For Improving Drug Quality in India – A Bizarre Intent

On January 16, 2017, quoting a Government source, a media report revealed, “India’s drug regulator is looking to inspect US pharmaceutical facilities, making critical medicines so that only high-quality products are imported from them.”

This intent follows a similar decision of the apex regulatory body – the Central Drugs Standard Control Organization (CDSCO), against some Chinese manufacturers on drug quality concern. The latest proposal to this effect was sent to the health ministry the previous week – the above report adds.

In this article, I shall explore the fundamental basis of this specific initiative. If it has any, I shall try to fathom whether it’s yet another case of misplaced priority of the decision makers, if not a bizarre one.

The current perspective:

About a couple of years ago, an article published in the global financial daily – the Financial Times, on September 9, 2015 titled, ‘Indian drugs: not what the doctor ordered’, articulated that the Indian pharma industry ‘now face a serious credibility crisis, as they battle to allay western regulators’ concerns about their manufacturing practices — especially the reliability of data from trials of their medicines.’

The report also pointed out: ‘Overseas regulators have been scrutinizing and banning products from some of India’s biggest and most reputable groups — including Sun Pharmaceuticals, IPCA, and Wockhardt – many of which have ongoing relationships with large multinational drug companies.’

Has anything changed now?

Nothing perceptibly seems to have changed in this area since then, to set our ‘own house in order’. Not even after witnessing a barrage of drug quality related ‘import bans’ by the US-FDA that involves Indian manufacturers of all sizes and scale. Instead, CDSCO turns its focus on setting-right ‘others’ manufacturing houses with its reportedly meagre manpower resources. Curiously, these initiatives include even those countries, which are globally acclaimed for having stringent regulatory frameworks well in place, such as the United States (US) and the European Union (EU).

Where a justifiable reason exists:

On Chinese API import by different countries, the article titled “Imports To Fuel India’s Active Pharmaceutical Ingredients’ Requirements,” published by Bloomberg | Quint on November 15, 2017 brings out a nice comparison. It says: ‘Among the top emerging and developing economies, India is a major importer of bulk drugs from China at 54 percent, followed by Indonesia at 24 percent, Brazil at 12 percent and South Africa at 8 percent.’ It also writes, in comparison, most of the developed markets of the world import in the range of just 2-3 percent from China.’

Going by this fact, Indian drug regulator’s inspection of some of the Chinese API plants is, by all means, understandable – mainly for two reasons. One, India is largely dependent on Chinese bulk drugs for formulations manufacturing and consumption in the country, besides exports. And the second, some incidents of compromised Chinese drug ingredients have already been reported. For example, citing quality issues, the Drug Controller General of India (DCGI) has recently, reportedly banned import of such questionable drug constituents from six major Chinese pharma companies. This is not a solitary instance. Similar incidents involving Chinese drugs were  reported in the past, as well.

An irony:

When international media agencies flash headlines, such as “U.S. and EU regulators urge Indian drug companies to step up standards,” Indian drug regulators decide to inspect overseas manufacturing plants, as well. Such a decision becomes intriguing, especially when it includes those countries, where from imports are meager, besides their stringent drug quality standards being globally acclaimed.

This is an irony, as the recent local media headlines like, “India among countries where 10% of drugs are substandard: WHO” or “… 27 medicines sold by top firms ‘fail’ quality tests in seven states”, unfold the veracity of drug regulatory laxity within the country.

The basis of the recent proposal becomes more incomprehensible, when the DCGI himself reportedly admits, even today that: “Substandard medicines are a major issue in India and we are looking out for ways to tackle the problem. As quality regulator, we are developing proper mechanisms to stop manufacturing and sale of counterfeit drugs so that they don’t reach the patients.”

The reasons cited for overseas plant inspection:

According to media reports, the reasons cited in the CDSCO proposal for Indian Drug Inspectors’ (DI) inspecting other overseas manufacturers, including those in the US and Europe, are broadly as follows:

  • Most of over 28 manufacturing sites registered in India from the US, manufacture critical formulations or critical new therapies, which are not available in other countries, as they fall into high-risk categories.
  • Inspections will not only result in compliance to the Drugs and Cosmetics Act and Rules, but also give exposure to Indian drugs inspectors to new technology adopted in the manufacturing and state-of-the-art facilities.
  • The sites will be inspected if they have made substandard drugs, received quality complaints, or faced action by other regulatory authorities.
  • Companies shortlisted for the proposed inspections include those making biologic and anti-cancer medicines.

Let me hasten to add, there is nothing wrong with this intent as such, but the moot point is: what’s the core issue that we are talking about? While addressing this point, let’s first have a quick look at India’s import of pharmaceutical product around the last two decades.

India’s import of pharmaceutical products – 1996 – 2018:

According to ‘Trading Economics’ (last updated in January of 2018), India’s import of pharmaceutical products decreased to USD 254.57 Million in 2016 from USD 795.34 Million in 2015. Average drug imports are shown as USD 645.06 USD Million from 1996 until 2016, reaching an all-time high of USD 1747.65 Million in 2012, and a record low of USD 64.32 Million in 1996.

Nonetheless, the micro- picture of India’s bulk drugs or API import isn’t quite the same. On December 19, 2017 in a written reply to the Lok Sabha, the Minister of State, Chemicals and Fertilizers gave details of India’s bulk drug imports from top five countries, as follows:

Country Import value Rs Crore Import value $ Million (Approx.)
China 12,254.97 1915 (66%)
United States 820.18 128 (4.5%)
Italy 701.85 110 (3.8%)
Germany 485.11 76 (2.6%)
Singapore 422.01 66 (2.3%)
Total 18,372.54 2871

It’s worth noting, although the overall value of API import has declined, including from China, its volume share still remains too high in India. More importantly, Indian drug import from the United States and the European countries, are not only very small, there doesn’t seem to be enough instances of substandard drugs imported from these countries to India, either.

The core issue:

Taking a serious note of the reported incidences of widespread substandard drugs by various reports, including the WHO, the core issue becomes rather obvious. What else could possibly be the core issue other than taking effective remedial regulatory measures to contain the menace of substandard drugs circulating within the country?

An article titled, “Correcting India’s Chronic Shortage of Drug Inspectors to Ensure the Production and Distribution of Safe, High-Quality of Medicines,” published by the International Journal of Health Policy and Management (IJHPM) on April 27, 2017, made an important observation in this regard.

It reiterated: Good drug regulation requires an effective system for monitoring and inspection of manufacturing and sales units. In India, despite widespread agreement on this principle, ongoing shortages of drug inspectors have been identified as a major hindrance to this effort by the national committees, since 1975. Rapid growth of India’s pharmaceutical industry and its large export market makes the problem more acute.

Thus, the major remedial measure that CDSCO needs to take on priority to effectively address this core issue, is the chronic shortage of competent drug inspectors in the country.

An assessment of the current situation:

On the ground, the above situation continues to prevail almost in every state of the country, with a varying degree, though. However, at this point, I shall quote just three such instances – only to illustrate the gravity of the situation.

Example 1 – Delhi:

The article titled, “Delhi’s pharmacy woes: Only 21 inspectors for city’s 25,000 chemists,” published by ‘India Today’ on November 25, 2017, well-captured the latest scenario in this regard, of India’s national capital – New Delhi.

It wrote, there’s no guarantee that the medicine you are buying from a pharmacy is safe. The drug regulatory body does not have enough manpower to conduct regular inspections of the city’s mushrooming chemist shops and wholesale units.

Against the sanctioned posts of 31 drug inspectors, the department has only 21 DI for keeping an eye on Delhi’s 25,000 medical stores, and blood banks. Quoting Government officials the report reiterated, while the number of DI has declined – or at best remained constant – over the past 40 years, the number of pharmacies has increased from 5,000 to 25,000.

Whereas, going by the Centre’s recommendation, Dr. Mashelkar Committee report and the Task Force Committee’s observation, there should be one drug inspector for every 50 manufacturing units. Considering the magnitude of the problem, the Drugs Technical Advisory Board (DTAB), in a recent meeting, reportedly suggested, there should be one official for every 200 sales outlets, and one official for every 50 manufacturing units.

Example 2 – Kerala:

Another report of July 08, 2017, with a similar headline – “Remedial action needed in medicine market”, focused on one more important state – Kerala. It wrote that the Kerala has just 47 drug inspectors to monitor the entire State drug market that has over 20,000 drug stores, excluding those located in the hospitals. “In Kerala – the consumer of about 15 to 20 percent of drugs manufactured in the country, there are no quality checks taking place owing to the manpower shortage” – the article cautioned.

Example 3 – Maharashtra:

Yet another national media report of March 16, 2017 carried a headline ‘FDA faces staff shortage again.’ It discussed the same issue for a major State where the financial capital of India is located – Maharashtra. Giving details, the article pointed out that out of 160 posts of drug inspectors across Maharashtra, only 90 have been filled so far and of the 250 food safety officer posts, just 180 have been filled. More than 50,000 pharmacies, 15,000 wholesalers and over 8,000 manufacturing units, are supposed to be properly governed as per the regulatory rules and godliness, to ensure high quality drug safety standards, by this meager DI staff strength of the State.


Against the above backdrop, it appears absolutely minimum to expect that CDSCO would make the public know, how does it plan to make the drugs manufactured for domestic consumption of high quality standards, as a safeguard to patients’ health and safety.

This calls for strict quality audits by the DIs of the individual states, at pre-determined periodicity, just as what US-FDA does to ensure exactly the same, for patients in their own country. With dwindling resources of DI, CDSCO seems to be continually failing in achieving this critical goal. There doesn’t seem to be any specific and transparent accountability criteria in place, for the CDSCO to comply with.

In this situation, the plan to audit the overseas manufacturing plants located in the US and EU for drug quality assessment, carving out a slice from the existing DI manpower strength, appears rather foolhardy. Moreover, the safety-risk for those imported medicines is apparently low, not just due to meager quantity of drug import, but also for stringent regulatory environment prevailing in those countries.

In view of all this, the media report on CDSCO’s plan to inspect US and EU pharma facilities, making ‘critical’ drugs to ensure high product-quality, is interesting. If it holds any water, the initiative may be construed by many not merely a case of misplaced priority, but a bizarre one, to say the least.

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.

China Relaxes Drug Price Control: Is Pharma Euphoria In India Misplaced?

On May 5, 2015, the National Development and Reform Commission (NDRC) of China announced that price controls on most drugs sold there would be lifted from June 1, 2015. This move was believed to tackle issues of drug quality and to encourage innovation among domestic companies. Only narcotics and some listed psychotropic drugs would continue to be controlled by the government.

Quite like in India, Chinese price controls for most drugs were blamed by the industry for low quality and even adulterated medicines that seem to threaten public health.

Apprehension expressed:

Almost immediately after the announcement for ending price control on most drugs, many started expressing serious apprehensions that this decision of the Chinese Government would lead to higher drug prices for the consumers at the retail level.

Without taking any chances, the Chinese Government immediately switched to a high decibel communication process to allay such fear.

Chinese Government quickly acted on allaying the fear:

Xinhua reported, China’s top economic planner, almost simultaneously, asked the country’s price watchdogs to organize a six-month check on the movement of medicine prices, following the above decision.

The NDRC said the move is intended to detect any illegal practices disrupting market order, such as price fixing and artificial inflation of prices.

The agency also urged local authorities to create an online platform for better price monitoring. The NDRC also said the key intent is to curb illegal practices, such as price fixing and manipulative changes to increase drug costs.

Gigantic role of Chinese ‘Universal Health Care’ system highlighted:

The following explanations also came from the Chinese Government to highlight that this decision is not likely to have adverse impact on its citizens:

  • China has a function Universal Health Care (UHC) system in place
  • According to NDRC, 80 percent of drugs are sold through hospitals in China and not through retail channels. Thus, public hospitals are the places where most transactions take place and drugs are procured through a process that involves tough price negotiations with the pharma companies.
  • In addition to control of prices at the local procurement level, most of the freed drugs would still be controlled somewhat by various medical insurance plans even before they reach the Chinese hospitals, where 80 percent of drugs are dispensed.
  • With this announcement, the Chinese Government would lift controls on the price of about 2,700 medicines from June 1, 2015 that accounts for just about 23 percent of medications available in the country.
  • Experts also said they expected medicine prices to remain unchanged.

Has the pricing pressure in China increased, on the Contrary?

On May 26, 2015 in an article titled, “Foreign Drug makers Face Pressure to Lower Prices in China”, Bloomberg reported:

“Starting June 1, 2015 most drugs in China will be liberated from government-set price caps. For foreign drug makers, though pressure to cut prices is rising. Since late last year, many provincial governments have introduced new bidding systems to bring down the cost of medicines they procure, and they’re pushing multinationals to compete more directly with cheap local generics on price.”

Chinese healthcare scenario is different from India:

From the above scenario, it is abundantly clear that Chinese drug procurement, distribution and consumption scenario is quite different from India.

  • China’s UHC is well in place and over 80 percent of its population gets medicines from public hospitals. Whereas, UHC seems to have been virtually jettisoned in India by the incumbent Government, at least for now, and around 75 percent of the populations purchase medicines from the retail market, out of pocket.
  • Whereas, the National Health and Family Planning Commission (NHFPC) of China announced in May 2015 that it would increase healthcare subsidies this year by 19 percent, i.e. just over US$ 60 per person, India decided not to make any increase even on its abysmal low expenditure on health, in its Union Budget 2015.
  • According to the National Health Policy 2015 (Draft) of India, total per capita health expenditure of the country was at US$ 62 in 2011, against China’s US$ 274 for the same year. This gap is likely to increase significantly with China adding to it another US$ 60 per capita through increase in healthcare subsidies in 2015.
  • Chinese Government believes that this step would help improve economic growth and boost domestic consumption, whereas Indian Government obviously thinks differently.

‘Why not in India’ type of reaction is misplaced:

There are many other critical differentiating factors in the comparative healthcare scenario between India and China.

Be that as it may, keeping only the above differences in mind, when one comes across some weird reasoning in a section of the Indian media stating, no wonder that raises many other eyebrows simultaneously. More so, as pharma related Indian media is not just vibrant, a large section of it is mostly on the ball, with up to date domain knowledge, and presenting incisive analysis.

A bizarre report: “Comparing apples to oranges”?

That said, I recently noted, while flipping through some pharma related business reports, a bizarre and seemingly uninformed comment on this subject. The article recently published in a leading business daily questioned, why the drug pricing policies of India and China are different? Obviously the author does not seem to be aware of the differences in the overall healthcare scenario between India and China, as deliberated above.

If the above question is taken as benign and laced with a dash of ignorance, it certainly raises the good old and much often repeated question, “Are we comparing apples to oranges”?

This is because we are comparing medicine procurement, distribution, usages and consumption scenarios of those two different countries that cannot be practically compared at all, especially in this regard.

An equally bizarre comment?

To make such ‘off the cuff’ reports spicy, some news-unworthy masala is also usually sprinkled on it. If I remember correctly, I read somewhere in one such typical report, probably a head honcho of the Indian unit of a pharma MNCs making blissfully ignorant, equally bizarre, attention hungry, ‘shooting from the hip’ type of remarks. The person most probably commented something like; the decade long ‘draconian price control in China’ failed to improve access to medicines. Thus, Indian Government, he imagines, should strongly introspect on its drug price control and allow free pricing for all drugs. I am not very sure, whether this is the representative view of the pharma industry in India or probably not.

Domain experts’ eyes on the ball:

Fortunately and most likely in the same piece, the real domain experts made very pertinent and sensible comments on India China comparison on this critical issue.

I hasten to add, this is my personal view, and may be the author concerned meant something different, which I would accept with due respect and humility.


Just because China has relaxed drug price control in the context of its own environment of a reasonably well-functioning ‘Universal Health Care’ system, India should not toe the line with its abysmally poor public healthcare products and services offerings. As a result of this, the country records one of the highest, if not the highest, out of pocket expenditure towards medicine in the world.

The bizarre reports and comments in this regard, as above, probably need to be taken, not with a pinch but loads of salt, and trashed for abject ignorance in the specific area.

Moreover, the Indian Government too does not seem to be in any mood just yet, to pay attention in the area of ‘Universal Health Care’ to ensure health for all in the country. The situation is not expected to improve in this year either, as the Government has not made requisite budgetary allocations for health, to play the ball as the time demands.

Does all these not mean that, going by the Chinese example, the ill-informed euphoria of a section of the Indian pharma industry is unrealistic, if not absolutely misplaced?

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.