Developing World Healthcare Blog

India, the FDA, and Why You Should Care

Indian Companies Are a Critical Source of the U.S.’ Generic Drugs

India has emerged as the second-largest (to Canada) exporter of generic drugs to the US, representing about 40% of volume. India also has the highest number (519) of non-US factories registered with the Food & Drug Administration (FDA), just ahead of China’s 517. Unfortunately, several events during 2013 and 2014 highlight the vulnerabilities of relying on India as a major source of generic drugs. During this time, the FDA banned imports from 25 factories. Even though these factories represent only 5% of the total, the bans have delayed and/or reduced generic competition for certain branded drugs (most notably Novartis’ blockbuster Diovan), and potentially raised prices for others.

Competitive Pressures and Conflicting Regulatory Approaches Open the Door to Trouble

Manufacturing generic drugs is a challenging business. Except for 180 days of market exclusivity granted to the company that is “first to file,” the business is commodity-oriented with supply and demand determining pricing, and the lowest-cost providers reaping the rewards. That said, India has some natural strengths here: a large pool of scientific talent, and low-cost land, labor, etc. At the same time, the competitive pressures create powerful incentives to cut corners. Also, major differences between India’s and the US’ regulatory philosophies send conflicting signals to the industry. India’s regulators approve products only for the home market, and merely collect and test samples of drugs for potential safety issues. In contrast, the FDA inspects factories for their compliance with Good Manufacturing Practice (GMP), and violations of GMP lead FDA to conclude that the products are defective.     

Should Pharmaceutical Production Be Similar to Sausage Making?*

Several high-profile import bans in 2013/14 highlighted troubling conditions found in certain factories:

Ranbaxy’s Toansa plant: Presence of "too numerous to count (TNTC) flies" in sample storage room; un-calibrated and unqualified instruments in laboratory; inadequate control over samples; and non-adherence to sample analysis procedures.

Wockhardt’s Chikalthana plant (contributes around 40% of profit): Dilapidated buildings with blighted windows connected by flaking pipes and capped by a rusty roof; urine spilling over open drains; soiled uniforms and mold growing in a raw-material storage.

Sun Pharmaceutical’s Karkhadi plant: Failure to ensure the completeness of laboratory records; and the manufacturing staff’s inadequate training and experience. Most observers view Sun as a high-quality operator, so these issues came as a shock.

FDA’s Staffing Efforts in India Facing Headwinds

The FDA is attempting to increase the number of inspections of India factories, but faces inadequate staffing and management turnover. An article in The Financial Express reports that FDA has conducted 90 inspections through August 4 of FY14, down from 111 in FY13 and 141 in FY12. FDA has fourteen people in India of which eight are responsible for medical products even though India agreed to permit FDA to have 19 inspectors. Even worse, about half of these inspectors are on short-term rotations of 2-3 months. In addition, FDA’s director for India resigned in May. FDA reports that they are on track to rebuild the inspection team to ten in the next few months.

India’s Central Drugs Standard Control Organization (CDSCO) recently issued new guidelines for inspections. Major changes include requiring inspections to last 2-5 days (FDA’s are 1-2 weeks), and inspectors to perform at least 5 inspections annually. FDA’s long-term strategy appears to be to help India boost its inspection capabilities to reduce reliance upon its own resources.

The Developing World’s Requirement for India to Upgrade Carries Risk for All

There is ongoing risk of supply disruptions and delayed generic launches as Indian companies adjust to the FDA’s standards:

  1. Prices for certain drugs could increase (even skyrocket.)
  2. Manufacturers probably will have difficulty passing along higher costs.
  3. Industry consolidation could accelerate: note that Sun Pharmaceuticals is purchasing Ranbaxy.

 

* Attribution: John Godfrey Saxe (2 June 1816 – 31 March 1887), American poet:

 

“Laws, like sausages, cease to inspire respect in proportion as we know how they are made.”