the US lawmakers on issues in India, which include:

  • Intellectual Property (IP)
  • Patent
  • Market access

Another recent report comments as follows:

“The US Chamber of Commerce has become a portal for dubious reports that claim India’s intellectual property regime is worse than China’s. Such “research” by paid lobbyists and disseminated through the halls of US Congress…”

Hefty fines for illegal practices, yet Black Box remains tight and safe: 

In December 2010, Healthcare advocacy group Public Citizen published a report that, for the first time, documented all major financial settlements and court judgments between pharmaceutical manufacturers and the federal and state governments of the United States since 1991.

It says, almost US$ 20 billion was paid out by the pharmaceutical industry to settle allegations of numerous violations, including illegal, off-label marketing and the deliberate overcharging of taxpayer-funded health programs, such as Medicare and Medicaid.

Three-fourths of the settlements and accompanying financial penalties had occurred in just the five-year period prior to 2010. There has been no indication that this upward trend is subsiding.

10 Largest Settlements and Judgments on Big Pharma mis governance:
(Period: Nov. 2, 1010 – July 18, 2012)

Company Amount    US$ Million Year Reasons
1. GlaxoSmithKline 3, 000 2012 Unlawful promotion, kickbacks, concealing study data, overcharging government health programs
2. Abbott  1,500 2012 Unlawful promotion, kickbacks
3. Johnson & Johnson 1,200 2012 Unlawful promotion
4.  Merck 950 2011 Unlawful promotion
5. Ranbaxy 500 2012 Poor manufacturing practices, falsifying data on FDA applications.
6. Johnson & Johnson 327 2011 Unlawful promotion
7. Boehringer Ingelheim 280 2011 Overcharging government health programs
8. Mylan’s Dey Pharma unit 280 2010 Overcharging government health programs
9. Elan 203 2010 Unlawful promotion, kickbacks
10. Johnson & Johnson 158 2012 Unlawful promotion

Conclusion:

All such expenditures, including expensive lobbying and court settlement charges for illegal business practices, as mentioned above, I reckon, are wasteful and avoidable. These are mostly outcomes of self serving measures, shorn of public health interest, 

If all these costs are eliminated and actual R&D expenses are reflected, in a transparent manner, there could be significant reduction in the costs of newer innovative drugs, extending their access to billions of patients, across the world.

Thus to help evaluating the innovative drugs with greater transparency, there is an urgent need for the Big Pharma to set examples by voluntarily disclosing the secrets hidden within the ‘Black Boxes’, as deliberated above. These disclosures should be made to the independent experts and the respective Governments under appropriate statutes.

Expectations of transparency in Governance should not, therefore, be restricted just to Government laws, policies and decisions, the industry should reciprocate it too, in equal measures.

To be patient-centric, transparency in governance needs to be a two-way traffic, where pharma industry should volunteer to be an integral part, sooner than later. Otherwise it may be too late for them to avoid harsh interventions of the respective regulators, as the intense pressure from intelligentsia, civil society and media, keep mounting.

That said, the question lingers:

When the ‘Big Pharma is rightly demanding transparency in all areas of public discourse, why are they so reluctant in making their intriguing ‘Black Boxes’ transparent, that too only in areas of public health interest, for fair experts review?

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.

Pharma FDI: Damning Report of Parliamentary Panel, PM Vetoes…and Avoids Ruffling Feathers?

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An interesting situation emerged last week. The Parliamentary Standing Committee (PSC) on Commerce proposed a blanket ban on all FDI in brownfield pharma sector. Just two days after that, the Prime Minister of India vetoed the joint opposition of the Department of Industrial Policy and Promotion (DIPP) and the Ministry of Health to clear the way for all pending pharma FDIs under the current policy.

On August 13, 2013, Department related Parliamentary Standing Committee on Commerce laid on the Table of both the Houses of the Indian Parliament its 154 pages Report on ‘FDI in Pharmaceutical Sector.’

The damning report of the Parliamentary Standing Committee flags several serious concerns over FDI in brownfield pharma sector, which include, among others, the following:

1. Out of 67 FDI investments till September 2011, only one has been in green field, while all the remaining FDI has come in the brown field projects. Moreover, FDI in brown field investments have of late been predominantly used to acquire the domestic pharma companies.

2. Shift of ownership of Indian generic companies to the MNCs also results in significant change of the business model, including the marketing strategy of the acquired entity, which are quite in sync with the same of the acquirer company. In this situation, the acquired entity will not be allowed to use flexibilities such as patent challenges or compulsory license to introduce new affordable generic medicines.

The withdrawal of all patent challenges by Ranbaxy on Pfizer’s blockbuster medicine Lipitor filed in more than eight countries immediately after its acquisition by Daiichi-Sankyo is a case in point.

3. Serial acquisitions of the Indian generic companies by the MNCs will have significant impact on competition, price level and availability. The price difference between Indian ‘generics’ and MNCs’ ‘branded generic’ drugs could  sometimes be as high as 80 to 85 times. A few more larger scale brownfield takeovers may even destroy all the benefits of India’s generics revolution.

4. FDI inflow into Research & Development of the Pharma Industry has been totally unsatisfactory. 

5. FDI flow into brown field projects has not added any significant fresh capacity in manufacturing, distribution network or asset creation. Over last 15 years, MNCs have contributed only 5 per cent of the gross fixed assets creation, that is Rs 3,022 crore against Rs 54,010 crore by the domestic companies. Further, through brownfield acquisitions significant strides have not been made by the MNCs, as yet, for new job creation and technology transfer in the country.

6. Once a foreign company takes over an Indian company, it gets the marketing network of the major Indian companies and, through that network, it changes the product mix and pushes the products, which are more profitable and expensive. There is no legal provision in India to stop any MNC from changing the product mix.

7. Though the drug prices may not have increased significantly after such acquisitions yet, there is still a lurking threat that once India’s highly cost efficient domestic capacity is crushed under the weight of the dominant force of MNCs, the supply of low priced medicines to the people will get circumvented.

8. The ‘decimation’ of the strength of local pharma companies runs contrary to achieving the drug security of the country under any situation, since there would be few or no Indian companies left having necessary wherewithal to manufacture affordable generics once a drug goes off patent or comply with a Compulsory License (CL).

9. Current FIPB approval mechanism for brownfield pharma acquisitions is inadequate and would not be able to measure up to the challenges as mentioned above.

The Committee is also of the opinion that foreign investments per se are not bad. The purpose of liberalizing FDI in pharma was not intended to be just about takeovers or acquisitions of domestic pharma units, but to promote more investments into the pharma industry for greater focus on R&D and high tech manufacturing, ensuring improved availability of affordable essential drugs and greater access to newer medicines, in tandem with creating more competition. 

Based on all these, The Committee felt that FDI in brown field pharma sector has encroached upon the generics base of India and adversely affected Indian pharma industry. Therefore, the considered opinion of the Parliamentary Committee is that the Government must impose a blanket ban on all FDI in brownfield pharma projects.

PM clears pending pharma FDI proposals:

Unmoved by the above report of the Parliamentary Committee, just two days later, on August 16, 2013, the Prime Minister of India, in a meeting of an inter-ministerial group chaired by him, reportedly ruled that the existing FDI policy will apply for approval of all pharmaceutical FDI proposals pending before the Foreign Investments Promotion Board (FIPB). Media reported this decision as, “PM vetoes to clear the way for pharma FDI.”

This veto of the PM includes US $1.6-billion buyout of the injectable facility of Agila Specialties, by US pharma major Mylan, which has already been cleared by the Competition Commission of India (CCI).

This decision was deferred earlier, as the DIPP supported by the Ministry of Health had expressed concerns stating, if MNCs are allowed to acquire existing Indian units, especially those engaged in specialized affordable life-saving drugs, it could possibly lead to lower production of those essential drugs, vaccines and injectibles with consequent price increases. They also expressed the need to protect oncology facilities, manufacturing essential cancer drugs, with assured supply at an affordable price, to protect patients’ interest of the country.

Interestingly, according to Reserve Bank of India, over 96 per cent of FDI in the pharma sector in the last fiscal year came into brownfield projects. FDI in the brownfield projects was US$ 2.02 billion against just US$ 87 million in the green field ventures.

Fresh curb mooted in the PM’s meeting:

In the same August 16, 2013 inter-ministerial group meeting chaired by the Prime Minister, it was also reportedly decided that DIPP  will soon float a discussion paper regarding curbs that could be imposed on foreign takeovers or stake purchases in existing Indian drug companies, after consultations with the ministries concerned.

Arguments allaying apprehensions:

The arguments allaying fears underlying some of the key apprehensions, as raised by the Parliamentary Standing Committee on Commerce, are as follows:

1. FDI in pharma brownfield will reduce competition creating an oligopolistic market:

Indian Pharmaceutical Market (IPM) has over 23,000 players and around 60,000 brands. Even after, all the recent acquisitions, the top ranked pharmaceutical company of India – Abbott enjoys a market share of just 6.6%. The Top 10 groups of companies (each belonging to the same promoter groups and not the individual companies) contribute just over 40% of the IPM (Source: AIOCD/AWACS – Apr. 2013). Thus, IPM is highly fragmented. No company or group of companies enjoys any clear market domination.

In a scenario like this, the apprehension of oligopolistic market being created through brownfield acquisitions by the MNCs, which could compromise with country’s drug security, needs more informed deliberation.

2. Will limit the power of government to grant Compulsory Licensing (CL):

With more than 20,000 registered pharmaceutical producers in India, there is expected to be enough skilled manufacturers available to make needed medicines during any emergency e.g. during H1N1 influenza pandemic, several local companies stepped forward to supply the required medicine for the patients.

Thus, some argue, the idea of creating a legal barrier by fixing a cap on the FDIs to prevent domestic pharma players from selling their respective companies at a price, which they would consider lucrative otherwise, just from the CL point of view may sound unreasonable, if not protectionist in a globalized economy.

3.  Lesser competition will push up drug prices:

Equity holding of a company is believed by some to have no bearing on pricing or access, especially when medicine prices are controlled by the NPPA guidelines and ‘competitive pressure’.

In an environment like this, any threat to ‘public health interest’ due to irresponsible pricing, is unlikely, especially when the medicine prices in India are cheapest in the world, cheaper than even Bangladesh, Pakistan and Sri Lanka (comment: whatever it means).

India still draws lowest FDI within the BRIC countries: 

A study of the United Nations has indicated that large global companies still consider India as their third most favored destination for FDI, after China and the United States.

However, with the attraction of FDI of just US$ 32 billion in 2011, against US$ 124 billion of China, US$ 67 billion of Brazil and US$ 53 billion of Russia during the same period, India still draws the lowest FDI among the BRIC countries.

Commerce Minister concerned on value addition with pharma FDI:

Even after paying heed to all the above arguments, the Commerce Minister of India has been expressing his concerns since quite some time, as follows:

“Foreign Direct Investment (FDI) in the pharma sector has neither proved to be an additionality in terms of creation of production facilities nor has it strengthened the R&D in the country. These facts make a compelling case for revisiting the FDI policy on brownfield pharma.”

As a consequence of which, the Department of Industrial Policy and Promotion (DIPP) has reportedly been opposing FDI in pharma brownfield projects on the grounds that it is likely to make generic life-saving drugs expensive, given the surge in acquisitions of domestic pharma firms by the MNCs.

Critical Indian pharma assets going to MNCs:

Further, the DIPP and the Ministry of Health reportedly fear that besides large generic companies like Ranbaxy and Piramal, highly specialized state-of-the-art facilities for oncology drugs and injectibles in India are becoming the targets of MNCs and cite some examples as follows:

  • Through the big-ticket Mylan-Agila deal, the country would lose yet another critical cancer drug and vaccine plant.
  • In 2009 Shantha Biotechnics, which was bought over by Sanofi, was the only facility to manufacture the Hepatitis B vaccine in India, which used to supply this vaccine at a fraction of the price as compared to MNCs.
  • Mylan, just before announcing the Agila deal, bought over Hyderabad based SMS Pharma’s manufacturing plants, including some of its advanced oncology units in late 2012.
  • In 2008, German pharma company Fresenius Kabi acquired 73 percent stake in India’s largest anti-cancer drug maker Dabur Pharma.
  • Other major injectable firms acquired by MNCs include taking over of India’s Orchid Chemicals & Pharma by Hospira of the United States.
  • With the US market facing acute shortage of many injectibles, especially cancer therapies in the past few years, companies manufacturing these drugs in India have become lucrative targets for MNCs.

An alternative FDI policy is being mooted:

DIPP reportedly is also working on an alternate policy suggesting:

“It should be made mandatory to invest average profits of last three years in the R&D for the next five years. Further, the foreign entity should continue investing average profit of the last three years in the listed essential drugs for the next five years and report the development to the government.”

Another report indicated, a special group set up by the Department of Economic Affairs suggested the government to consider allowing up to 49 per cent FDI for pharma brownfield investments under the automatic route.However, investments of more than 49 per cent would be referred to the Foreign Investment Promotion Board (FIPB).

It now appears, a final decision on the subject would be taken by the Prime Minister after a larger inter-mimisterial consultation, as was decided by him on August 14, 2013.

The cut-off date to ascertain price increases after M&A:

Usually, the cut off point to ascertain any price increases post M&A is taken as the date of acquisition. This process could show false positive results, as no MNC will take the risk of increasing drug prices significantly or changing the product-mix, immediately after acquisition.

Significant price increases could well be initiated even a year before conclusion of M&As and progressed in consultation by both the entities, in tandem with the progress of the deal. Thus, it will be virtually impossible to make out any significant price changes or alteration in the product-mix immediately after M&As.

Some positive fallouts of the current policy:

It is argued that M&As, both in ‘Greenfield’ and ‘Brownfield’ areas, and joint ventures contribute not only to the creation of high-value jobs for Indians but also access to high-tech equipment and capital goods. It cannot be refuted that technology transfer by the MNCs not only stimulates growth in manufacturing and R&D spaces of the domestic industry, but also positively impacts patients’ health with increased access to breakthrough medicines and vaccines. However, examples of technology transfer by the MNCs in India are indeed few and far between.

This school of thought cautions, any restriction to FDI in the pharmaceutical industry could make overseas investments even in the R&D sector of India less inviting.

As listed in the United Nation’s World Investment Report, the pharmaceutical industry offers greater prospects for future FDI relative to other industries.  Thus, restrictive policies on pharmaceutical FDI, some believe, could promote disinvestments and encourage foreign investors to look elsewhere.

Finally, they highlight, while the Government of India is contemplating modification of pharma FDI policy, other countries have stepped forward to attract FDI in pharmaceuticals. Between October 2010 and January 2011, more than 27 countries and economies have adopted policy measures to attract foreign investment.

Need to attract FDI in pharma:

At a time when the Global Companies are sitting on a huge cash pile and waiting for the Euro Zone crisis to melt away before investing overseas, any hasty step by India related to FDI in its pharmaceutical sector may not augur well for the nation.

While India is publicly debating policies to restructure FDI in the ‘Brownfield’ pharma sector, other countries have stepped forward to attract FDI in their respective countries.  Between October 2010 and January 2011, as mentioned earlier, more than 27 countries and economies have adopted policy measures to attract foreign investment.

Thus the moot question is, what type of FDI in the pharma brownfield sector would be good for the country in the longer term and how would the government incentivize such FDIs without jeopardizing the drug security of India in its endeavor to squarely deal with any conceivable  eventualities in future?

Conclusion:

In principle, FDI in the pharma sector, like in any other identified sectors, would indeed benefit India immensely. There is no question about it…but with appropriate checks and balances well in place to protect the national interest, unapologetically.

At the same time, the apprehensions expressed by the Government, other stakeholders and now the honorable members of the Parliament, across the political party lines, in their above report, should not just be wished away by anyone.

This issue calls for an urgent need of a time bound, comprehensive, independent and quantitative assessment of all tangible and intangible gains and losses, along with opportunities and threats to the nation arising out of all the past FDIs in the brownfield pharma sector.

After a well informed debate by experts on these findings, a decision needs to be taken by the law and policy makers, whether or not any change is warranted in the structure of the current pharma FDI policy, especially in the brownfield sector. Loose knots, if any, in its implementation process to achieve the desired national outcome, should be tightened appropriately.

I reckon, it is impractical to expect, come what may, the law and policy makers will keep remaining mere spectators, when Indian Pharma Crown Jewels would be tempted with sacks full of dollars for change in ownerships, jeopardizing presumably long term drug security of the country, created painstakingly over  decades, besides leveraging immense and fast growing drug export potential across the world.

The Competition Commission of India (CCI) can only assess any  possible adverse impact of Mergers & Acquisitions on competition, not all the apprehensions, as expressed by the Parliamentary Standing Committee and so is FIPB.

That said, in absence of a comprehensive impact analysis on pharma FDIs just yet, would the proposal of PSC to ban foreign investments in pharma brownfield sector and the PM’s subsequent one time veto to clear all pending FDI proposals under the current policy, be construed as irreconcilable internal differences…Or a clever attempt to create a win-win situation without ruffling MNC feathers?

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.

Pioglitazone Conundrum: Should The Drug Regulator Step Over The Line?

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Recent order of the Indian drug regulator to withdraw all formulations of the well known, yet controversial, anti-diabetic drug – Pioglitazone from the domestic market has created a flutter in the country, ruffling many feathers at the same time.

Withdrawal of any drug from the market involves well-considered findings based on ongoing robust pharmacovigilance data since the concerned product launch. To ascertain long-term drug safety profile, this process is universally considered as important as the processes followed for high quality drug manufacturing and even for R&D.

A paper titled, “Withdrawing Drugs in the U.S. Versus Other Countries” brings to the fore that one of the leading causes of deaths in the United States is adverse drug reaction. Assessing enormity and impact of this issue, the United Nations General Assembly for the first time in 1979 decided to publish a list of banned pharmaceutical products that different countries may use for appropriate decisions keeping patients’ safety in mind, as they will deem necessary from time to time.

An interesting finding:

Quite interestingly, the paper also highlights:

“There are a number of pharmaceuticals on the market in the USA that have been banned elsewhere and similarly, there are some drug products that have been banned in the United States, but remain on the market in other countries.”

Different policies in different countries:

The reason for the above finding is mainly because, various countries follow different policies to address this important health related issue. For example, though the United States will withdraw drugs based on the decision taken by its own FDA, it will also compare the action taken by countries like, UK, Japan, Australia and Sweden on the same subject.

However, many experts do believe that United Nations must take greater initiative to make all concerned much more aware about the UN list of dangerous drugs, which should be continuously updated to expect the least.

Need transparency in pharmacovigilance:

Pharmacovigilance has been defined as:

“The task of monitoring the safety of medicines and ensuring that the risks of a medicine do not outweigh the benefits, in the interests of public health.”

An article on Pharmacovigilance by A.C. (Kees) van Grootheest and Rachel L. Richesson highlights as follows:

“The majority of post marketing study commitments are never initiated, and the completion of post marketing safety studies (i.e., phase IV studies) declined from 62% between 1970 and 1984 to 24% between 1998 and 2003.”

Thus, in many countries, due to lack of required transparency in the pharmacovigilance process, harmful drugs continue to remain in the market for many years before they are withdrawn, for various reasons.

The above paper strongly recommends, “While there might be monetary benefits for each country in keeping these drugs on the market, the U.N. must step up the visibility of the withdrawal of dangerous drugs list.”

Recent Pioglitazone withdrawal in India:

Recently in India, the Ministry of Health under Section 26A of the Drugs and Cosmetics Act, 1940 has suspended the manufacture and sale of Pioglitazone, along with two other drugs, with immediate effect, through a notification issued on June 18, 2013.

As per the Drugs and Cosmetic Rule 30-B, import and marketing of all those drugs, which are prohibited in the country of origin, is banned in India. Just as in the United States, the Ministry of health, while taking such decisions in India, compares long-term safety profile of the concerned drugs in countries like, USA, UK, EU and Australia.

A Parliamentary Standing Committee of India has already indicted the drug regulator for not taking prompt action on such issues to protect patients’ treatment safety.

Pioglitazone: the risk profile:

In India:

A leading medical journal (JAPI) cautions:

“Given the possible risk of bladder cancer, physicians have to be extremely careful about using pioglitazone indiscriminately in the future.”

The JAPI article continues to state:

“We require more robust data on the risk of bladder cancer with pioglitazone and Indian studies are clearly needed. Till that time, we may continue the use of this drug as a second or third line glucose-lowering agent. In all such cases, the patient should be adequately informed about this adverse effect and drug should be used in as small a dose as possible, with careful monitoring and follow up.”

In the USA:

In 2011 The US FDA as a part of its ongoing safety review of pioglitazone informed physicians and the public that use of this drug for more than 12 months is linked to an increased risk of bladder cancer.

The USFDA review is reportedly based on “an ongoing 10-year observational cohort study as well as a nested, case-control study of the long-term risk of bladder cancer in over 193,000 patients with diabetes who are members of the Kaiser Permanente Northern California (KPNC) health plan.”

Based on this finding US FDA directed that physicians should:

  • Not use pioglitazone in patients with active bladder cancer.
  • Use pioglitazone with caution in patients who have a prior history of bladder cancer, adding, “The benefits of blood sugar control with pioglitazone should be weighed against the unknown risks for cancer recurrence.”
  • Tell patients to report any signs or symptoms of “blood in the urine, urinary urgency, pain on urination, or back or abdominal pain, as these may be due to bladder cancer.”
  • Urge patients to read the pioglitazone medication guide.
  • Report adverse events involving pioglitazone medicines to the FDA MedWatch program.

The moot point:

Considering the above US FDA directives in the Indian context, the moot point therefore is, whether it will be possible for the drug regulator to ensure that physicians and the patients in India follow such steps for drug safety with pioglitazone?

In Canada:

Another new Canadian study has again reportedly linked Pioglitazone with risks of bladder cancer and cautioned, “physicians, patients and regulatory agencies should be aware of this association when assessing the overall risks and benefits of this therapy.”

Pioglitazone and its combinations banned in France and Germany:

After a government-funded study, tracking diabetics from 2006 to 2009, concluded that Pioglitazone increases bladder cancer risk, the French Medicines Agency (FMA) announced withdrawal of Pioglitazone along with its fixed-dose combination with Metformin, as well.

FMA also advised doctors to stop prescribing Pioglitazone, plain or in combination, and asked patients, who are on this drug to consult their doctors immediately.

Simultaneously, German health authorities also acted on similar lines.

An intriguing comment by the Indian drug regulator:

Keeping all these in view, it is indeed intriguing to note that the Indian drug regulator is reportedly open to re-examine the case of pioglitazone and revoking its ban in India, if strong scientific evidences emerge in support of safety and efficacy of the drug.

However, the question then comes up is what more new scientific evidences that the Indian drug regulator is now expecting, especially when the pharmacovigilance studies are almost non-existent in India?

Moreover, such comments of the drug regulator not only prompt raising doubts about the fragility and hastiness of his own decision of banning Pioglitazone in India, but also amply demonstrate lack of seriousness in his part on this extremely important decision on drug safety?

‘Drug Product Liability Claims’ in India virtually non-existant:

In most of the developed countries, appropriate regulations are in place for product liability claims.

Under this law, if any patient suffers injury in any form while administering  a pharmaceutical drug, the patient concerned is eligible to make pharmaceutical-drug-based product liability claims, which usually involve a huge amount of money by any imaginable standard.

These claims are based on:

  • Improperly marketed pharmaceutical drugs. This category includes:

- Failure to provide adequate or accurate warnings regarding a dangerous side effect.

- Failure to provide adequate instructions on safe and appropriate use of the drug.

- The “bad advice”, which may have been given by the manufacturer or by a doctor, pharmacist, sales rep, or some other medical provider.

In the United States drug safety and effectiveness related litigations reportedly also include:

-        Criminal and civil complaints brought by the U.S. Department of Justice.

-        Lawsuits brought by state Attorney Generals and private plaintiffs under state consumer protection acts and other causes of action.

In India, closer to the above system there is a law in paper, named as “Products Liability”. This law deals with the liability of manufacturers, wholesalers, distributors, and vendors for injury to a person or property caused by dangerous or defective products. The aim of this law is to help protecting consumers from dangerous or defective products, while holding manufacturers, distributors, and retailers responsible for putting into the market place products that they knew or should have known were dangerous or defective. However, in reality, there are hardly any damages slapped by consumers on to the manufacturers in India under this ‘Product Liability’ law.

It may sound however bizarre, but is a hard fact that many drugs in Fixed Dose Combinations (FDCs) had never even gone through any form clinical trials on human volunteers before they were for the first time allowed to be marketed in India by the drug regulators.

In absence of any active steps taken by the government to educate and encourage patients to make use of this law, patients, by and large, would continue to pay a heavy price for their ignorance, keeping their mouth shut all the way, while using:

- Defectively manufactured pharmaceutical drugs.

- Pharmaceutical drugs with dangerous side effects.

- And even improperly marketed pharmaceutical drugs.

As stated before, it is worth repeating, neither is their any functional pharmacovigilance system in place in India.

Drug product liability suit for Pioglitazone in the United States:

Just to cite an example, one report indicates:

“According to court filings, all of the Actos (Pioglitazone) lawsuits pending in the Western District of Louisiana allege Takeda Pharmaceuticals failed to provide adequate warnings to doctors and patients regarding the drug’s association with an increased risk of bladder cancer. Last month (April, 2013), the nation’s first trial involving Actos bladder cancer allegations ended with a Los Angeles Superior Court jury awarding $6.5 million to a plaintiff who was diagnosed with the disease after taking the drug for four years”. However, the judge overseeing the case granted Takeda Pharmaceuticals’ request to set aside the verdict.

The report also indicates, ‘more than 1,200 Actos bladder cancer claims are pending in the Louisiana litigation. Additional Actos lawsuits have been filed in state litigations in California and Illinois.’

Indian doctors and manufacturers protest together against Pioglitazone ban:

It is equally intriguing to note, despite serious life threatening side-effect and restricted usage profile of Pioglitazone, as established internationally through robust and large clinical studies, both the doctors and the Pioglitazone manufacturers in India are urging the government to lift ban on this drug immediately, keeping the silent patient community in the front line, as usually happens all over.

A news report highlighted that ‘doctors flayed the ban on anti-diabetes drug Pioglitazone and requested the Centre to reverse its decision in interest of patients.’

Another media report highlighted, major drug makers are strongly opposing the move of the government to ban Pioglitazone, in India.

Conclusion:

Without generating another set of robust evidence proving contrary to what has been already concluded in the United States and EU based on strong supporting pharmacovigilance data, if the Indian drug regulator revokes the ban of Pioglitazone, it will be construed as a huge compromise with patients’ safety interest with this drug.

This issue assumes even greater importance, when the ‘drug product liability’ system is almost dysfunctional in India.

The other alternative of the drug regulator is to revoke the ban, wilting under combined pressure of the manufacturers and doctors and ask for safety warnings trying to emulate, as it were, what has been done by the US FDA.  

In which case, with full knowledge that it is virtually impossible for any one to comply with the above US FDA requirements in India, will the drug regulator not step over the line, yet again?

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 Wonderland of Pharma Generics: Some Steps In, Some Steps Over the Line

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To scale-up access to healthcare, especially for the marginalized population of any country, greater access to affordable generic drugs will always remain fundamental, besides improving healthcare infrastructure and its delivery mechanism.

Thus, there should be a robust mechanism across the world to facilitate quick entry of cheaper generic equivalents immediately after patent expiry of the original molecule. Any attempt to step over the line, blocking entry of generics surreptitiously by vested interests must be brought to justice sooner. Such measures assume increasing importance, as without availability of newer generics, unmet medical needs of the most vulnerable section of the society cannot be met effectively by any country.

Newer generics will play a critical role even in the Indian context. Besides many other diseases, India is already known as the diabetic capital of the world with an estimated population of 70 million diabetics by 2020.

Greater access to treatment for such chronic ailments and many other dreaded diseases with increasing trend of prevalence, like cancer, multiple sclerosis, Alzheimer and autoimmune disorders, besides common tropical diseases, would also depend on the availability of cheaper and newer generic medicines.

Global innovators stepping into generics business in emerging markets:

Sniffing the growth opportunities in the generics business in an environment of patent cliff, even many hard-nosed innovator companies have been entering into this business either through local acquisitions or through various collaborative arrangements. Examples of some of these companies are as follows:

  • Novartis entered in generic business with its Sandoz arm
  • Pfizer with collaborative arrangements in India with Aurobindo Pharmaceuticals (India) in March 2009 and with Strides Arcolab in January 2010
  • Daiichi Sankyo acquired Ranbaxy of India
  • GlaxoSmithKline acquired 16 percent stake of Aspen Pharmacare of South Africa,  Laboratorios Phoenix
in in Argentina and signed a development and commercialization license with Dr. Reddy’s Laboratories (DRL)
  • Sanofi acquired Shantha Biotechnics and Universal Medicare of India, Zentiva in Czech Republic, Laboratorios Kendrick in Mexico, Medley in Brazil and Helvepharm in Switzerland
  • Abbott Laboratories acquired the pharmaceutical formulations business of Piramal Healthcare and collaborated with Zydus Cadila

A pro-generic initiative in the west: 

Ireland’s parliament has recently passed a bill on pro-generic initiatives. Under this new law pharmacists will be permitted to substitute branded medicines, which have been designated by the Irish Medicines Board (IMB) as interchangeable.

Currently in Ireland, if a specific brand of medicine is prescribed for a patient, the pharmacist must supply only that brand.

Some steps over the line blocking entry of generics:

Interestingly, to continue marketing high priced innovative drugs even after patent expiry, attempts are still being made to block entry of cheaper generics through equally innovative means by stepping over the line.

On April 15, 2013 ‘The New York Times’ reported several such cases of the recent past in the United States. The report gives details of the players involved in each of these cases.

Prompted by these unfortunate incidents, the Federal Trade Commission (FTC) of the US investigated into the matter involving the American drug companies and charged many of them with ‘anticompetitive behavior’. These practices are no longer new and are being followed by some companies over a long period of time.

One of the latest and elegant, yet a very simple strategy reportedly works as follows:

  • Generic drug makers need samples of patented drugs to generate required regulatory data to obtain marketing approval for launch after the molecules go off patent.
  •  Some innovator companies (named in the report) refuse to sell their patented drugs to generic manufacturers for development of generic equivalents.
  • Traditionally, the generic drug makers purchase their requirements from the concerned wholesalers.
  •  However, because of safety concerns, drugs are now mostly sold with restrictions on who can buy them.
  • This compels the generic manufacturers to ask the innovator companies for samples of the patented products.
  • Unfortunately, mostly they get a negative answer.
  •  In defense, innovator companies explain that they are ensuring any possible improper use of their innovative drugs and also say that no law binds any company to do business with another.

It is alleged that the companies, which most aggressively pursue such measures are those with drugs nearing end of their patent life.

The report indicates that the federal regulators in USA do consider this strategy of creative interpretation of drug safety laws, is illegal.

The news item also indicates that most of these drugs are for serious illnesses like various types of cancers, multiple sclerosis and other rare diseases costing US$ 79,000 to US$ 229,000 a year to patients.

More instances:

Another recent report  highlights that European Union’s anti-trust regulator will fine two European pharmaceutical Company and seven other drug makers for blocking generic drugs against “pay-for-delay” deals. Ranbaxy’s name also features in this report.

The report also states that brand name companies, especially in the western world, have been defending “pay-for-delay” deals to extend patents and avoid costly litigation.

It reports that in a typical case, a generic rival may challenge the patent of a brand-name competitor, which then pays the rival a sum of money to drop its challenge. Interestingly, defenders of the practice call it a legitimate means to resolve patent litigation.

A recent debate:

Another interesting development has come up with the pain killer drug OxyContin of Purdue Pharma, which went off patent in April 2013.

Just before patent expiry, Purdue Pharma reportedly reformulated and pulled out its previous version of OxyContin, without abuse-deterrent measures, from the market giving reasons related to safety and efficacy of the drug.

In the notice to the Federal Register, US-FDA reportedly said, “Compared to original OxyContin, reformulated OxyContin has an increased ability to resist crushing, breaking, and dissolution using a variety of tools and solvents.” The regulator, consequently, barred the generic companies from making copies of the older versions of OxyContin without tamper-resistant qualities.

This development, will not allow drug manufacturers like Teva and Impax to make and launch generic equivalents of older versions of OxyContin.

This report also says that similar request has been filed with US-FDA by Endo Health Solutions Inc. for safety of its old painkiller drug Opana, which could force the generic version of the drug manufactured by Impax’s going out of the market in favor of high priced medicine.

On this development the Generic Pharmaceutical Industry in America has reportedly commented, “Blocking generic drugs could mean leaving behind the millions of patients who stand to benefit from access to lower-cost versions of OxyContin”. Some experts have also expressed apprehension that such a precedent would likely to encourage many others to work for similar safety related changes to extend patent life of a product.

Having said that, it appears to be a complex regulatory issue where the possibility of drug abuse has to be carefully weighed against the benefits of low cost generic entry for greater access to patients.

‘Disparaging’ generic drugs:

Reuters , quoting the French Competition Authority, recently reported from Paris that a global pharmaceutical major has “created a doubt over the quality and the safety of generics, without any proven basis.”

As a result, the report says, the French Competition Authority has fined the drug maker 40.6 million euros (US$52.7 million) for “disparaging” generic competition.

The news report further indicates that this decision followed a complaint of Teva Sante filed in 2010 against communication practices of the branded molecule discouraging the use of its generic versions by the doctors.

The innovator company may appeal against this decision.

European Commission found similar practices:

It is interesting to note that in 2009, the European Commission also reportedly found similar practices, including ‘pay-for-delay deals’ which not only adversely impacted competition, but also delayed entry of cheaper generic drugs into the EU markets.

That said, entry of generic drugs is still not speedy in all therapy areas. In this context, a study titled, “Drug patent expirations and the speed of generic entry,” concluded that the generic industry mostly target chronic drug markets with high turnover products and entry of a generic drug is also greatly influenced by the existing branded substitutes in the marketplace.

Importance of the Indian generic drugs:

According to BCC Research, the global generic drug market is expected to grow at a CAGR of 15 percent over five years registering a turnover of US$ 169 billion in 2014.

In this market, India is now the world’s biggest provider of low priced high quality generic medicines to the developing world. The experts opine in various context, the world must ensure that this vibrant hub of generic drugs does not get adversely impacted at any cost for any vested interest.

According to Pharmexcil pharma exports from India stood at an impressive US$ 14.6 billion during 2012-13 compared to US$ 13.2 billion in 2011-12. Indian Ministry of Commerce had unfolded a ‘Strategy Plan’ to take it to US$ 25 Bn by 2013-14, which currently appears to be a very ambitious objective.

Taken together, India and China now reportedly manufacture over 80 percent of the Active Pharmaceutical Ingredients (APIs) of all drugs used in the United States.

As reported by BMJ from 2003 to 2008, in various programs supported by donor organizations like the Global Fund, generic drugs from India contributed over 80 percent of the medicines used to treat AIDS, including 91 percent of pediatric antiretroviral products and 89 percent of the adult nucleoside and non-nucleoside reverse transcriptase inhibitor markets.

In addition, India is considered to be an extremely valuable source of high quality affordable generic drugs for the treatment of cancer, cardiovascular conditions, infections and other non-infectious chronic diseases and conditions.

Allegations against Indian generic drugs:

In a situation is like these, some aberrations within the Indian generic space like, what has happened currently with Ranbaxy are, at times, made universal and blown out of proportion, probably on behalf the interested players to paint the domestic pharmaceutical industry, in general, black. There is no doubt, however, all such cases of fraud on patients, wherever these take place must be brought to justice.

The issue arises when such instances are grossly generalized. For example, an American Enterprise Institute report titled, “Cheap Indian generic drugs: Not such good value after all?” quoting US-FDA, highlights that “Pharmaceutical companies in developing countries are increasingly falsifying data about the quality of their medicines.”

It further alleges, Indian producers in particular strive to reduce costs by substituting cheaper ingredients or skimping on good manufacturing practices, and often patients and well-informed pharmacists alike will overlook the flaws.

The article laments, “Indian companies and regulators simply deny there is any difference in product quality between their products and those made in the West.”

Indian perspective to the allegation:

In response to such allegations a very recent FICCI –Heal 2012 publication titled “Universal Healthcare: Dream or Reality?” articulated as follows:

“Selected reporting of malpractices in healthcare has painted a poor picture of the sector. However, the instances of misconduct/corruption are miniscule compared to public perception.”

Some important campaigns in favor of generics:

However, a publication from ‘Global Pharmacy Canada’ says,

“Generic medications are just as safe and effective as their brand-name equivalents. All the drugs supplied by the pharmacies we deal with are government approved. The manufacturers they buy from follow strict World Health Organization (WHO) standards for Good Manufacturing Practices (GMP). One or several of the following agencies have approved these manufacturing facilities:

  • Food and Drug Administration (FDA), USA
  • Medicines Control Agency (MCA), UK
  • Therapeutic Goods Administration (TGA), Australia
  • Medicines Control Council (MCC), South Africa
  • National Institute of Pharmacy (NIP), Hungary
  • Pharmaceutical Inspection Convention (PIC), Germany
  • State Institute for the Control of Drugs, Slovak Republic
  • Food and Drug Administration (FDA), India”

Similarly USFDA comments on generic drugs as follows:

“Generic drugs are important options that allow greater access to health care for all Americans. They are copies of brand-name drugs and are the same as those brand name drugs in dosage form, safety, strength, and route of administration, quality, performance characteristics and intended use.”

“Health care professionals and consumers can be assured that FDA approved generic drug products have met the same rigid standards as the innovator drug. All generic drugs approved by FDA have the same high quality, strength, purity and stability as brand-name drugs. And, the generic manufacturing, packaging, and testing sites must pass the same quality standards as those of brand name drugs.”

The growth drivers:

According to a recent study, following are the key growth drivers of the global generic pharmaceutical industry:

  • Governments’ and payers’ need to contain rapidly increasing healthcare expenditures
  • A growing middle-class in emerging markets
  • Longer life expectancy
  • A large number of patent expiries for innovator drugs, many of them are mega blockbusters

All these have contributed to the growth of global generic industry from less than US$ 50 billion in 2004 to over $80 billion by 2011 improving global patient-access to medicines significantly.

The report also says, if a more general definition of off-patent medicines is used to define generics, estimates have placed the size of the industry at closer to $150 billion. In the United States alone, generic sales have more than tripled since 2000 and now exceed $51 billion in 2011.

Encourage speedy entry of generics:

Even the Federal Trade Commission (FTC) in a report titled “Generic Drug Entry Prior to Patent Expiration: An FTC Study,” stated as follows:

“Expenditures on pharmaceutical products continue to grow and often outpace expenditures for other consumer products. Pharmaceutical expenditures concern not only consumers, but government payers, private health plans, and employers as well. Generic drugs offer opportunities for significant cost savings over brand-name drug products.”

In its report FTC recommended that generic drugs should not experience delays when entering the market. The Commission also highlighted that both pharmaceutical innovation and cheaper generic drugs bring enormous benefits to patients.

Conclusion:

It is widely recognized that generic medicines play a key role to improve access to medicines to a very large section of population of the world.

Currently, important policy measures taken by the countries like, United States, United Kingdom, Canada, Holland, Denmark and Germany for increasing use of generic drug have started helping them to achieve this objective. At the same time, such policies are helping them to garner significant savings in their respective healthcare cost.

Out of pocket expenditure towards healthcare being around 80 percent in India, un-interrupted availability of high quality affordable generic medicines will help the patients significantly. This should, no doubt, need to be ably supported by the Government by rolling-out much awaited ‘The Universal Healthcare’ proposal of the High Level Expert Group (HLEG) appointed by the Planning Commission of India, sooner.

To improve demand of generic drugs, the prescribers too need to be influenced by the regulators, as has happened in many countries of the world.

Finally, the requirement to maintain high quality standards for generic medicines should be non-negotiable and continuously be kept under careful vigil of the drug regulators.

The complex dynamics of the global generic drugs market are indeed intriguing. It is indeed a ‘Wonderland’, as it were.

Be that as it may, in this wonderland of pharma generics, as some continue to step in and some others continue to step over the line, it is also important to understand how this industry caters to the healthcare needs of billions of poor and needy.

Respective Governments across the world should facilitate speedy entry of more number of newer generic drugs in the market. Simultaneously, the drug regulators will require bringing to justice to all those forces, which will attempt blocking or delaying entry of generics, causing great harm to a vast majority of patients across the world.

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.

Is Fraud or Negligence in Drug Quality Standards Not a Fraud on Patients?

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As we know, a substance is called a drug when it has scientifically proven and well documented efficacy and safety profile to reduce both mortality and morbidity of patients. Any fraud or negligence in the drug quality standards, for whatever may be the reasons or wherever these take place, is a fraud on patients and should warrant zero tolerance.

A perception survey on drug quality:

According to a poll released in 2010 by the ‘Pew Charitable Trusts’s Prescription Project’ of the United States:

  • More than three out of four voters are confident that prescription drugs made in the USA are free from contamination
  • While less than one in 10 feel confident about medications made in India or China.
  • 54 percent of Americans distrusted Indian drugs and 70 percent distrusted Chinese drugs.
  • “When you buy a shirt, it will say right on the label where it was made, but when you get a pharmaceutical, you don’t know.”

Despite all these, the survey points out that in 2007, 68 percent of the ingredients of all drugs sold worldwide came from India or China, as compared to 49 percent in 2004.

Experts comment that USFDA does not have either people or resources required to monitor manufacturing in the geographically widespread locations, as these are today.

Recent spate of charges against Indian pharmaceutical companies – a vindication?

Recent spate of charges against some top ranked Indian companies, will further dent the image of India not just in the United States or Europe, but also as a pharmacy of high quality yet low cost generic drugs for the developing countries of the world.

In May 2013, well known India-based pharma major Ranbaxy reported to have pleaded guilty to criminal charges of manufacturing and distributing some adulterated medicines, produced at its Paonta Sahib and Dewas, facilities and agreed to US$ 500-millon settlement. Can this be considered as a vindication of the above perception on the quality of ‘made in India’ drugs?

The view of WHO:

Interestingly the World Health Organisation (WHO) even after the above USFDA indictment has commented that at present it has no evidence that Ranbaxy manufactured medicines that are currently prequalified by WHO are of unacceptable quality.

Indian drug regulator initiates action:

It is good to know that the Drugs Controller General of India (DCGI) and the Ministry of Health will reportedly decide the way forward in this matter on completion of a fact-finding study initiated by the Central Drugs Standards Control Organization (CDSCO) on the subject.

Other incidents in India:

Following are examples of other reported serious regulatory violations involving the domestic pharmaceutical companies:

No.

Year

Company

Issue

Status
2009 Lupin USFDA warning for Mandideep plant Resolved in 2010
2010 Claris Life Sciences USFDA ban products for manufacturing norms violations Ban revoked in 2012
2011 Zydus Cadila USFDA warns Co. over Moraiya, Gujarat Facility Ban revoked in 2012
2011 Dr Reddy’s USFDA bans sale of drugs from Mexico facility Ban revoked in 2012
2013 Jubilant Life Sciences Gets USFDA warning for Canada facility Company taking corrective steps
2013 Wockhardt Banned from exporting products from its Aurangabad factory to the US due to quality concerns In discussion

Source: The Economic Times (May 22, 2013), Financial Express (May 25, 2013)

Though some other countries also have faced bans from exporting products, it cannot be taken, I reckon, as any consolation by anyone.

A Mumbai Hospital demonstrated the mood of zero tolerance:

The above expression of good intent should not just remain as a ‘lip service’. Indian drug regulator is expected to take a leaf out of all these allegations and initiate appropriate audit as required. Otherwise, exhibiting zero tolerance, like Jaslok Hospital of Mumbai, many other institutions will ask their doctors not to prescribe products of these companies to protect patients’ interest. More hospitals reportedly are mulling similar action against Ranbaxy.

IMA expresses apprehension:

Even ‘The Indian Medical Association (IMA)’ has reportedly asked the DCGI to investigate quality of medicines manufactured by Ranbaxy.

It happens in the ‘heartland’ too just as in the ‘hinterland’:

Contrary to the above poll released in 2010 by the ‘Pew Charitable Trusts’s Prescription Project’, pointing accusing fingers, in this respect, exclusively to India and China, may not be just fair. Incidents of such regulatory violations are not just restricted to Indian pharmaceutical companies either. Unfortunately, these happen with the global majors too.

None of these should be condoned in any way by anyone and attract as much global publicity, public wrath and zero tolerance, as all these would possibly deserve.

Following are some examples:

No

Company

Issues with USFDA

Consent decree signed (year)

Issue status

Penalty amount
Schering-Plough GMP violations affecting four manufacturing sites and 125 products

Yes (2002)

Closed (2007)

 $500 Mn.
GlaxoSmithKline Manufacturing deficiencies found at Puerto Rico facility

Yes (2005)

Pending

 $650 Mn. Bond
Wyeth GMP violations at plant in Pennsylvania and New York which were producing FluShield

Yes (2000)

Pending

 $297 Mn. Plus 18.5% of sales of FluShield
Abbott Labs Non-conformance with quality system regulations for in vitro diagnostic products at an Illinois facility

Yes (1999)

Pending

 $212 Mn.
Boehringer Ingelheim To bring its Ohio facility into compliance with regulatory requirements

Yes (2013)

Pending

 Not specified

Source: Financial Express (May 25, 2013)

Further, in December 1998 the US FDA reportedly had stopped shipments of Abbott Laboratories’ clot-busting drug Abbokinase till the company had resolved undisclosed manufacturing problems at its plant. Abbott subsequently resolved this to the satisfaction of the drug regulator.

Even end May 2011, the USFDA reportedly raised concerns about contamination of drugs of the American pharmaceutical major – Hospira, at its Indian manufacturing facility.This issue was highlighted as the latest in a string of manufacturing and quality problems dogging the company since 2010.

American lawmakers demand thorough review of USFDA oversight procedures:

Pressure has reportedly started mounting in the United States for a thorough review into the effectiveness of oversight procedures for all bulk drugs and formulations manufactured in foreign facilities.

Simultaneously, there is also a specific demand for an in-depth review of all actions of the US regulator for so many years, which allowed Ranbaxy’s ‘massive fraud to remain unchecked’.

Beyond regulatory oversight, need robust internal system driven model as a fire-wall:

To address such issues only drug regulators interventions may not be just enough, maintaining total integrity of ‘Supply Chain’ of an organization proactively in a well structured, fool-proof and a system-driven way, will continue to play the most critical role. This will help creating ‘fire-wall’, which will be difficult to breach.

The scope of Supply Chain:

The scope of ‘Supply Chain’, which is comprised of the entire network of entities from vendors who supply raw and packaging materials, manufacturers who convert these materials into medicines, together with warehouses, distributors, retailers and healthcare centers who will reach these medicines ultimately to patients exactly the way these will deserve.

Thus, just not in the manufacturing process, any breach of security at any place of the supply chain can cause serious problems to patients. 

Accordingly, pharmaceutical companies need to adequately invest along with appropriate staff training programs to ensure that the Supply Chain Integrity is maintained, always.

Supply Chain Security (SCS) is critical:

SCS, therefore, deserves to be of prime importance for the pharmaceutical companies across the globe. Recent high profile SCS related cases, as mentioned above, have exposed the vulnerability in addressing this global menace effectively.

All pharmaceutical players should realize that not just ‘show-off’, an effective integrated approach is of paramount importance to eliminate this crime syndicate, which is taking lives of millions of patients the world over.

Mixing-up counterfeit drugs with this menace may not be prudent:

Shouting for counterfeit drugs involving mainly intellectual property related issues, may be  important, but will in no way help resolving self-created menaces arising out of breach of supply chain integrity endangering million of lives, in another way.

Though an expensive process, can’t be compromised:

It is worth repeating, securing pharmaceutical supply chain on a continuous basis is of critical importance for all the pharmaceutical players across the globe. However, the process will no doubt be expensive for any company.

Like other industries, in the pharmaceutical sector, as well, cost effective procurement is critical, which entices many pharmaceutical players, especially, in the generic industry not to go for such expensive process just to maintain the SCS.

A serious SCS related tragedy:

I would like to reinforce my argument on the importance of SCS with the following example of the ‘Heparin tragedy’ where the supply chain integrity was seriously violated with ‘ingeneuity’.

In the beginning of 2008, there were media reports on serious adverse drug events, some even fatal, with Heparin, a highly sulfated glycosaminoglycan of Baxter International. Heparin is widely used as an injectable anticoagulant. Baxter voluntarily recalled almost all their Heparin products in the U.S. Around 80 people died from contaminated Heparin products in the U.S. The US FDA reported that such contaminated Heparin was detected from at least 12 other countries.

A joint investigation conducted by Baxter and the US FDA ascertained that the Heparin used in batches associated with the serious adverse drug events was contaminated with Over Sulfated Chondroitin Sulfate (OSCS). It was reported that Heparin Scientific Protein Laboratories, Changzhou, China supplied Heparin to Baxter.

The cost of OSCS is just a fraction of the ingredient used in Heparin. Being driven by the criminal profiteering motive the manufacturers in Changzhou, China had reportedly used OSCS for highly sulfated glycosaminoglycan, as the former could not be detected by the pharmacopeia test in use, until 2008. This is because OSCS mimics Heparin in the pharmacopeia test. Post this criminal event, at present, all over the world more specific pharmacopeia test methods have been adopted for Heparin.

Stakeholders need to be extremely vigilant:

Considering all these, pharmaceutical players and the drug regulators from across the world should put proper ‘fool proof’ systems in place to eliminate the growing menace of criminal adulteration of APIs, drug intermediates, excipients entering in the supply chain together with preventing any breach in their logistics support systems.

Apprehension against generic drugs as a class:

Taking advantage of the situation, one can possibly say, as some vested interests have already started propagating that generic equivalents of the branded drugs are really not quite the same in quality.

However, the point that cannot be ignored is the comment of a senior USFDA, who was quoted in the same article saying, “I have heard it enough times from enough people to believe that there are a few products that aren’t meeting quality standards.“

Generic drug manufacturers should make serious note of such comments and act accordingly to allay prevailing lurking fear on the use of generic medicines, in general, though small in number.

Conclusion:

Following the recent series of incidents including that of Ranbaxy, the image of India as a low cost generic drugs manufacturer of high quality could get adversely impacted. Although there are enough instances that such things happen in the developed world, as well, including the United States.

Moreover, in the backdrop of high decibel quality concerns raised by USFDA, the level of apprehension regarding effectiveness of generic drugs made in India may increase significantly, unless some tangible, well thought out and highly publicized remedial measures are taken forthwith.

The decision of Jaslok Hospital, Mumbai advising their doctors for not using Ranbaxy products to patients on the same ground, will further strengthen the public apprehension.

Whatever may be the reason, as long as any company is in the business of manufacturing medicines, there should be demonstrable zero tolerance on any compromise, fraud or negligence in the drug quality standards. Any fraud and negligence in drug quality, I reckon, is virtually a fraud against humanity.

That said, changing mindset towards a strong corporate governance by walking the talk, all pharmaceutical companies must guarantee safe and high quality medicines to the society, come what may.

This, I believe, could be achieved by putting in place a robust SCS system and ensuring that this is not compromised in any way… anywhere…ever… for patients’ sake…both globally and locally.

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.