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Indian pharma must address quality concerns to penetrate global markets deeper

Right dose
Indian drugmakers are finally sitting up to take note of how to make medicines the healthy way. They have been forced to tweak age-old practices by cleaning up hygiene issues at their plants. And it’s not because the drug controller at home insisted that they get their basics right.

As local generic makers corner a bigger slice of the first-world healthcare market, selling cheaper alternatives to high-priced innovations by big pharma, they are coming under heightened scrutiny by foreign regulators, particularly the US food and drug administration (FDA) and the UK’s medicines and healthcare products regulatory agency (MHRA), on the globally-accepted best manufacturing practices.

The enhanced probes and recent instances of non-compliance on quality and manufacturing practices by Ranbaxy and Wockhardt are cases in point. Some 526 drug manufacturing facilities are approved by the FDA in India. Some 78 of these were issued Form 483s by the FDA, which is 20 per cent of all the Form 483s issued to foreign drugmakers in FY13, ending September 30.

A Form 483 is issued by FDA to notify the company’s management of objectionable conditions. Companies must respond in writing to these objections and clarify the corrective steps they are taking, and then, of course, go on to implement the plan.

Worse, till February 19, some 31 Indian manufacturing facilities were under the FDA’s import alert, with Ranbaxy’s Toansa facility the latest to join the list on January 24.

According to India Ratings and Research, a Fitch group company, the USFDA issued 43 import alerts against pharmaceutical facilities during 2013, of which 21 facilities were in India, taking India’s share to 49 per cent of the total.

Aditi Kare Panandikar, managing director at Indoco Remedies, said at a recent summit of pharma companies, “It is regular practice for the FDA to inspect facilities catering to its market. In case it raises some observations, both major and minor, it will issue a Form 483. While it is absolutely necessary for companies to maintain the quality standards, there is no reason for panic. Instead, the focus should be on doing the needful.”

Indoco Remedies received a Form 483 for its Goa plant II (Sterile Ophthalmic Formulations) last year with certain “minor observations”. The company says it has already responded to the FDA, which has since not reverted on the matter. More recently, however, the company posted on the Bombay Stock Exchange that it had received certificate of good manufacturing practice compliance for the same plant from the state institute for drug control (SUKL) of the Czech Republic.

Cipla’s global head of quality Ranjana Pathak also stated recently, “Indian pharmaceutical companies are coming under the FDA ambit because they are not following all the rules specified in the guidelines. What is to be done is to simply follow the rules. If you make a mistake, it doesn’t matter. Follow the rules which tell you how not commit those mistakes. Actually GMP makes for good business.”

Besides Ranbaxy and Wockhardt, Bangalore-based Strides Arcolab also received an FDA warning for its injectible manufacturing arm Agila Specialties in 2013. In 2011, the Mexican unit of Dr Reddy’s Laboratories received an import alert for violating manufacturing standards. However, the alert was withdrawn after the company initiated corrective measures.

In 2011, Aurobindo Pharmaceuticals received an import alert for violating manufacturing standards at two of its units. These were revoked in 2013 after the company took corrective steps. Earlier instances also show warning letters or observations were issued on manufacturing practices to Sun Pharmaceutical Industries, Cadila Pharmaceuticals, Lupin and Cipla.

Meanwhile, all these FDA actions have raised a counter-question as to whether Indian companies are being deliberately pulled up at the behest of global big pharma that has been losing market in their home countries? Both FDA and the Indian pharma industry reject that notion.

An official from Aurobindo Pharma, who did not wish to be named, said, “The rising diplomatic concerns are not referring to the compliance issues or inspections. What is important is to keep oneself aligned with this mindset and invest in the regulatory upkeep in line with expectations and to ensure that quality is not compromised. For Aurobindo, the focus has always been the advanced markets and we are committed to quality. A regulator has all the right to check even the slightest of deviation in standards. All our manufacturing sites cater to all the markets and are approved by global regulators. Sometimes it may happen that one particular site follows checks by the US FDA, but the UK MHRA may find a fault. It is based on several factors, sometimes as basic as what answers are given by the personnel located at the site.”

After returning to the US from her recent nine-day India visit, FDA commissioner Margaret A Hamburg told the international media, “We are not (specifically) targeting Indian companies. We are undertaking our required regulatory activities. We inspect and take appropriate actions for companies within the US. If a company is manufacturing a product for sale in the US, it has to meet our regulatory standards and requirements and we inspect facilities in other countries as well. So, what is happening in India is consistent with what happens in the US and other parts of the world.”

In an exclusive interview with Financial Chronicle, Hamburg said, “Many Indian firms understand good manufacturing practices and use them. The problems we have seen with companies are why we have chosen to make quality one of our highest priorities this year. Whether innovator or generic, companies must build their reputation by building quality so that patients and healthcare professionals have trust in their products. Quality is the basis of the public’s confidence in pharmaceuticals and confidence in the high quality of products being produced at American facilities is what has helped make the US pharmaceutical industry the gold standard for the world.” (Read full interview in this issue).

According to an industry expert who too did not wish to be named, the increasing inspections seem to be fallout of India emerging as the second-largest supplier of drugs to the US with 40 per cent market share for generics and over-the-counter drugs. In 2012, India exported $4.2 billion worth of generics to the US.

The problem of Indian companies not being able to match up to the US standards could also come from the fact that regulations differ from country to country. Regulations are not uniform across regulators. So, while the FDA is especially stringent in its norms and regulations, it may not be that strict in India. Levels of scrutiny also vary depending on differences in processes and ways while conducting an investigation.

Sameer Shah, senior associate at Khaitan & Co, said, “The regulatory and compliance standards (including US GMP) issued by the USFDA are applicable only for those manufacturing companies which are exporting to the US market so that the USFDA can be absolutely assured of the quality of medicines/ active pharmaceutical ingredients (APIs), etc., imported into the US. India also prescribes certain GMP guidelines, and at least on a basic level, one would expect the standards to be more or less the same.

However, it appears that the US is more aggressive in terms of maintaining compliance and conducting more audits and inspections. Further, some of the violations pointed out by the USFDA audit are too basic to be not covered under the Indian GMP standards. Therefore, it might be incorrect to state that Indian standards are faulty. It is more a question of enhanced compliance and enforcement.”

Thus, while a certain batch of products can be passed by one regulator, it may not be cleared by the other.

At a time when reliance on Indian manufacturing is increasing, the onus is on the authorities and the companies to adhere to the compliance norms and to maintain standards. “The companies already know what are expected from them. It is important for FDA to know that the generics they are importing meet its standards and are safe for its patients. With FDA now having its office in Mumbai and planning to increase its employee strength in India from 12 to 19, Indian pharma companies will be under more frequent checks and inspections,” the expert quoted earlier said.

In a working paper titled “India’s drug quality under the spotlight with FDA visit,” the Ranbaxy whistleblower Dinesh Thakur says: “If India wants its companies to export to the US, it should finance and equip its inspectors properly to build a cadre of talented, professional inspectors.”

The working paper was co-authored by Amir Attaran, law and medicine professor at Ottawa university, and Roger Bate, author of Phake: The deadly world of falsified and substandard medicine.

Certain independent research data from the US suggest that at least 5 per cent of Indian medicines sold in India fail basic quality control tests.

Thakur further says, “The onus of taking corrective action is wholly on the Indian authorities, and sooner they demonstrate their competence, the sooner their carriers would get to expand their operations in the US. This approach provides strong incentive to the Indian government and industry to get their act together because the financial incentive is huge.”

At a time when drugs from pharmaceuticals companies in the developing countries, especially from India and China, are looked upon with suspicion, there is a growing need for the local industry to prove its quality and integrity.

Washington-based think tank Pew Research Centre’s survey last year showed that 54 per cent of Americans distrust Indian drugs and 70 per cent distrust Chinese drugs.

Roger Bate in a article “Cheap Indian generic drugs: not such good value after all?” says some companies, particularly Indian firms, substitute cheaper ingredients and skimp on good manufacturing practices in order to reduce costs and drive profits. A World Health Organisation (WHO) estimate says one of every five drugs produced in India is spurious.

Yet, there are apologists for the Indian pharmaceuticals industry. One such, Biocon chairman Kiran Mazumdar Shaw, believes, “It (compliance issues) is not an India-centric problem. For every one company that has flouted norms, there are several others here that are up-to-date. Bashing India alone for this is a very wrong thing to do. Non-compliances differ in nature and most of them can be corrected within a short time, without impacting the quality of drugs. For instance, if the equipment used is not calibrated for more than a month, that can be a compliance issue too. But that doesn’t mean that the equipment used is not working properly.”

Health minister Ghulam Nabi Azad assured the FDA commissioner that Indian drugs are “affordable” but not cheap and spurious.

Yet, Hamburg minced no words when she drove home the need for “transparency” in her talks with the Indian authorities and insisted that “there should be a common set of standards so that people have quality, safe and efficacious drug.”

PV Appaji, director general of drug exporters association Pharmexcil, said, “No doubt there has been negative publicity about Indian drugs and their quality and we are taking steps to ensure that the misconception is handled by ways of awareness programmes in various countries.”

India’s role in producing low-cost medicines could be well established, but what can be seen as a potential threat to the brand is the increasing perception that the drugs lack in quality. Pharma companies here strongly defend their case, suggesting that there can always be one-offs, especially in this sector.

According to the Aurobindo official quoted earlier, India makes low-cost drugs not because the quality is compromised, but because of other factors like low-cost human resources, including semi-skilled personnel. There is no cost advantage on the manufacturing front.

Given the crossroads where they stand today, the Indian companies must tighten their internal processes and manage quality in a more proactive manner to meet the regulatory expectations abroad at each and every step, starting from raw materials used to finished produce and final packaging.

The Indian drug authority should be proactive in setting global benchmarks for compliance. The local drug regulator must tackle shortfalls in trained manpower, besides boosting financial resources as well as technical and process support.

“It is critical to increase the capacity of the national drug regulatory authority to monitor drugs both in the public and private market. As a country that produces medicines not only for its own people, but also for millions across the developing world, India has a responsibility for ensuring that the medicines it produces meet WHO quality standards,” says Leena Menghaney, Access Campaign India coordinator at Medicines Sans Frontieres or MSF (Doctors without borders).

The Aurobindo official too suggests, “They could look at the current GMP (cGMP) inspections enforcing quality, crackdown on defaulters and other such issues and not just focus on the larger distribution-related measures like price ceilings or cost cutting. It could be demotivating at times. This way there could also be a check upon small-scale companies mushrooming without any regulation, which are mostly responsible for the spurious drugs.”

The Indian pharma story stands out globally for producing generic alternatives for critical illnesses like HIV, TB and cancer, bringing down the price of critical medicines by as much as 90 per cent. Consider HIV. A major portion of the antiretroviral medicines purchased by the US government’s global AIDS programme comes from India, and over 80 per cent of the HIV medicines used by MSF to treat more than 2,80,000 people with HIV in 21 countries are generics from India.

“MSF faced an astronomical price tag of $10,000 per person per year for life-saving HIV medicines, which barred treatment for millions and prevented us from being able to reach more than a very limited number of patients. But a solution was found in India. The country, free from having to grant patents on medicines until 2005, was able to manufacture low-cost, quality generic medicines for a fraction of the existing price. Overnight, the cost to treat someone with HIV fell by over 96 per cent, to $360 per person per year. Generic competition has seen the cost fall further,”

Menghaney further says that low-cost production of medicines in India, however, does not require companies to cut corners and endanger patient safety.

“We find Ranbaxy’s behaviour in the past to have been unacceptable, and corrective action should be taken to ensure that Ranbaxy, and any other pharmaceutical company, whether originator or generic, follows regulations that ensure medicines are safe and effective,” she continues.

So, while the Indian regulators and companies must not lose focus on manufacturing low-cost life-saving drugs for their global customers, they should gear up to address quality and compliance issues. The US regulator, too, is planning to conduct training sessions in India with the pharma industry to bridge the growing gaps in manufacturing practices.

“There is a lot of mismatch between what the USFDA expects and what is being done by Indian companies. Although there are changes happening towards the better, there still needs to be a lot of sensitisation on the entire issue. In fact, when the USFDA chief was here in India, the need for training in India was raised. The regulator is sensitive to lab audits and practices, but Indian companies are not being able to implement the required practices, or as would be required. It will take time for corrective action because one needs to clearly understand the requirements in the first place. Right now, all our learning is just based on reports, so there can hardly be any preventive action,” said a top official of a Hyderabad-based company, who too did not want to be named.

There is need for companies to shift from compliance to quality, since the FDA cares about quality and focuses on quality metrics. The focus should be on risk assessment process, product and public health.

Rahul Prithiani, director of Crisil Research, said, “In the past few years most of the violations of current good manufacturing proce­sses (cGMP) by Indian com­panies have been in the areas of systems and proce-sses or related to personnel and facility itself. The companies need to focus on these areas proactively. Further, timely corrective and preventive actions have to be taken to avoid FDA action.”

Ranjit Kapadia, senior vice-president at Centrum Broking, is of the view that the FDA training will be good for industry. “The training will help both Indian companies and regulators understand what is exactly expected of them. They must understand the rule to perfect documentation so that the regulatory, compliance and quality issues may not turn out to be a wider problem in the future. The FDA is extremely cautious about the fact that there should not be any repetition of the Chinese heparin contamination case.”

Illinois-based UL, an independent, not-for-profit product safety testing and certification organisation, has also taken up the role to train employees of pharma companies on the compliance norms.

A senior Wockhardt official said his company has put a lot of focus on quality assessment and centralised training. “We have recently enhanced our quality team by appointing around 75 people. The company has also begun imparting centralised training instead of the earlier prevalent centre-wise training,” the official told Financial Chronicle.

A presentation by former deputy drug controller Kapil Bhargava points out that the most reported observation by the regulators compared with the total non-compliance reports (NCRs) is of “documentation” deficiencies, which are almost 50 per cent.

Bhargava said data integrity was a major concern with regulators. One way to check such errors is to move from a manual system to an electronic one.

Ellen Leinfuss, SVP, UL EduNeering, said, “We are looking at large Indian companies that wanted to improve on their scalability. We started this process of educating companies only a few months ago, and about six-eight Indian companies have so far shown interest. As one scales up, one will have to pay the cost for not moving to an electronic mode. A lot of manpower is used to do run-around with papers which keeps space for more such errors.”

The training programmes of FDA and UL will also be cost-effective for Indian companies. “It is important to reinforce the guidelines set by the regulators to continue doing business with them. These programmes will be useful for those who have already been exporting to the overseas market, especially to the US, and also for the first timers. Compared to doing such trainings in the US, it will be much cheaper doing it here in the home-country,” said the pharma consultant quoted earlier.

So, at a time when demand for generics is poised to increase in the US, the Indian pharma industry is expected to continue to enjoy its lion’s share in cheaper generics, thanks to the growing number of approvals and registration of the largest number of generic products with the USFDA in recent years.

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