The World Is Looking

For Affordable Drugs –

and India Needs to
Keep Delivering
The export of generic pharmaceuticals is one of India’s
strengths. But both the government and manufacturers need
to do more if they want to continue to stay ahead of China.
In 2016, India exported $651 million worth of pharmaceutical products to Latin America, as
compared to China’s $404 million-worth pharma exports. In fact, India has consistently beaten
China in the last five years in pharma exports to Latin America. What makes this even more
interesting is that India imports the bulk of its raw materials from China, converts them into
finished products and exports them.

Making a name in Latin America

India exports affordable generic drugs to the region, in contrast to the costly, patented products
supplied by MNCs. This has led Latin American governments and people to have a positive view
of India as an important contributor to their objective to reduce the cost of healthcare. In fact,
Brazil and Chile encouraged the entry of Indian pharma companies into their countries to put
pressure on MNCs and local drug-makers to increase the availability of generics and reduce the
cost of medicines.

India is also a major supplier of bulk drugs (pharmaceutical raw materials known as API) to
Latin American manufacturers of pharma products. The export of bulk drugs are worth over
$300 million. This helps Latin American manufacturers reduce their cost of production, thanks to
the low-cost inputs from India. Indian pharmaceuticals are not considered a threat to the Latin
American industry, which has been hurt badly by the large-scale entry of Chinese manufactured
products in many sectors.

Some Indian pharma companies have even set up manufacturing plants in Brazil, Mexico and
Argentina. Besides supplying to the local markets, these units also export to the US and other
countries outside the region. The Glenmark plant in Buenos Aires has become the company’s
global hub for the manufacture and export of oncological products to over 20 countries,
including the US.

The success and positive perception of Indian pharmaceuticals have helped in enhancing the
image of other Indian companies, as well as India as a whole, in Latin America. Latin American
trust in Indian medicines has helped in increasing their confidence in the quality of other Indian
products as well.

But India’s pharma lead over China is not just limited to Latin America. In fact, India’s global
export of pharmaceuticals is double that of China. In 2016, India’s pharma exports were worth
$13 billion, as against Chinese exports worth $7 billion. India is the tenth largest pharma
exporter in the world, while China ranks at 16.

Other importers
India is the fourth largest supplier of pharma to the US, with exports worth $5.1 billion, while
Chinese exports to US were just $1.1 billion in 2016. Indian companies account for 30% of the
US’s generic drug imports. It is also creditable that India has the largest number (over 200) of
US FDA-approved pharma units outside the US. Some Indian firms such as Sun
Pharmaceuticals, Lupin, Reddy Labs and Cipla have also established manufacturing units in the
US.

India leads China in exports to the EU as well. In 2016, India’s exports were worth $1.56 billion
as against China’s $1.36 billion. Even in Africa, where the Chinese have spoiled the market with
massive credit and some non-transparent practices, India’s pharma exports were worth $2.8
billion as against China’s $618 million in 2016.

The UK is the second largest market for Indian pharma exports, which stood at $464 million in
2016. India also exported to other developed markets in 2016, including Australia ($220
million), Germany ($161 million), France ($145 million), Netherlands ($143 million), Canada
($143 million) and Belgium ($125 million).

India exports half of its total production of pharmaceuticals. Exports to the US and other
rigorously-regulated western markets account for over 50% of India’s global exports. This has
given a stamp of quality to Indian pharmaceuticals, adding to the confidence in Indian medicines
in Latin American and the rest of the developing world.

India is the largest exporter of generics (by volume) in the world, accounting for 20% of global
export volume. The low cost of production and the large and strong base of scientific and
technical human resources have given Indian exporters of generic medicines a competitive
advantage. The world has recognised India’s role as the main contributor to the lowering of
healthcare costs in developed countries like the US and the UK. Western NGOs was well as
foundations such as the Bill and Melinda Gates Foundation, Doctors Without Borders and the
Clinton Foundation buy Indian generics for use in their healthcare work in Africa.

The way forward

There are, of course, many challenges that Indian pharma exports face. Some Indian companies,
including Ranbaxy, have been caught and fined or their products banned by the US FDA and its
EU counterpart for violations of quality standards and authenticity of data. There is a shortage of
qualified pharmaceutical scientists for research and development work. While the exports are
dominated by a few large players, there are many small and medium companies that need
technological and infrastructural support. There is a need to strengthen the Indian regulatory
system and train people for the industry in collaboration with educational institutions. Indian
companies have profited from mass producing those products whose patents have expired. But
they need to move beyond this business model and become innovative, with more investment in
research. The government of India should also keep up its solid stand against pressures from the
US to change Indian patent laws.
Pharmaceuticals are not a focus area for China; it is its 39th largest export item. But China has
started catching up fast. For India, pharma is of greater importance, as its fifth-largest export
item. Given this significance and the competitive advantage that India has, it is time for the
government to specially focus on pharma exports, just as it has successfully done for IT. The
government and the Indian pharmaceutical industry should work out a comprehensive strategic
policy to increase exports in the future. According to a June 2016 study by Assocham, India’s
pharma exports could reach $20 billion by 2020.

While the large exports of IT products and services, and diamonds are facing a downturn due to
unfavourable global trends, the exports of generic medicines offers a brighter future in both the
short and long term. The developed and developing world are concerned about the high costs of
patented medicines and what this means for healthcare. Countries are keen to use more generics
to cut down the cost of healthcare. This is an unmissable opportunity for India.

The success of pharma exports should be an inspiration for Indian exporters of other
manufactured products who complain about and suffer from Chinese competition.

Ambassador (retired) R. Viswanathan is a Latin America expert

Generic medicines in India have received a new impetus with Prime Minister Modi
himself advocating the usage of these medicines. Doctors will now be required to
prescribe generic formulations of medicines, as opposed to specific brands. The
Prime Minister has announced that prescription of medicines by their generic names
will be mandatory.

What’s good about this move?This is expected to bring down drug prices and
expand access to affordable health solutions. As per the latest National Sample
Survey Office survey on healthcare, in 2014, medicines emerged as a principal
component of total health expenses—72% in rural areas and 68% in urban areas.
For a country with one of the highest per capita out-of-pocket expenditures on
health, even a modest drop in drug prices will free hundreds of households from the
widespread phenomenon of a medical poverty trap.

In addition to the social benefits, the generics-only policy also makes economic
sense. By promoting generic drug consumption, the government safeguards the
health of its generic drug manufacturing industry—one of the largest suppliers of
low-cost medicines in the world.

With increasing pressure from the “Big Pharma” companies in developed countries,
Indian generic manufacturers must now operate under a markedly restrictive
intellectual property rights (IPR) regime. The new policy can ensure that—at least in
the Indian market—generic manufacturers retain an advantage. Big Pharma’s
access to Indian consumers will have to be routed through generic companies using
channels such as voluntary licensing.

Low-cost medicines, apart from their attribute as a commercial commodity, have far-
reaching implications on public health and international human rights. India has
unambiguously subscribed to the pro-public health argument, and has articulated its
position several times at home and in international forums.

Expected Questions

 What is the future of generic medicines in India? Examine in the context of

surging pharmaceutical sector in India and large populace with limited
affordability for branded medicines?
 How do you view the impact of Jan Aushadi scheme on the health outcomes
of India given that India spends little on health?
 What are the ethical issues involved in the debate on branded and generic
drugs?

Syllabus

 General Studies Paper -II

 What is a generic drug?
 Ageneric drug is a pharmaceutical drug that is equivalent to a brand-name
product in dosage, strength, route of administration, quality, performance, and
intended use.
 The term may also refer to any drug marketed under its chemical name without
advertising, or to the chemical makeup of a drug rather than the brand name
under which the drug is sold.
 TheIndian government began encouraging more drug manufacturing by Indian
companies in the early 1960s, and with the Patents Act in 1970.
 The Patents Act removed composition patents for foods and drugs, and though
it kept process patents, these were shortened to a period of five to seven years.
 The resulting lack of patent protection created a niche in both the Indian and
global markets that Indian companies filled by reverse- engineering new
processes for manufacturing low-cost drugs.
 The code of ethics issued by theMedical Council of India in 2002 calls for
physicians to prescribe drugs by their generic names only.
 Analysis
 At least 90% of the Indian domestic pharmaceutical market, of `1,00,000 crore
and more, comprises drugs sold under brand names. There simply are not
enough generic name equivalents of branded medicines sold.
 About half the market—`50,000 crore and more—is for fixed-dose combinations
(FDCs) of drugs, a further half of them irrational.
 Many FDC drugs contain even eight or nine medicines. To write, and
remember, the constituents of FDC drugs in generic names is impractical,
considering that there would be thousands of FDC brands.
 A combination drug is a fixed-dose combination (FDC) that includes two or
more active pharmaceutical ingredients (APIs) combined in a single dosage
form, which is manufactured and distributed in fixed doses.
 Even if the doctor manages to write a prescription in generic names for single-
ingredient drugs, pharmacists will sell the brand that maximises their
commission and will in all likelihood not stock the less costlier but equivalent
brand or generic medicine that is as good. This defeats the basic intention of
making medicines affordable for consumers.
 Prescription by generic names merely shifts the focus of the pharmaceutical
industry’s unethical drug promotion to the pharmacist; away from the
prescriber, and resulting in business as usual.
 Medicines will continue to account for anything from 50% to 80% of treatment
costs.
 Steps taken in this regard
 The Government of India has championed setting up Jan Aushadhis, which are
pharmacies selling only generic name medicines to the extent possible, giving
preference to pharmaceutical public sector undertakings (PSUs) too.
  There are not enough Jan Aushadhis, possibly less than 3,000 against the
more than eight lakh retail pharmacies in existence, with many rural areas still
underserved.
 To facilitate Jan Aushadhis, the Drugs Technical Advisory Board (DTAB) in May
2016 considered amending Rule 65 (11A) of the Drugs and Cosmetics Act,
1940 so that pharmacists can dispense generic name medicines and/or
equivalent brands against prescriptions in brand names.
 The DTAB rejected the idea citing that the bioavailability of a generic drug may
not be as good as that of the prescribed brand.
 Bioavailability is a measurement of the extent of a therapeutically active
medicine that reaches the systemic circulation and is therefore available at the
site of action; whereas bioequivalence is the comparison of the bioavailability
of two medicines, say the generic drug and the branded drug.
 This means that the government’s top decision-making body on medicine-
related matters does not have confidence in the products manufactured by the
government’s own PSUs.
 The DTAB, however, could have recommended bio waivers on
bioavailability/bioequivalence (BA/BE) for certain classes of drugs based on
their permeability and solubility, a practice followed in countries where
healthcare is well regulated.
 BA/BE studies are essential for certain critical dose drugs and drugs of narrow
therapeutic range, which are few in number.
 By implication, the DTAB has doubts that generic name medicines in general
can have acceptable BA/BE at all. Probably, the DTAB is not confident that
India’s regulatory agencies can strictly enforce quality requirements.

Additional information

 A Bureau of Pharma PSUs of India (BPPI) has been established on the 1st of
December 2008 comprising all the Pharma CPSUs under the Department of
Pharmaceuticals.
 The Bureau will bring about effective collaboration and cooperation in furthering
the working and resources of these organizations.

More specifically it would:

1. Co-ordinate marketing of the generic drugs through the Jan Aushadhi stores.
2. Co-ordinate supply of medicines in the State from their own plants, other
Pharma PSUs of Central & State Governments and Private Sector.

Coordinate with Hospitals in preparation of formulary.

 1. Monitor proper running of Jan Aushadhi stores with the help of other CPSUs.
2. Provide medicines as per rates decided in the joint Forum/Core Committee.
3. Monitor activities of the Jan Aushadhi stores in the areas allocated to them.

Experiments in states

 The Tamil Nadu and Rajasthan governments procure generic name medicines
at extremely competitive prices year after year, and crores of drugs are in use
in their public health systems, thanks to the quality assurance systems in place.
 The success of the drug procurement system in these two states should
counter the defeatist narrative that insists that generic medicines can never be
good.
 This is not to underestimate the challenges in ensuring quality generic
medicines countrywide, but the critics from the medical profession are doing
the poor patient enormous disservice by swallowing the disinformation from the
pharmaceutical industry about the general lack of bioavailability of generics as
compared to brands.

When a pharma company invest & develop any new drug & earn patent rights for it,
then is called branded drug(BD). The duplicates of branded drugs are known as
generic drugs. They have following differences:

Production: Only Company with patent rights are allowed to manufacture Branded
Drug. Once patent lapses, other companies are allowed to produce generic drugs.

Cost: Unlike generic drugs, branded drugs incur high cost due to high investment
research & development.

Ingredients: The active ingredient (the one which cure the disease) of both drugs
are same but the differs in colour, shape or taste

Affordable, effective & easy drug access important for "universal healthcare”. So,
India has decided to bring a law for doctors to prescribe generic medicines which
have certain issues:

1. Implementation: Lower awareness and corruption have given rise nexus

between Doctors chemists & pharma sector. So, public awareness via digital
media along surveillance mechanism to curb nexus
2. International pressure: Big western pharmaceutical lobbies may back
stringent IPR rigme & compulsory licensing. They may blame India to breach
TRIPS agreement and drag into WTO. But recent UN report has given
 precedence to human rights over patent rights which support India's move for
affordable generic price to improve health care
3. Supply side challenge: India is import driven country for active
pharmaceutical ingredient and already facing challenge of substandard quality
of generic drugs. Along with this current move may reduce FDI inflow in pharm
sector and slowdown research & development in domestic pharma companies.
However, India has taken steps like ‘India Pharma & India Medical Device 2017’
and new IPR policy that offer incentive & ease of doing business in India. India
should adopt stricter accreditation and inspection rules for generic drugs.

Branded vs Generic drugs – Alternate opinion

 A generic drug is approved only after it has met rigorous standards established
by the FDA with respect to identity, strength, quality, purity, and potency.
 All generic manufacturing, packaging, and testing sites must pass the same
quality standards as those of brand name drugs.
 The generic drug manufacturer must prove its drug is the same as
(bioequivalent) to the brand name drug.
 For example, after the patient takes the generic drug, the amount of drug in the
bloodstream is measured. If the levels of the drug in the bloodstream are the
same as the levels found when the brand name drug is used, the generic drug
will work the same.
 In the West, brand names are given to researched and patented first-in-market
innovator drugs.
 After the expiry of patent period, other companies launch generics of the
innovator drug with just the pharmaceutical salt name at a hugely discounted
price. So, the only difference between a brand name drug and its generic
version is the price.
 The issue in India is not about expensive brand name drugs versus cheaper
generics, as in the West, but one of quality drugs versus suspect quality drugs.
 Branded generics are also generics with a brand name, plus the quality
assurance from well-known companies like Cipla, Sun or Dr Reddy’s. Doctors
have come to trust these companies and their brands over time.
 Indian pharma’s field force numbering nearly one million medical
representatives have done a good job of building this trust in their companies
and brands.
 It is simply not possible for doctors to transfer this trust to generics,
manufactured by unknown companies.
 The entire issue of cheaper generics is based on the premise of measurable
and enforceable assurance about quality through bioequivalence tests and
other globally mandated parameters. In the absence of that, the generics-only
diktat is a non-starter.
  In the absence of an international standard drug regulatory mechanism like the
USFDA, Indian doctors have to rely on the reputation of companies like Cipla,
Sun and hundreds of others who have demonstrated their commitment to
quality over time and become trusted names in the eyes of doctors and
patients.
 Also, Indian branded generic companies have been innovative in terms of drug
delivery systems to improve absorption, reduce side-effects, thereby increasing
the efficacy of the drug.
 These novel drug delivery system (NDDS) drugs are available in all category
of drugs from ordinary mouth dissolving pain-killers for quick results to complex
diabetes drugs that are released into the blood in a steady stream to ensure
better blood-sugar control with lesser chances of hyperglycemia – one of the
dangerous complications of taking diabetes medicines.

Jan Aushadhi Scheme

 The Government has launched ‘Jan Aushadhi Scheme’ to make available

quality generic medicines at affordable prices to all, especially the poor,
throughout the country, through outlets known as Jan Aushadhi Stores (JASs).
 Under the Jan Aushadhi Scheme, the State Governments are required to
provide space in Government Hospital premises or any other suitable locations
for the running of the Jan Aushadhi Stores (JAS).
 Bureau of Pharma PSUs of India (BPPI) is to provide one-time assistance of
Rs.2.50 lakhs as furnishing and establishment costs, start up cost for setting
up a Jan Aushadhi Outlet.
 Any NGO/Charitable Society/Institution/Self Help Group with experience of
minimum 3 years of successful operation in welfare activities, can also open
the Jan Aushadhi store outside the hospital premises. A margin of 16% on the
sale price is built in the MRP of each drug.
 In addition, the JAS are eligible for incentive linked to sale of medicines @ 10%
of monthly sales amount, subject to a ceiling of Rs.10,000/- pm for a period of
first 12 months. In case of Stores opened in North Eastern States and other
difficult areas i.e., Naxal affected areas/Tribal areas etc., the rate of incentive
is15% of monthly sale amount, subject to a ceiling of Rs.15,000/- per month.
 At present more than 175 Jan Aushadhi Stores have been opened across
various States/UTs. JAS are opened on the locations as requested by the entity
intending to open. The steps are also taken to open Jan Aushadhi stores in all
AIIMS, prominent Hospitals, Medical Colleges under the Ministry of Health &
Family Welfare.

The Public Health Foundation of India (PHFI) was asked to study the
Scheme and suggest remedial measures. PHFI in their report pointed
out the following factors which were mainly responsible for the
scheme not being successful:
(i) Over dependence on support from State Government.
(ii) Poor Supply Chain management.
(iii) Non-prescription of Generic Medicines by the doctors.
(iv) State Governments launching free supply of drugs.
(v) Lack of awareness among the public

After the report government has taken several remedial measures to

remove the problems associated with the scheme. Various steps
taken by the government are given below:
a) Increasing the number of products from 361 to 504 medicines and 161 surgical
and consumable items. Recently 88 more drugs are added to the basket.
b) Improving the supply chain mechanism through appointing Distributors and C&F
agents in different States.
c) Increasing the number of functional stores.
d) Strengthening the Operating Agency i.e., BPPI through augmenting of manpower.
e) Relaxation in the eligibility criteria of Operating Agency for JAS.

However, there are three fundamental areas of concern.

 The first relates to the efficacy of Indian-made drugs. Oftentimes, such drugs
have been found to contain less than the required amount of active
pharmaceutical ingredient (API), rendering them ineffective.
 Closely linked to the issue of efficacy is the lack of data integrity. The poorly
managed documentation practices of Indian generic firms featured as the
primary criticism flagged by foreign regulatory authorities. The lack of reliable
and complete data on the test results of specific drug batches, along with
inconsistencies in the records presented, meant that inspection and verification
of drug quality was extremely difficult.
 Another aspect relates to the hygiene standards of the manufacturing plants.
Individuals suffering from illness are especially susceptible to infections, and
inspections of generic drug plants reveal pest infestations and dilapidated
infrastructure

Way forward

 The Medical Council of India (MCI), in an amendment to the Code of Conduct

for doctors in October 2016, has recommended that every physician “should
prescribe drugs with generic names legibly … and he/she shall ensure that
there is a rational prescription and use of drugs.”
 How the MCI is going to ensure rational prescription and use, without a
framework to measure the same, should be looked into seriously.
 Rational use and prescription depends on the doctor, the pharmacist, the
regulator, and the consumer.
 Some minimum prerequisites for rational use are: prescription-only medicines
(Schedules G, H, H1 and X) must not be available freely over the counter;
doctors and their professional bodies along with regulators must ensure there
is no misuse of antibiotics and critical drugs; and the removal of all
irrational/harmful/useless medicines, both FDCs and unscientific single
ingredients, must be ensured.
 Practical guidelines for rational use and prescription audit of medicines must
be developed and implemented seriously by all doctors. Branding of off-patent
drugs needs to be discouraged as is the practice in well-regulated countries.
 The Hathi Committee Report (1975) too had recommended debranding.
 Price control of an enlarged list of essential and life-saving drugs is a must as
was mandated by the Supreme Court in 2003.
 The current market-based price mechanism of the Drug Price Control Order
(DPCO) 2013 is a travesty and has resulted in ceiling prices that allow 2,000%
to 3,000% (and in some cases, 10,000%) margins. This needs to be replaced
by the cost-plus method of ceiling price fixation of the DPCO 1995.
 The number one priority must, thus, be the replication of the Tamil
Nadu/Rajasthan model of free medicines in all states, and pharmaceutical
PSUs must be re-energised and reinvented instead of the government
disinvesting in them.
 Since the issue is also about quality, the government must put in place reforms
that will make it mandatory for drug manufacturers in India to adhere to globally
accepted standards.
 Only recently, the government has put out a statement to the effect, “The union
health ministry is in the final stages to release a draft guideline towards
enhancement of good manufacturing practices (GMP) to align India-specific
standards with global regulations for better product quality of pharmaceutical
products. Meanwhile, the drug controller general of India has also submitted a
proposal to the Union health ministry to mandate upgradation of Schedule M
drug manufacturing units to WHO-GMP level under the purview of drug rules
towards good manufacturing practices adopted globally.”
 The solution to the problem of branded versus generic lies in strengthening the
existing drug regulatory and quality control structure.
 The strategy can be two pronged with an increase in the capacity of existing
testing laboratories and opening up of new laboratories in government colleges.
 A time bound plan to make generic prescriptions mandatory will also prepare
Indian pharma’s vast supply chain of 800,000 wholesalers and retailers to get
used to the new initiative progressively. India’s 800,000 retailers have thrived
because it is a profitable high-margin business.
 Conclusion:
 The push towards generics is lauded by many stakeholders. In a global
economic environment that is turning increasingly hostile to generic drug
 production, this is a bold move—indicative of the government’s categorical
support for one of its key industries.
 While the push for a generics-only policy is a step in the right direction, it is
important to assess and ensure that Indian generic companies are competent
enough to take on the task before institutionalizing such a policy. Also, the
policy must move beyond rhetoric—for in a sector such as health, faulty policy
design will directly affect the country’s mortality statistics.