Ranbaxy Fines: More Than Meets The Eye

Indian generics manufacturer Ranbaxy was recently slapped with fines by the U.S. FDA for the manufacturing and distribution of ‘adulterated’ drugs.

AsianScientist (Jun. 24, 2013) – Ranbaxy was recently slapped with fines by the U.S. Food and Drug Administration (USFDA) for the manufacturing and distribution of ‘adulterated’ drugs, but is this just the beginning as the crown jewel of the Indian pharma industry tries to engage Western markets?

For a start Ranbaxy is a subsidiary of Daiichi Sankyo. The Japanese pharmaceutical major made the strategic acquisition in 1998 with an eye to the growing and lucrative global generics drug industry in which Indian players have a dominating presence.

Over the years, India’s pharmaceutical industry has not only earned the appellation of ‘Pharmacy to the Third World’ for its affordable medicines but has also become a major supplier of generics to Western markets in North America and Europe.

As India’s generics manufacturers increasingly engage the international markets, the flaws and mismatches are beginning to show up. An important aspect, pointed out by a parliamentary committee in May, is the fact that India’s Central Drugs Standard Control Organization (CDSCO) lacks adequate qualification facilities.

The committee found that the CDSCO’s testing laboratories, located in the cities of Hyderabad, Kolkata, Mumbai, Chennai, Guwahati and Chandigarh, were “not fully equipped and required upgradation with the state-of-the-art facilities for testing and analyzing complex formulations and detect spurious, misbranded, sub-standard and adulterated drugs.”

“The extant Indian system is nowhere in so far as sheer competence and professional qualifications are concerned, when compared with countries like the US and UK,” the committee reported while asking the government to take a cue “from similar mechanisms functioning in some of the developed countries like the US, UK, Canada, etc.”

“Since India produces medicines for millions of people across the developing world, India has a responsibility to ensure that the medicines it produces and exports meet WHO quality standards,” Leela Menghaney, legal officer with Medicins Sans Frontieres, told Asian Scientist Magazine.

MSF sources antiretroviral medicines from Ranbaxy but only after they have been prequalified by the World Health Organization (WHO) or otherwise approved by a stringent regulatory authority.

WHO has stated that since a 2004 instance of malpractice by Ranbaxy there has been strict international monitoring and that currently there is no evidence that Ranbaxy products on the WHO List of Prequalified Medicinal Products are of unacceptable quality.

“Indeed, since 2004, international cooperation between stringent regulators and WHO-Prequalification of Medicines Program has been enhanced to allow early sharing of regulatory intelligence and to facilitate coordinated action, when necessary,” the WHO statement says.

Experts on pharmaceutical products in India say the fact that Ranbaxy was caught providing false documentation does not really add up to ‘adulteration.’

“The drug regulatory regime in India is different from that in the US as also the definitions and documentation,” explains Dr. Mira Shiva, who has served on several important government committees on drugs and public health.

In the United States, if a company does not comply with current Good Manufacturing Practice (cGMP) regulations its medicines can be considered ‘adulterated,’ while in India the same word would mean deliberate mixing or drugs with unapproved ingredients.

Ranbaxy was fined for providing cooked up data concerning procedures followed in its manufacturing facilities and pleaded guilty to allowing drug samples to be stored in a refrigerator, which did not meet specified temperature and humidity ranges and failing to disclose this fact.

The U.S. Justice Department statement said the company had “pleaded guilty to felony charges relating to manufacture and distribution of certain adulterated drugs made at two of Ranbaxy’s manufacturing facilities in India.”

Ranbaxy agreed to pay a criminal fine and forfeiture totaling US$150 million and settle civil claims under the False Claims Act and related laws for US$350 million, but these fines had nothing to do with drug quality or inefficacy.

“The fact is that Ranbaxy continues to do business in the U.S. in spite of everything that the Western competition has brought up against it and other manufacturers of generic drugs,” Shiva told Asian Scientist Magazine. “There are no reports of patients suffering as a result of using Ranbaxy drugs, or we would have heard from USFDA.”

Ranbaxy currently has plans to file three to four generic drug applications every year in the U.S. and take advantage of a six-month marketing exclusivity period given to early birds that get approval for generic versions of drugs whose patents have expired.

But this is precisely what worries Western big pharma whose business model works by keeping drug prices high. Each time the patent on a drug expires, the generic manufacturers move in with prices that are 90 percent lower than the original.

“It is no secret that Western pharma companies see Indian generic manufacturers as a threat and they have lost no opportunity to paint the Indian industry as dirty and unethical, through they are eager to source bulk medicines from India or buy into the generics business,” said Shiva.

Between 2011 and 2015, several of ‘blockbuster’ drugs worth an estimated US$250 billion in annual sales have either gone off patent or will do so and these are being snapped up by the generics industry, not necessarily Indian.

Ranbaxy, it seems, stumbled while taking short cuts on the way to laying an early bird claim to bag the generic market in the U.S. for Atorvastatin, an anti-cholesterol drug (sold under the brand name of Lipitor by Pfizer) that went off patent in 2011.

Shiva said it is forgotten that USFDA has imposed bigger fines on the manufacturers of patent drugs. In 2009, Pfizer was compelled to fork out US$2.3 billion for illegally marketing drugs and bribery. In the following year, Glaxo paid US$3 billion against charges that included withholding safety data from regulators.

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