The Hindu published an opinion piece a few days back titled “Taking a myopic view of foreign made generic drugs” by Srividhya Raghavan, Professor of Law at Texas A&M University on July 9, 2019. Sadly, opinion pieces these days seem to go the same way as reported news is, void of any fact-checks and balance in views expressed.

Let me begin by highlighting “factual” mistakes in this piece. The author says “Much of the focus was on contamination found in one drug made by Ranbaxy”. This one sentence states three facts incorrectly.

A cursory review of the settlement agreement prior to authoring this piece would have revealed that the company pled guilty to knowingly introducing “adulterated” drugs (not contaminated drugs, a term which is used to obfuscate the issue) into US interstate commerce with an intent to defraud or mislead. Second the plea agreement lists the following drugs: Sotret, Gabapentin, Cefaclor, Cefadroxil, Amoxycillin & Amoxycillin and Potassium Clavunate. By my math, these are more than one drug. In fact, the US FDA had invoked its seldom used Application Integrity Policy to block the importation of as many as 30 drugs made by this company into the US. Third, the focus was not on something that was “found” in any drug made by Ranbaxy, it was on compliance with the US cGMP requirements for product quality. This is just one simple illustration of how statements not based on facts are used to advance a self-serving narrative.

Then there is the usual whataboutery to distract attention from the real issue. The author says “Ranbaxy saga unfolded 14 years ago” and that “strategy of raising fears of “contaminated” foreign generics has successfully prejudiced Americans against valid generic drugs”. One only need to look at the most recent US FDA annual report from the Office of Compliance to see that more than a third of the Warning Letters issued in FY 2018 for cGMP violations are for data integrity. One wonders how the author’s lack of support for Ranbaxy’s behavior comports with her views of the same exact behavior documented by many generic manufacturers who make their product overseas documented extensively by the US regulator last year? Last year was not 14 years ago. And is it fair to ask if finding carcinogens in your blood pressure medication that has been documented extensively now with generic Valsartan real? Or is this called fear-mongering? How about the Canadian Genric Drug Maker Apotex withdrawing 31 ANDA approvals from the US FDA because it couldn’t substantiate data (which was at the core of the case against Ranbaxy) filed from its facilities in Bangalore & Mumbai yesterday (July 10, 2019). Is that recent enough?

Drawing comparison to the abhorrent behavior at Turing Pharmaceuticals of raising prices to making substandard drugs and selling them to unsuspecting patients does a real disservice to any cogent argument that can be made in favor of using good quality generic drugs. She argues that somehow what the US FDA does with inspecting foreign facilities is an “over-reach” of its jurisdiction and that the observations made by the US FDA inspectors on Form 483 are against what she calls “American cGMP practices as the global standard”.

What she does not mention is that Section 708 of FDASIA explicitly confers this extra-territorial jurisdiction to the US FDA for enforcement. How’s that for a balanced view?

I wish the author would take a few minutes to review any of the inspection observations (Form 483) from any time she chooses and highlight one instance where an observations made by an inspector is not under a specific section of Code for Federal Regulations (CFR). This is absolute nonsense directed toward those who do not understand how the regulations work; and surely not expected from a legal professional.

The author further argues that “there is no scale to determine whether problems portrayed in the final report” and that “the absence of a proper scale provides a loophole, enabling the regulator to cherry-pick and treat all instances of non-compliance as egregious violations”. Again, a few cursory minutes spent on the Google machine would have explained in reasonable detail the difference between observations on Form 483, a Warning Letter, An Import Alert, an invocation of the Application Integrity Policy and a Consent Decree. This argument is specious at best and misleading at worst and tells you what the agenda behind the comment is.

Academics are expected to advance opinions based on facts and professors of law are expected to understand statutes before opining on their application. As demonstrated above, this opinion piece fails miserably on both counts.

A study, funded by US-Aid & run by the U.S. Pharmacopeia, was performed in Ghana on two life-saving medications used during labor — Oxytocin & Ergometrine. The results were both astonishing and scary.

Out of the 169 Oxytocin samples assayed, 55.62% failed. Of the 99 Ergometrine injection samples, 73.74% failed, and all of the 11 (100%) Ergometrine tablets tested failed assay.

The question is: How do the countries of origin (India and China) allow their Pharma companies to ship such poor quality medicines, especially those which have a life or death impact to countries in Africa? Who is accountable for this?

Original Report ➡️ Ghana Maternal Products Study

One of the most shocking discoveries during the course of my research into the Indian drug regulatory system over the last few years were the minutes of the 46^th meeting of the Drugs Consultative Committee (DCC) held in 2013, which has representation from all the state drug control administrations. These minutes revealed that stability testing was compulsory for only those classified as ‘patent and proprietary’ drugs. Stability testing according to the minutes of the committee was not mandatory for the generics approved by state licensing authorities. In pertinent part, the minutes noted the following:

“Since there is no requirement as a condition of license of proving that drugs are stable under recommended conditions of storage for other than Patent & Proprietary Medicine in Drugs & Cosmetics rules it can lead to unstable products being licensed in the country. As it is serious lacuna, it is very important to put it in rules.”

At the time I was shocked to read this because stability tests are mandatory across the world for all medicines whether generic or patented. The simple aim of a stability test is to ensure that medicine can retain its efficacy despite changing temperatures and pressure conditions. Some of this testing is done soon as the batch is manufactured while some of the testing is done after a few months on samples of the batch that have been retained. If a batch fails stability testing it has to be recalled and destroyed. Manufacturers obviously do not like to lose money like this but then again, they should perhaps invest in quality manufacturing.

Stability testing is especially important in a country like India with its hot and humid climate which can cause poorly manufactured medicine to break down chemically. There are simple techniques to test the stability of these drugs such as putting the medicine in a controlled temperature and pressure environment to examine its durability. Of course, these tests take up time and resources. During my time at Ranbaxy I had discovered that the company was regularly fudging stability data for the American market.

At the DCC meeting in 2013, the committee had made the following recommendation to the government to make stability testing mandatory for all generics:

“The members agreed that it is necessary that evidence and data of the stability of the drug products proposed to be manufactured by the licensee are required to be submitted to the regulatory authorities so as to ensure the stability of the drug formulations licenced in the country by the State Licensing Authorities. The DCC after deliberation agreed to the proposed amendments to the Drugs and Cosmetics Rules, 1945.”

As of 2016, when I filed a PIL before the Supreme Court, the recommendation of the DCC had not yet been enforced which is why I made it an issue in the PIL. After the Supreme Court’s reluctance to admit my PIL, I sent a report to the Health Ministry outlining several issues, including the need to make stability testing mandatory. On May 2, 2017 the Ministry of Health published draft rules for making stability testing compulsory for generic medicine. However, for some reason, the draft rules were never translated into law and a few months later, in August, the DCGI was sending plaintive letters to state drug controllers requesting them to “advise” manufacturers to submit stability data. At the time I co-wrote an op-ed in the Indian Express shaming the government for its failure to make stability testing mandatory despite a consensus that such testing was required. Finally, in April, 2018 the Ministry of Health made stability testing mandatory by amending the D&C Rules.

The battle however was only half won because the industry has been fighting back tooth and nail. On February 11, 2019 the business portal Pharmabiz reported that the pharmaceutical industry had sought the rollback of mandatory stability testing for generic medicines. The report quotes an industry official as saying the following:

“This is indeed a big challenge for existing as well as new manufacturers and becomes a hurdle for implementing the mission “Make in India” to invite new plant, will badly affect the export and unit in the pharmaceutical sector. Because due to this it shall take minimum 8 to 9 months to finish stability test and get product approval of molecules for commercial production for the new as well as existing manufacturing units, a delay which shall put a huge financial burden,” said Nipun Jain, chairman of SMPMA.”

This statement basically accepts that the Indian industry has been exporting pharmaceutical drugs to several jurisdictions (presumably countries with lax regulatory requirements, called ROW countries) without complying with the standards of mandatory testing. I am simply stunned at the callousness with which the Indian industry puts its own profits before the well being of its patients.

It gets worse. Last month, Pharmabiz reported that the drug manufacturers in Bihar approached the DCGI to complain against the state drug controller on account of its anti-industry policy. The main grouse against the Bihar drug controller was the fact that he sought to apply the mandatory stability testing requirement! The Pharmabiz article cites some outdated guidelines from 1988 without any reference to the amendment to the amendments in 2018 that made stability testing mandatory. The same article reveals an incredibly hostile attitude of the local manufacturers towards the regulator in Bihar and it is clear that the industry is trying to have him “administratively reassigned”.

In light of these news reports, I strongly suspect that the mandatory stability requirements are not being enforced by most the state drug controllers. A guidance document that was to be released to guide state drug controllers and industry on the parameters of stability testing is pending despite a committee being setup specifically for this task. The minutes of the DCC can be viewed here.

In this regard, I have written to the Health Secretary Ms. Preeti Sudan, requesting that she ask the DCGI to submit a report on the implementation of the mandatory stability testing by state authorities as well as urgently release the guidance document for public comment so that all stakeholders can contribute to defining the stability requirements for our drug supply. Given the pushback from the industry, I fear that the industry will attempt to hijack the process behind closed doors. Further, a guidance document on this issue would help state drug controllers in implementing the stability requirement with consistency across the country.

The letter to Secretary Sudan can be found here.

Author: Prashant Reddy Thikkavarapu, republished with the author’s permission from the original SpicyIP post

There has been panic and alarm amongst doctors, especially gynecologists, since the announcement by the Ministry of Health & Family Welfare (MOHFW) on June 27, 2018 that only one public sector undertaking, Karnataka Antibiotics & Pharmaceutical Ltd. (KAPL) would be authorized to manufacture and supply oxytocin for the Indian market from July 1, 2018. The drug oxytocin is considered a critical hormone for maternal health  since it is used to inducing labour and more importantly, to control bleeding during labour, which can otherwise be a cause of death amongst young women in India who tend to be anemic.

While several media reports reported the restricted manufacturing order as being announced only on June 27, the order restricting manufacture of oxytocin was issued on April 27, 2018. This strangely worded order, which was issued under Section 26A of the Drugs & Cosmetics Act, forbade the private sector from manufacturing this drug for the Indian market while still allowing them to manufacture for the purposes of exporting the hormone manufactured in India. Limiting the manufacture to only one public sector undertaking understandably caused panic amongst the medical community because the government was basically disrupting an entire market dominated by the private sector and its action could lead to potential shortages. Given that India has a population of 1.3 billion people, it is doubtful if just one company can meet the demand of the entire nation. It is perhaps for this reason that the government has extended the deadline to September 1.

The background of the events leading to this order is a perfect illustration of the quackery that passes off as health policy in this country.

The court of its own motion, the amicus & the absence of evidence

The government order dated April 27 begins with the observation that the High Court of Himachal Pradesh in the case of ‘Court on its motion v. State of Himachal Pradesh’, had observed that “there is large scale clandestine manufacture and sale of the drug Oxytocin leading to its grave misuse, which is harmful to animals and humans” and that it had ordered the government to consider the feasibility of restricting the manufacturing of Oxytocin to only the public sector.

A reading of the High Court’s order delivered by a bench of Chief Justice Mansoor Ahmad Mir & Justice Tarlok Singh Chauhan reveals that the judges took up this issue of alleged misuse of Oxytocin, on November 24, 2014 after they read a news item published in daily Hindi vernacular Amar Ujala alleging the “illegal use of lethal vaccine Oxytocin on fruits, vegetables and animals”. In reality, Oxytocin is not a vaccine but a hormone, naturally produced by the human body. The most common allegation, which has also been made in Parliament, by animal activists, like the incumbent Minister for Child Development Maneka Gandhi, is that Oxytocin is misused by dairy farmers to induce labour in cattle so as to force their bodies into producing milk.

As if often the case with such public interest litigations, the high court appointed a senior advocate as amicus curiae to assist the court. The court records that the amicus curiae had “painstakingly” placed on record material demonstrating the supposedly rampant and widespread misuse of Oxytocin on milch animals, fruits and vegetables which was harmful to not just the animal but also on humans who drank the milk of these animals. The judgment records the following as the possible effects of Oxytocin on the human body:

“The Oxytocin not only effects the cow/buffalo, it filters into the milk and consequently, has been held responsible for breast and uterine cancers, male impotence, excessive hair on woman and balding for men, early or erratic periods, early development of breasts (in both sexes). Its use is also considered harmful eyes, especially in children. The hormone affects the reproductive ability of woman. Its most common symptoms are exhaustion and loss of energy. Consumption of Oxytocin infected milk by pregnant woman increases risk of hemorrhage. It is also responsible for high spike in tuberculosis cases in humans. (e) Beef all over India has been found to be extremely toxic with large amount of this drug. (f) The direct infusion of this drug in vegetables, fruits and other consumables for humans is also widespread making such food items highly infected with Oxytocin.”

Astonishingly, the court does not cite a single scientific study or research paper to back its claims.

This is not insignificant because the central government in 2010 had commissioned the Indian Medical Research Council (ICMR) to address various health and safety issues related to Oxytocin. In one of the studies published in the Indian Journal of Medical Research, which is the official publication of the ICMR, a team of 5 scientists from the National Institute of Nutrition (a unit of ICMR) concluded that “These findings suggest that exogenous OT injections do not influence its content in milk. Further, OT present in milk is rapidly degraded during intestinal digestion, ruling out its intestinal absorption and associated adverse health consequences, if any.” In other words, there was no evidence that oxytocin administered on milch animals would have an adverse effect on the human body.

There is a second study, reportedly conducted by the National Dairy Research Institute (NDRI) in September, 2016 which reported that oxcytocin had no side-effects on the health of animals and milk because the hormone is a naturally occurring in milch animals and is similar to other hormones like insulin. The risk, as per the study, of continuously administering oxytocin is that the milch cattle develop an addiction and don’t respond to normal milk ejection stimuli. This second study has been cited by the incumbent Minister of Health J.P. Nadda in the Rajya Sabha on December 2, 2014 while responding to a question from Dr. Chandan Mitra asking the government whether it had studied the ill effects of Oxytocin on animals and human beings. The same study was cited once again by the incumbent Minister for Agriculture Radha Mohan Singh in response to a question in the Lok Sabha by Supriya Sule and Satav Rajeev on the effects of administering Oxytocin on animals. The amicus and by extension the High Court appear to have been entirely unaware of the above discussed studies because there is no mention of either study in the judgment.

The multiple regulatory deliberations on Oxytocin at the DCC

The two statutory bodies under the Drugs & Cosmetics Act are the Drugs Consultative Committee (DCC) and the Drugs Technical Advisory Board (DTAB). While the first is committee consisting of representatives of different state drug controllers with a mandate to ensure uniformity of regulations amongst the country, the second is an expert body consisting of regulators and independent experts with a mandate to provide technical advice to the Central Government i.e. the Ministry of Health & Family Welfare (MOHFW). Both bodies can only make recommendations to the MOHFW which then takes its own decision.

The issue of stricter regulation of Oxytocin was discussed at both the DCC and DTAB on multiple occasions, in response to petitions and questions in Parliament by Maneka Gandhi demanding action against the misuse of Oxytocin. The DCC discussed the issue on July 20, 2012 and November 12-13, 2013. The minutes of these meetings record mostly generic statements about the supposed misuse of Oxytocin and how it is pushed through clandestine operations – there is no mention of any statistics or verifiable source of information supporting its “widespread misuse”. The meeting in 2013, records that the issue was being taken up specifically because Maneka Gandhi had raised the issue of misuse of Oxytocin with the Secretary of Health. These two meetings of the DCC find mention in the High Court’s order. A third meeting not mentioned in the court’s order, took place on October 16, 2015 where Maneka Gandhi herself turned up before the DCC to share her views with the members. Going by the minutes, it does not appear that Maneka was even aiming for a ban of Oxytocin but better regulation of clandestine, illegal manufacture and sales.

The DTAB’s finding that Oxytocin & the Central Government’s orders

The DTAB first discussed this issue on November 25, 2013 because Maneka Gandhi had raised it in Parliament. Unlike the DCC meeting held just days earlier, the DTAB noted the fact that the Department of Animal Husbandry, Dairying and Fisheries, Ministry of Agriculture had not recommended the ban of the hormone for veterinary uses because it had therapeutic applications on animals. As a result, the DTAB declined to recommend a ban on the drug for veterinary uses. Instead it made generic recommendations to state drug controllers to curb misuse of the drug through increased surveillance and raids.

A few months after that meeting, on January 17, 2014 the central government issued an order under Section 26A of the Drugs & Cosmetic Act, 1940 ordering the formulations meant for veterinary uses to be sold to only veterinary hospitals while ordering bulk Oxytocin manufacturers to supply the active pharmaceutical drug only to licensed manufacturers. The opening line of this particular order noted that the central government “is satisfied that the drug Oxytocin has a definite therapeutic use in certain medical conditions”.

Three months after that order was issued, on April 1, 2014 the DTAB met to discuss just Oxytocin; there was no other item on the agenda. The minutes of the meeting record, with some exasperation, that notwithstanding the order issued on January 17, 2014 tightening the distribution channels of Oxytocin, “Smt. Maneka Sanjay Gandhi, M.P. has however, again written to the Secretary, Ministry of Health and Family Welfare that the misuse of Oxytocin, is leading to a substantial loss of livestock in the country.” The minutes also record that the “Secretary, Health and Family Welfare, had therefore, desired that the matter should be expeditiously placed before the DTAB for its considerations.” Despite the pressure from Maneka Gandhi, the DTAB, to its credit, reiterated its position that the hormone has a definite role in the medical field both for humans and animals thereby ruling out any ban on the legitimate manufacture of the drug especially when sale of the hormone was possible only under prescription. Regarding the problem with manufacture and sale of the drug through illegal channels the DTAB concluded that the problem of misuse could not be countered by banning the drug. The committee instead prescribed a public awareness strategy combined with new rules on maintaining records of sales of Oxytocin.

Six months after the DTAB meeting, once Maneka Gandhi was appointed the Minister for Child Development in the Modi cabinet, the then Drug Controller General of India (DCGI) G.N. Singh sent a circular to all state authorities, informing them that “Smt. Maneka Gandhi, Hon’ble Minister of Women & Child Development has taken up the matter with the Secretary, Ministry of Health & Family Welfare that the misuse of Oxytocin, is leading to a substantial loss of livestock in the country.” The circular then notes that an inter-ministerial committee was constituted by the MOHFW to study the problem and that the committee had recommended all state authorities to keep a strict eye on illegal use of Oxytocin and to investigate the sources of illegal supply. The circular also requests all state authorities to provide details of manufacturers of Oxytocin along with the statistical information on the seizures conducted, quantity seized, persons arrested, prosecutions filed during the previous three years. Finally, it appears, the central government was trying to collect information to figure out the scope of the allegations about Oxytocin misuse but the question is whether drug regulators were the appropriate authorities who could even collect such information.

State drug regulators can only regulate the quality and sale of the drug till the point of the sale (The Chemist). Thereafter, the manner in which a drug is misused by dairy farmers on milch cattle falls within the jurisdiction of authorities under The Prevention of Cruelty to Animals Act, 1960. It is only the Police Officers and other authorities under this legislation who can prosecute cases of misuse of Oxytocin in animals. Drug inspectors have no jurisdiction to prosecute cases of cruelty to animals. It follows therefore that they will not have any credible information on the scale of misuse of Oxytocin. Going by the figures presented in Parliament on March 20, 2018 by Krishna Raj, the Minister of State of Agriculture and Farmers Welfare (also responsible for Animal Husbandry) in response to a question by MP George Baker, there were less than handful of prosecutions related to misuse of Oxytocin. His response in Parliament listed 8 cases in Chhattisgarh related to seizure of Oxytocin injections, 1 case in Karnataka, 4 cases in Tamil Nadu and 7 cases in Uttar Pradesh. A different set of figures was put forth in Parliament on July 20, 2018 by the Minister of State for Health Ashwini Kumar Choubey who reported a total of 42 cases filed in the previous year by different state drug regulators and the central regulator. Most of these cases are likely for violation of the Drugs & Cosmetics Act rather than offences under the Prevention of Cruelty to Animals Act because as explained earlier, Drug Inspectors cannot prosecute cases of animal cruelty, they can only prosecute violations of the Drugs & Cosmetics Act. In the case of Oxytocin there are special rules requiring packaging of the hormone in a single blister pack which several manufacturers appear to be violating this rule attracting prosecutions from the regulators. In no event is this proof of misuse of the hormone on milch cattle.

In 2015, the DTAB took up the issue of Oxytocin twice, once at its 69^th meeting on April 22 and a second time at its 70^th meeting on August 18. The DTAB invited to these meetings, experts from the Indian Veterinary Research Institute (IVRI), ICAR – Ministry of Agriculture and the National Dairy Research Institute (NDRI). All the experts concurred that Oxytocin was required even for veterinary purposes and could not be banned. The problem identified by the experts was the unauthorised manufacture and sale of Oxytocin. The Joint Commissioner of FDA, Maharashtra stated in the 70^thmeeting that the Oxytocin manufactured by units licensed under the Drugs & Cosmetics Act was too expensive to be used by milkmen and that the problem was with raw material being smuggled across the border for crude manufacturing by unlicensed units. According to the Commissioner, it was this Oxytocin that was cheap enough to be used by dairy farmers. Both times, the DTAB agreed that the only response to the problem was increasing surveillance and educating diary farmers about the downsides of overusing Oxytocin.

The High Court and its judgment  

The High Court in its judgment dated March 15, 2016 takes note of only the DTAB meetings in 2013 and 2014, missing out the more detailed deliberations in 2015. The court then concludes, without citing any evidence whatsoever, “that inspite of various provisions of the Drugs and Cosmetics Act and other statutes in place, this Court cannot be oblivious to the fact that there is large scale manufacture and sale of drugs carried out in clandestine manner and that there is grave misuse of Oxytocin by farmers and dairy owners, which is the matter of great concern.”

The fact of the matter however is that not a single one of the meetings of the DCC or DTAB ever produced any particulars regarding the scope of the problem. It is thus baffling that the High Court concluded that the problem was so rampant. However, convinced as it was about the misuse of Oxytocin, the court decided that it must issue directions for both the state government and the central government. One of these directions that was made to the State of Himachal Pradesh (and not the Union of India) was “to consider the feasibility of restricting the manufacture of Oxytocin only in public sector companies and also restricting and limiting the manufacture of Oxytocin, by companies to whom licenses have already been granted.” For almost two years, the central government did nothing about a feasibility report and rightly so since the direction was aimed at the state government and not the central government.

The pressing question now is what has changed between the 70^th meeting of the DTAB held in August, 2015 and the order of the MOHFW on April 27, 2018 to force the MOHFW to restrict the manufacture of oxytocin to the extent that the domestic supply of this crucial hormone is restricted? The answer again, appears to be Maneka Gandhi.

Did Maneka propose restricting manufacture Oxytocin to only the public sector?

In June, 2017 several months before the government issued the order restricting manufacture of Oxytocin, the Hindu reported that the government was considering restricting the manufacture of the hormone by only public sector undertakings. The report attributes the idea for restricting the manufacture of the drug to Maneka Gandhi and even quotes her close associate Gauri Maulekhi backing the proposal. Maulekhi is perhaps better known for her role in forcing the government to introduce the highly controversial Prevention of Cruelty to Animals (Regulation of Livestock Market) Rules, 2017. Those rules which threatened to derail the entire cattle trade in the country, jeopardising the livelihoods of farmers, was the result of a PIL filed by Maulekhi before the Supreme Court in 2014.

The screws start tightening thanks to the Health Secretary

In March 30, 2017 just months before the report in the Hindu, the DCGI in a communication to state drug regulators, noted that the Secretary of Health had convened a meeting on March 14, 2017 to “take stock of situation relating to restrict and regulate manufacturing of Oxytocin and to permit its manufacturing in PSU in compliance to the judgment of the High Court of Himachal Pradesh”. It is not clear why the Secretary was under the impression that the High Court’s order was directed towards the central government when the recommendation to study the feasibility of restricting the manufacture to the PSU sector was directed at ‘respondent No.1’, the state government. Nevertheless, in September, 2017 the Ministry wrote to the DCGI instructing him to communicate to all state governments to take certain directions to comply with the terms of the High Court’s order. This included the constitution of special teams in each district to control the sale of Oxytocin, strictly enforcing licensing of manufacture of Oxytocin, publishing on the internet details of licences and monthly manufacturing of Oxytocin and finally steps to sensitise the public on misuse of Oxytocin. Restricting manufacture to the public sector was not yet on the agenda.

The DTAB met once again on February 12, 2018 and Oxytocin was yet again on the agenda. The minutes of the meeting record a terse recommendation to prohibit the import of Oxytocin and restricting the supply of Oxytocin to only registered hospitals and clinics in both the private and public sector. Unlike the minutes of the earlier meetings that recorded the views of different members the minutes of this meeting only stated the final conclusion without any reasoning. More importantly though, the DTAB never made a recommendation to the Ministry to restrict manufacture to only the public sector.

The meeting with the manufacturers of Oxytocin & the restrictions that followed

Four days after the DTAB’s meeting, the new DCGI Eswara Reddy issued a notice summoning all the manufacturers of Oxytocin on February 22, 2018 to discuss the issue of illegal manufacture and use of Oxytocin since there were reports that the hormone was being misused in India on milch cattle. There was no mention in the notice of any plan to restrict manufacture of the drug to only the public sector.

After meeting the manufacturers, the DCGI issued a public notice on February 28, 2018 regarding the alleged misused of Oxytocin. The notice invited public comments on a proposal to restrict the manufacture of Oxytocin to only KAPL and also clearly mentioned the High Court’s judgment as the inspiration behind the move. The notice also made it clear that the private sector could still manufacture but only for export and not the Indian market. The notice was entirely silent on the earlier DTAB meetings that discussed the issue threadbare.

While the minutes of the meeting with the manufacturers are not publicly available, it is known is that the government clearly stepped up efforts on the Oxytocin issue in the months that followed. The push appears to have come from the Prime Minister’s Office as reported by the Wire which conducted a high-level meeting. The source cited in the Wire’s report was a circular issued on April 6, 2018 by the Anti-Smuggling Unit of the Central Board of Excise and Customs (CBEC) informing its various departments that subsequent to a meeting held at the Prime Minister’s Office (PMO) it was decided that all the bonafide requirements of Oxytocin should be met by indigenous production and all imports should be banned. All units were thus alerted to the possibility of smuggling and were instructed to keep vigilant.

Thereafter on April 9, 2018 Dr. Eswara Reddy chaired a meeting of the DCC consisting of all state drug regulators, where they were informed that amongst other measures DTAB at its meeting on February 12, 2018 had recommended restricting manufacture of Oxytocin only to public sector units. This was blatantly false because DTAB never made such a recommendation in its February meeting.

The orders under Section 10A & 26A

In April, the Ministry of Health issued two orders related to Oxytocin. The first was issued on April 24, 2018 under Section 10A of the Drugs and Cosmetics Act, 1940 prohibiting the import of Oxytocin into India, with immediate effect, on the grounds that the central government was “satisfied that the use of the drug Oxytocin and its formulation in any name or manner is likely to involve certain risk to human beings and animals and that it is necessary and expedient to prohibit the import of the said drugs in the public interest.” This was a grossly incorrect statement because government ministers in Parliament as well as the DTAB have time and again, reiterated that Oxytocin was of vital importance for both humans and animal. In fact, in its earlier Section 26A order issued in January, 2014 the MOHFW had categorically expressed its satisfaction that Oxytocin had a definite therapeutic use in certain medical conditions. What changed this conclusion?

The reason the MOHFW had to blatantly lie in this manner was because Section 10A of the Drugs & Cosmetics Act allows the government to prohibit import only if it is satisfied that the use of a drug is likely to involve any risk to human beings or if it lacks therapeutic value or lack therapeutic justification.

The second order was issued by the MOHFW on the April 27, 2018 under Section 26A of the same legislation and was to come into effect from July 1, 2018 (which date has been pushed to September 1, 2018). Unlike, the import ban order, the order under Section 26A was justified on the grounds that the High Court of HP had “observed” that “large scale clandestine manufacture and sale of Oxytocin was leading to its grave misuse, which is harmful to animals and humans”. This possibility of misuse is quite different from classifying the drug itself as a risk to animals and humans, as was the language used in the order under Section 10A.

Citing the High Court’s recommendation to study the feasibility of restricting Oxytocin to public sector units, as well as the DTAB recommendation to regulate the manufacture of the hormone, the order of the MOHFW imposes a number of conditions on the sale of Oxytocin, the most important of which was the decision to restrict manufacture for the domestic market to only the public sector, while allowing the private sector to continue manufacturing for exports. The order is entirely silent on how these supplies from the private sector would be barred from entering the domestic trade channels. In addition to restricting sales to the public sector, the order by the Ministry also disrupts the entire distribution market by mandating the sale of Oxytocin by the public sector directly to registered hospitals in the public or private sector or to specified government programs. The sale through chemists was completely prohibited. This means that regular trade channels are completely disrupted leading to severe market inefficiencies that will likely cause the price of the drug to spike once the ban is actually enforced.

The orders for a crackdown

Following this comical process, in the month of May 2018, in preparation for the clampdown on Oxytocin, the DCGI issued an office memorandum informing his staff that the issue of misuse of Oxytocin had been discussed at the “highest levels of the government” before the orders were issued under Section 10A and Section 26A and that all officers of the Central Drug Standards Control Organisation (CDSCO) would have to launch special operations to prevent and detect illegal manufacturing, sale and distribution of Oxytocin with the cooperation of the police, if necessary. The circular ended with the direction that the matter was to be given the “top priority”. Sure enough, in the following months the CDSCO announced large seizures in Bihar, while the police in Hyderabad and Punjab also announced large seizures. While the seizure in Bihar was allegedly due to violation of packaging norms, the seizures in Hyderabad and Punjab appear to be blatantly illegal because neither police force has the power to seize those drugs from distributors unless they had proof that the drug was being illegally administered to milch cattle in a way that violated the Prevention of Cruelty to Animal Act, 1960.

Why did no one in the pharmaceutical industry challenge the order in April itself?

What is more intriguing about this entire episode is the fact that nobody in the pharmaceutical industry challenged the Ministry’s orders until July 31, 2018 when it was reported that Mylan challenged the legality of the order, although even that is not visible on the Delhi High Court’s website.

The chronology of the events documented in this bizarre episode raise some very basic questions which need some deliberation:

1. The competency of the legal justice system to adjudicate issues that are deeply embedded in Science. Did the amicus accurately represent the facts and did the Bench understood the issues?
2. The disproportionate influence that well-meaning activists have on policy making. Whether the actions of the Ministry led by the Minister Menaka Gandhi were driven by a specific agenda is anyone’s guess.
3. The role of the regulator and the regulatory process once again in using scientific evidence to implement policy is once again highlighted in this episode. Political pressure notwithstanding, the role of the regulator is to speak for public health.

The larger question to ask at this stage, is who in the private sector is going to profit from the government’s extremely arbitrary actions and whether this regulatory action was a charade?

The Economic Times reported today of my petition to the Prime Minister to hold the Ministry of Health and Family Welfare to account for all the promises it made to the Parliament of India over several years regarding its opaque and unscientific decisions regarding several drugs that continue to be on the market today. A copy of the petition is here.

I was asked why I decided to petition the Prime Minister now, almost after two years since the highest court in the land refused to listen to plea calling it academic. For the sake of context, I am reproducing my responses to the questions I was asked below:

Our primary responsibility in holding the elected and bureaucracy accountable is to demand that the promises made to us are fulfilled. More often than not, these promises are conveniently swept under the rug, and we go on with business as usual. Unless we learn from history, and find out what was done wrong, how do we expect those who govern to correct the processes and do the right thing going forward?

According to a recent report in the Mint, the Drugs Technical Advisory Board (DTAB), a statutory authority under the Drugs and Cosmetics Act, 1940 was to meet this week to deliberate amongst other things, the possibility of a ban on a drug called Buclizine. This drug, which was initially introduced in India by a Belgian company called UCB Pharma, was then sold to an Indian company named Mankind Pharma.

Buclizine is the most potent reminder of the absolute lack of accountability at the Ministry of Health. Originally approved as an antihistamine (treating motion sickness and allergies), the government in 2006 mysteriously approved the drug for an additional indication – as an ‘appetite stimulant’ for children. In order to approve the drug for an additional indication, the drug regulator is required to review data from additional clinical trials to establish the efficacy of the drug for the new indication. Except, the allegation against Buclizine has been that there were never any clinical trials or studies to establish the drug’s efficacy as an appetite stimulant. Apparently, even Belgium, the country of origin of this drug, has not approved Buclizine as an appetite stimulant. In other countries like the US, the drug has been entirely discontinued for all indications.

The controversy surrounding Buclizine’s approval in India as an appetite stimulant is no secret. Some vocal sections of the medical community have been voicing their criticism against the use of the drug as an appetite stimulant since 2011. Then in 2012, the Parliamentary Standing Committee on Health & Family Welfare, in its 59^th report, slammed the regulator for approving the drug. The committee reviewed the status of this drug in other countries, the lack of clinical trials needed to demonstrate safety and efficacy and demanded an inquiry into how an approval was granted; it also recommended punishment for those who approved the drug. The committee concluded with the following recommendation to the government:

“The Committee is of the view that responsibility needs to be fixed for unlawfully approving Buclizine, a drug of hardly any consequence to public health in India, more so since it is being administered to babies/children. At the same time the approval granted should be reviewed in the light of latest scientific evidence, regulatory status in developed countries, particularly in Belgium, the country of its origin.”

The government promised an inquiry, which never took place even though in 2013 the Standing Committee “took serious umbrage” in its 66^th report to the Ministry’s dilatory tactics.

Finally, in 2016, almost 4 years after the Standing Committee red-flagged the approval, an expert committee called the SEC met on February 19, 2016 and held deliberations over the use of Buclizine as an appetite stimulant. Since the company marketing the drug was unable to present any clinical data to justify the use of the drug as an appetite stimulant, the committee recommended that the drug be discontinued as a therapy for this indication. A few months later, the DTAB met on June 27, 2016 and after considering the SEC’s report “endorsed the proposal for prohibiting the manufacture, sale and distribution of Buclizine for the indication “as appetite stimulant”. DTAB also set up another expert committee to examine the continued use of Buclizine for other indications.

These recommendations from the SEC and DTAB were more than sufficient for the Ministry of Health to issue an order under Section 26A of the Drugs & Cosmetics Act, 1940 prohibiting the use of the drug as an appetite stimulant. Yet, no such order was passed by the Ministry of Health.

Now in 2018, we are back to square one with the DTAB reportedly meeting once again to deliberate the issue of Buclizine. In the meantime, the company selling Buclizine has claimed a turnover of Rs. 14 crores from this product, selling 42 lakh tablets every year to unsuspecting patients.

If you think that courts will hold the government accountable, think again. I tried filing a PIL before the Supreme Court in 2016 raising a number of issues including the approval granted to Buclizine. I was told by the court that I was raising academic issues after which my lawyers withdrew the petition.

The case of Buclizine is open and shut – if there is no clinical data demonstrating the efficacy of the drug as an appetite stimulant, the drug should never have been approved in the first place. The fact that the drug continues to be available on the Indian market 6 years after a bipartisan Parliamentary Standing Committee rapped the Ministry on its knuckles is a sign of a deep-rooted rot in the Ministry of Health. Merely changing secretaries in the Ministry will not cure this rot. Repealing and replacing the Drugs & Cosmetics Act, 1940 to put in place a more transparent and accountable mechanism is the only solution.

The following piece was published in the Indian Express (although abridged) on March 13, 2018

A common theme among the pundits these days on Television and in Newspaper articles is whether the country ought to privatize its banking system and that the government should get out of running public sector banks. The multi-billion fraud that allegedly has been committed on taxpayers by unscrupulous businessmen is nothing new. We have seen scams of this nature in the past; and you can be rest assured, there will be novel and more innovative techniques that enterprising thieves will employ to be beat the system in the future. No system is failsafe, especially now, with the pervasive nature of technology that affects even the smallest aspect of life.

Sadly, as usual, we seem to focus on the symptoms of the problem rather than its root cause. Whenever these incidents come to light, our first reaction, rightfully is to try and fix the problem. Unfortunately, instead of taking a systematic approach to triage the problem, understand its root-cause and implement fundamental changes, we get carried away by perfunctory cosmetic changes evangelized by the same people under whose nose the fraud occurred.

I speak from personal experience of having lived through this rigmarole for eight long years and in the process, learning a few things. Fraud of this scale is never the work of a few. In my case, selling medicines to treat HIV-AIDS which were nothing but chalk powder and worse to countries in Africa was not just the remit of a few mid-level managers. Everyone up and down the food-chain knew and consented to this sickening fraud. Even in a society such as ours, where hero-worship is the norm and investment in building sustaining institutions is the exception, no one person, or a small group could have pulled this off by themselves.

Which bring us to the current banking scandal.

Does anyone honestly believe that the managers of these public sector banks did not know that their core-banking system was not integrated with SWIFT? No one knew that the multiple approvals needed to execute a SWIFT transaction were all done by ONE person or a very small group of individuals? Are we to believe, as Debashis Basu points out, that three levels of audit, concurrent, internal & statutory, not to speak of the RBI oversight all conveniently did not notice these shenanigans over many years? Are we to believe that the six senior secretaries, two additional secretaries, two economic advisors and the deputy director general were all asleep at the Department of Financial Services? If you believe that, I have a bridge here to sell you.

We need to step back and ask ourselves a question: How do we build institutions that are independent of powerful people, vested business interests or political influence? Is getting the Parliament to enact a new law, like the Fugitive Economic Offenders Bill a panacea? Not likely. Every new law, however sound, in the end will be at the beck-and-call of the regulators and the administration. Remember, banking is the most regulated business in India. We have regulators on top of regulators; how well has that served us? All we do is to swap out who “the powerful” are. Instead of politically well-connected bankers, we will have well-connected bureaucrats. How does that prevent fraud?

We have to first accept that no system or process, however sound, will protect us from ill-meaning scoundrels. Crooks are always two steps ahead of the law. In order to understand their motives, we need to understand what incentivizes their behavior.

Effective governance to prevent fraudulent behavior is contingent on three key factors. Integrity of the people responsible for governance; effectiveness of the law and its implementation and, an independent check to keep the first two accountable.

The first of these three is straightforward. Until such time that we allow retiring bureaucrats plum positions on the Boards of these organizations and not hold those who currently staff such august bodies to account when public resources are pilfered from right under their noses, this will not change. Whether we have the political will to make this happen is anyone’s guess.

A tough and unforgiving rule of law implemented by a competent and proactive legal justice system is a good deterrent. But this is India. In a country like ours, where the legal-justice system seldom dispenses justice in a timely manner, to say nothing of the investigative agencies responsible for prosecution and their allegiance to political masters, putting all our eggs in this basket seems unwise.

The third, a more effective way is to incentivize integrity. Level the playing field. For every crook out there, there are ten honest people. Yes, there are those who will want to ride the gravy train and sell their soul for a shiny shilling. But in every organization, there are those whose conscience pricks at them when they see the public taken for a ride. The sad part is that more often than not, these people buy peace for their family and career by moving on or looking the other way without taking action. Why do they do this? Simple: our legal-justice system does not afford protection to those who speak the truth; it only punishes them – never rewards them. Those few brave who muster courage to stand-up for what is right are marked with a scarlet letter or worse, end up like Manjunath Shanmugham or Sateyndra Dubey. Notable others include Sanjiv Chaturvedi, Ashok Khemka, Rajan Nair, Satish Shetty, Narendra Kumar, Lalit Mehta…the list goes on.

Let me remind you, we had a part time finance minister for almost a year in the tenure of the current administration. Speaks to our priorities when it comes to safeguarding the public banking system, doesn’t it? Hindsight is 20/20, but how many of us raised this division of responsibility as a fundamental risk to the oversight of public resources? Only when the horses have bolted do we want to put a padlock on the stable door. Now imagine if insiders within the banking system raised this as a potential risk in a timely manner. Would we have been this indifferent?

What is the solution?

How about incentivizing whistleblowers with irrefutable evidence and well-developed legal cases to speak up in the interest of the society at large? What about incentivizing integrity?

We know this works and it has been done to great success in the United States. Under the modern American False Claims Act, whistleblower award programs protect those who choose to stand up for the truth, and they reward those who bring successful actions out of the proceeds of the victory. “Whistleblowers only get paid if they win, and they only get a small fraction of the sums recovered” by the government.

This law has been so effective that in the health care arena, the U.S. Government recovers $20 for every $1 spent investigating whistleblower complaints.

If we accept that our institutions are fragile, that our culture worships heroes rather than invest in building sustainable institutions and that our legal justice system has a long way to go, warts and all; then deterrence is only a partial threat to potential wrongdoing; one that can be bargained for the right price. Incentivizing integrity is the another tool we have to counter this abhorrent behavior.

Countries such as Australia and Italy are looking to model their own fraud fighting laws upon this 30-year old American law.

Sadly, our own Whistleblower’s Protection Act, passed by Parliament in 2014 is languishing; with the government showing no intention of promulgating rules to operationalize it. In fact, even before implementing the law, blatant attempts are being been made to water down its provisions through an amendment bill currently in the Rajya Sabha. Although narrower in scope than the U.S. law, proper implementation of the Whistleblower Protection Act and an inclusion of private right of action within the current law would be a giant step for India in fighting fraud. One does hope that the legal-justice system will address its own deficiencies and we wont see another display of public anguish from those who are tasked with dispensing justice in a timely manner.

The only question then is whether the current attention being paid to banking fraud is enough to tip India into the ranks of those moving to incentivize integrity and protecting whistleblowers?

It appears that the Ministry of Health has put a kibosh on the much-discussed mandatory generic prescription plan after all. Newspaper reports say that they have advised the Prime Minister’s office of a potential scarcity of “quality” medicines should the administration proceed with their plans. The report further says that the Ministry anticipates if “unbranded generics” were procured exclusively by Jan Aushadi stores, in about two years time, we may make a dent in addressing the underlying problem.

This admission by the MoH begs several questions. First, how could the PMO let the Prime Minister make such a public proclamation of a potential scheme without basic understanding of the dynamics that affect the current situation? Doesnt this volte-face damage the PM’s credibility? What lessons does the PMO derive from this fiasco?

Second, in recommending that the supply-chain for Jan Aushadi stores be exclusively “unbranded generics” while at the same time, acknowledging that our supply chain largely consists  of therapeutically unproven and and potentially unsafe medicines, what does the MoH’s recommendation do to Public Health? Are they saying that somehow unbranded generics will all be of good quality and proven therapeutic efficacy in two years? Where is the plan to make that happen?

We can continue to distract the attention of our citizens with phrases like “doctor-big pharma nexus” and “big pharma-chemist nexus”, both of which have some truth to them; but unless we are ready to address the underlying problem, I am willing to bet that even after five years we will still be talking of these same issues.

The underlying problem we refuse to acknowledge is that we do not have a regulatory framework and robust institutions to ensure good quality, affordable medicines in our country. And until that changes, we will continue to debate and argue about these peripheral issues; and nothing will change. Let me illustrate it with a few examples.

Despite the mis-directed rhetoric about “fake-news” and “witch-hunt” in the context of Russian meddling in the US elections last year; no reasonable person, I mean no one (well, other than extreme partisans) questions the ability of the FBI and Special Counsel Robert Muller to get to the bottom of this issue. Have you asked yourself why? Because, successive US administrations across political parties over years have built the institution of the Federal Bureau of Investigation and its reputation as an independent investigative agency. Everyone knows that the FBI will do its job and the guilty will be brought to justice. It is never seen as a “caged-parrot” and that is why, even the most ardent supporters of the current US President cannot take potshots at the agency. Now, ask yourself do you have similar confidence in our institutions? Especially the CDSCO and the MoH? How well has political patronage served us as a nation?

Second, the US FDA has a new Commissioner, someone who has significant ties to the industry and has been a prominent member of a right-wing think tank. After his confirmation, his public actions have been toward addressing the same issues we are dealing with here in India, including access and affordability. If you look at his blog and the actions he has taken in the last two months, they are all based on factual data, like encouraging more competition by making public a list of drugs that have a single manufacturer to reduce drug-shortages.  Scott Gottlieb demonstrates exceptional leadership through his actions and his understanding of the industry guided by the principle of protecting Public Health of the citizens of the US. When was the last time you saw such leadership at the MoH and the CDSCO? And why should we accept any less?

If we are serious about providing affordable, good quality medicines to our citizens, lets us learn from what others are doing that is actually making a difference, not by announcing ill-conceived schemes. Get the right leadership at the MoH and the CDSCO. Overhaul the Drugs and Cosmetics Act and enforce the law of the land and hold manufacturers who make substandard medicine accountable. These are concrete actions that the PMO can take today, without any harebrained schemes.  The million dollar question is, will it?

When the story about Ranbaxy pleading guilty to seven counts of criminal felony broke in May 2013, the standard response across the Indian pharma industry and the Indian drug regulator CDSCO was that there was nothing wrong with products manufactured by Indian companies and somehow the US regulator was out to get Indian industry because it was under the influence of large Pharma and therefore acting maliciously.  Events of the last four years, which have included detailed Warning Letters documenting outright fraud and Import Alerts have categorically shown what the reality is when it comes to compliance with good manufacturing standards in the Indian pharmaceutical industry when supplying to the US market. Faced with real evidence of actual behavior within the industry when it comes to compliance, the industry seems to have finally accepted the truth. Finally, earlier this year, the Industry Lobby in India, the Indian Pharmaceutical Alliance (IPA) acknowledged that 85% of the drug supply in India has no data supporting therapeutic efficacy. So much for the “foreign-hand conspiracy” theory!

A second, more insidious reason, now being propagated by the Indian pharmaceutical industry is that the US regulator is somehow capricious; that its standards for compliance are evolving when it comes to how the US regulator assesses compliance for Indian manufacturing facilities. The underlying insinuation is that somehow the goal posts are being moved, thereby intentionally making it hard for the industry to comply. Nothing can be farther from the truth.

It is true that standards do evolve over time, but the process of adopting new standards is very detailed, thorough and transparent. Unlike in India, in the US, new proposed standards get a lot of attention in trade publications and discussions at meetings such as PDA and ISPE. Take the case of Quality Metrics for Manufacturing. It has been over two and half years of discussions with the industry to get a final draft of the proposed metrics.  The argument advanced by the Indian industry is that somehow the standards to which the industry is held change overnight, or every few months making them hard to comply and therefore be cited for lack of compliance.

The question therefore is, why do those representing industry indulge in such false propaganda? It seems to me that there is a disconnect between what the Indian pharmaceutical industry sees in inspections from what they are designed to do.

An “audit” or an “inspection” is NEVER intended to identify all the deficiencies at any manufacturing location. If you read the standard text in all Warning Letters, it includes the following: ‘Deviations cited in this letter are not intended as an all-inclusive list. You are responsible for investigating these deviations, for determining the causes, for preventing their recurrence, and for preventing other deviations.’

Inspections are a snapshot in time, and it is unreasonable to expect that even the most experienced inspectors can identify ALL deficiencies in one or two at the site. On a Pre-Approval Inspection (PAI), the investigators generally look to see that the facility and the batch records are consistent with the NDA/BLA/ANDA submission, and that the laboratory data (particularly lot release and stability) are traceable to raw data. On a routine, periodic cGMP inspection, they have more leeway, the scope is broader and inspectors generally look for areas where other inspections have identified common problems. An example is “test” or “sample” injections in chromatography weren’t even on the inspection radar a decade or so ago; they are now a standard inspection item because they have become more knowledgeable and sophisticated in detecting fraud and many have been trained in forensic procedures recently. If the inspection is “for-cause”, it’s a whole different ball-game. These type of inspections are triggered by a specific concern, and therefore are more focussed on specific aspects of the manufacturing process.

Pre-inspection audits are routinely used by pharmaceutical companies to get an “independent-assessment” of their processes and systems. Many a time, such audits identify areas of concern which are flagged to the management’s attention. What becomes of such notifications is largely driven by the prevailing culture within the company. As the saying goes, “you can fool some people most of the time …”

So, now, let us understand what makes the industry say that the goal-posts are being moved? Indian pharma industry has always seen inspections as the qualifying gate, an event at a point in time, that gives us the ticket to sell our product in the US market. The entire focus is on “passing the inspection”, not necessarily making a quality product.  A cursory Google of news about the industry will throw up umpteen articles focussing on the number of observations on Form 483, or whether an EIR has been issued; keep looking for articles that talk about “continuous improvement”, CAPA and Statistical Quality Control within these companies. Yes, you will find them, but they will be few and far between.

Gone are the days when the US FDA gave the industry a month’s notice to “prepare” for the inspection; the days when someone from the company tagged along with the inspectors because they did not know the local language, and because the facilities were located in remote areas. These factors gave the company’s ability to “control” what they wanted the inspectors to “see”. Plus, the fact that these were overseas trips for the inspectors from the US, in a new country and the inspectors were afflicted with common travel phenomenon “jet-lag” all played into the ability of the company to “direct” the inspection. Post Ranbaxy, the game has changed. The US FDA has permanent inspectorate staff stationed in its office in India. The sooner the Indian pharma industry understands this, the better.

The fact that inspectors have now gotten smarter, come prepared with knowledge and forensic training in detecting fraud appears to the honchos at these companies as “moving the goal post”.  Just because during the last visit, inspectors did not look in the trash-bin where the shredded raw data was discarded or at the entry log which showed that people who signed off on the cleaning validation never actually present on that day the document was signed doesn’t mean that this time they wont. Requirements for “Data Integrity” were always in the “Predicate-Rules” of Code of Federal Regulations, it’s just that the inspection team last time did not pay attention to these fraudulent behavior because they assumed the integrity of scientific process, something which is taken for granted across the world. Now they know better. The investigation led by Office of Criminal Investigations (OCI) at the US FDA as a part of the investigation into Ranbaxy’s fraudulent practices educated the inspectorate on the “reality” of how inspections are managed by the Indian pharma industry.

We are so focussed on managing the inspection to ensure a “successful” outcome that we have lost sight of what the inspection is intended to do in the first place. Ask those who are responsible for these inspections and how large a bonus is tied to their objective of successfully “passing” a US FDA inspection. This is the reason why, even after three and sometimes four years from the time were first inspected, some of these companies continue to face punitive regulatory actions even today. And this, is what is meant by the industry when they claim that the US FDA is changing regulations and that is the reason why the Indian industry fails to comply.

A significant contributor to the industry’s nonchalant attitude toward inspections is the dysfunction at our own regulator, the CDSCO. If our regulator had its act together, and played a constructive role in ensuring the industry was held to proper standards to begin with, pharma companies would have never gotten away with doing the kind of things that we find in almost all the warning letters issued. Lab supervisors would have never “encouraged” scientists to “test-samples-into-compliance”, destroy raw data if the results did not match their expectations, make-up Certificates of Analysis or run a second set of samples to produce “desirable” results.  These were acceptable actions during most CDSCO inspections. Inspections from CDSCO were more about “managing” the inspector than ensuring compliance with Schedule M. More importantly, the same Lab Managers and Directors would have stood-up to the C-Suite and told them that handling the workload with half the staff isn’t possible; you cannot extract blood from a stone. Sadly, it was much easier to buy our way out of inspections conducted by our local regulator and that became the norm. Because we have had  an incompetent and corrupt regulator for decades as the Parliamentary Standing Committee Report says, this behavior has become so ingrained in our industry. Decades of this behavior manifests itself in how we view inspections, a ticket to making money by selling our product, whatever its quality may be.

So the next time you hear someone in the industry talk about moving goal-posts as the reason why they are cited for compliance failure, ask them some pointed questions. Ask them to show you the specific regulation in the CFR which has changed without public comment. Ask them when it was changed and more importantly, what it is that they did before the change that they claim was made.

Ideas and concepts expressed in this blog were the result of a discussion with Barbara Unger, who consults in the area of cGMP and Regulatory compliance. I wish to thank her for her insights.

It has been widely reported that an RSS Affiliate (Swadeshi Jagran Manch) has taken issue with the recommendation of the Niti Ayog to delink the Drug Price Control Order (DPCO) from the National List of Essential Medicines (NLEM).

In order to understand if this recommendation makes sense, we need to first understand why a NLEM and a DPCO exist in the first place.

The reason for a NLEM is simple. The World Health Organization (WHO) defines an Essential Medical List as “Essential medicines are intended to be available within the context of functioning health systems at all times in adequate amounts, in the appropriate dosage forms, with assured quality, and at a price the individual and the community can afford.” It further says “National lists of essential medicines usually relate closely to national guidelines for clinical health care practice which are used for the training and supervision of health workers.”

Therefore, clearly, a functioning healthcare system in a country like ours needs to ensure some medicines, which our medical community considers as essential should be available at all times. It is important to note that this is not a static list; depending upon the need of the hour, this list changes. For example, when the avian-flu epidemic hit, Oseltamivir (Tamiflu) was added to this list because of its public-health impact, until we got a handle on that disease.

Now let us understand why we need price controls. In functioning markets, where the consumer demand drives price, controls are redundant. However, as I have argued in the past, healthcare is not a perfect market. The consumer (patient) is often ill-informed about the choices she is prescribed and therefore, regulation is needed to protect the consumer. The question here is whether we apply control across the board or use it as a selective tool to ensure there is no price gouging.

We have used the DPCO as a broad corrective measure to counter inefficiencies in our healthcare system. In an ideal situation, all things being equal (especially the quality of our drug supply), and external influence is minimized (over-the-top promotional practices), natural market forces should drive the price to the point of affordability. Price of medicine will reach some sort of an equilibrium assuming there are more than a few manufacturers who supply the product to the market. Historically, this doesn’t happen because the system is opaque and often skewed. Therefore, the knee-jerk reaction is to impose external controls, which are often counter-productive to achieve the goal of affordability.

Our country needs a viable and thriving pharmaceutical industry; and external controls typically do not foster its health. We need our industry to manufacture good quality product, which works as specified and provides therapeutic benefit. The industry has to make a profit and create value for its shareholders. An across-the-board implementation of price controls is counter-productive to this goal.

The problems that challenge affordability are somewhere else. They are in our regulatory framework, our ability to enforce the law as it is written today and our dysfunctional institutions which are responsible for the implementation of our healthcare policy.

Price controls are necessary when there is no competition. If a particular manufacturer has monopoly on a life saving product, price-caps are justified. But using this method when there are a myriad of manufacturers who are expected to make the same product and compete on price is not good for our healthcare system. Clearly, not all things are equal when it comes to medicines in India. There are grades of quality, and I have adequately written about this earlier. We need to fix that and allow the market to determine who survives and who doesn’t.

In markets for essential medicines, competition will ensure low prices; but we have to accept that prices may be higher than the capped price, because caps, set too low compromise the ability of legitimate manufacturers to make a good quality product. Going back to the WHO definition of EML, a key criteria, good quality, is compromised if the price cap is set too low. For example, in 2011, prior to the introduction of the National Pharmaceutical Pricing Policy, 27 of the 74 drugs under price control were discontinued by the industry because it was unprofitable for them to make. As recently as 2013, wholesalers and retailers temporarily stopped buying stocks of essential medicines with unviable margins leading to a shortage of medicines in the market. How does this help us protect public health?

The larger issue that needs addressing is strengthening our institutions and making governance transparent and accountable. It has been reported that the administration is considering consolidating bureaucracy across multiple ministries to simplify implementation of policy objectives. There is absolutely no reason why Ministry of Commerce and Industry, Ministry of Health & Family Welfare and Ministry of Chemicals & Fertilizers all have to have a say. Improving standards of governance and accountability requires qualified administrators; especially people who have background and experience in public health be hired, empowered and made accountable to the citizens of this country. And finally, bringing our outdated healthcare law on par with globally accepted standards for quality should be a key objective.

DPCO is a tool that we need to use sparingly, not broadly. There are good reasons where price caps make sense, but using is across the board is not helpful. We need to enable market forces to function, and use the regulatory and the legal justice system to hold people who distort the market dynamics publicly accountable. Using it to cover up dysfunction and inefficiencies in our systems is not a sound solution. Price caps are not appropriate for medicines on the EML; we should enable the market to drive affordability. Specialty medicines with monopoly producers is where price caps are most effective, or at least a threat of a negotiated price so that gouging does not occur.

The recommendations of the Niti Ayog seem to be in the right direction for the country. Delinking the EML from DPCO makes sense; price caps may be warranted in certain cases and an EML is required, but competition will ensure low enough prices and hopefully of good quality if we get fix our systems and get our institutions working properly. Let us not make the same mistake we made before; take knee-jerk actions to address a short-term problem and compromise what we need for the country in the long term.