For over four decades, the Indian pharmaceutical industry has played a critical role in making life-saving drugs accessible to the poorest of the poor, not only in the developing and the least-developed, but also in the developed world. Every time it has faced any serious crisis, the entire world has prayed for and worked towards lending it a helping hand. However, lately, it is going through its worst slowdown. What factors have caused this? Are they the same structural factors that had almost derailed the sector a decade back? Or is it something of its own doing? More importantly, are these impediments reversible?
Neha Dewan & Shakti Shankar Patra | July 2015 Issue | The Dollar Business
It was March, 2005. The eyes of the entire world were on the Indian Parliament. Not because of the madhouse that it frequently becomes, but because it was debating a piece of legislation, which had the potential to make or mar millions of lives around the world. The legislation – amendments to India’s The Patents Act, 1970, to make it TRIPS (The Agreement on Trade-Related Aspects of Intellectual Property Rights) compliant – had become necessary because three months ago (December 2004), the government had hurriedly brought in an ordinance to meet WTO’s January 1, 2005, deadline. Now, it was time to discuss, debate and bring-in the final law, particularly since the ordinance was to lapse on the 31st of March, 2005.
The messiah
The stakes were high. Just imagine this. Few days before the ordinance was promulgated, Dr. Jim Yong Kim, Director, Department of HIV/AIDS, WHO, had written a letter to India’s Minister of Health and Family Welfare Dr. Ambumani Ramadoss. Among other things, the letter read, “As India is the leader in the global supply of affordable antiretroviral drugs and other essential medicines, we hope that the Indian government will take the necessary steps to continue to account for the needs of the poorest nations that urgently need access to antiretrovirals (ARVs), without adopting unnecessary restrictions that are not required under the TRIPS Agreement and that would impede access to medicines.”
Similarly, about a month before the Parliament was to debate the legislation, Achmat Dangor, Director of Advocacy, Communication and Leadership, UNAIDS, had written a letter to India’s Minister of Commerce and Industry Kamal Nath. A part of the letter read thus: “Affordable HIV medications from India have so far saved thousands of lives, yet more than 8,000 people around the world continue to die every day because they have no access to treatment. Despite concerted efforts across the world, only about one in ten people in urgent need of HIV antiretroviral treatment in low and middle-income countries has access to existing medicines. Current legislative proposals intended to take the 1970 Indian Patents Act beyond the commitments agreed in the World Trade Organisation’s Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) threaten to undermine India’s leadership in providing affordable medicines.” What were these TRIPS proposals that the entire world wanted India not to adhere to? And why was India such a big cog in the wheel?
In 2005, Dr. Jim Yong Kim, the then Director of Department of HIV/AIDS, WHO, had urged India to keep the interests of HIV affected patients in mind while amending its patent law
Main cog
Until joining the WTO, one of the main features of India’s patent law was the non-recognition of product patents. In other words, Indian law allowed others to produce something that you had invented as long as they were not using the process that you had used to produce it. For example, if you had invented a new drug to cure a certain type of cancer, the Indian government would have protected your rights on how you produced it. But it wouldn’t have stopped someone else from manufacturing the same drug by a different process. This had allowed Indian pharmaceutical companies to reverse-engineer newly invented drugs in the developed world and manufacture them without spending a penny on R&D. While some claimed this feature of the Indian law was against the interests of researchers and innovators, others believed that it had been a lifeline for millions of people, not only in India but around the world, who would have otherwise never been able to afford new life-saving drugs.
India joining the WTO and agreeing to the TRIPS Agreement, however, was to end this forever. For, TRIPS mandated not only the recognition of process but also product patents and, hence, was a death-knell for Indian pharmaceutical companies’ reverse engineering capabilities. That is why people like Dr. Kim and Dangor were urging Indian lawmakers to utilise all possible flexibilities in the TRIPS Agreement to curb the scope of patent protection in the country.
On an average, Indian pharmaceutical companies spend 10 percentage points (as a percentage of sales) less on R&D as compared to MNCs
The lifeline
After frantic debates and arguments, the Indian Parliament passed the bill to amend The Patents Act, 1970, on March 23, 2005, to make it WTO-compliant, but made enough provisions to limit the scope of patent protection in the country. So, while on one hand, the amended law now defines an invention as, in Section 2 (j), “a new product or process involving an inventive step and capable of industrial application”, thereby recognising product patents, on the other hand, it limits their scope by defining ‘inventive step’ as, in Section 2 (ja), “a feature of an invention that involves technical advance as compared to the existing knowledge or having economic significance or both and that makes the invention not obvious to a person skilled in the art”.
Similarly, to clip the wings of product patentees, the law, under ‘what are not inventions’ reads, in Section 3 (d), “the mere discovery of a new form of a known substance, which does not result in the enhancement of the known efficacy of that substance, or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus, unless such known process results in a new product or employs at least one new reactant.”
USFDA regularly inspects drug manufacturing plants in India to ensure their adherence to safety standards laid down by it
Litmus test
The amendments to The Patents Act, 1970, while making India WTO-compliant by recognising product patents, also kept the window for reverse-engineering open, thereby making all stakeholders reasonably happy. But it was about to go through a much sterner test. On May 17, 2005, US awarded a patent on the beta crystalline form of imatinib mesylate to Swiss MNC giant Novartis AG. By then, the composition – a game changer for chronic myeloid leukaemia patients – was already being marketed by Novartis under the brand name Gleevec. A few months after Novartis had launched Gleevec, Hyderabad-based Natco Pharma had launched a generic version of it under the brand name Veenat. Armed with a US patent and amended patent laws in India, Novartis dragged Natco to the judiciary for patent violation.
After a long-drawn out seven-year battle, the Supreme Court of India, on April 1, 2013, citing the above mentioned provisions of the amended The Patents Act, 1970, dismissed Novartis’ patent claim on imatinib. “In view of the findings that the patent product, the beta crystalline form of imatinib mesylate, fails in both the tests of invention and patentability as provided under clauses (j), (ja) of section 2 (1) and section 3 (d) respectively, the appeals filed by Novartis AG fail and are dismissed with cost,” the Supreme Court verdict reads. While always anticipated to be ruled against it, thanks to a similar verdict by Madras High Court earlier, the rejection of Novartis’ claims on imatinib can be termed as a massive victory for those of the view that excessive patent protection leads to monopolies, many times, at the cost of the larger good of the society.
The imatinib case is considered to be a landmark, not only because it virtually made the point clear that India will not protect patents at the cost of patients, but also because it prolonged the lives of millions of leukaemia patients around the world. “When we take the case of imatinib mesylate, the original drug’s cost was out of bounds for the middle class. It ranged around Rs.2-3 lakh for a month’s dose, but after Natco Pharma brought in the generic version of it, the same drug’s cost was cut down to Rs.8,000-10,000, thus succeeding in increasing the accessibility of the drug for most people,” answers Dr. Hari Menon, Professor, Medical Oncology, Tata Memorial Centre. The obvious question that then comes to mind is, "Can something so much cheaper be equally good?"
Responding to our question on whether generic drugs are in any way inferior to branded drugs, Dr. Menon says, “We cannot say generics are inferior, but yes, we face problems with certain generic drugs, particularly when compared with branded drugs. When we prescribe a generic drug, we basically prefer companies, which have a good track record. Producing a drug first involves research, then the process of analysing the salt, and then testing them. Unfortunately, nowadays, we don’t do this. Studies that have been done on a few generic drugs are very disturbing. The only way to ensure proper drugs is to have strict regulations.” And this ‘regulation’ that Dr. Menon refers to is what the pharmaceutical industry is all about, other than patent laws of course.
As good as they come
While ideally, the market for pharmaceutical drugs should just be a function of population, even in their case, economics has the upper hand. Hence, despite accounting for less than 5% of the global population, US is, by far, the biggest market for pharmaceutical drugs. In fact, despite being home to some of the top pharmaceutical companies, US is also the biggest drug importer in the world. Given this fact, its regulator – US Food and Drug Administration (USFDA) – wields enormous clout in the pharmaceutical world, since not a single drug can be marketed in US without its seal of approval. Is this clout the reason for a lot of friction between it and Indian drug manufacturers and exporters? Trying to remove such misconceptions, Howard Sklamberg, Deputy Commissioner for Global Regulatory Operations and Policy, USFDA, says, “The FDA does not treat manufacturing plants in India any different than those in US or in other countries. The agency’s mission is to protect public health, and this requires holding all firms to the same high standards.” 
Explaining his point further, Sklamberg says that through a variety of methods, including scientific reviews, inspections of facilities and post-market surveillance, FDA strives to ensure that regulated product manufacturers, wherever they may be located, comply with standards and regulations for their products provided to US consumers. And that FDA seeks to ensure that Indian manufacturing facilities exporting pharmaceutical products to US understand the risks associated with their product’s processes and ensure they remain compliant to FDA’s regulations. Understandably, USFDA officials are of the view that Indian drug manufacturers are as good as those from any other country when it comes to complying with the agency and meeting its set parameters and regulations. “The problems encountered by FDA investigators in India are similar to those seen around the world in manufacturing,” he tells The Dollar Business.
Similarly, USFDA’s counterpart in European Union – European Medicines Agency (EMA) – also thinks that Indian pharmaceutical companies’ adherence to standards, regulations and guidelines laid down by it is at par with the best in the world. “EU authorities carry out about 150 inspections every year in India of both active pharmaceutical ingredient (API) and finished product manufacturing sites. To date, only small percentages of these sites are found to be non-compliant with EU Good Manufacturing Practice (GMP). This rate is consistent with rates found for total GMP inspections carried out every year,” experts at EMA tell The Dollar Business.
The Thin line
According to USFDA, “A generic drug is identical or bioequivalent to a brand name drug in dosage form, safety, strength, route of administration, quality, performance characteristics and intended use. Although generic drugs are chemically identical to their branded counterparts, they are typically sold at substantial discounts from the branded price.” Similarly, the World Health Organisation (WHO) defines a generic drug as “a pharmaceutical product, usually intended to be interchangeable with an innovator product that is manufactured without a licence from the innovator company and marketed after the expiry date of the patent or other exclusive rights.” In simpler words, a drug is called a generic drug if it has been manufactured by an entity other than the holder of its patent, but only after the patent has expired. And since the new entity manufactures it via reverse-engineering, without spending anything on R&D, it (the new entity) is able to sell it at just a fraction of the original drug. And herein lies a big conundrum. 
If companies don’t spend on R&D and invent new drugs, mankind will inevitably lose the fight against diseases. But if the patient is forced to bear even the R&D spend on a drug, as is the case with branded drugs, most of them, at least in the developing and least-developed world will, anyway, not be able to afford it. In fact, as discussed above, generic drugs manufactured by Indian pharmaceutical companies have long been the only ray of hope for millions of patients worldwide.
Validating this further, a senior official with the Office of the US Global AIDS Coordinator and Health Diplomacy, says, “Indian manufacturers are a major source of antiretroviral drug (used for treatment against HIV) procurement for The United States President’s Emergency Plan for AIDS Relief (PEPFAR) based on cost and quality.” When asked what PEPFAR thinks about the quality of ARVs it procures from Indian manufacturers, the official says, “No product failures have been reported in the past nine years. The willingness of Indian pharmaceuticals to seek and obtain USFDA approval or tentative approval for generic ARVs has been essential to PEPFAR’s ability to procure generic ARVs, provide treatment to many while ensuring that patients receive high quality ARVs.” But while these statements can be music to the ears of those backing generics, research and innovation cannot be written off altogether, can they? S. V. Veerramani, President, Indian Drug Manufacturers’ Association (IDMA), has clear views on the issue. “A branded drug or patented drug is the result of research and innovation and a generic drug is only a continuance of the same at a lower price. Hence, encouragement should always be given to branded or patented drugs to foster research and innovation. While a generic drug can be useful for the present, a patented drug is important for the future,” he tells The Dollar Business. So, do Indian pharmaceutical companies spend enough on R&D? Of course not!
European Medicines Agency claims that it has found only a small percentage of manufacturing units in India non-compliant to its GMP
Copy cats
A detailed The Dollar Business Intelligence Unit study reveals that on an average, Indian pharmaceutical companies spend 10 percentage points less on R&D than their global peers. For example, while the World No.1 in terms of revenue – Novartis AG – spent 17.1% of its sales on R&D in FY2014, India’s top pharmaceutical company by sales – Sun Pharmaceuticals – spent just 6.3% of its sales on R&D in FY2014. What’s worse? Even these small amounts that Indian pharmaceutical companies are spending on R&D are mostly aimed towards discovering new processes to manufacture generics, rather than discovering/inventing new products. “Our R&D is not very strong, neither is it fast growing, particularly in the drug discovery sector. But R&D is happening and is very much in place in the areas of formulation development and new dosage forms and process development for a known active pharmaceuticals ingredient (API),” Dr. P. V. Appaji, Director General, Pharmaceuticals Export Promotion Council of India (Pharmexcil), tells The Dollar Business, confirming what many speculate. Even Dr. Menon is not happy with the state of affairs. “The evolution of the Indian pharmaceutical industry has more been on the lines of generic drugs. It needs to pump more money into R&D, so that new drugs can be manufactured,” he tells The Dollar Business.
While recognising product patents, Indian law has enough provisions to discourage excessive patent protection. These made the SC rule against Novartis' claim on imatinib
Vainglorious?
Despite repeated criticism for not investing enough in R&D, the success of the Indian pharmaceutical industry is stunning. For example, the senior official with the Office of the US Global AIDS Coordinator and Health Diplomacy, says, “Since 2011, Indian pharmaceuticals have represented over 90% of all antiretrovirals (ARVs) procured by PEPFAR.” Similarly, Sklamberg says, “Generic drugs now account for 80% of US prescriptions, and India is the second-largest exporter of drugs to US.” But the best appreciation of the Indian pharmaceutical industry comes from Dr. Arun Bhadra Thapa, Acting WHO Representative to India. “More than 65-70% of medicines in the WHO Prequalified List of Medicinal Products belong to Indian manufacturers in the segments of HIV/AIDS, Tuberculosis, Malaria and Reproductive Health. India is also a major vaccine producer and has 18 major vaccine manufacturing facilities. These vaccines are supplied to the national and international markets (150 countries), which make India a major vaccine supplier across the globe. For example, more than 70% of all measles vaccines used globally are produced in India. Recently, 100% of meningitis conjugate meningococcal vaccine produced in India has been successfully introduced and used in the West African meningitis belt, which has prevented major meningitis epidemics in the sub-Saharan Africa,” Dr. Thapa tells The Dollar Business.
Not a birth right
If everything is so hunky-dory about the Indian pharmaceutical industry, why haven't export volumes grown gloriously in recent years? Why was the volume of medicines exported from India in FY2015 16.4% lower than that in FY2012? The answer to these questions is simple – competition. The generic drugs market is getting commoditised. Since it isn’t based on innovation and R&D, the entry barriers are pretty low. In fact, increasing competition and making generic drugs as cheap as possible seems to be one of the main goals of policymakers. “The most effective way to continue to keep prescription drugs affordable for patients is to increase competition. Millions of patients and the entire healthcare system would benefit from streamlining and expediting the approval process so that more generics can reach the market sooner,” Ralph Neas, President & CEO, Generic Pharmaceutical Association (GPhA), USA’s leading trade association of manufacturers and distributors of generic drugs, tells The Dollar Business. But where is this competition coming from?
The answer to this question is simple. The increased competition for Indian pharmaceutical companies is coming from two stalwarts in manufacturing – China and Mexico. Validating this, Dr. Appaji says, “Active Pharmaceutical Ingredient [API] is the major segment in which China is a competitor to India. It is becoming a competitor even in formulations. Even countries like Bangladesh, Vietnam and Ukraine are becoming competitors.” An analysis by The Dollar Business Intelligence Unit reveals that in the last four years, China and Mexico have overtaken India when it comes to export volume growth of pharmaceutical drugs (corresponding to base 1 in CY2005). And this makes absolute sense, given that generics is getting commoditised and is today mostly a function of manufacturing capabilities. Hence, if Indian pharmaceutical companies want to maintain their leadership role when it comes to generics, they have to reinvent themselves. But how?
Let’s again take the case of India’s top pharmaceutical company by sales – Sun Pharmaceuticals. In FY2014, on a consolidated revenue of Rs.16,080.4 crore, it had an EBITDA of Rs.7,703.9 crore, or 46.3%, and a net profit of Rs.3,141.5, or 19.5%. On the other hand, when it comes to the world’s top pharmaceutical company by sales – Novartis – in FY2014, on a consolidated sales of $58 billion, it had an operating income of $10.7 billion, or 18.5%, and a net profit of 15.8%. Why should a company, which spent 17.1% of its sales on R&D last year (Novartis), profit so much lower than a company that spent just 6.3% of its sales on R&D (Sun Pharmaceuticals)? The answer is, it shouldn’t. Assuming Sun Pharmaceuticals is a proxy for the Indian pharmaceutical industry (in FY2014, it had earned 95% of its revenue from generics – 60% from US generics, 23% from Indian branded generics and 12% from international generics), it’s pretty clear where the problem is. Indian pharmaceutical companies can’t expect to remain as profitable as they have been. They should just thank their stars for earning 138.4% more dollars for exporting 9.6% less volume of drugs between FY2010 and FY2015 [see chart titled: India's medicament mixtures (in dosage) exports]. Such pricing power can’t stay with them forever. Hence, in order to remain competitive in the international market and resume export volume growth, Indian pharmaceutical companies have to cut down prices and learn to operate at lower margins. That in FY2015, Sun Pharmaceuticals EBITDA margins collapsed over 10% and net margins almost halved as compared to that in FY2014, proves that Indian companies are starting to wake up to the new reality.
Even the little money Indian pharamaceutical companies spend on R&D is intended more towards process, rather than product development
Wake up call
The Indian pharmaceutical industry has a simple choice to make if it wants to get out of the current slowdown. Either it has to spend on R&D and develop new drugs, thereby reducing its overdependence on generics, or, what is more probable, it has to cut down on margins and concentrate on volume. Reminding how important the next 2-3 years is for the industry, Minister of Health and Family Welfare J. P. Nadda, while speaking at a FICCI event recently, said, “The window period of 2015-18 is very critical when the patent tenure of many biopharmaceuticals and innovative molecules will expire.” On the other hand, speaking at the same event, Dr. Jyotsna Suri, President, FICCI, said the sector is under pressure, both in terms of pricing and margins, and hence, needs government support. “The sector looks to the government for support,” she said. But should it?
Government of India provides lucrative incentives to pharmaceutical drug exporters – 3% under MEIS and over 2% duty drawback. Thanks to such government support, India’s 2nd largest pharmaceutical company by market capitalisation – Lupin – had earned Rs.119.9 crore from export incentives in FY2014, which represented 5.2% of its standalone profit of Rs.2,397.4 crore. [Sun Pharmaceuticals doesn’t reveal the amount it earns from export incentives]. But as they say, the more the merrier. Seconding Dr. Suri’s plea for more government support, IDMA’s Veerramani says, “The export incentive of 3% under MEIS is not adequate. If given the right encouragement, exports can grow many times over.”
It’s actually puzzling that an industry, which earns a lion’s share of its revenue from overseas markets, wants more government support! It’s also unfortunate that an industry, which has always been protected by the legislature and the judiciary because of the social role it plays, seems to be forgetting the society itself. It seems the massive amounts of profit Indian pharmaceutical companies are earning is making them want only more. But if it does some introspection and earnestly tries to ascertain the reasons for the slowdown it is facing, it can easily turn a corner. For, all it needs to do is remember the face of those poor patients, who had ensured it was always protected, and ask itself a simple question – is it doing enough to make life-saving drugs available to the poorest of the poor?
A famous French historian and philosopher once said, "Men who are occupied in the restoration of health to other men, by the joint exertion of skill and humanity, are above all the great of the earth. They even partake of divinity, since to preserve and renew is almost as noble as to create." Voltaire, as he is known, was probably referring to the clan of doctors. We can say much the same about drug-makers, can't we? Someone (knowing India, ideally someone "popular") needs to drop reminder letters at the doors of Indian drug giants, we reckon.
“70% of all measles vaccines used globally are produced in India” – Dr. Arun Bhadra Thapa, Acting World Health Organisation (WHO) Representative to India
Dr. Arun Bhadra Thapa, Acting World Health Organisation (WHO) Representative to India
TDB: What’s World Health Organisation's (WHO) take on the role Indian pharmaceutical companies have played in making life saving drugs accessible to even the most underprivileged?
Dr. Arun Bhadra Thapa (ABT): The Indian pharmaceutical industry has been playing a pivotal role in the supply of affordable and quality pharmaceuticals to the developed and developing countries. India is emerging as a world leader in generic pharmaceuticals production, supplying 20% of the global market for generic medicines. The industry accounts for 8% of global production and is exporting to over 200 countries. Indian manufacturers are also key contributors to the WHO Prequalification Programme (PQP), which ensures the safety and efficacy of medicines by setting standards for generic medicines. More than 65-70% of medicines in the WHO Prequalified List of Medicinal Products belong to Indian manufacturers in the segments of HIV/AIDS, Tuberculosis, Malaria and Reproductive Health. India is also a major vaccine producer and has 18 major vaccine manufacturing facilities. These vaccines are supplied to the national and international markets (150 countries), which make India a major vaccine supplier across the globe. For example, more than 70% of all measles vaccines used globally are produced in India. Recently, 100% of meningitis conjugate meningococcal vaccine produced in India had been successfully introduced and used in the West African meningitis belt and had prevented major meningitis epidemics in the sub-Saharan African countries.
TDB: Does WHO think Indian pharmaceutical industry broadly adheres to good manufacturing practices (GMPs) led down by it? Why hasn’t WHO been fully successful in bringing the entire world under the umbrella of common GMPs and other such standards?
ABT: Good manufacturing practice (GMP) is a system for ensuring that products are consistently produced and controlled according to quality standards. It is designed to minimise the risks involved in any pharmaceutical production that cannot be eliminated through testing the final product. There must be systems to provide documented proof that correct procedures are consistently followed at each step in the manufacturing process, every time a product is made. WHO has established detailed guidelines for good manufacturing practice for pharmaceutical products and biologicals. There are more vaccines and medicines produced by India, which are on the list of WHO prequalified medicinal products, than from any other country. Standard procedures are applied in a consistent fashion for assessment and reassessment of the acceptability of vaccines for supply through UN agencies. WHO-PQP continuously monitors manufacturers’ participating in WHO medicines prequalification scheme. When issues of concern are observed, notices are issued to the company and published on the WHO-PQP website. Additionally, measures to verify data integrity have been strengthened to enhance detection of any fraudulent data used in support of an application for WHO product prequalification. One of the requirements to become eligible and retain the prequalification status is to have a National Regulatory Authority (NRA) assessed as functional against the WHO published NRA indicators. The National Medicines Regulatory system of India was declared ‘functional’ against WHO NRA indicators for the vaccine area, including regulatory inspections and GMP compliance in 2009 and 2012. The last assessment indicated that the Indian regulatory system that oversees vaccines has continued to raise its performance gradually and had met all critical indicators for vaccine prequalification in several functions. So far, the progress documented by WHO in the area of vaccine regulation has been impressive and the system now meets the standards of the WHO NRA published indicators on functional regulatory system for vaccines. Government of India has contributed substantial national resources to strengthen the NRA, guided by a roadmap – Institutional Development Plan – produced with support from WHO, which include regulatory inspections and GMP strengthening. Many countries have formulated their own requirements for GMP based on WHO GMP. Others have harmonised their requirements. During recent years, a number of changes have been made to the ways in which regulators work. National Regulatory Authorities now work and cooperate much more closely, and have undertaken several international initiatives and pilots to improve data and intelligence sharing, and improved cooperation when responding to quality concerns about pharmaceutical products.
TDB: What’s WHO’s general view on generics? Does it consider them a necessary evil?
ABT: In recent years, the concept of Universal Health Coverage (UHC) is being widely discussed all over the world as a key objective countries should pursue for the well-being of their populations. In order to facilitate progress towards UHC and achievement of the health-related Millennium Development Goals, WHO’s overall strategy is to improve access to essential medicines as one of the prerequisites on that way and it is based on the principles of evidence-based selection of a limited range of medicines, efficient procurement and distribution systems, affordable prices and the rational use of medicines. WHO not only supports generic products, but rather promotes them, whether through different mechanisms, such as guidelines for conducting bioequivalence studies or through the WHO Prequalification Programme. Generic products serve public health in multiple ways – they are considerably less expensive than originator products, and competition among generic manufacturers reduces prices even further. A range of policy options is available to promote the use of generics, including fostering and developing generic medicine policies and advocacy for their dissemination and use. India has multiple examples on how addressing the issue of access to generic medicines improved utilisation of government health services and ensured some turnaround in financial risk protection of its population.
“Natco pharma's generic version made Imatinib mesylate affordable” - Dr. Hari Menon, Professor, Medical oncology, Tata Memorial centre, Mumbai
Dr. Hari Menon, Professor, Medical oncology, Tata Memorial centre, Mumbai
TDB: Give us a sense of how much more generic drugs have made life-saving medical treatment accessible to the middle and lower-middle class in India.
Dr. Hari Menon (HM): The evolution of generics have made a lot of drugs accessible to middle-class Indians. Their availability has profoundly increased and people with chronic diseases are now able to get proper treatment. When we take the case of imatinib mesylate (a drug used for curing leukemia), the original drug’s cost was out of bounds for the middle class. It ranged around Rs.2-3 lakh for a month's dose, but after Nacto Pharma brought in the generic version of it, the same drug’s cost was cut down to Rs.8,000-10,000, thus succeeding in increasing the accessibility of the drugs for most people.
TDB: How many of your leukemia patients were being able to afford imatinib mesylate before its generic version was introduced? By what percentage do you think its reach increased post its introduction by Natco Pharma?
HM: Maybe, only around 20% of the patients were being able to afford the drug before its generic version was introduced. But now, I would say, the affordability has increased to almost 100%, since (a) we get the drug at lower price and (b) for people, who are still not able to afford it, we make them active participants under G-PAP programmes or other such programmes, wherein it is provided free of cost.
TDB: Do you find generic drugs anyway inferior to branded drugs?
HM: We cannot say generics are inferior, but yes, we face problems with certain generic drugs, particularly when compared with branded drugs. When we prescribe a generic drug, we basically prefer companies that have good track record. Producing a drug first involves research, then the process of analysing the salt, and then testing them. Unfortunately, nowadays, we don’t do this. Studies that have been done on a few generic drugs are very disturbing. The only way to ensure proper drugs is to have strict regulations.
TDB: Do you think Indian pharma companies spend enough on R&D?
HM: The Indian pharmaceutical industry really needs to be good with R&D, since currently, it is largely dependent on just generic drugs. Although what we have achieved, like exporting HIV drugs to Africa, is remarkable, we don’t consider the new drugs that research could have brought into existence. Though the large Indian pharmaceutical companies are paving their way into R&D, we still don’t have results.
TDB: What kind of support does Tata Memorial Centre get, if any, from Indian pharmaceutical companies, to make life-saving drugs more affordable?
HM: We can’t say there is any kind of support from the pharmaceutical industry. However, during a tender and before deciding on a supplier, we also keep in mind its track record. This, in turn, helps us in giving concessions to our patients, thereby helping them get drugs at affordable prices.
TDB: What’s your take on the evolution of the Indian pharmaceutical industry? Having become the second biggest exporter, do you think India is fully self-sufficient in life saving drugs?
HM: The evolution of the Indian pharmaceutical industry has more been on the lines of generic drugs. It needs to pump more money into R&D, so that new drugs can be manufactured. Talking about self-sufficiency, the generic drugs that we have today are good for normal leukemia patients, who are prescribed imatinib. But when this gets into another level, where we have to prescribe other drugs, it becomes difficult as their generic drugs available don’t come from companies that have a good track record. Affordability also becomes an issue.
“90% of all ARVs procured by Pepfar are from Indian Pharma companies” - Office of the United states Global AIDS Coordinator and Health Diplomacy
Office of the United states Global AIDS Coordinator and Health Diplomacy
TDB: Tell us about PEPFAR’s (US President’s Emergency Plan for AIDS Relief) drug procurement process. Do you think the Indian pharmaceutical industry is a major source for you only because of the cost factor?
PEPFAR: The US President’s Emergency Plan for AIDS Relief (PEPFAR) issues open tenders for antiretroviral medications (ARVs). Proposals received are then evaluated according to a set of criteria that, in the aggregate, represent best value to the US government. This includes product specifications, quality standards, competitive prices, and on time delivery. In seeking best value, the US government strives to maintain a healthy generic ARV market. Indian manufacturers are a major source of ARV procurement for PEPFAR based on cost and quality. Since 2011, Indian pharmaceuticals have represented over 90% of all ARVs procured by PEPFAR.
TDB: Can you provide us a source-country wise breakup of the pharmaceutical drugs that you procure? Please also tell us about the countries that provide them to you at the lowest prices.
PEPFAR: PEPFAR procures ARVs from five countries with the vast majority manufactured in India. The other countries are United States, United Kingdom, Germany, and South Africa.
TDB: How would PEPFAR describe the role that Indian generic pharmaceutical companies have played in reducing its mean cost of AIDS treatment to just $315 per patient?
PEPFAR: Access to optimal value ARV procurement has enabled PEPFAR to provide treatment to a significant number of patients. By 2013, PEPFAR procured 97.3% generic ARVs by value.
TDB: What’s PEPFAR’s take on the general quality of drugs provided to it by Indian pharmaceutical companies?
PEPFAR: PEPFAR only procures ARVs that have been approved or tentatively approved by the US Food and Drug Administration (USFDA). FDA is the gold standard of drug regulatory authorities, thus ensuring that the products meet internationally recognised quality standards. Sampling and testing is done on a routine basis and no product failures have been reported in the past nine years. The willingness of Indian pharmaceuticals to seek and obtain USFDA approval or tentative approval for generic ARVs has been essential to PEPFAR’s ability to procure generic ARVs, provide treatment to many while ensuring that patients receive high quality ARVs.
TDB: Tell us a bit about your expectations from the future of this partnership.
PEPFAR: PEPFAR will continue to purchase HIV/AIDS pharmaceutical commodities based on open and fair procurement practices that focus on quality and price to optimise securing best value. The Indian pharmaceutical industry is an important partner in PEPFAR’s commitment to achieve an AIDS-free generation and reaching the Joint United Nations Programme on HIV/AIDS (UNAIDS) 90-90-90 global treatment target – 90% of people with HIV diagnosed, 90% of those diagnosed on ART, and 90% of people on treatment virally suppressed by 2020.
“Encouragement should always be given to branded or patented drugs” - S. V. Veerramani, President, Indian Drug Manufacturers’ Association (IDMA)
S. V. Veerramani, President, Indian Drug Manufacturers’ Association (IDMA)
TDB: How would you react to the view that generic drugs, although necessary from a humanitarian angle, are a dampener to research and innovation?
S. V. Veerramani (SVR): Generic drugs, no doubt, reduce the cost of medicine and treatment. But a choice needs to be given to the patient, whether to buy a generic drug or a branded drug. While a generic drug has its own benefits, branded medicines provide greater assurance and commitment from the manufacturer on the quality and reliability of the product. A branded drug or patented drug is the result of research and innovation and a generic drug is only a continuance of the same at a lower price. Hence, encouragement should always be given to branded or patented drugs to foster research and innovation. While a generic drug can be useful for the present, a patented drug is important for the future.
TDB: Why do you think Indian pharmaceutical companies don’t invest much in R&D? Do you think some kind of government incentive needs to be provided for them to do so?
SVR: The strict price regulations in India don’t allow much margin for Indian pharmaceutical companies to invest adequately in R&D. It is necessary for the government to be selective on price regulations and also provide adequate incentives to encourage investment in R&D.
TDB: What do you think has caused a stagnation in the volume of pharmaceutical drug exports from India in the last five years, although they have continued to grow in value terms?
SVR: In the past, exports from India rose exponentially and catered to more and more number of countries. However, consequent to increasing expectations on the part of global regulators, Indian pharma companies are in the process of strengthening their compliance and regulatory systems. It is only a matter of time when Indian pharmaceutical companies will gain increasing acceptance. We also need to be aware of competition from China and other countries.
TDB: How satisfied are you with the Indian government’s export incentives (3% under MEIS) and duty drawbacks of over 2% for pharmaceutical drug exports?
SVR: The export incentive of 3% under MEIS is not adequate. Further, the government has also withdrawn the Incremental Exports Incentivisation scheme. There is a need for reinstating the same and also provide more export incentives for Indian pharmaceutical companies. There can be increased subsidies in investment and interest rates. If given the right encouragement, exports of Indian pharmaceuticals can go up many fold.
TDB: Reports suggest that the average price of generic drugs in US has quadrupled in the last five years. Do you agree with this? If yes, what’s the reason for such a trend?
SVR: The price of generic drugs charged by Indian companies for exports to the US has not gone up and I don’t agree that the average price of generic drugs in US have quadrupled.
TDB: Do you think GDUFA (Generic Drug User Fee Amendments), which has increased the powers of the USFDA, has been the reason for increased scrutiny of Indian generic pharmaceutical manufacturers in recent years?
SVR: GDUFA is not the reason for increased scrutiny of Indian generic pharmaceutical manufacturers in recent times. It is more because of the fact that US is getting sizable percentage of drugs from India and they would like to ensure quality and safety.
TDB: Since a lot of drugs are set to go off-patent in the coming years, how are Indian pharmaceutical companies positioned to benefit?
SVR: With a number of drugs going off-patent in near future, Indian pharmaceutical companies are well positioned to get the benefits of the same. They also have the necessary capability, technological expertise and background to manufacture products of quality and reliability.
TDB: Do you think when it comes to TRIPS, most issues are sorted or do you think there are still a lot of conflicts?
SVR: With respect to TRIPS, most of the issues have been sorted out and conflicts have come down due to greater understanding on both sides.
“EU authorities carry out about 150 inspections in India every year” - Office of the European Medicines agency
Office of the European Medicines agency
TDB: Reports suggest generics account for over 55% of the total pharmaceutical drug market in EU. Given this, what are European Medicine Agency’s main concerns when it comes to imports from non-EU nations like India?
European Medicine Agency (EMA): India is an important source of both finished products and active substances. In addition, it is becoming an increasingly important location for clinical trials, including bioequivalence trials. While medicines development and manufacturing is global, the regulation of medicines for use by patients in EU has to follow EU rules. It is, therefore, essential that the standards applied by pharmaceutical companies in India, or elsewhere, are compatible with EU standards. We work with pharmaceutical regulators in countries outside EU, but we also send out our own inspection teams to clinical trial and/or manufacturing sites to obtain reassurance whether standards to which they work are acceptable in EU or not.
TDB: What is European Medicine Agency’s overall take on the quality of generic drugs exported by India to EU?
EMA: The same high standards for quality apply to all medicines in EU, regardless of whether they are generic or innovator medicines. Although we can’t comment specifically on generics, note that EU authorities carry out about 150 inspections every year in India of both active pharmaceutical ingredient (API) and finished product manufacturing sites. To date, only small percentages of these sites are found to be non-compliant with EU Good Manufacturing Practice (GMP). This rate is consistent with rates found for total GMP inspections carried out every year.
TDB: How do you ensure that Indian drug manufacturers adhere to your set norms? Do you collaborate with agencies like the USFDA?
EMA: The health and safety of patients is at the core of EMA’s work. Our goal is to provide patients with safe, effective and high-quality medicines. Over the last few years we, together with the European Commission, have continuously strengthened our cooperation with India through channels such as the EU-India Working Group on Pharmaceuticals and Biotechnology. This cooperation is essential for us to achieve our goal to protect patients, whether they are in Europe, in India or elsewhere in the world. In European Union, a number of rules are in place to ensure that medicines comply with EU standards, no matter where they have been developed or manufactured. In order to be imported into EU, an API needs to be accompanied by a Written Confirmation issued by the competent authority of the country where it is produced, confirming that GMP is at least equivalent to recognised EU standards. All batches of medicines released onto the market in EU must be certified both for quality and GMP compliance. If the product is manufactured outside EU and has been imported, in order to be certified, it needs to undergo a full re-test in EU, unless a mutual recognition agreement is in place. In terms of authorisation and supervision of manufacturers, all manufacturers listed in the application dossier of a medicine authorised for market in EU are regularly inspected by a European Union competent authority, irrespective of whether they are located in EU or in a country outside EU. In the area of GMP inspections, we work closely with other international regulators like the FDA. An example of this collaboration is the international active pharmaceutical ingredient inspection programme. In this programme, representatives from authorities in Europe conducted a joint initiative with the US FDA and the Australian Therapeutic Goods Administration (TGA) on international GMP inspections of API manufacturers located outside the participating countries. A pilot for this programme ran from December 2008 until December 2010. Based on the positive experience from this pilot, the agencies have agreed to continue with their collaboration, taking into account the experiences and lessons learned during the pilot.
TDB: Reports suggest the prices of generic drugs in United States have quadrupled in the last five years. What’s the trend in European Union?
EMA: The agency is not responsible for reviewing pricing or reimbursement issues. These issues are handled at the national level in individual EU countries.
TDB: Have you found any significant difference in the quality of drugs that come under centralised authorisation procedure and those that come under national authorisation procedures of individual EU members?
EMA: The same high standards, rules and requirements apply to all medicines in European Union, regardless of whether a medicine is authorised nationally or centrally.
“Indian companies have realised the importance of drug development” - Dr. P. V. Appaji, Director General, Pharmaceuticals Export Promotion Council of India (Phamexcil) 
Dr. P. v. Appaji, Director General, Pharmaceuticals export promotion council of India (Phamexcil)
TDB: What is the Indian pharma industry’s strategy for growth in the near future?
Dr. P. V. Appaji (PVA): Indian pharma companies are fully geared up. But the constraint is that there is no big pipeline available to the industry in the next three to four years. The pipeline is not very conducive and there are no big attractions for the generic companies to expect growth with the new drugs that are going off patent. Already, there is not much value realisation from off-patent medicines. Pharma exporters have to plan anew to take advantage of provisions made available to them by USFDA and go in for drugs under Section 505 (b) 2, which enables them to register and develop improved versions of existing dosage forms of the same formulations. The advantage in developing improvised dosage forms is that while they realise high value, they do not involve high research cost. Moreover, with appropriate plans, the pharma industry can expand its footprint in Latin American countries, in addition to the existing US markets.
TDB: Why is it that there is little or no spend on drug discovery in India? Is it because made-to-order, off-the-shelf recipes for generics are more lucrative?
PVA: Let me clarify on the impression that the generic market doesn’t require R&D. This gives a poor image to the Indian generic manufacturing sector and also to the country. The truth is that R&D is required to develop processes for production of APIs, formulations and generic drugs. At the same time, Indian generic companies have also realised the importance of drug development and drug discovery. In fact, some companies like Dr. Reddy’s, Zydus Cadilla and Ranbaxy are already into drug discovery.
TDB: Lack of resources to invest in R&D has often been flaunted as the reason for little/no R&D initiative by Indian pharmaceutical companies. How far is this true?
PVA: The pharma industry should have the freedom to generate revenue. But since the government has its own compulsions, 30-40% of the drugs are under price control. This is depriving the pharma sector to derive revenue. Considering such a situation, the alternative is for the government to itself fund R&D initiatives. Unfortunately, pharma related R&D like clinical trials and clinical research, which are part and parcel of the development of new molecules, have also been experiencing challenging times in the form of several judicial decisions against them in the last few years.
TDB: How conducive is the environment in India for FDI in pharma?
PVA: Our view is that there shouldn’t be any restriction on FDI in brownfield projects for at least exporting companies or 70% export focused companies. Presently, restrictions exist irrespective of whether it is an export or domestic market focused company. The exporters’ point is that since they have grown with only an export focus, and despite this, the domestic segment has not been adversely impacted, takeovers and FDI should be considered for them. Even in general, FDI restrictions in brownfield ventures should be focused only on top-end players. To restrict FDI into small companies is not advisable. For, it will not promote exports.
TDB: China has started giving stiff competition to India in the international market for generic drugs. Which factors do you think are working in its favour? Which other countries do you expect competition from in the future?
PVA: China, which is ahead of India in APIs, is also becoming a big competitor in formulations. Apart from this, it has also started exporting to India. We have always demanded that whatever rules or measures China is imposing on Indian exports, we should reciprocate in the same manner. But India is not being as aggressive as China is in enforcing such measures. The Chinese government protects and promotes the interests of its pharma industry. Our government should also implement such industry- friendly policies. Bangladesh, Vietnam and Ukraine are also becoming India’s competitors in the pharma market, mostly on the basis of prices. For example, South Africa is sourcing nutraceuticals from Bangladesh because of lower prices. Even Myanmar is importing medicines from Bangladesh because of the same reason.
TDB: How satisfied are you with the export incentives provided to the pharma sector?
PVA: The new FTP is very encouraging, but since overseas competition is increasing, the incentive being given at the moment are not adequate and are also not at par with that by other governments, especially China. According to general feedback that we get, the Chinese government is far better than its Indian counterpart in terms of providing incentives.
“Policymakers should Try & increase generic competition”
Ralph Neas, President & CEO, Generic Pharmaceutical Association (GPhA)
TDB: Tell us what Generic Pharmaceutical Association (GPhA) thinks about the Indian pharmaceutical industry’s contribution in making life saving drugs affordable to even the most underprivileged.
David Gaugh (DG): The Indian generic drug industry is an integral partner in providing safe, effective and more affordable generic drugs to millions of people worldwide.
TDB: What do you think is the main source of conflict between USFDA and Indian drug exporters? How do you think such conflicts can be reduced?
DG: As the industry expands global operations, it is more important than ever for the FDA, the leading US expert in public health and pharmaceutical safety and science, to work with its international counterparts in India and across the world. Part of the Generic Drug User Fee Act (GDUFA) allows the agency to expand its activities, both nationally and internationally. This is just one reason to ensure the FDA has the resources to carry out its mission. For example, a key component of GDUFA is global inspection parity. This will pave the way for FDA to focus on product safety and effectiveness, including bioequivalence of medicines, across the world. The end goal will be for US patients and caregivers to know that when they receive generic medicines, regardless of the geographic location of their origin, they are receiving the same medicine with the same active ingredients but at a lower cost.
David Gaugh, Senior Vice President (Sciences & Regulatory Services), GPhA
TDB: How justified do you think the current labelling norms for generic drugs in US are? What’s your take on the new Proposed Rule?
Ralph Neas (RN): The GPhA has already submitted new comments on the FDA’s Proposed Rule to update generic drug labeling requirements, urging the agency to adopt the joint alternative proposal known as the Expedited Agency Review (EAR), which has been put forward jointly by us and the Pharmaceutical Research and Manufacturers of America (PhRMA). Additionally, supply chain participants, minority health groups and others have sent letters to the agency supporting the EAR and raising patient safety concerns with the Proposed Rule because it creates a scenario where disparate and potentially conflicting information from multiple manufacturers for single medicines could be widespread, causing confusion and putting patient safety, access and savings at risk. The FDA is the only entity with all the data needed to recommend a safety information change. No single manufacturer has access to the full range of available data – the proprietary data from clinical studies or the data held by each individual applicant holder. The Proposed Rule would require generic manufacturers to update labels based on incomplete information without first receiving FDA approval. For these reasons, 48 organisations that represent minority health providers, the nation’s pharmaceutical supply chain and others stand with GPhA and PhRMA in support of an alternative to the FDA’s Proposed Rule to change generic labeling guidelines. In addition to safety concerns, the cost burden of the Proposed Rule would be significant too. A report by Matrix Global Advisors finds that spending on generic drugs could increase by $4 billion per year. Of this, government health programmes could pay an additional $1.5 billion, and private health insurance the rest $2.5 billion. Further, a survey, co-released by GPhA and the National Coalition on Healthcare, revealed that 76% of the physicians, physician assistants, and pharmacists – the healthcare providers that patients rely most on to explain safety information about their prescription drugs – are wary of the Proposed Rule causing patient confusion. Further, these professionals believe that current safety information available is adequate (86%) and that FDA approval should be required before any label change is made (81%). Respondents also indicated that the Proposed Rule could impact their willingness to prescribe generic drugs (60%).
TDB: Certain reports claim that in US, the prices of generic drugs have quadrupled in the last five years. What do you think have been the reasons for this?
RN: Generic medicines are a critical part of system-wide efforts to hold down healthcare costs. Indeed, the world’s leading healthcare analytics firm, IMS Institute for Healthcare Informatics, has found that generics saved $239 billion in 2013 (a 14% increase in savings from 2012) and more than $1.46 trillion over the recent decade. Further, the Express Scripts 2013 Drug Trend Report issued in 2014 shows that since 2008, the price of brand drugs has almost doubled, but the price of generic drugs has been cut roughly in half. Generic manufacturers can proudly point to a legacy of savings and access that will continue to bring expensive treatments within reach for millions of people. That is why the GPhA is disappointed at how some have mischaracterised the facts about generic drug prices. Their data is missing one crucial element – perspective. The examples cited by the Healthcare Supply Chain Association (HSCA), which you are referring to, on recent purchases by group purchasing organisations (GPOs) focuses on 10 drugs in a marketplace of more than 12,000 safe, affordable generic medicines. In fact, thousands of generics have seen significant price erosion over time due to the competitive nature of the marketplace. One such example is that of Lipitor – for which generics have saved all involved an estimated $7 billion per year. In addition, many generic prices are so low that thousands of stores across the country offer them to consumers even for free. The most effective way to continue to keep prescription drugs affordable for patients is to increase competition. Millions of patients and the entire healthcare system would benefit from streamlining and expediting the approval process so that more generics can reach the market sooner. As the newly- released report from Matrix Global Advisors shows, there are opportunities for FDA to facilitate pharmaceutical competition. To continue to save American patients and the healthcare system trillions of dollars in drug costs, the GPhA believes that policymakers should take the following key steps to increase generic competition – (a) in partnership with the industry, the Congress should encourage the timely FDA review of the more than 3,000 generic drug applications that have been filed with the agency. Once those are approved, consumers will have more options than ever, and that will help drive down prices; (b) the Congress should review the abuse of programmes designed for protecting patient safety, such as REMS, that some brand companies are misusing as a way to keep generics out of the market. This practice lowers competition and keeps prices high. A recent study by Matrix Global Advisors estimates that countering this misuse could save the health system $5.4 billion; and (c) the Congress should encourage the FDA to increase competition for cutting edge biologics by enacting regulations for biosimilar approvals and supporting a naming policy that encourages competition from safe, more affordable biosimilar medicines. Taken together, these policies would provide American consumers with more choices, greater access to medicines, and billions of dollars in increased generic savings.
"USFDA has been very independent in its assessment of Indian companies" - Ramesh Swaminathan, Chief financial officer, Lupin LIMITED
Ramesh Swaminathan, Chief financial officer, Lupin LIMITED
TDB: As the 10th largest generic pharmaceutical company in the world, tell us about some of the challenges that generic drug manufacturers, particularly those in India, face.
Ramesh Swaminathan (RS): Indian generic drug manufacturers are better poised than our other international counterparts to address the needs of the US market. That 40% of the drugs supplied to US market are produced by Indian companies bears testimony to this fact. The Indian pharmaceutical industry is the third largest in terms of volume and one of the fastest growing industries in the world. Some of the challenges we’ve faced over the past year in the US market are a visible slowdown on product approvals, rapid consolidation on the customer-trade partner’s front leading to price erosions within the US generics market and stiff competition. Changes in regulatory frameworks also continue to pose a challenge.
TDB: With US accounting for almost half of your revenue, tell us about the regulatory hurdles, like labelling norms etc., that you face in the country. How different are the regulations in US from those in your second most important market – Japan?
RS: All pharmaceutical companies across the world have to follow certain guidelines and procedures for manufacturing, as prescribed by concerned regulatory authorities. All these companies are subjected to the same level of scrutiny and those with sound systems and processes continue to succeed. Moreover, we believe that the USFDA has been very independent in its assessment. They have the right to regulate and scrutinise what goes into their country and express concern about the safety of their citizens. The pharmaceutical sector has to be dealt with constant compliance and one must understand that there are no shortcuts to quality in this context. Given that regulatory authorities evaluate the same scientific data, there are no great differences in the evaluation approaches of USFDA or PMDA in Japan. But regulatory actions, especially post approval change actions, are a little different because the regulatory framework of each regulatory agency is different. However, in terms of market dynamics, both these markets are poles apart since US is a generics market and Japan is a branded market, which is now slowly opening up to generics.
TDB: Do you think GDUFA, which has increased the powers of the USFDA, has been the reason for the increased scrutiny of Indian generic pharmaceutical manufacturers in recent years?
RS: We, at Lupin, treat anything to do with quality and compliance very seriously. We have been working very closely with the FDA and other regulators as well as external consultants, which has helped us stay ahead of the curve and keep pace with a very dynamic and an ever-changing complex regulatory environment. There are no short-cuts to compliance and as Indian players start to export more and more pharmaceuticals to advanced markets like US and Europe, the scrutiny will only increase and continue. Companies need to be ever vigilant about their manufacturing operations and processes and ensure that they stay current with GMP guidelines as issued by FDA and other regulators across the world.
TDB: Do you think export incentives provided by Government of India is one of the many reasons for a bit of backlash against Indian generic drugs in the West?
RS: The backlash against Indian generic drugs in the West has largely been due to IPR and patent conflicts, pricing control, compulsory licensing and quality of products and manufacturing processes. We don’t think export incentives provided by Government of India is one of the reasons.
TDB: Reports suggest that the average price of generic drugs in US has quadrupled in the last five years. Do you agree with this? If yes, what’s the reason for such a trend?
RS: The price hike in generic drugs in the US is actually not applicable to all generic drugs. In fact, prices have also reduced for some generic drugs. Production levels of the drugs in question, shortage in their supply or shortage of API, changes in demand and fluctuations in the cost of raw materials are some of the factors driving up the prices of generic medicines in the US. Prices also fluctuate based on third party channels like insurers, pharmacies, pharmacy benefit managers and other payers.
“We do not approve manufacturing plants; we inspect them” - Howard Sklamberg, Deputy Commissioner for Global Regulatory Operations and Policy, USFDA
Howard Sklamberg, Deputy Commissioner for Global Regulatory Operations and Policy, USFDA
TDB: Given that the number of USFDA approved drug manufacturing plants in India are the highest in the world, after US of course, how difficult a job is it to monitor them?
Howard Sklamberg (HS): First, it’s important to clarify that drug manufacturers seeking to produce FDA-approved active pharmaceutical ingredients (API) or finished drug products for use by patients in United States must be registered with the agency. The FDA doesn’t ‘approve’ drug manufacturing plants – the agency inspects them, and if they are not up to the standard, we do not approve an application to market drugs made there. In 2012, President Obama signed into law the Food and Drug Administration Safety and Innovation Act (FDASIA). A section of this law, known as the Generic Drug User Fee Amendments (GDUFA), requires the agency to achieve the same inspectional schedule for foreign facilities as domestic manufacturers, and to clear the backlog of applications by the end of the first five-year user fee authorisation period. The FDA does not treat manufacturing plants in India any different than those in the US or in other countries. The agency’s mission is to protect public health, and this requires holding all firms to the same high standards. The agency has conducted risk-based inspections of FDA-registered drug manufacturing facilities in India for many years.
TDB: Since two of the three biggest sources of USA’s pharmaceutical imports (in volume terms) are its neighbours Canada and Mexico, would the USFDA like imports from India to reduce because that would ease its challenge of monitoring?
HS: India is quickly becoming a significant player in the global marketplace, representing an important source of FDA?regulated products. Generic drugs now account for 80% of US prescriptions, and India is the second-largest exporter of drugs to the US. Canada is first and Mexico is third. With a diverse population, highly skilled work force, and favorable economic conditions, India has become increasingly attractive. Today, we regularly engage with them on everything from sharing information on clinical trials to collaboratively addressing product safety issues that may harm American consumers. We are eager to continue the work started by Commissioner Hamburg in 2014, when she visited India and signed a milestone Statement of Intent between our two countries, seeking to “collectively work together to improve the lines of communication between our agencies and work diligently to ensure that the products being exported from India are safe and of high quality.”
TDB: What exactly is the role of your office at the US embassy in New Delhi?
HS: Our presence in India allows us to better collaborate with our Indian regulatory counterparts and enables us to leverage our combined resources, harmonise science-based standards and increase regulatory capacity. In doing so, FDA continues to ensure that medical products moving in international commerce are safe, effective, and of high quality. The staff in the FDA’s India Office regularly (a) engages with Indian counterpart regulatory authorities to ensure the timely exchange of information regarding clinical trials that are conducted that support marketing applications in the US; (b) partners with Indian counterpart agencies on various bilateral and regional capacity building initiatives; (c) works with regulated product industries in India that wish to export their products to the US to assure their understanding of our standards and expectations regarding FDA-regulated products; (d) coordinates and collaborates daily on product quality and safety issues with other US government agencies that have complementary missions to assess conditions and events in those areas that might impact the safety and quality of FDA-regulated products being exported to the U.S; and (e) works closely with FDA centres to inspect high-risk facilities based in India.
TDB: What is USFDA’s general view of drug manufacturing norms and regulations in India? How different are they from those in US? Do you think the practices at USFDA non-approved facilities are very inferior to those that are USFDA approved?
HS: Again, it’s important to clarify that drug manufacturers seeking to produce FDA-approved active pharmaceutical ingredients (API) or finished drug products for use by patients in the United States must be registered with the agency. The FDA doesn’t ‘approve’ drug manufacturing plants. The FDA determines the quality of products from those plants. The FDA’s primary mission is to protect and promote the health of the American public. FDA’s focus is to ensure that drug manufacturing facilities in India that are registered with the FDA comply with current good manufacturing practices (CGMPs) and produce safe, effective, high-quality drugs for American consumers. These registered facilities produce FDA-approved finished drug products and/or active pharmaceutical ingredients for use by American patients. The delivery of drug quality by these firms is essential. Ideally, our approach will complement the baseline, legal requirement of compliance with the higher bar of firms’ self-interest in being recognised for providing quality products and engaging in a different way with FDA.
TDB: What do you think are the main challenges for the regulation of pharmaceutical products in India? Is USFDA doing anything to train the Indian pharmaceutical industry with global best practices?
HS: Through a variety of methods, including scientific reviews, inspections of facilities and post-market surveillance, FDA strives to ensure that regulated product manufacturers, wherever they may be located, comply with standards and regulations for their products provided to US consumers. FDA seeks to ensure that Indian manufacturing facilities exporting pharmaceutical products to the United States understand the risks associated with their product’s processes and ensure they remain compliant to FDA’s regulations. The problems encountered by FDA investigators in India are similar to those seen around the world in manufacturing. Common issues include inadequate or poor quality systems implementation, data integrity issues, inadequate validation of various processes used in manufacturing or testing and product adulteration or contamination. While some Indian companies operate state-of-the-art facilities and meet good manufacturing practices (GMPs), others do encounter problems and operational challenges. Staff from the FDA’s India office work with these companies to identify the problems and take the necessary steps to self-correct. In November, 2014, as a continuation of FDA’s efforts to strengthen the quality, safety and integrity of imported drugs, the FDA India Office, in collaboration with our Center for Drug Evaluation and Research’s Office of Compliance and the Office of Regulatory Affairs, held four workshops in India. The workshops were held in partnership with European Directorate for the Quality of Medicines and Drug Information Association and involved the Indian Drug Manufacturers Association, Parenteral Drug Association and Organisation of Pharmaceutical Producers of India. Over 560 participants from the pharmaceutical industry attended the four two-day workshops.
TDB: Given that India is the only developing country, which features among the top 15 pharmaceutical products exporters in the world (in value terms), what’s USFDA’s view on certain sections of the industry thinking that the constant scrutiny of Indian pharma companies by it is a function of them attempting to break the Western hegemony?
HS: India, as the second largest provider of finished drug products to United States, with almost 10% of that market, has, for many years, been a consistent provider of low-cost and quality medical products, including drug products, for many countries of the world. The FDA seeks to ensure that Indian manufacturing facilities shipping product to the United States understand the risks associated with their product’s processes and remain compliant with the FDA’s current good manufacturing practice (CGMP) requirements for drug products. India’s success in providing a significant share of the generic products used in the United States and the growing percentage of their exports to the United States are ample evidence of the Indian pharmaceutical sector’s ability to meet US standards and regulations. We also remain vigilant and will take appropriate action if, or when, lapses occur.
TDB: Tell us the role that USFDA plays, if any, in facilitating trade between the 2nd biggest exporter of pharmaceutical drugs (in volume terms) – India, and the biggest importer of them – the United States?
HS: FDA’s role is to evaluate the safety and effectiveness of drug products, wherever manufactured. FDA is not a trade agency. As noted previously, India is quickly becoming a significant player in the global marketplace, and represents an important source of FDA?regulated products. We continue to collaborate and engage with Indian regulators, who have become important strategic partners for FDA. We are working together to ensure that the products being exported from India are safe and of high quality.
TDB: How would USFDA rate Indian pharmaceutical companies’ promptness in responding to alerts by it? How does it compare with that of companies in other countries?
HS: The FDA, by policy, does not discuss communications with the companies it regulates.
