INDIA’S pharmaceutical sector, under fire from multinational drug-makers and Western governments for its alleged blatant violation of intellectual property rights, has come under a cloud after a parliamentary panel exposed unethical practices at the Central Drugs Standard Control Organisation, the industry regulator.

Last week, parliament’s standing committee on health and family welfare, came out with a damning, 78-page indictment of the regulator following an 18-month probe into its working. The lawmakers accused the regulator, the drug controller-general of India (DGCI), who heads the CDSCO, for having colluded with pharmaceutical firms — both international anddomestic — in hastening approvals and even allowing some drugs, banned in other countries, to be sold in India.

The panel scrutinised 42 drugs that are sold in India and sought relevant papers from the DGCI and the health ministry.

Thirteen of these drugs are banned in the US, Canada, the UK, Europe and Australia. Among them, nimesulide, a non-steroidal, anti-inflammatory drug, banned in many countries, continues to be sold in India, as the regulator was backing the drug-maker.

Last year, the Indian government finally succumbed to public pressure and banned the paediatric use of nimesulide — globally, a ban on prescription of the drug for children was imposed in 2005 — though it continues to be sold for adults.

The parliamentary committee also found that 11 of the drugs scrutinised by it were approved by the regulator without the firms conducting phase-III clinical trials for safety and efficacy.

“There is sufficient evidence on record to conclude that there is collusive nexus between drug manufacturers, some functionaries of CDSCO and some medical experts,” the lawmakers said in their report. “On average the regulator is approving one drug every month without trials. This cannot be in public interest by any stretch of imagination. Such irregular approvals spare drug producers the cost and efforts but put Indian patients at risk.”

Other shocking findings reveal that the regulator approved 33 new drugs between 2008 and 2010 without conducting clinical trials and 25 drugs were cleared without getting the opinion of qualified experts. Four drugs were approved by non-medical staff of the CDSCO, who did not put it for clinical trials or seek the opinion of medical experts.

For decades, the parliamentarians noted, the regulator has been according primacy to the propagation and facilitation of the drugs industry, neglecting “the poor and hapless patient.” It found that there “is adequate documentary evidence to come to the conclusion that many opinions were actually written by invisible hands of drug manufacturers and experts merely obliged by putting their signatures.”

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Though highly ‘regulated’ for years, the pharma sector in India is frequently accused of gross violations of safety and hygiene. The sector, with sales of over $12 billion a year, is the fourth-largest in the world (in terms of volume), but is bristling with over 10,000 producers, many of them tiny entities.

The parliamentary report, however, did not spare the big multinationals and said many of their drugs were released in India without clinical trials. But many of the foreign firms named in the report denied wrong-doing and claimed that they had followed the rules.

According to Tapan Ray, director-general, Organisation of Pharmaceutical Producers of India (OPPI), which represents international firms, all its members had complied with domestic regulations. He hoped that necessary remedial measures would be taken by the concerned authorities to set the system right.

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INTERNATIONAL drug-makers and many western governments have in recent weeks expressed concerns over thegovernment’s move to issue the first ‘compulsory licence’ to Hyderabad-based Natco Pharma to manufacture a low-cost version of ‘patent-protected’ Nexavar (generic name: sorafenib), an anti-cancer drug.

In March, the controller-general of Patents, Designs and Trademarks, directed German drugs major Bayer — which holds a patent on Nexavar till 2021 — to grant a compulsory licence to Natco for the manufacture of the generic version of the drug.

The Trade-Related Intellectual Property Rights (TRIPS) agreement under the World Trade Organisation (WTO) permits countries to invoke a compulsory licence allowing a domestic firm to produce a generic version of a patented drug in the public interest. This was done to ensure poorer patients had access to the life-saving medicine.

The government allowed Natco to manufacture and sell sorafenib — an effective drug in the fight against liver and kidney cancer — for a maximum of Rs8,880 (about $165) for a pack of 120 tablets for a month’s treatment. Bayer has been selling the drug at a whopping Rs280,000 (about $5,220) for a month’s dosage. Natco has to pay a six per cent royalty on net sales to Bayer.

The first such instance of compulsory licensing stunned the global pharmaceutical industry and many governments. US commerce secretary John Bryson told Anand Sharma, his Indian counterpart, that his government was deeply concernedover the move, as it could weaken the global patent regime under TRIPS.

The US also placed India on a priority watch list for allegedly providing insufficient protection and enforcement of IPR.

“The US would closely monitor developments concerning compulsory licensing of patents in India, following the broad interpretation of the law in a recent decision by the Controller General of Patents, while also bearing in mind the Doha Declaration on TRIPS and Public Health,” noted the annual report of the US Trade Representative (USTR).

Last week, Sharma clarified that no more applications for compulsory licences were pending from pharma companies for manufacturing low-cost versions of patented medicines.

BAYER has also challenged the compulsory licensing of its drug and has appealed to the Intellectual Property Appellate board against the ruling. It is also suing Indian pharma major Cipla over patent infringement relating to Nexavar. After Natco launched its generic version of sorafenib, Cipla slashed the price of its generic version of the same drug by 75 per cent to Rs6,840 for a month’s therapy.

But developing countries and healthcare activists around the globe cheered India’s move to introduce compulsory licensing.

“Multinational drug companies are going to insist on stronger IPR because the Indian generic industry is a threat to them,” remarked Mira Shiva, coordinator of the All India Drug Action Network. “The USTR report is part of that continued pressure tactic.”

Prices of other cancer drugs have also tumbled in India in recent weeks. Cipla slashed the price of its drugs to battle lung cancer and brain tumour by between 60 and 75 per cent. Y.K. Hamied, chairman, Cipla, denied the company had been directed to do so by the government. “We have decided to make the drugs affordable to more patients,” said Hamid, who had about 10 years ago slashed the price of anti-retroviral drugs for AIDS patients in Africa to just $1 a day.

Hamied says Cipla is now drawing out a strategy to cut the prices of nearly two-dozen anti-cancer drugs further.

About three years ago, Cipla had taken on Swiss pharma giant Roche Holdings by launching a generic version of erlotinib at Rs46,000 for a month’s therapy, as against the price Rs140,000 charged by Roche for its branded drug Tarceva. Rochedragged Cipla to court, slapping a patent infringement case, which has still not been decided.

Roche itself has now decided to reintroduce some of the expensive anti-cancer drugs at lower prices by outsourcing their manufacturing to smaller Indian firms. Other international drug-makers including Novartis have also been battlingdomestic firms including Cipla, Sun Pharma, Ranbaxy and Natco, who have been selling anti-cancer drugs at a tenth of the price at which the international firms sell.