The Union Health Minister Mr. Ghulam Nabi Azad has proposed, in Parliament, a whistle blower scheme for all those informants who volunteer with information on spurious or counterfeit drugs. According to the policy a maximum of 20% of the total cost of consignments will be payable to the informant provided that the total compensation does not breach a ceiling of Rs. 25 lakhs. Even government officials can claim rewards under this new policy. Kudos to the Government of India for coming up with this innovative scheme which is sure to create immense pressure on the substandard/counterfeit drug manufacturers. This is the latest in a string of policy initiatives by the Government, the last being the amendment to the Drugs and Cosmetic Act. This latest amendment created stringent penal provisions, with a minimum of 5 years imprisonment which can be extended to life.
The problem of fake/counterfeit/spurious drugs is beginning to create problems for the entire Indian pharmaceutical industry which has so far managed to build up an excellent reputation on account of both price and quality. The Government of India has been in the process of carrying out a study to document the actual magnitude of the problem. A recent pilot study carried out by a group of researchers, [including Dr. Roger Bates, who recent authored this article for the WSJ and Dr. Bibek Debroy (who was recently an expert witness in the mega compulsory licensing dispute at the Copyright Board)] in Chennai and Delhi came to the conclusion that whilst 5% of all drugs in Chennai were spurious, 12% of all drugs in Delhi fell in the same category. According to the study these figures indicate an improvement in the regulatory mechanisms, especially in Chennai. More importantly the Study points out that spurious drug exports are beginning to affect the image of the Indian pharmaceutical companies. African countries like Nigeria are beginning to bar imports from atleast 25 Indian pharmaceutical companies.
A related problem with the international pharmaceutical trade is that there is no uniformity in the definitions of what qualifies as counterfeit and substandard. The IMPACT negotiation which we blogged about here were shot down by the Indian Government despite Indian law providing for almost similar definitions. The devil therefore lies in the definition.
More from my site