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Time To Reinvent

‘The first step in reinventing ourselves is to recognise what our customers want and to provide access to goodquality and affordable medicines’

In addition to playing a key role in the nation’s delivery of healthcare, the pharmaceutical industry has been a defensive investment for many. Over the last decade, the industry consistently delivered healthy profit margins. The business model, which has served the industry so well, has now come under pressure. The question now is whether the industry can recover from this downturn and reclaim its past glory?

To answer this question, we have to look at how we got here first. The Hatch-Waxman Act of 1984 was the key turning point. It enabled Indian manufacturers to supply generic medicines after the expiry of patent protection to the lucrative US market. The turn of the last century saw Indian manufacturers make significant top-line gains from forays into the US and European markets. Several blockbuster drugs that lost patent protection in the last decade offered windfall first-to-file opportunities. In its ambition to make billion-dollar revenue, the industry somehow lost focus on its raison d’être. We forgot about those we serve.

We never invested in building institutions that support growth. Industry always pushes the envelope, and strong institutions provide checks and balances to questionable practices that are employed when boundaries are pushed. In our case, this balance became lopsided.

It took an outside force, the US Food and Drug Administration (FDA), to open our eyes. Ranbaxy was not an outlier as it was made out to be by both the industry and the sentinel (Central Drugs Standard Control Organisation, CDSCO), which was supposed to keep an eye on the industry.

The industry is reeling from regulatory actions that enjoin it from exporting its product to its largest markets. The Indian Pharmaceutical Association (IPA) has finally found religion in acknowledging that 85 per cent of the country’s drug supply has no therapeutic basis. Awareness about irrational fixed dose combinations has thrown up some interesting legal challenges and fundamental questions about how we allow these drugs to enter the market in the first place. Investors are shying away from making commitments because there is no confidence in our data.

Changes are afoot in the US that impact our industry. In order to address affordability, the US FDA for the first time in its history is trying to influence drug pricing through competition. It recently published a list of branded drugs without patent protection, and it has committed an expedited approval process for generic versions of products on this list. Our government’s signature initiative for controlling costs seems to be two pronged: using the National Pharmaceutical Pricing Authority to establish pricing thresholds; and to address access through JA stores. The success of this initiative will largely depend upon convincing prescribers of the quality of medicines available in our supply chain. Confidence in the industry’s ability to produce quality products largely hinges on the ability of the local regulator (CDSCO) to enforce globally acceptable standards for good manufacturing practice. Expecting a foreign regulator (US FDA) to do that through periodic inspections is akin to expecting the Federal Aviation Administration to regulate safety of Air India flights to the US.  It is unsustainable and will never work.

We have already lost a large part of our active pharmaceutical ingredient business to China. The Chinese are investing in building formulation skills, and will come after our dosage form business sooner than later. It is instructive to look at how China has dealt with a similar problem that is prevalent it its industry. Heparin was a bigger PR disaster than Ranbaxy. But China Food and Drug Administration (CFDA) is a full member of the International Conference on Harmonisation today, while our regulator is an observer to this organisation that sets standards for the industry. Circulars issued last month by the CFDA aim to bring China’s standards closer to globally accepted norms, while our minister for industry and commerce says, “India should be setting standards rather than following the standards which are being set”. Do you ever wonder why the Chinese are more effective at dealing with similar problems than we are?

Given the poor access to primary healthcare in India, especially in rural India where a majority of our population lives, providing access to good quality medicines becomes our first line of defence in ensuring public health. For far too long, we have lived with medicines of questionable therapeutic effect. The recent debate on prescribing mandatory generic drugs has confirmed what we knew anecdotally, that most practicing physicians do not have faith in Indian generics. Forget what the US regulator says about the quality of our medicine, the biggest customers of the industry, our own doctors have no faith in the industry’s product.  

The first step in reinventing ourselves is to recognise what our customers want and to provide access to good-quality, affordable medicines.

For far too long, we have used a “band-aid” approach to addressing the ills of our industry. If the industry has to reinvent itself, we need to rip apart the rot from its roots and start afresh. The legal justice system, which is a key part of the enforcement mechanism, needs to adjudicate the laws of the land consistently and not let convicted companies/individuals off with a slap on the wrist. The government gave an assurance of overhauling the colonial era Drugs and Cosmetics Act in the Parliament almost a year ago, but nothing has come of it yet. In April this year, it issued a notification amending the rules making bio-equivalence studies mandatory for certain class of drugs; another band-aid.

Restoring confidence in the industry will take time, and there will be pain when you rip the band-aid off. It all starts with a globally consistent regulatory framework when it comes to the quality of medicines we produce. Public comment and stakeholder engagement is key when it comes to formulating such an expansive piece of legislation, and I hope our mindset is not what the minister said, that we will set our own standards. That is precisely how we got here in the first place.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.



Dinesh S. Thakur

The author is a public health activist and the chairman of Medassure Global Compliance Corporation

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