Counterfeit Drug Policy in India

Counterfeit Drug Policy in India. By Roger Bate
India's major pharmaceutical companies have been badly served by India's political system.
The New Ledger, March 12, 2009

For the past decade India's major pharmaceutical companies, alongside the public health community and police services, have attempted to drive forward a modern drug regulatory system which, among other things, would have effectually combated the scourge of counterfeit and substandard drugs. But due to a combination of lobbying from middle-sized companies making suspect quality drugs, as well as some states, which wanted to maintain control of drug quality decisions, the status quo is to remain. This is a tragedy for the many thousands who die annually from substandard medicines in India (and from India exports to Africa and Asia), most estimates say that at least 10% of Indian drugs are substandard.

Radical revisions to the Drugs and Cosmetics Act of 1940 have been proposed on and off for the past thirty-odd years. Yet the major amendments proposed in October 2007 would have increased the minimum jail time for convicted drug counterfeiters from five years to ten years and increased the minimum fine for such offenses from 10,000 rupees (about $320) to a million rupees (about $32,000).

In November 2008, The Indian health minister, Anbumani Ramadoss from Tamil Nadu, pledged that through this amendment the Indian government would "go all out to do away with spurious drugs." But while he certainly tried to push the amendments through parliament, and succeeded through the upper house, he has failed to even get the lower house to hear the bill. With an election expected in two months the amendments will have to wait for another administration. Some local pharmaceutical company experts consider it may be years before the amendments are tabled again.

The amendments would have created a central drug authority, which in principle would have administered the entire drug regulatory system, overseeing drug quality and authorizing product marketing. At the moment the Drug Controller General of India authorizes new domestic and imported drugs but the manufacture of drugs is controlled by individual state drug authorities. The DCGI is underfunded and the states vary in the demands they place on companies and the monitoring and enforcement of those companies infringing rules. Maharastra, home to many large and respected pharmaceutical companies has nearer western style quality control, with at least some push towards what would be considered oversight of Good Manufacturing Practice (GMP). Whereas Uttar Pradesh, home to many counterfeiters, has weaker oversight and non-existent GMP control. Yet a drug manufactured and approved in one state can be sold anywhere in the country, or exported. Substandard producers can locate in states with weak controls and ply their wares everywhere, allowing hundreds of substandard state-approved medicines to proliferate.

According to well placed locals, behind the scenes lobbying by politicians from states with weak GMP controls, prevented the amendments from becoming law. If they had failed they would lose revenue paid by pharmaceutical companies and perhaps more importantly they would lose control. According to experts from world class domestic and international pharmaceutical companies, while the revenue loss would be minimal the loss of control would have meant a reduction in opportunities for graft.

Meanwhile the U.S. Food and Drug Administration is establishing an office in India to oversee drug quality exports to America. Now that the Indian Government has effectively abdicated responsibility for quality control, it has made FDA's job much harder. By not squashing political opposition to the necessary legal changes, India's best companies may lose out on increasingly important export markets.

India's major pharmaceutical companies have been badly served by India's political system. While the Government plays to the militant anti-patent crowd, defending the rights of politically connected companies that enjoy ripping off western patents, it does nothing to improve the image of Indian companies oversees. When the FDA banned the exports to US in fall 2008 of India's largest drug company, Ranbaxy, it was a major blow to Indian prestige, yet few found the ban unexpected, given the lack of oversight by the Indian Government. Companies like Ranbaxy are always looking for ways to cut costs, and even if top management want to maintain high quality it is very easy for lower level managers to cut corners if there is no local oversight.

If some of Ranbaxy's drug stability data was falsified, as alleged by FDA and US Department of Justice, is anyone really surprised?

India has seen how a series of product scandals took a harsh toll on China's global credibility, its arch-rival in industrial development, yet it has squandered the chance to clean up its own act. This will, sooner or later, come back to bite them.

Since 1975, successive Indian government commissions have urgently recommended product safety reforms and been ignored. Perhaps only when hundreds die oversees from Indian exports, and its drugs are discredited and then banned across the world, will the necessary changes be made.

Roger Bate is a resident fellow at AEI.