Does India Believe In Two Different Drug Quality standards?

“Maintain and sharpen your intellectual honesty so that you’re always realistic. See things as they are, not way you want them to be.”

The above profound statement is what the Management Guru Ram Charan made in his book titled, ‘Execution: The Discipline of Getting Things Done’ co-authored by Larry Bossidy.

Placing the content of this book against current series of events plaguing the Indian pharmaceutical industry, a pertinent question floats at the top of mind. Are these books meant to hone the corporate leadership practices at all level or for preserving in the bookshelves, just as another collector’s item?

This is probably a good question to deliberate upon. Otherwise, why do we keep on encountering barrage of newspaper reports on rampant fraudulent practices within the pharmaceutical industry, especially related to quality of drugs and pricing?

Today’s flavor of ongoing practices:

Just to give a flavor of ongoing practices, following are what appeared in today’s newspaper headlines, besides umpteen numbers of instances reported in the past:

• “USFDA says team threatened during Wockhardt inspection”
• Or “FDA caution on Wockhardt US unit”
• Or even “GSK Consumer fined for overcharging” Crocin Advance tablets

All these similar and unabating instances of “short changing” the systems by the business leadership, vindicate the point that much sought after management Pandits’ precious wisdom to corporate honchos seems to be falling in deaf ears, as a sizable section of the Indian pharmaceutical industry apparently sacrificing the “Intellectual Honesty” in the alter of greed and quick profit making.

“Medicine is for people, not for the profits” – George Merck:

To exemplify “Intellectual Honesty” in the above book, Ram Charan and Larry Bossidy deliberated on ‘The 10 Greatest CEOs Ever’. One of these 10 greatest CEO is George Merck of the global pharmaceutical giant Merck & Co, who articulated his vision for his Company way back in 1952 as follows:

“Medicine is for people, not for the profits.” 

George Merck believed that the purpose of a corporation is to do something useful, and to do it well, which also ensures decent profits.

Some say, those were the good old days of ethics and values. Things do not seem to be quite the same in today’s India, for various reasons. ‘Walking the Talk’ clutching the ethics and values close to one’s heart, is glaringly missing in a large section of pharma leadership of date.

Currently, all indications confirm that the market would keep growing at a decent pace, despite all odds, as we move on. To achieve sustainable success in the rapidly changing business environment, especially in the healthcare space, globally accepted quality standards of products and services, delivered in a credible and equitable way with built in scalability, would matter the most

Does India believe in two different drug manufacturing quality standards?

Not withstanding the possible opportunities galore, as stated above, the spate of ‘Warning Letters’ from the US-FDA have brought to the fore existence of two different quality standards for drug manufacturing in India:

• High quality plants dedicated to serving the largest market of the world – the United States and following the US-FDA regulations.

• Other plants, with much less regulations, to cater to the needs of the Indian population and other developing non-regulated markets.

In a situation like this, especially when many Indian manufacturers are repeatedly failing to meet the American quality standards, the following questions come up:

• Is the US-FDA manufacturing requirement too troublesome, if not oppressive?

• If not, do the Indian and other patients too deserve to have drugs conforming to the same quality standards?

Answers to these questions are absolutely vital to convince ourselves, why should Indian patients have access to drugs of lower quality standards than Americans, with consequential increase in their health risks?

Different strokes for different folks:

To immediately alleviate the business risk of Indian exporters through resumption of business with those banned drugs in the United States, the only immediate solution is to ensure strict conformance to US-FDA regulations by enhancing organizational ethics and value systems to the desired level of acceptance of the US regulator, as most of these were identified as fraudulent practices and alleged ‘threats’, as reported above.

However, for getting answer to the question of dual drug manufacturing quality standards in India, Indian Ministry of Health has already made the public understanding on the subject even more complicated.

This is due to conflicting acts of two responsible officials in the Ministry of Health of India on the same issue, as follows:

• On February 10, 2014, Dr. Keshav Desiraju, the then Secretary of Health signed a “Statement of Intent” with Dr. Margaret A. Hamburg, Commissioner of US-FDA to encourage collaboration between American and Indian regulators to effectively address this issue.

• The very next day, on February 11, 2014, the Drug Controller General of India, while addressing the media expressed his great apprehension against over regulation of the US regulator.

It is, therefore, amazing to note the above different strokes for different folks by the same ministry and on the same very sensitive subject, creating a snowballing effect of confusion within the stakeholders.

Conclusion:

To reap rich harvest out of the emerging gold-plated opportunity, as stated above, not just coming from India, but across the world, Indian pharma does need a strong leadership with unflinching belief in business practices weaved in corporate ethics and values.

Even to come out of the episodes of repeated ‘Warning Letters’ from US-FDA, casting aspersions on the quality of Indian drug manufacturing standards, which are mainly related to alleged fraudulent business practices, strong corporate leadership with high ethics and value standards at all level is of absolute necessity.

Equally important is to follow the visionary statement of the pharma iconoclast George Merck, made way back in 1952 that “Medicine is for people, not for the profits”.

Moving towards this direction, would the newly formed Ministry of Health clarify expeditiously, without any ambiguity and with intellectual honesty that Indian patients are taking as safe and effective medicines as their counterparts, living in any other corner of the developed world, including the United States?

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Does India Believe in Two Different Drug Quality standards?

New ‘Modi Government’ - Would Restoring Cordial Relationship with America Be As Vital As Calling Its Bluff On IP?

Newspaper reports are now abuzz with various industry groups’ hustle to lobby before the ‘Modi Government’ on their expectations from the new regime. This includes the pharmaceutical industry too. The reports mention that the industry groups, including some individual companies, have started getting their presentations ready for the ministers and the Prime Minister’s Office as soon as a new government takes charge on May 26, 2014.

Conflicting interests on IP:

While the domestic pharma industry reportedly wants the new Government to take a tough stand on the Intellectual Property (IP) related issues with the United States (US), the MNC lobbyists are raising the same old facade of so called ‘need to encourage innovation’ in India, which actually means, among others, for India to:

• Amend its well-crafted IP regime

• Change patentability criteria allowing product patents for even ‘frivolous innovation’ by scrapping Section 3(d) of the Indian Patents Act

• Introduce Data Exclusivity

• Implement patent linkages

• Re-write the Compulsory Licensing (CL) provisions and not bother at all, even if patented drugs are priced astronomically high, denying access to majority of Indian population.

Interestingly MNC Lobby Groups, probably considering rest of the stakeholders too naive, continue to attempt packaging all these impractical demands on IP with unwavering straight face ‘story telling’ exercises, without specificity, on how well they are taking care of the needs of the poor in this country for patented medicines.

This approach though appears hilarious to many, MNC lobbyists with their single minded purpose on IP in India, keep repeating the same old story, blowing both hot and cold, nurturing a remote hope that it may work someday.

Recent views:

On this score, along with a large number of independent experts from across the world, very recently, even the former Chairman of Microsoft India reportedly advised the new ‘Modi Regime’ as follows:

“While the new government must work hard to make India more business friendly, it must not cave in to pressure on other vital matters. For instance, on intellectual property protection, there is enormous pressure from global pharmaceutical companies for India to provide stronger patent protection and end compulsory licensing. These are difficult constraints for a country where 800 million people earn less than US$ 2 per day.”

The Chairman of the Indian pharma major – Wockhardt also echoes the above sentiment by articulating, “I think Indian government should stay firm on the Patents Act, which we have agreed.” 

Other domestic pharma trade bodies and stakeholder groups in India reportedly expect similar action from the ‘Modi Government’.

Strong India matters:

India is the largest foreign supplier of generic medicines to America, having over 40 percent share in its US$ 30-billion generic drug and Over-The-Counter (OTC) product market.

Thus, expecting that Indian Government would wilt under pressure, the 2014 ‘Special 301 Report’ of the US Trade Representative (USTR) on Intellectual Property Rights (IPR) has retained India on its ‘Priority Watch List’, terming the country as violators of the US Patents Law. It has also raised serious concern on the overall ‘innovation climate’ in India urging the Government to address the American concerns in all the IP related areas, as mentioned above. 

My earlier submission in this regard:

In my blog post of February 5, 2014, I argued that patentability is related mainly to Section 3(d) of the Patents Act. and India has time and again reiterated that this provision and all the sections for invoking CL in India are TRIPS compliant. If there are still strong disagreements in the developed world in this regards, the Dispute Settlement Body of the ‘World Trade Organization (WTO)’can be approached for a resolution, as the WTO has clearly articulated that:

“WTO members have agreed that if they believe fellow-members are violating trade rules, they will use the multilateral system of settling disputes instead of taking action unilaterally. That means abiding by the agreed procedures, and respecting judgments. A dispute arises when one country adopts a trade policy measure or takes some action that one or more fellow-WTO members considers to be breaking the WTO agreements, or to be a failure to live up to obligations.”

Thus, it is quite intriguing to fathom, why are all these countries, including the United States, instead of creating so much of hullabaloo, not following the above approach in the WTO for alleged non-compliance of TRIPS by India?

How should the new Government respond?  – The view of a renowned pro-Modi Economist:

Subsequent to my blog post of February 5, 2014, as mentioned above, a recentarticle dated March 4, 2014 titled “India Must Call The US’ Bluff On Patents” penned by Arvind Panagariya, Professor of Economics at Columbia University, USA, who is also known as a close confidant of Prime Minister Narendra Modi, stated as follows, probably taking my earlier argument forward:

“Critics of the Indian patent law chastise it for flouting its international obligations under the TRIPS Agreement. When confronted with these critics, my (Arvind Panagariya) response has been to advise them:

• To urge the US to challenge India in the WTO dispute settlement body and test whether they are indeed right.

• But nine years have elapsed since the Indian law came into force; and, while bitterly complaining about its flaws, the USTR has not dared challenge it in the WTO. Nor would it do so now.

• Why?

• There is, at best, a minuscule chance that the USTR will win the case.

• Against this, it must weigh the near certainty of losing the case and the cost associated with such a loss.

• Once the Indian law officially passes muster with the WTO, the USTR and pharmaceutical lobbies will no longer be able to maintain the fiction that India violates its WTO obligations.

• Even more importantly, it will open the floodgates to the adoption of the flexibility         provisions of the Indian law by other countries.

• Activists may begin to demand similar flexibilities even within the US laws.

On possible actions against India under the ‘Special 301’ provision of the US trade: 

 For more please click on this link

Is Sun Pharma Sailing in The Same Boat As Ranbaxy?

A ‘Warning Letter’ of May 7, 2014 from the USFDA to Sun Pharmaceuticals – the no.1 pharma major by market capitalization in India has nailed its Karkhadi, Vadodara, Gujarat based plant in India for similar data deletions as found at Ranbaxy.

Such data manipulation reportedly got Ranbaxy into so much trouble that it last year paid U$ 500 million and agreed to plead guilty to 7 felony charges.

The concerned Gujarat based plant of Sun pharma manufacturers the antibiotic cephalosporin.

This development came to the fore just weeks after Sun Pharmaceutical announced a US$ 3.2 billion deal to buy the much troubled, yet the largest generic drug company of India – Ranbaxy.

My earlier apprehensions on this deal:

At that time in my blog post of April 14, 2014, I expressed my apprehensions on this deal on four key areas, with as many words as follows:

1. Sun Pharma too is under USFDA radar:

As we know that along with Ranbaxy, Wockhardt and some others, Sun Pharma also had come under the USFDA radar for non-compliance of the Current Good Manufacturing Practices (cGMPs).

Under the prevailing circumstances, I apprehended, it would indeed be a major challenge for Sun Pharma to place its own house in order first and simultaneously address the similar issues to get USFDA ‘import bans’ lifted from four manufacturing plants of Ranbaxy in India that export formulations and API to the United States.

This could be quite a task indeed for Sun Pharma.

 2. Pending Supreme Court case on Ranbaxy:

Prompted by a series of ‘Import Bans’ from US-FDA on product quality grounds, the Supreme Court of India on March 15, 2014 reportedly issued notices to both the Central Government and Ranbaxy against a Public Interest Litigation (PIL) seeking not just cancellation of the manufacturing licenses of the company, but also a probe by the Central Bureau of Investigation (CBI) on the allegation of supplying adulterated drugs in the country.

Ranbaxy/ Sun pharma would, therefore, require convincing the top court of the country that it manufactures and sells quality medicines for the consumption of patients in India.

 3. CCI scrutiny of the deal:

Out of the Top 10 Therapy Areas, the merged company would hold the highest ranking in 4 segments namely, Cardiac, Neuro/CNS, Pain management and Gynec and no. 2 ranking in two other segments namely, Vitamins and Gastrointestinal.

Noting the above scenario and possibly many others, the Competition Commission of India (CCI), after intense scrutiny, would require taking a call whether this acquisition would adversely affect market competition in any of those areas. If so, CCI would suggest appropriate measures to be completed by the two concerned companies before the deal could take effect.

This would also be a task cut out for the CCI in this area.

 4. SEBI queries:

Securities and Exchange Board of India (SEBI), has already sought information from Sun Pharmaceutical on stock price movement and the deal structure.

According to reports, it is due to “Ranbaxy shares showing good movement on three occasions: first in December, then in January and subsequently in March 2014, just before the deal was announced.” This has already attracted SEBI’s attention and has prompted it to go into the details.

The matter is now subjudice.

The current scenario:

Out of my four identified areas of challenges, Sun Pharma has already started feeling the heat in the following two areas:

1. Quality issues with FDA:

The issue is extremely important, as to turn around Ranbaxy, this has to be addressed to the complete satisfaction of the USFDA. Otherwise, the game is a non-starter.

2. SEBI queries on stock price movement and the deal structure:

In this area, just today the Supreme Court reportedly refused to stay the Andhra Pradesh High Court order that stalled the US$ 4 billion Sun Pharma merger with Ranbaxy. Daiichi Sankyo and Ranbaxy had approached the Supreme Court seeking vacation of the stay of the status quo order by the High Court, which on April 25, 2014 directed the BSE and NSE not to approve the merger while admitting a petition by retail investors alleging insider trading in the US$ 4 billion deal.

The vacation bench comprising of Justices B S Chouhan and A K Sikri also directed the High Court to decide on Sun Pharma’s application seeking vacation of the status quo order within two days and posted the matter for further hearing on May 29. The judges observed that the Andhra High Court has no territorial jurisdiction over the merger process.

The outcome of this case would indeed be interesting and crucial for Sun Pharma.

Conclusion:

Even if one keeps aside the three issues out of above four as the legal ones, the very first challenge related to USFDA on drug quality, would continue to remain as the ‘make or break’ area, for this deal to be commercially successful for Sun Pharma.

When USFDA reportedly nailed Sun Pharma’s Karkhadi , Vadodara, Gujarat based plant for similar data deletions as found at Ranbaxy, it may give a feeling that the acquirer Sun Pharma possibly is also sailing in the same boat as the acquiree Ranbaxy.

If this apprehension makes any sense, the moot question that comes up:

“Can one blind man show the right direction to another blind man sailing in the same boat in the midst of a storm?”

Let us wait for the eternal time to tell us the answer.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion

Big Pharma Receives Another Body Blow - Would Indian Slumber End Now?

Big Pharma Receives Another Body Blow - Would Indian Slumber End Now?

On May 13, 2014, The New York Times reported, while major pharmaceutical companies have been facing increased scrutiny of their marketing practices from governments around the world, last Wednesday the Chinese authorities sent a strong warning to the pharmaceutical industry implicating Mark Reilly, the former head of Glaxo’s China operations, of ordering his subordinates to form a “massive bribery network” that resulted in higher drug prices and illegal revenue of more than US$150 million.  Mr. Reilly, a Briton, and two Chinese-born Glaxo executives, Zhang Guowei and Zhao Hongyan, had allegedly arranged to bribe government officials in Beijing and Shanghai.

The Chinese police has reportedly said that its 10-month investigation has found that under Mr. Reilly, Glaxo had pushed its staff to meet aggressive sales targets and that the company had conducted “false transactions” through its financial department to transfer “illegal gains” made in China to overseas companies. The authorities also said Mr. Reilly and other senior executives at Glaxo had bribed officials to stop investigations of wrongdoing at the company.

The report also states, although bribery is common in China, it is rare for foreign-born executives from MNCs to be prosecuted. In 2009, a Chinese-born Australian executive at the British-Australian mining giant Rio Tinto was arrested in a bribery and money-laundering case.

“Ethics Matter” – A Chinese warning to MNCs:

On May 16, 2014, Xinhua – the official news agency of China wrote in an editorial that Chinese probe into GSK’s local sales practices should send a warning to other foreign companies doing business in the country that “Ethics Matter”.

This stern action by China is indeed another body blow on the so called ‘ethical image’ of Big Pharma, despite its sophisticated global ‘Public Relations’ machinery working overtime under the respective pharma associations across the world.

Drug price manipulation:

While citing the example of a hepatitis B drug – Heptodin, Xinhua editorial said that GSK “manipulated prices to disguise real costs”, as Heptodin is declared as 73 Yuan to customs in China even though the actual cost is 15.7 Yuan and is sold at 26 Yuan in Canada or 30 Yuan in the U.K.

Quoting a Ministry of Public Security official at a briefing on May 14, it stated that Glaxo charged prices in China that in some cases were seven times as high as in other countries, and used the extra money to pay bribes.

According to this media report, in June last year, “Chinese authorities began investigating allegations that Glaxo had funneled money through local travel agencies to pay bribes to doctors in return for prescribing its drugs. They last year detained some executives on suspicion of economic crimes involving 3 billion Yuan of spurious expenses and trading in sexual favors.”

Not a first time allegation:

This is not the first of such cases and most probably won’t be the last also. Since quite some time many pharmaceutical giants are being reportedly investigated and fined, including out of court settlements, for bribery charges related to the physicians.

In this context July 4, 2012, edition of The Guardian reported a similar astonishing story on Big Pharma. When you click on this short video clipping, which was published on September 29, 2012 you would see that Big Pharma’s Medicaid fraud penalties had reached a record high with GlaxoSmithKline fined $3 Billion in the United States at that time.

It is widespread:

Following are a few more recent examples to help fathom the enormity of the problem:

• In March 2014, the antitrust regulator of Italy reportedly fined two Swiss drug majors,Novartis and Roche 182.5 million euros (U$ 251 million) for allegedly blocking distribution of Roche’s Avastin cancer drug in favor of a more expensive drug Lucentis that the two companies market jointly for an eye disorder.

• Just before this, in the same month of March 2014, it was reported that a German court had fined 28 million euro (US$ 39 million) to the French pharma major Sanofiand convicted two of its former employees on bribery charges.

• In November 2013, Teva Pharmaceutical reportedly said that an internal investigation turned up suspect practices in countries ranging from Latin America to Russia.

• In May 2013, Sanofi was reportedly fined US$ 52.8 Million by the French competition regulator for trying to limit sales of generic versions of the company’s Plavix.

• In August 2012, Pfizer Inc. was reportedly fined US$ 60.2 million by the US Securities and Exchange Commission to settle a federal investigation on alleged bribing of overseas doctors and other health officials to prescribe medicines.

• In April 2012, a judge in Arkansas, US, reportedly fined Johnson & Johnson and a subsidiary more than US$1.2 billion after a jury found that the companies had minimized or concealed the dangers associated with an antipsychotic drug.

There are many more of such examples.

The situation is alarming in India too:

For more please click on this link .