Time to call the US bluff on pharmaceuticals

While Indian drug makers are expected to adhere to norms in the US, one of their key markets, why aren't US companies operating in India following the laws here?

Margaret Hamburg, Commissioner of the US Food and Drug Administration (US FDA) is in India to ensure that products shipped to the US from India meet their requirement of safety and quality. The visit is a welcome move, especially after a series of penalties and bans have been imposed on Indian pharmaceutical companies who were exporting to the US.

In all the cases, evidence has been given that companies had not followed ethical manufacturing practices. There is nothing wrong in banning them and, in fact, that is what Indian drug enforcement authorities should be doing. If something is not good for human consumption in the US, it certainly is not good in India. Rather than following stricter manufacturing policies and monitoring them through surprise checks, it is surprising that the Indian government has asked US FDA to announce its arrival to manufacturing companies, thus giving drug makers time to get their act right.

The US regulator has also said that it plans to conduct workshops across India to educate Indian drug firms about the changing quality requirements in the US. This too is a step in the right direction.

While there have been voices against the way Indian companies were being treated and the high level of penalties imposed, the fact is that the US FDA has been strict with companies across the globe, including those in the US. As Yusuf Hamied, chairman of Cipla pointed out in an interview with Business Standard [CLICK HERE TO READ THE INTERVIEW] that out of the 120 warning letters that have been issued by US FDA, only six have been given to Indian companies.  Johnson & Johnson’s plant in US has been shut down, while companies like Pfizer, Glaxo and Teva have been prosecuted as well.

India is the third largest trade partner of the US and the second largest supplier of over-the-counter (OTC) formulations and prescription drugs to the US. It is in Indian companies’ interest that they follow the law of the land to which they are exporting. Passing of Obamacare is a big opportunity for Indian firms. The US, with its high level of debt and deficit, is not in a position to finance the populist scheme by buying pharmaceutical products from its own companies. It needs a cheaper source of products. That is where India, known as the pharmacy of the world, comes in.

Having said that, the point about following the law of the land also holds true for US companies, especially those who are currently operating in the country, or intend to do so.  

Off late, especially after the apex court judgement against Novartis for trying to extend its already expired patent for cancer drug Glivec, pharmaceutical companies in the developed world (termed as big pharma), have been pressurising their government to act against India.  In late 2002, Dr Reddy's won a similar case against Pfizer, for Amlodipine Maleate, which also was a 'me-too' product. Unable to launch blockbuster drugs, Big Pharma have resorted to tweaking their old innovations in order to extract more money. Rather than accepting the patent laws of the country they want to impose the laws prevalent in their country.

Amit Gupta, Advocate on Record, Supreme Court of India and Attorney, New York State Bar in an article in Business Standard [CLICK HERE TO READ THE ARTICLE] pointed out that the US Chamber of Commerce has recently asked Barack Obama Administration to designate India a Priority Foreign Country. This is the worst classification given to foreign countries that deny adequate and effective protection of intellectual property rights. US industry trade group Pharmaceutical Research and Manufacturers of America (PhRMA) have also voiced similar view.

Just as Indian companies are expected to maintain quality and safety standards for the US market, big pharmaceutical should also respect the rule of the land. The essence of the Supreme Court order was that India cannot afford the high price of drugs. The order was not against research as big pharma makes it sound. Not only in India but globally too, there are only a select few who can afford the high price of products these big pharma charge on the pretext of research.

In the case of Glivec, the actual discovery was done by a University Professor, but the economic benefit of the drug was claimed by Novartis. Not happy about getting a monopoly status for just 20 years, the company wanted its exclusivity to be extended by tweaking the drug a bit without impacting the efficacy of the product. Governments in developed countries can afford to pamper such practices but not those in the developing world.

It is high time the government of India played a tough role. The US needs cheap drugs and US companies need big markets like India. Few Indian patients can afford the high price of patented drugs, and those who can, generally do not get themselves treated in the country. But before we call the US bluff we need to get our act together by following the best manufacturing practices and not giving them an opportunity to ban us.