Deregulation of the pharma industry in the time of scandals
Ever since the USFDA first announced the $500
million dollar fine against Ranbaxy Laboratories in 2013, there have been a
raft of scandals involving the Indian pharmaceutical industry. All of the big
names in the industry including Sun, Dr. Reddy’s, Wockhardt, GVK Bio, Alkem have
come under scrutiny from foreign drug regulators. These investigations have
resulted in a range of regulatory actions against Indian companies by foreign
regulators. Instead of taking the cue from its foreign counterparts and increasing
regulatory scrutiny, the Drug Controller General of India (DCGI) appears has
been on a drive to reduce the regulation governing the Indian pharmaceutical
industry in the name of ‘Make in India’.
In two public notices over the last month,
the DCGI has announced its intention to extend the validity of licences granted
to clinical research organisations (CROs) conducting bioequivalence and
bioavailability studies and to licences granted for the manufacture, sale and
distribution of drugs. In order to understand the implications of these
regulatory announcements it is necessary to understand the problems with the
Indian pharmaceutical industry.
Over the last decade, the industry has been
plagued with two different type of scandals. The first type of these is related
to data fabrication by CROs that conduct bioequivalence (BE) testing. These
tests are required primarily by foreign regulators, prior to granting marketing
approval, to manufacturers to sell new generic drugs into this market. Such
testing is conducted by external CROs on 50-70 healthy subjects. The aim is to
test whether the generic drug performs as well as the innovator drug. Indian
CROs have been caught fabricating test results in several cases in the last
decade. The genesis of the Ranbaxy scandal was the fabricated test reports at
Vimta Laboratories caught by an inspection team of the World Health
Organisation (WHO). Last year, the European Union suspended approval of over
700 drugs from multiple manufacturers who had their drugs tested at GVK Bio
because of evidence of data fabrication. Last year also saw the WHO accuse
Quest Life Sciences of data manipulation and fabrication while providing
similar testing services. Earlier this year, the German regulator levelled
similar allegations against Alkem Laboratories. In most cases, data is
fabricated either because of pressure from the pharmaceutical company which
wants to introduce its drug into the market as soon possible. In other cases, fabrication
happens because of poorly trained or lazy staff. Indian drug regulatory
officials like to characterise these scandals as “documentation problems”; but
the real life consequences of such fraud are drugs which do not work as
advertised. In the best case scenario, this means a patient may take longer to
recover, in the worst case scenario it means a preventable death.
These CROs are supposed to be regulated in
India, but neither Dr. G.N. Singh nor the state regulators have announced any
action against any of these CROs despite foreign regulators providing
sufficient evidence to warrant cancelling their licences and prosecuting the
management of these companies under criminal law.
The second type of scandal involves
pharmaceutical companies themselves indulging in fabrication of data during
quality testing. Under Indian law, every batch of a drug is required to be
tested before it is shipped to the market. If a batch fails such tests, it has
to be withdrawn from the market. Foreign regulators have hard proof that in
several cases, Indian pharmaceutical companies have fudged or deleted tests
pertaining to batches which failed quality tests – in other words Indian
pharmaceutical companies knowingly sold medicine which failed testing. This is
a serious offence even under Indian law. Yet, neither the DCGI nor the state
regulators took any action against these pharmaceutical companies. Even after
Ranbaxy pled guilty to flagrant violations in the USA, there has been no action
against the company in India.
Given the widespread culture of data
fabrication and dishonesty that seems to permeate every pore of the Indian
pharmaceutical industry, the drug regulator should be talking about tightening
every screw in the regulatory mechanism. Yet Dr. G.N. Singh, the DCGI is
speaking about easing the regulatory framework. In the two public notices
referred to earlier in this piece, he has proposed that licences for
manufacture, sale and distribution which are currently valid for 5 years, will
now last until perpetuity and that there should be an assessment of compliance
with the conditions of the licence only once in 10 years. This is not advisable
for the simple reason that licence renewals offer regulators a stick to ensure
compliance on part of an errant player. Technically, regulators can also
suspend licences for violations but in India courts step in too often to stay
such decisions. The courts however cannot step in and order a regulator to
renew a licence. By doing away with licence renewals, the DCGI is weakening its
own powers.
Similarly, another proposal is to increase
the validity of licences for CROs conducting BE studies from the existing 1
year to 3 years. In other words, there will be fewer inspections and the
industry can continue with business as usual. It is baffling to see the
government reward an industry which has attracted so much bad press in the last
decade by easing off on regulation. One wonders if there is anyone in the
administration who speaks for public health in India?
Both public notices talk only of facilitating
the ‘ease of business’ for the industry. There is no mention in either notice
of balancing the ‘ease of business’ with the need to ensure public health
through access to quality medicine. If
the DCGI is working under the impression that his job is to facilitate ‘ease of
business’, it is perhaps time to retire him and find somebody who understands
the real role of a national health regulator.
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