Over the last several years, the Comptroller & Auditor General (CAG) has pointed out to serious deficiencies in the public procurement of medicine by major institutions like the Ministry of Railways, Ministry of Defence and the Central Government Health Scheme (CGHS), which is administered by the Ministry of Health & Family Welfare. Some of the findings of these various audit reports are highlighted below:

For samples which were tested from the Armed Forces Medical Stores Depot (AMFS), the CAG report notes that the rate of rejection for locally procured medicine, due to samples failing quality tests, increased from 15% to 31% during 2006-07 to 2010-11. The average rate of rejection during the three year period of 2008-09 to 2010-11 was therefore 24% approximately. This means that one in every four drugs dispensed by these organizations is not of standard quality. This is a shockingly high rate of NSQ drugs which are used to treat people who fight for our country.

In its report no. 28 of 2014 on the Railways Hospitals, the CAG noted that substandard drugs worth Rs. 21.45 lakh were supplied to 20 hospitals over 8 different zones of the railways. The actual figure is most likely higher because as also noted in the same CAG report, the railways hospitals were not conducting mandated pre-dispensing testing of consignments i.e., each consignment of these drugs is required to be tested before being issued to patients. Such pre-dispensing testing is a testimony to the lack of faith in the ability of the DCGI and state drug controllers to effectively regulate quality standards. Can you imagine a drug approved and regulated by the US FDA being subject to this kind of procedure?

Even in cases where pre-dispensing quality testing is conducted, it was found that in 8 hospitals, over 4 railways zones, had dispensed these drugs to patients and then received the test reports indicating that the drugs were NSQ. In one case in Kolkata, 93.8% of a batch of drugs were dispensed before the test reports returned from the lab. Imagine what consequences the patients who got these drugs suffered. In most of these cases, CAG noted that information regarding these suppliers of NSQ drugs was not shared on railnet, “an internal portal”, for information to other zones. Independent of the CAG report, we also filed a RTI application with the Ministry of Railways asking for the names of all the pharmaceutical companies blacklisted by the Indian Railways. To our surprise, we learnt that the Indian Railways does not have a single consolidated blacklist of all pharmaceutical companies which have been debarred from supplying to the Railways because of poor quality products that they supply. Instead our RTI application was transferred to each zonal railways office. We found that each zone had its own blacklist thereby giving rise to the probability that a supplier blacklisted by one zone can still supply to other zone. Of all the zones which provided replies, only the Western Railways, NorthWestern Railways, North-East Frontier Railways & Eastern Zone even had a blacklist. Some of the companies on the list were rather big names like Biocon (blacklisted for Rosuvastatin), RPG LifeSciences (blacklisted for Atorvastatin), Sandoz, Alkem, Alembic Pharmaceuticals, Abbot etc. Some manufacturers like Ind-Swift & CMG Biotech Pvt. Ltd. were blacklisted for all of their products, while the others were blacklisted for only specific drugs that they supplied. Most of the other zones like the Southern Railways, Northern Railways, South Central Railways, East Coast Railways all claimed that they had not blacklisted evena single manufacturer. The lack of a consolidated blacklist is likely creating windows of opportunity for the manufacturers of sub-standard drugs to supply to one zone even after being blacklisted by others.

The CAG Report No. 20 of 2007 (Performance Audit) titled ‘Procurement of Medicines and Medical Equipment’ by government hospitals and CGHS pointed out several deficiencies in the procurement process. Essentially, the entire procurement process was punctuated by completely arbitrary behaviour and lack of set processes or guidelines. One of the key deficiencies pointed out with regard to quality control was the failure of hospitals, including AIIMS to carry out mandatory testing on all procurements before issuing. (para 7.1.8) The CAG report spurred a more detailed examination of the CGHS processes by the Public Accounts Committee (PAC) of the Lok Sabha in its 24^th Report (2011) and 84^th Report (2013). Some changes were made by the MoHFW, but clearly the changes were not enough because as noted by the PAC in its 22^nd Report (2015), sub-standard drugs in the CGHS were still a problem. As noted by the Committee in its report between 2009-2012, CGHS, Bombay had reported Rs. 28.45 lakhs worth of drugs as sub-standard. Of these medicines, stock worth Rs. 15.66 lakhs had already been issued to patients. The Committee had noted “Such instances highlight the absence of a robust mechanism for quality assurance, which exposes the patients to the hazards of sub-standard medicines and drugs”.

In the backdrop of the above reports, we attempted to scrutinise the blacklisting policies followed by the above public authorities to penalise the suppliers of sub-standard drugs. Such blacklisting policies are important because very often, blacklisting is the only punishment meted out to suppliers of sub-standard drugs. Prosecutions are very rare in the Indian context as I have documented in my previous blogs.

As of now, each Ministry follows its own procurement and blacklisting guidelines. While individual Ministries may have different needs, it is surprising to see the degree of variability in each of their blacklisting guidelines. Here are some obvious holes in their procedures:

• The CGHS blacklisting guidelines are contained in the “Procurement and Operational Manual for Medical Store Organisation and Government Medical Store Depots”. The guidelines basically borrow the classification of various defects with sub-standard medicine from certain DCC Guidelines which creates a classification mechanism of Category A, Category B & Category C defects. In the context of the procurement manual, Category A defect in a product results in the supplier being barred for 3 years and if there is a repeat, then the supplier is barred from supplying any products. Category B defects are treated similarly. Such a system of blacklisting is however rather superficial and fails to understand the nature of the pharmaceutical industry. If a particular batch of medicine fails quality control testing at a certified GMP manufacturing facility (as all Indian pharmaceutical facilities are required to be), it would mean that the facility is not GMP compliant because by their very nature, GMPs create a fool proof mechanism to ensure quality. Every batch has to be tested before it is shipped and the manufacturer has to test the samples before shipping out commercial supplies. In many cases in India, manufacturing problems arise due to non-compliance with GMPs and the defects within a particular batch are merely a symptom of a larger problem within the company. This is the reason why we see a string of warning letters from foreign regulators to the who’s-who of the Indian pharmaceutical industry. Therefore, when a public authority detects quality issues with a particular batch of drugs, it should conduct a deeper investigation and determine the reasons for the problem – in some cases it could be purely a case of cheating or fraud by the supplier to make more profits. In such a case, the entire manufacturing facility should be banned, there is no point of banning the supplier only the one product which has failed the quality control test.
• MoD’s Policy Regarding Quality Assurance of Drugs and Punitive Action: This policy laid down by the Directorate of Quality Assurance (Stores) follows the same logic as the CGHS guidelines although the parameters for classifying defects are entirely different.
• The Indian Railways has its own Drug Procurement Policy, 2014. Unlike the MoD or the CGHS guidelines, the Railways doesn’t lay down a product specific blacklisting policy. The guidelines states that if there are adverse reports regarding the performance of a firm, the railways officers will inspect the facility and if the firm continues to fail to comply with orders of the Railway to improve quality it will be deregistered. What makes the Railways officials expert at detecting compliance problems at the manufacturer when they have no formal training in conducting such inspections is a question that is never asked. In practice however, from the blacklists provided to us by the Railways, it is quite clear that some zones like the Western Railways are actually following a product wise ban which is contrary to what is stated in the policy.

Apart from an urgent need to completely replace these blacklisting norms, another major reform required to the current process is to create a consolidated blacklist for all publicly funded entities. As noted in the CAG report, even within the Railways there is little sharing of information on NSQ suppliers.

Given the large amounts of money spent on public procurement of drugs, stronger quality controls norms will not only save public funds but also raise the costs for the inefficient firms who aren’t able to maintain quality. More importantly, they will close the loopholes that the drug companies use to exploit the system.

The best way to achieve the above objectives is for Parliament to enact a law dealing with public procurement of medicine. This was one of the prayers that I had sought in my PIL. Unfortunately, the Supreme Court thought that this was an academic issue.

One of the many problems with the pharma regulation debate in India is the tendency to focus more on “spurious drugs” rather than “sub-standard drugs”. Chances are, we hear more about “Spurious Drugs” when both practitioners (doctors) and patients talk about the quality of our drug supply. It is rare that we ever hear of substandard drugs. Why is that?

“Spurious drugs” which are the same as counterfeit drugs are manufactured with the sole intent of financial gain by passing of fakes as a legitimate product. On the other hand, substandard drugs are manufactured by legitimate manufacturers under their own name but without following good manufacturing practices. As a result, these products are either lower in potency compared to what they say on the label, or contain other substances which are harmful to the patients who take them. It is necessary to draw a distinction between these two because spurious drugs are a ‘law & order’ problem while substandard drugs are a regulatory problem. Contrary to the general belief, substandard drugs are a much bigger problem than spurious or counterfeit drugs in India. The figures below provide hard evidence of this trend:

Source: http://www.indiaspend.com/cover-story/1-in-7-indian-drugs-revealed-as-substandard-97614

There is a rather simple rationale for this trend. Since the intent behind counterfeiting is financial gain, it makes sense for the counterfeiters to go after high priced products. For example, it makes sense to produce a counterfeit Prada or Louis Vuitton handbags because of the brand equity (price) they command in the market. It makes no sense to counterfeit a no-name product, because the financial incentive simply doesn’t exist. In a country like India, where price-controls are the norm in the pharmaceutical industry; and even for those medicines that are not under the purview of government imposed price controls where the price-point is extremely competitive, does it really make sense for anyone to produce a counterfeit drug? The answer is evident in the chart above.

As you can see, we don’t really have a problem with Spurious Drugs; we do indeed have a problem with Substandard Drugs. The data we have collected through the RTI process tells us that while these numbers are severely under-reported, the trend holds. The prevalence of spurious drugs is infinitesimally small compared to the prevalence of substandard drugs. So why is it that the public debate in India focuses more on spurious drugs?

Our research indicates several reasons for this. One of the likely reasons for this confusion is that there is the generally poor level of awareness about drug regulation in India. There is little understanding about the difference between what is a spurious drug and what is substandard. If we expect grassroot level awareness about the problem with our drug supply, lets first make sure we get the nomenclature right. A less likely, but equally culpable reason is the confusing terminology intentionally used in the Drugs & Cosmetics Act, 1940 to deal with various categories of defective drugs. This is an issue which requires a more detailed explanation.

The various definitions in the Drugs & Cosmetics Act

The law currently contains four different categories of “offences” with respect to quality of a drug or its packaging: “misbranded drugs”, “spurious drugs”, “adulterated drugs” and drugs which fail to comply with “standards of quality” laid down in the Second Schedule to the Drugs & Cosmetics Act, 1940.

Broadly speaking, “misbranded” covers drugs which aren’t labelled as per the law or if the drug makes a false claim for any of its ingredients or if a drug is coloured or powdered to conceal damage and misrepresent its therapeutic value. “Spurious drugs” covers the offence of misrepresenting the manufacturer of the drug or misrepresenting the active ingredient of the drug itself. “Adulterated drugs” includes the addition of any substance that is filthy or putrid or reduces the quality or strength of the drug or if it is prepared and packed in insanitary conditions. Interestingly, “Sub-standard” is not defined in the Act; instead Section 18(a)(1) merely states that the manufacture of drugs which are not of standard quality is prohibited. So much for downplaying the real problem with our drug supply. Mind you, all of the above definitions have been simplified for the sake of this blog post since the actual definitions are a lot more complicated, confusing and overlapping. Various components of the definitions of “misbranded” and “adulterated”, are actually covered by the definition of “not of standard quality”. The graphic below depicts how poorly these categories are defined.

Source: http://icrier.org/pdf/Working_Paper_310.pdf

As if the confusion created by these arbitrary classification is not enough, there are the DCC guidelines discussed in an earlier post, which create artificial categories like “grossly sub-standard drugs” and drugs with “minor defects”. Does it come as a surprise to anyone that the most common parlance for public discussion therefore gravitates toward the terminology most “marketed” by the industry, namely Spurious drugs?

The multiple definitions of, what is essentially bad medicine, directly affects the legal and public debate because it creates confusion in the minds of policy-makers and journalists as to which type of offence covers what kind of defect in the drug. This is perhaps one of the reasons we see people in public office and media use spurious, adulterated, misbranded and not of standard quality in an interchangeable fashion.

The American approach to defining bad medicine

On the other hand, the United States for example has two simple categories: one is adulterated drugs and the other is misbranded drugs. Although the definitions are detailed, the simple categorisation helps to simplify the public debate since the media has to deal with only two simple categories.

An additional advantage of the American approach over the Indian approach is that it focuses even on manufacturing processes unlike the Indian definitions which focus only on the end product. Under American law, there is a presumption that if a drug fails to comply with good manufacturing practices (cGMP), the end product is adulterated. I reproduce the relevant portion of the definition:  “if it is a drug and the methods used in, or the facilities or controls used for, its manufacture, processing, packing, or holding do not conform to or are not operated or administered in conformity with current good manufacturing practice to assure that such drug meets the requirements of this chapter as to safety and has the identity and strength, and meets the quality and purity characteristics, which it purports or is represented to possess”

There is no such presumption in Indian law. Our approach to quality is focussed on evaluating the marketed drug against a set of standards established by the Indian Pharmacopoeia. No wonder that while the American and European drug inspectors repeatedly find and penalize questionable practices among the Indian manufacturers, the CDSCO’s track record is all but making empty threats.

This is one of the reasons why one of my PILs sought to clean the current slate so that we could begin by creating a modern framework for regulating drugs in India. Unfortunately, the Supreme Court thought this was an academic issue. The fact that such confusion affects law enforcement and public health of over a billion people who live in India is somehow lost in translation.

Among all the issues I have written over the last month since the Supreme Court refused to admit my petitions, there is no better than the issue than this one when it comes to how the current regulatory structure intentionally creates and encourages a market for substandard drugs in India. The incompetence of the regulator coupled with the collusion and influence of the powerful pharmaceutical lobby over policy making is so obvious in this case that it makes for a text-book case of how not write and enforce regulation for public health.

Over the last several years, there have been increasing concerns about the quality of medicines manufactured and exported from India to the rest of the world. Violations of compliance with Good Manufacturing Practices (cGMP) and Good Clinical Practices (cGCP) have been highlighted by regulators from the North America and Europe for product that is manufactured in India and exported to these continents. An equally important issue which has received almost no public attention is the fact that Indian law currently does not compulsorily mandate demonstration of therapeutic equivalence and stability for generic drugs sold in India. Although the absence of these regulations in Indian law does not affect regulated markets like the US and EU which impose strict quality standards for their drug supply, they do have a direct bearing on the health outcomes of patients in India and other third world countries which import drugs from India.

Before explaining the system of drug approvals in India, it is first necessary to understand the importance of bioequivalence and stability testing.

The Thalidomide tragedy in Europe in the 1960s was one of the defining moments of the modern pharmaceutical industry. The tragedy, led to the introduction of a legal framework which mandated rigorous clinical trials, wherein a new drug’s safety and efficacy had to be established in human patients before being approved for therapeutic use. Clinical trials mandated post the Thalidomide tragedy are expensive and risky affairs; expensive because they require sound statistical models for the number of patients and expected outcomes and risky because chemicals (and now biologicals) don’t necessarily behave the same way in human body as they do in the laboratory. Legislation like the Hatch-Waxman Act of 1984 created a new regulatory pathway which allowed generics (identical copies to the innovator product) to enter the market if the regulator was satisfied that the generic drug was bioequivalent to the innovator product. Unlike clinical trials which are conducted on a patient population, a bioequivalence (BE) study is carried out on healthy subjects and is therefore significantly cheaper and safer when compared to full scale clinical study. The science behind a bioequivalence study is relatively simple. All drugs have what is called the API, the active ingredient which cures the ailment along with other filler material called excipients. The way the API and excipients come together to form the dosage (e.g., a tablet, or capsule or a syrup or an injection) requires a special process, which is based on established science. Parameters like particle size, blend uniformity, tablet weight, breaking strength, density, flow property, punch penetration etc. all have a material impact on how fast the dosage dissolves (established by a dissolution test), absorbed into human body and becomes therapeutic. Conducting a BE study evaluates how a particular formulation behaves in the bloodstream of a human being when compared to the innovator drug it copies demonstrating whether the intended therapeutic effects can be reasonably guaranteed in human physiology.

If a generic drug fails a BE study, it means that it doesn’t behave in a manner similar to the innovator drug. This is not necessarily bad in itself. The innovator drug has very specific characteristics, called the Pharmacokinetic (PK) and Pharmacodynamic (PD) profile that shows how it behaves in the human body. If the generic formulation fails the BE study, it means that its method of action is different from that of the innovator drug it intends to copy. The science behind the innovator drug and its therapeutic effect is established by the innovator company through clinical trials. Therefore, if the generic drug behaves differently, it means that the regulator then has to evaluate whether the generic formulation has the same therapeutic effect, side effects and overall characteristics as the innovator drug does. This requires a clinical study. The route of approval for such a product is different and is not govered by the regulations that accord approval for generic drugs. If however, a BE study is not conducted, there is absolutely no way to verify the manufacturer’s claim that its drug works at all, let alone work as well as the innovator’s drug.

The generic pharmaceutical industry in India, in conjunction with Indian clinical research organisations (CROs) have a long history of manipulating bioequivalence studies required by the American and European regulators. The Ranbaxy scandal, which first came to light in 2003, exposed the scale of fabrication and manipulation of bioequivalence studies being conducted in India at Vimta Laboratories. Recent investigations by the French regulator ANSM at GVK Bio, the US FDA at Semler Research and the German Regulator BfArM at Alkem Laboratories have exposed how Indian CROs continue to manipulate bioequivalence studies for their clients – mostly the Indian pharmaceutical industry.

The problem in India today is that generic drug companies which enter the market after the expiry of the ‘new drug’ status (4 years after first approval is granted in India), are not required to conduct bioequivalence tests. Manufacturing licenses are given to these companies by State Regulators (SLAs) who are not required by the law to confirm that the product they approve in fact works as intended and offers any therapeutic benefit to patients. Lets reflect that for a second; what this means is that the so called medicine that is approved by the state regulators is no better than snake-oil.

This nonsense is based on a faulty reasoning that anyone can manufacture drugs, without a modicum of scientific knowledge, experience or process controls. How then does the regulator satisfy itself that the generic formulation is as good as the innovator drug? The answer is simply that our SLAs have absolutely no information on whether Indian generics drugs are even half as good as the innovator drug. In July 2013, an expert committee headed by Dr. Ranjit Roy Chaudhury which was constituted by the Government of India to formulate a new policy on drug approvals and clinical trials had recommended that BE studies be made compulsory for all generic drugs sold in India. This recommendation was placed before the 47^th Drugs Consultative Committee (DCC), a statutory committee consisting of representatives of all state drug controllers, the central government and the DCGI.

In this meeting, the DCC discussed the Expert Committee’s recommendation and rejected it on the grounds that India lacked the infrastructure to carry out such studies. The exact reasoning of the DCC is reproduced below:

“The recommendations of the Prof Ranjit Roy Chaudhury Committee in respect of Bioavailability or Bioequivalence (BA / BE) studies conducted in India were deliberated in detail. The members were of the view that BA / BE studies in respect of drugs manufactured in the country shall be insisted whenever there are issues relating to patient safety and variable bioavailability. As the infrastructure for conduct of such studies is not uniformly available in the country it cannot be implemented as a rule.”  

In the same breath however, the Committee recommended that BE studies be conducted for the purposes of export consignments if foreign countries so require such approvals. The hypocrisy of the DCC is absolutely stunning. It is well documented that there are a plethora of Clinical Research Organizations (CROs) in the country that conduct these BE studies for the same Indian manufacturers who intend to sell their product in the western markets. Their argument that the infrasture to conduct these studies is not uniformly available is ridiculous. Going by their reasoning, each state in the union ought to have its own manufacturing facility that serves that particular region. That is clearly not so; we know where most of our medicine manufacturing facilities are. They are in Himachal Pradesh, Andhra Pradesh, Uttarakhand, Maharastra and now in Sikkim. Why is it that we accept medicine made in a different state but will not accept a BE study conducted wherever the facilities are? So this line of reasoning is purely specious.

Why then are Indian citizens being subjected to medicines of questionable therapeutic value when compared to the drugs that are being exported to foreign countries, often manufactured by the same companies? Clearly, infrastructure exists to conduct BE studies for drugs made for export; the DCC recognizes that. This double standard, especially by a statutory body which is responsible for formulating regulations govering quality of medicine in India is criminal.

This is the reason why so many of our doctors switch medication so often. It is also the reason why they prescribe steriods along with the actual medicine because their faith in the medicine to work as intended is so low. Any honest Indian physician will tell you privately that not all generic drugs work as advertised; the only option for them is to switch brands and cross their fingers. This is the reality of healthcare in India and the consequence of a corrupt and incompetent regulator who is hand-and-glove with the industry whose powerful lobby dictates the terms of the healthcare policy for the country. And the Supreme Court thought that this was an academic issue.

The list of double standards between the drugs which are exported and those which are consumed by patients in India also extends to the issue of stability testing. The US & EU require rigorous stability studies to be conducted on any drug being sold in their markets. ‘Stability studies’ are required to ensure that drugs do not breakdown due to atmospheric conditions such as temperature and humidity during their storage and that the drug is stable till the claimed date of expiry on the label. These studies are conducted by placing a sample of the drug in a controlled environment such as a refrigerator and subjecting it to differing atmospheric conditions to test whether the drug decomposes. Parameters for stability testing differ amongst different countries depending on their climate. Globally, most regulators recognise four zones, depending on their climate. These are Zone I (Temperate), Zone II (subtropical, with possible humidity), Zone III (hot/dry) and Zone IV (hot/humid). India falls in Zone IV.

Stability testing is of paramount importance in a country like India because of our hot and sometimes humid climate which creates conditions conducive to their degradation. A drug which fails stability testing will not have the same effect on patient as a stable drug. In the worst case, the products of the drug’s degradation can lead to serious adverse effects. In either case, public health will be significantly compromised. The DCC, in a meeting in its 46^th meeting held in November, 2013 had concluded that the lack of mandatory stability testing for generics licensed by SLAs was a ‘serious lacuna’ in the law. The Committee had unanimously recommended that the Drugs & Cosmetics Rules, 1945 be amended to make stability testing mandatory for all generic drugs, not just those which are in the ‘new drug’ category. However the rules have not amended since; almost two and half years post the committee’s recommendation. One can only surmise why.

There are very few barriers to setting up a manufacturing facility to produce drugs for the Indian market today. You need to know no science, no understanding of human physiology, no appreciation for bioavailability and bioequivalnce and no commitment to patient safety. The decisions of the DCC clearly attest to this fact. Regulatory capture by the powerful industry lobby that intentionally frames regulations with loopholes is the reason why our drug supply has so many substandard drugs; and as a country, we have no systems and processes in place to understand the long term impact of this malfeasance on our citizens.

As the pharmacy of the developing world, lax Indian regulations affect not only Indian citizens but also the weak and diseased in the several countries across Asia, Latin America and Africa. In refusing to admit my PILs, the Supreme Court now has given the industry and the regulators a free hand to continue with business as usual.