Earlier last month, the European Commission adopted a decision directing all member states to suspend national marketing authorizations of about 700 generic drugs tested and approved by Indian lab GVK BioSciences, sparking a retaliation by the Indian government in terms of a deferral of scheduled talks with the EU on the EU-India Free Trade Agreement. The suspension order is pursuant to a recommendation by the Committee for Medicinal Products for Human Use (CHPM) of the European Medicines Agency (EMA) based on a detailed report prepared by the Agency in January of this year. This decision is believed to impact about 1-1.2 billion dollars in export earnings by Indian pharmaceuticals according to Pharmexil.
The EMA recommendation
The entire saga began when the French medicines regulatory agency (ANSM) raised concerns about the testing and clinical practices at GVK BioSciences, a laboratory based in Hyderabad that, among other things, conducts bioequivalence certification. This was after an on-site inspection conducted in May of last year. In their January report, this was what EMA had to say about the testing practices at GVK:
“The inspection revealed data manipulations of electrocardiograms (ECGs) during the conduct of some studies of generic medicines. These manipulations appeared to have taken place over a period of at least five years. Their systematic nature, the extended period of time during which they took place and the number of members of staff involved cast doubt on the integrity of the way trials were performed at the site generally and on the reliability of data generated at that site.”
Thus the agency was of the view that, in light of the existence of these discrepancies in testing data for certain drugs, it could no longer safely accept the stamp of endorsement from GVK on any drug. It must be remembered that GVK’s role as a bioequivalence tester is to essentially perform the technical procedures whose results form the substance of the EU regulator’s decision to allow those drugs into their markets. While the Indian Pharmaceutical Alliance (IPA) has decried the move as sweeping, Mr. Murali Neelakantan, formerly Global General Counsel at a prominent Indian generic company and presently Principal at Amicus, points out that it is hardly illogical that a serious and credible challenge to the integrity of the testing process would colour all drugs passed by that process.
Further, the decision includes an exemption for those drugs of ‘critical’ value as deemed by national regulatory agencies provided that a bioequivalence report is submitted for each of those drugs within 12 months of this decision. The UK has already decided to keep certain ‘critical’ drugs on the shelf after noting that no complaints had been received in relation to any of the drugs on the list.
The decision also speaks of certain conditions for the withdrawal of the suspension in Annexure III more broadly. This Annexure is unavailable on the EU website and so I cannot comment on the nature of these conditions. If one of these conditions is that marketing authoritisation would be reinstated on the submission of an alternate test report, then in my opinion, the decision cannot be called unreasonable. However, it remains unclear as to what companies are to do to reintroduce these drugs if they are not ‘critical’. Here is the real harm in the ban. If these drug companies merely used the wrong testing lab, then to penalise them and bar patients from using them when these products are in all likelihood perfectly safe, is disproportional if the companies are not given the option to prove their quality.
Retaliatory action by the Indian govt.
The Indian government has come out in full support of the Pharmaceutical Industry, and the Ministry of Commerce issued a press release stating that the government is deferring trade talks with the EU for the present in light of its disappointment on the EU decision. It is further stated that the industry “is one of the flagship sectors of India which has developed its reputation through strong research and safety protocols over the years and therefore, Government of India will examine all options in this regard. It is pertinent to mention that most of these drugs are already in EU market for many years without any adverse pharmaco-vigilance report from any member state.”
First, it is unclear that the ban implies a widespread substandard quality in manufacturing by Indian generics. A look at the list of drugs banned reveals that only a small fraction are produced by Indian generic companies. For this reason, Pharmexil’s estimate of a billion dollars in trade also seems like an overestimate. Therefore, to characterise the ban as an indictment of the quality of manufacturing by Indian generics more generally is plainly false. In fact, for around 300 drugs the EMA was able to find test relevant data from other sources and accordingly did not include them on the banned list.
Secondly, while GVKs testing services can be said to be a peripheral activity in the pharmaceutical industry, it must be remembered that the actual quality of pharmaceutical products is not explicitly denied. Thus the manufacturing processes and practices of the Indian companies are not under the scanner. The EMA only makes the limited point that the testing agency is not doing its job. GVK, of course, has blatantly denied such allegations, pointing out that other regulatory agencies including the FDA of the US have found no problems with their practices or certification. Mr. D G Shah of the IPA questioned the expertise of the regulators, who are not medical practitioners, to evaluate an aspect such as ECG readings and arrive at a conclusive finding that they are manipulated. If this is true and the very basis for the finding of data manipulation is watery, then this entire incident is a serious misuse of the regulatory process to clamp down on generic entry. However, I do not find this argument convincing. First, this adverse finding was unsuccessfully challenged by a number of pharmaceutical companies. Secondly, as regulators, their principal expertise would have to be recognising anomalies in testing data and practices. Rather, as Mr. Neelkantan points out, there seems to be a larger systemic issue about the (un)importance of data integrity for testing laboratories.
The Indian government’s decision to defer the talks, then, seems rather inapposite. It seems to flow more from the reported trade repercussions of this decision than any inherent arbitrariness or error in the decision itself. This has the dangerous potential of watering down the legitimate concerns that have been raised about smear campaigns run by Big Pharma against generics. While it is important to defend and support the Indian pharma industry in the face of the tremendous international pressure against its easy operation, especially in Big Pharma strongholds, it is also important to face and correct lapses in individual companies. The real question is whether Indian generic companies face more intense scrutiny than others and whether regulatory outcomes are disproportionately unfavourable to the former. Even though the present case lacks precedent, the EU is insistent that the measure is merely the result of technical irregularities in testing. And if the EU is serious that this action is merely a reflection of the scientific finding, then it must provide an easy alternative for companies seeking to get their drug cleared and off the list. GVK has offered to reconduct all the tests under supervision and without charge. That seems like a ready solution to this entire fiasco.