More than just a rubber stamp?

Indian drug makers have been boasting of having the highest number of US FDA (Food and Drugs Administration) approved facilities outside the US. However, as leading drug makers come under the scanner of the US watch dog, they feel that the FDA has become stringent on Indian drug makers, but, industry experts negate the same. Arshiya Khan does a reality check

Consider this—Contrary to expectations, Ranbaxy Labora-tories managed to report a 11 percent growth in USA despite the ongoing US FDA ban. Given the seriousness of the US FDA issue, it is imperative for the company to resolve it immediately. Acquisition of a US FDA approved facility can provide short-term trigger to the stock price. Operational performance for next few quarters is likely to be muted till the US FDA issues are resolved, as per a Motilal Oswal Report. Going by the performance of the quarter despite the hanging sword the company has performed above expectations. The biggest challenge to achieve the growth target is for Ranbaxy, Lupin and Dr Reddy's Laboratories (DRL), as they would require higher approvals from the US FDA. Comparatively, Sun Pharma and Glenmark may need lower drug approvals. Ranbaxy would require 20 more approvals to meet the 20 percent growth target, as per a report by the Credit Suisse.

In such a scenario when the US FDA is constantly keeping an eye on the Indian drug makers will they be able to gain the expected approvals from the FDA?

What brings the FDA to light?

"FDA only provides an oversight. In India, due to shortage of manpower and resource constraint, Indian FDA is unable to fulfil its audit obligation fully" - Dr Ajit Dangi President and CEO Danssen Consulting

"It is unfair to blame the 'MNCs' for everything. The 'MNCs' themselves are the most frequent targets of USFDA" - Dr Gopakumar G Nair Patent Attorney and CEO Gopakumar Nair Associates

"I do not think any regulator can have two different standards for the same generics. The laws of the USFDA are very clear and transparent about the requirements to be complied with the generic drugs and the USFDA regulators have a responsibility to ensure compliance" - Dr Venkateswarlu Former DCGI

The US FDA, perceived to be one of the toughest regulatory agencies in the world, has come under severe pressure from the US Congress to spruce up its act due to several incidents, which took place in the US recently. These include contamination of heparin injections resulting in several deaths, melanine in candies imported from China, high lead content in paint used in toys, biphenyls in packaged drinking water, etc.

What could get worse is that Ranbaxy defaulted on one of its manufacturing facilities during this time and the outcome of this has to some extent fallen on Indian drug companies as well.

The US FDA banned 30 Ranbaxy drugs made at two of its facilities in India and issued two warning letters to the Indian company. Added to the list is Sun Pharma's US subsidiary which was also hauled up with FDA deciding that it will not give fresh marketing approval for drugs made from Sun's Detroit-based plant. The latest to be hit was Lupin, when the FDA pointed out 15 manufacturing deficiencies at Mumbai-based drugmaker's Mandideep plant in Madhya Pradesh.

Going by this the FDA would now pull up Indian drug makers even for minor deficiencies, which will malign the Indian drug industry's reputation though there is no evidence to prove that any of their drugs lack either efficacy or safety. But if Ranbaxy's case is proved in favour of the FDA, it might create reputational issues for the sector.

What is also creating a buzz in the US now is that the Indian companies are not meeting regulatory norms, and US companies are outsourcing (to India) only to increase margins and often compromising on quality. And hence, the biggest set back that Indian companies might now face is that of being dubbed as an inferior quality manufacturing location in the international market. China is already viewed with suspicion in the US after several cases of inferior quality drugs, including a recent case when batches of contaminated heparin raw material killed 149 people in the US, were traced to a Chinese location. Therefore, the regulatory body is expected to be more stringent with Indian companies.

Reality check

Issuance of warning letters to Indian drug makers shows the caution that these developed countries ensure while dealing with critical components for human consumption like medicines. And this is in sharp contrast to the abysmal standards of the drug regulatory system in India, which allows even more serious offences of the kind to go unpunished and often, even unnoticed. This brings up a question—are the USFDA norms too stringent on Indian pharma or is the Indian drug regulatory system too lax?

Avers Dr Venkateswarlu, former DCGI, "I do not think US FDA is harsh. As per the information available from the 483s (483s represent concerns noted by an FDA investigator after completion of inspection. This is the form used by investigators to record their observations of non-compliance with cGMPs), Ranbaxy has violated the GMP requirements specified under the USFDA Regulations. The USFDA is only ensuring that the drugs supplied to patients in the US are complying with the requirements since quality has to be built in design through compliance to GMPs."

Agrees Dr Gopakumar G Nair, Patent Attorney and CEO, Gopakumar Nair Associates, USFDA is rightly 'harsh' on all aspects of quality assurance, documentation, integrity in GMP, GLP and GCP and other areas. USFDA is 'not' selectively harsh on Indian pharma. He continues, "FDA in countries like India, are a bit more liberal and 'soft' when dealing with irregularities in documentation."

It's not only the Indian companies who are being scrutinised. Continues Nair, all developed nations supplying generic drugs are subject to similar stringent review. He says, "All manufacturers, including those in the US, are dealt with equally 'harshly'."

Also doing the rounds is another question—is the US FDA acting under pressure from the MNC lobby who would like to curtail the activities of generic players? Nair negates this. He says, "It is unfair to blame the 'MNCs' for everything. The 'MNCs' themselves are the most frequent targets of USFDA." Dr Ajit Dangi, President and CEO, Danssen Consulting, concurs, "MNCs have also been censored by the FDA for non-compliance." Sharing insights, Nair says, "The type of 'notice' and 'punitive action' received by an Indian company is routinely being received by many MNC pharma companies as well. Only that they are not so much publicised and politicised. Maybe there are isolated attempts to resort to 'non tariff barriers' or 'technical barriers' practiced by individual players or governments. Such tactics invariably boomerangs."

Striking a similar chord, Dangi exclaims, "This is more of a perception than a reality. Everyone knows that generics are a reality and that is why many MNCs also have a generic arm." (eg Novartis having Sandoz).

Policies and politics

With the Obama administration stressing on reducing healthcare costs, through lower cost medication, generics seem to be the answer. Going by this will the US FDA have to bow to the administration's will and adopt a more lenient stance? Remarks Venkateswarlu, "I do not think any regulator can have two different standards for the same generics." He explains, the laws of the USFDA are very clear and transparent about the requirements to be complied with the generic drugs and the USFDA regulators have a responsibility to ensure compliance. Agrees Dangi, "Both US FDA and the administration have the same goal and ie to provide American people with good quality, safe and efficacious drugs at affordable price."

On a different note Nair highlights that the latest US President, Barrack Obama's move to legalise 'Buy American' is the biggest threat to global trade including an assault on WTO and TRIPs and the provision of 'National Treatment' which is at the heart of the WTO and TRIPs.

Loopholes in the Indian regulatory system

Both Indian system and US FDA are different regulatory systems operating at different levels. The Indian system is far behind as the system does not address therapeutic quality, drug master file (DMF) and change controls in the DMF (SUPAC) guidelines. The process of marketing authorisation currently followed in India is far from satisfactory and needs a substantial improvement, according to Venkateswarlu.

All FDA audits are basically paper audits carried out for a few days. According to the FDA, the primary responsibility of producing safe and efficacious drugs is with the manufacturers.

There may be various reasons for the gaps in the way the Indian regulatory system functions. Nair highlights, "The drug regulations are not adequately and strongly enforced, partially due to inherent 'system' difficulties and failures and partially due to 'peer' pressure or excessive political interference." He remarks, "The USFDA enforces the rule of the book, literally. There is no room for deviations and individual discretions."

Dangi makes another point, "FDA only provides an oversight. In India, due to shortage of manpower and resource constraint, Indian FDA is unable to fulfil its audit obligation fully."

He continues to say that the schedule `M `of the Indian Drugs Act is the minimum GMP standards required to run a pharma facility. Even then there was a resistance from small scale units for its timely implementation. Also, we do not have a federal system like the US, as a result of which we have varying degrees of implementation of regulatory practices across various states. He suggests, a Central Drug Authority, as recommended by Dr Mashelkar Committee, is the way to go.

Filling the missing gaps, Nair elaborates, Indian regulatory practices, both from the industry and trade, as well as from FDA and DCG(I) need to be revamped and encouraged to self-regulate, self-correct and voluntarily clean-up.

The new amendments

More so, as per recent guidelines, Indian pharma developing oral anti-diabetes drugs and targeting the US market will have to follow new 17 December 2008 recommendations by the US FDA, or FDA, and prove that their drug therapies for type 2, or adult onset, diabetes would not increase cardiovascular risks. Amongst many other companies these would include Indian companies like DRL, Piramal Life Sciences, Biocon and Glenmark Pharmaceuticals. Also stricter USFDA norms will force Indian companies to manufacture in the US, which will result in increase in costs.

This might be a cheap trick on side of the Obama government as it is looking at sourcing generic products and there may be an attempt by global innovator majors to question the standards of Indian drugs and stop their entry.

USFDA comes to India

The perception that a considerable part of the industry might have is whether the FDA setting up offices in India will sideline the Indian drug regulatory system?

"No such apprehension is valid. Indian regulations will oversee only Indian regulatory provisions. USFDA will (as before) continue to satisfy themselves that USFDA requirements are uniformly and without exception, throughout the year, maintained by the USFDA approved units."

Besides, this will help potential Indian companies to subject themselves to USFDA inspection faster. The guidance and knowledge-sharing will also improve. The setting-up of USFDA offices in India will help the USFDA to carry out surprise inspections, periodically or as the unit deserves. The problems faced by Indian USFDA approved units are also the same, that they will be subjected to 'surprise inspections' more than before. To that extent, it is all the more a need of the hour to develop a 24x7x365 quality culture in all aspects of corporate governance. Small and medium units will not in anyway be impacted by USFDA opening office in India. On the contrary, we will have more 'experts in town' to rely upon, says Nair.

As issues with regulatory authorities change, it is not going to be that easy for Indian firms to absorb the blow and go ahead. If they do not want to loose on the market share the only way out for them is to ensure compliance and fulfil the requirements of regulated markets. However, Dangi feels, "Only way is to have a continuous dialogue with FDA’s of the developed world and seek guidance from them. The case in point is that of China. They have developed excellent working relationship with the US FDA and made continuous improvements.”

arshiya.khan@expressindia.com