Deregulation of the pharma industry in the time of scandals

Over the last decade, the industry has been plagued with two different type of scandals.
Deregulation of the pharma industry in the time of scandals
Deregulation of the pharma industry in the time of scandals
Written by:

By Dinesh Thakur and Prashant Reddy Thikkavarapu

Ever since the USFDA first announced the $500 million dollar fine against Ranbaxy Laboratories in 2013, there have been a raft of scandals involving the Indian pharmaceutical industry. All of the big names in the industry including Sun, Dr. Reddy’s, Wockhardt, GVK Bio, Alkem have come under scrutiny from foreign drug regulators. These investigations have resulted in a range of regulatory actions against Indian companies by foreign regulators. Instead of taking the cue from its foreign counterparts and increasing regulatory scrutiny, the Drug Controller General of India (DCGI) appears has been on a drive to reduce the regulation governing the Indian pharmaceutical industry in the name of ‘Make in India’.

In two public notices over the last month, the DCGI has announced its intention to extend the validity of licences granted to clinical research organisations (CROs) conducting bioequivalence and bioavailability studies and to licences granted for the manufacture, sale and distribution of drugs. In order to understand the implications of these regulatory announcements it is necessary to understand the problems with the Indian pharmaceutical industry.

Over the last decade, the industry has been plagued with two different type of scandals. The first type of these is related to data fabrication by CROs that conduct bioequivalence (BE) testing. These tests are required primarily by foreign regulators, prior to granting marketing approval, to manufacturers to sell new generic drugs into these market. Such testing is conducted by external CROs on 50-70 healthy subjects. The aim is to test whether the generic drug performs as well as the innovator drug. Indian CROs have been caught fabricating test results in several cases in the last decade. The genesis of the Ranbaxy scandal were the fabricated test reports at Vimta Laboratories caught by an inspection team of the World Health Organisation (WHO). Last year, the European Union suspended approval of over 700 drugs from multiple manufacturers who had their drugs tested at GVK Bio because of evidence of data fabrication. Last year also saw the WHO accuse Quest Life Sciences of data manipulation and fabrication while providing similar testing services. Earlier this year, the German regulator levelled similar allegations against Alkem Laboratories. In most cases, data is fabricated either because of pressure from the pharmaceutical company which wants to introduce its drug into the market as soon possible. In other cases, fabrication happens because of poorly trained or lazy staff. Indian drug regulatory officials like to characterise these scandals as “documentation problems”; but the real life consequences of such fraud are drugs which do not work as advertised. In the best case scenario, this means a patient may take longer to recover, in the worst case scenario it means a preventable death.

These CROs are supposed to be regulated in India, but neither Dr. G.N. Singh nor the state regulators have announced any action against any of these CROs despite foreign regulators providing sufficient evidence to warrant cancelling their licences and prosecuting the management of these companies under criminal law.

The second type of scandal involves pharmaceutical companies themselves indulging in fabrication of data during quality testing. Under Indian law, every batch of a drug is required to be tested before it is shipped to the market. If a batch fails such tests, it has to be withdrawn from the market. Foreign regulators have hard proof that in several cases, Indian pharmaceutical companies have fudged or deleted tests pertaining to batches which failed quality tests – in other words Indian pharmaceutical companies knowingly sold medicine which failed testing. This is a serious offence even under Indian law. Yet, neither the DCGI nor the state regulators took any action against these pharmaceutical companies. Even after Ranbaxy pled guilty to flagrant violations in the USA, there has been no action against the company in India.

Given the widespread culture of data fabrication and dishonesty that seems to permeate every pore of the Indian pharmaceutical industry, the drug regulator should be talking about tightening every screw in the regulatory mechanism. Yet Dr. G.N. Singh, the DCGI is speaking about easing the regulatory framework. In the two public notices referred to earlier in this piece, he has proposed that licences for manufacture, sale and distribution which are currently valid for 5 years, will now last until perpetuity and that there should be an assessment of compliance with the conditions of the licence only once in 10 years. This is not advisable for the simple reason that licence renewals offer regulators a stick to ensure compliance on part of an errant player. Technically, regulators can also suspend licences for violations but in India courts step in too often to stay such decisions. The courts however cannot step in and order a regulator to renew a licence. By doing away with licence renewals, the DCGI is weakening its own powers.

Similarly, another proposal is to increase the validity of licences for CROs conducting BE studies from the existing 1 year to 3 years. In other words, there will be fewer inspections and the industry can continue with business as usual. It is baffling to see the government reward an industry which has attracted so much bad press in the last decade by easing off on regulation. One wonders if there is anyone in the administration who speaks for public health in India?

Both public notices talk only of facilitating the ‘ease of business’ for the industry. There is no mention in either notice of balancing the ‘ease of business’ with the need to ensure public health through access to quality medicine.  If the DCGI is working under the impression that his job is to facilitate ‘ease of business’, it is perhaps time to retire him and find somebody who understands the real role of a national health regulator. 

Note: Views expressed are the personal opinions of the authors.


Related Stories

No stories found.
The News Minute