Policy Working Papers

GVK BIO and India’s drug quality problem

In July 2015, India deferred talks on the India-EU Investment and Trade Agreement after the EU banned 700 generic drugs that were tested at Hyderabad-based GVK Biosciences (GVK Bio). The Indian government said it was "disappointed and concerned by the action."1

India exported $15.4 billion worth of pharmaceutical products in 2014, with Europe accounting for $3 billion, or approximately 20% of that total. Out of the $3 billion in European imports, generic medicines constituted approximately $1 billion, with drug ingredients accounting for the rest, according to Pharmexcil. As one of the largest export industries for India, even the partial loss of this trade could have a large imact on the Indian economy, arguably an important reason for the Indian government response.

However, the response was disproportionate and, given the evidence we will present, wrong. But Indian media and government, prone to see conspiracies against national interests, followed a policy that resonates within India.. To understand why, some brief background is required.

Expanding Access to Medicines

In September of 2015, The World Health Organization (WHO) issued a warning letter to Mumbai-based Svizera Labs, part of Maneesh Pharmaceuticals, threatening to rescind approval for use of its Tuberculosis (TB) drugs if quality standards were not dramatically improved. A health authority criticizing an Indian drug producer is not news, the US Food and Drug Authority issued dozens of complaints against such companies in the past year alone, however, such action from WHO was unusual as WHO is not a drug regulator.

WHO has taken on the role of a pseudo-regulator in its efforts to increase access to medicine. Products made in markets with limited regulatory oversight are often of unknown provenance and quality. WHO tries to assess these products, approving of the better ones, so buyers can have more confidence in their quality. The WHO prequalification of medicines (PQM) system has likely become the single most important quality metric in emerging markets, especially for the donor community, which buys millions of treatments of WHO approved generic medicines each year.

Yet there has been no independent evaluation of whether WHO is effective in overseeing quality, and whether its assessments are societally beneficial. Moreover, there is a lack of evidence that WHO assessments drive better production quality – WHO may just be approving manufacturers who already make a good product; simply identifying good manufacturers is probably beneficial in and of itself.

Drawing on my team’s quality assessments of thousands of samples in 19 emerging countries (primarily large cities), we find that PQM products are far better quality (five times less likely to fail basic quality analysis) than those approved locally that are not approved by WHO. These results echo findings from the few other studies undertaken.

Furthermore, an unpublished study by McKinsey, funded and quoted by WHO, stressed the importance of PQM. For a total budget of US$ 13 million in 2013, the manufacturers that achieved prequalification allegedly delivered quality controlled vaccines, therapies and diagnostics worth approximately US$ 3 billion. McKinsey claims that the PQM process also assists emerging market medicine regulatory authorities to increase their own capacity to oversee production standards.

Yet the WHO is not a stringent regulatory authority, and when products we sampled were subjected to more rigorous tests, PQM products were more likely to fail than those products approved by stringent regulators like the FDA (after all WHO has no jurisdiction over any company – some can make a good product and achieve approval, but then do not always make a good product for the market).

More concerning is WHO’s own response to this critique. When confronted by evidence of inferior product quality in their approved products, WHO initially ignored the evidence, then denied any problem in a press release without ever answering the specific questions raised. WHO was acting more like the public relations department for the manufacturers than an independent arbiter of quality.

In principle the PQM system could be beneficial even if more of the products it approves fail quality control than those approved by stringent authorities (like FDA), but there are risks that inferior products, if used by millions of people, could drive resistance across populations, to say nothing of the suffering of those taking those products.

A thorough assessment of products is therefore warranted, yet is unlikely to occur. While WHO staff seek high quality medicines for patients, WHO has no practical interest in assessing quality, when any criticism has been made it has ignored and then denied it. Worse still, some of its staff has pressured researchers not to be involved in independent assessments.

However, encouraging signs are beginning to emerge. With the WHO criticism of Svizera Labs, WHO is taking on some of the responsibility of its assumed regulatory function. Additionally, while interactions between regulators in emerging markets and the developed world could deliver a more nimble and better adapted selection of products than a centralized overly-bureaucratic hyper-sensitive UN agency, corruption at the national level in emerging markets ensures that such an outcome is not happening.

Drug inequality: Allowable variations and illegal underperformance in off-patent drugs

Generic drugs are allowed to vary from the originator drug in the amount of active pharmaceutical ingredient (API) likely to be absorbed by a typical patient. We contend that this allowable variation range is too wide to guarantee the same therapeutic effect (bioequivalence) in all drugs and that some generics have been approved without having met even these requirements. Greater availability of generics and increased substitution between them is exacerbating the problem of non-bioequivalence and in principle requires increased monitoring of drug levels in patients, which mitigates price savings. However, drug levels are rarely monitored, leading to unknown but likely significant clinical problems. We present case studies to support these assertions.
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