Kalyan Chatterjee
Patients in India, especially the poor with limited access to healthcare, are caught between the devil and the deep sea. They cannot afford the exorbitantly priced patented medicines offered by global ‘big pharma.’ For that matter, even most people in prosperous countries find them prohibitively expensive. Naturally, they turn to much cheaper generic medicines. But even in this they are short-changed for many of these are substandard or, worse, contaminated and at times claim lives.
Instead of tightening the norms in the face of mounting evidence of poor-quality medicines being manufactured in India, the Central Government decided to walk in the opposite direction in the name of “ease of doing business”. On July 27, it passed the Jan Vishwas Bill, 2023, in the Parliament which eases the penal provisions for the manufacturing “not of standard quality” (NSQ) drugs. Under the new law, Section 42 (2) of the Pharmacy Act, 1948, and Section 27 (d) of the Drugs & Cosmetics Act, 1940, have been decriminalised.
Earlier, under Section 27(d) any manufacture supplying poor quality drugs faced a jail term and fine, but now they can get away by paying a fine of ₹5 lakh, while the amendment of Section 42(2) means that now a pharmacist selling a wrong just has to pay a fine of ₹1 lakh without facing any prison time. According to experts, these amendments will further erode the credibility of the Indian pharmaceuticals, which is already under the microscope following reports of serious adverse events some foreign countries due to administrating of substandard drugs that were manufactured in India.
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Here is another example of the why public deliberations are important when considering amendments to existing laws. Case in point is the Jan Vishwas Bill 2023.
You have read about the impact it will have on our drug quality by diluting penal provisons of the D&C 1/n
— Dinesh S. Thakur (@d_s_thakur) August 2, 2023
Recent developments have exposed the serious shortcomings of both big pharma and ‘humble pharma’ when it comes to the issue of ensuring public health. The first was the Covid-19 pandemic when big pharmaceutical firms were keen to earn quick profits by placing vaccines in the market as quickly as possible rather than working to derive the best possible vaccine.
The second development was the death of about 90 children in The Gambia and Uzbekistan in 2022 after consuming cough syrup manufactured in India, contaminated with ethylene glycol. More recently, an eyedrop made by a Chennai-based firm came under scrutiny in the US after reports came out of it containing drug-resistant bacteria that can cause multiple eye infections.
India has earned the nickname of ‘pharmacy of the world’ because of its expertise in the making of low-cost generic drugs. The deaths, however, showed poor quality control regulation. Over the past decade many facilities that produce for the US have come under the scanner of American regulatory body Food and Drugs Administration (FDA).Clearly, regulatory controls on drug production have not been taken with the seriousness they deserve.
It took the Indian government more than six months to take cognisance of the problem and order quality checks. But there is no information about what steps the government is going to take to strengthen quality control for such a vital industry that accounts for a fifth of the global pharmaceutical trade.
In such a situation, those looking for inexpensive healthcare are left with hardly any choice. They either have to buy exorbitantly priced patented medicines or turn to low-cost generic drugs of uncertain quality. This is a problem that plagues not just the poor countries of the world but also the rich countries, which have increasingly turned to generic medicines to check healthcare costs.
The origins of this dilemma can be traced back to when the modern pharmaceutical industry came into being. The traditional model followed by the industry over the past century or so has been based on manufacturing by private enterprise driven by the concept of patents to protect intellectual property rights and promote innovation.
When decolonisation occurred in the mid-20th century, newly independent countries found that they had to import medicines from their former colonisers at prices that were unaffordable as they were expected to provide healthcare to their people, an issue that had been neglected by the colonisers. In India’s case, before independence about 87% of medical requirements were met through imports, mostly from the United Kingdom. Infectious diseases like tuberculosis and smallpox, and vector-borne diseases like malaria were the immediate challenges facing the newly independent country.
The country’s first prime minister, Jawaharlal Nehru, was convinced that the pharmaceutical drugs industry should be in the hands of the state-owned sector: “I think an industry of the nature of the drug industry should not be in the private sector anyhow. There is far too much exploitation of the public in this industry.”
He was right, since at that time drug prices in India were the highest in the world. There was a pressing need for antibiotics to fight infectious diseases, and gammaxene and DDT to get rid of mosquitoes, the vector of malaria that was endemic in many parts of the country. In addition, controlling malaria required production of anti-malarial drugs. Setting up manufacturing of affordable drugs in the government-owned sector was, therefore, a major priority.
To meet these requirements, Hindustan Antibiotics Limited (HAL) was set up in 1954 at Pimpri (Pune) with the help of WHO and UNICEF to manufacture penicillin, streptomycin, gentamycin, ampicillin, and amoxycillin. Another major public sector drug manufacturer, Indian Drugs and Pharmaceuticals Ltd (IDPL), was set up in 1961 with Soviet help to manufacture anti-malarial drug chloroquine as well as life-saving antibiotics, which it continued to do for the following half-century.
India has a rich legacy of generic drug manufacturing for more than 70 years.The effectiveness of India-manufactured medicines set aside the scepticism about its capabilities that might have been perceived during the initial years. This success story also inspired confidence in early entrepreneurs. As manufacturing facilities came up, universities began to offer relevant technical courses hitherto unavailable and became the nurseries of trained manpower for private entrepreneurs. Alongside these developments, new research institutions were set up by the government. In other words, by the end of the 1960s, nearly all the components required for the making of an independent domestic pharmaceutical manufacturing system were in place, enabling India to meet most of its medical requirements from the domestic industry.
Two developments further boosted the Indian pharmaceutical industry. One was a crucial change in India’s patent law in 1970, when product patents were replaced by process patents for pharmaceuticals and limited to seven years. India had been planning to introduce changes in the patent law ever since 1949 when the first patents committee recommended that the law should ensure that pharmaceutical products were made available to the public at the cheapest possible prices. The legal protection offered by the 1970 change opened the door for small and medium private entrepreneurs to enter the market.
The window of 24 years that Indian entrepreneurs got till 1994 when India joined the World Trade Organisation (WTO) and agreed to implement intellectual property rights proved sufficient for them to find their feet. They reverse-engineered their way through the 1990s to transform India into the third largest active pharmaceutical ingredients (API) producer in the world by 2005, behind China and Italy. The period was marked by a reduction in the share of MNCs in the Indian market to just 20%.
However, after the law was changed back to product patent in 2005, Indian companies realised that they could no longer depend on the reverse engineering path for growth. They therefore seized a new opportunity provided by the Hatch Waxman Act passed in the United States in 1984 to facilitate the approval of generic drugs and make treatment of AIDS/HIV affordable.
Indian companies now focussed on manufacturing off-patent drugs, having already perfected scientific and manufacturing capabilities. This helped the industry to grow to 3,000 pharmaceutical companies, 10,500 plants and 2.7 million workers — supplying a fifth of the world’s demand for generic medicines. It meets about 40% of the US demand for generic drugs, half of the African demand, and 25% of the demand for all medicines in the UK.
However, despite being such a major producer of pharmaceutical drugs, India still does not have a strong regulatory mechanism for quality and safety issues, which are crucial for the industry. The regulatory mechanism is fragmented at best with the Central Drugs Standard Control Organisation (CDSCO) only authorised to grant approval for new drugs, while state drug controllers oversee manufacturing, licensing, inspection, and regulatory enforcement. Thus, the Indian Drugs and Cosmetics Act (1940), the law that regulates drugs, is therefore interpreted differently in different states.
This serious weakness was brought to light by Dinesh Thakur, an activist and whistleblower. A former employee of the now defunct drug major, Ranbaxy Laboratories, Thakur took it to an American court in 2007 for selling adulterated medicines. Ranbaxy’s American arm not only admitted to this but also paid a fine of $500 million after pleading guilty in 2013.
Since then, the FDA began paying closer attention to generic drugs manufacturing facilities outside the US, whose products were sold there. A drug is held to be adulterated if it violates guidelines contained in the Good Manufacturing Practices (GMP) issued by the WHO which is one of the elements of the WHO Certification Scheme on the quality of pharmaceutical products moving in international commerce. It is used as a yardstick for inspections by bodies like the FDA.
But the overall underlying issue runs much deeper—it is a choice between expensive patented medicines manufactured by the world’s pharma majors or low-cost generics pioneered by India that provide the poor with access to medicines, but at times are plagued by serious quality issues.
According to an article in the British Medical Journal (BMJ), in an ideal market patents can promote research and innovation — striking a “fair” balance between old and new technologies. But the pharmaceutical sector does not operate in an ideal market. “Unlike consumers of ordinary goods, consumers of patented medicines—also known as patients with medical needs—may not be in a position to defer consumption until prices fall.” High prices cannot be defended on grounds of “acquisition costs” either since they cannot be counted as investment in drug development. Acquisitions simply involve acquiring firms that have developed promising new drugs.
The Covid-19 pandemic exposed the shortcomings of a pharmaceutical industry controlled by private players, who prioritised profit and market share over public health and safety. The Swiss NGO, Public Eye, has in its 2021 report given an account of the big bonuses reaped by the top executives of companies that manufactured Covid-19 vaccines simply by “selling millions of their shares at particularly crucial moments during R&D of Covid-19 and treatments or vaccines….”
According to Els Torreele, a bio-medical scientist working at the University College of London (UCL), in the race for the vaccine, there was no mechanism to ensure the development of the best possible vaccine by using the best possible science. The vaccine development was characterised, above all, by secretive competition and no knowledge sharing.
By September 2020, one million people had already died of Covid-19 and 33 million were infected worldwide but private companies backed by wealthy nations were still not willing to agree to open licensing despite the critical situation. The US, UK, EU, Japan, Australia, Canada and Switzerland resisted this at a WTO meeting in April 2021. This, despite the fact that billions of dollars in public funds had been spent to develop the vaccine.
The University College of London Institute of Innovation and Public Purpose (IIPP) has suggested a way out. In a 2018 report, “People’s Prescription”, IIPP calls for an overhaul of the patent regime so that it becomes transparent and encourages innovation rather than blocking learning and collaborations. The focus of innovation should be on public health advances rather than on market returns.
