As we crossed the third quarter of 2013, in retrospect, it has been a momentous as well as tumultuous nine months. The value of production of bulk drugs and formulations has crossed Rs 100,000 crores, exports more or less equalled domestic consumption, domestic companies command around 80 per cent of the Indian market and India has the largest number of FDA approved plants and ANDAs granted by U.S.FDA outside the US apart from being one of the largest suppliers of generic drugs for the global market.

 However in recent times, every aspect of the Indian pharmaceutical industry’s functioning was affected and continues to be affected by events which could not have been predicted even a decade back. Several regulatory mechanisms have been initiated by the Government of India including a major revamping of the Drugs & Cosmetics Act 1940 and the setting up of a Central Drug Authority similar to the U.S. FDA .

Regulatory challenges
The pharmaceutical industry has always been for good reason the most regulated industrial sector all over the  World. The major components of Industry’s activities are 1) R&D for the discovery and development of new drugs 2) Product development of both the APIs and their galenic forms 3) Marketing 4) Post Marketing Surveillance 5) Providing medical information to the medical profession and the patients and 6) pricing of drugs .

While it is well accepted that self regulation is the best possible mode, often times in the real world of diverse vested interests, regulatory controls are deemed to be an unavoidable imperative. In the history of the industry fresh and more stringent regulations have always been imposed following major drug tragedies.

The best example is the 1962 FDA regulations following the Thalidomide tragedy of 1961 and the Kefauver-Harris Committee’s recommendations.

In India regulatory systems have evolved over time and they are patterned after those of the U.S. FDA and the UK MHRA. During the last one year, a large number of statutory controls and regulatory measures have been brought about in India either as statutes or guidelines encompassing the various activities of the pharmaceutical industry.

Research & development
There are regulations which cover the entire drug discovery and development programme at the pre-clinical and clinical stages. In Vitro and In Vivo experiments involving pathogenic organisms have to follow biosafety guidelines. At the animal experimentation stage, there is increasing resistance to indiscriminate use of animals . Even though there are no specific regulations to guide them the principles of 3 Rs namely ‘Replace, Reduce and Refine’ are being increasingly emphasised. The use of primates in drug screening and development was banned in India in 1977.

 Very recently, the Government has banned the use of animal screening for development of cosmetics. The biological material when used even for research purposes come under the purview of the Biodiversity Act of 2002. All experiments carried out in the Laboratories have to follow strict Good Laboratory Practices (GLP) norms stipulated under the OECD guidelines monitored by the Department of Science & Technology. National accreditation in the form of NABL certification add credibility to the quality of facilities used in pre-clinical research.

Protection of inventions in drug discovery is assured under the various legislations on Patents, Trade Marks, Designs, Copy Right and Geographical Indications. Of these the impact of Indian Patents Act 2005 is the most relevant. The Indian Patents Act while complying with the TRIPS agreement is unique in the matter of standards of patentability of inventions under Section 3(d), provision for both pre-grant and post-grant opposition for applications as well as granted patents, defining the terms under which compulsory licenses can be granted and requirement of disclosure of source and origin of material used for the patented invention. There has still been no decision in India on the issue of Data Protection as an added provision and incentive for innovation based companies.

Age of biologicals
Modern drugs are moving into an era of biologicals based on the technology for production of r-DNA proteins and monoclonal antibodies. It is estimated that over 40 per cent of new drugs will be based on these technologies by 2015. In its wake has come up several regulations since there are genuine concerns about their medium and long term effects on food, health and environment. Apart from biosafety and biodiversity regulations, there are a number of control measures administered by a number of agencies such as the r-DNA Advisory Committee, Committee on Genetic Manipulations, Institutional Biosafety Committee and the Genetic Engineering Approval Committee.

Yet another area concerning biological drugs is the ambiguity with regard to approval of biosimilars. Unlike chemical based drugs, standards of bioequivalence have to be necessarily different for r- DNA proteins. Only in December 2012 has the FDA come out with guidelines for approval of biologicals and in India , both the Department of Biotechnology and the Indian Council of Medical

Research have issued very preliminary guidelines, even though there are still many questions remaining unanswered.

Clinical trials
The Amended Drugs and Cosmetics Act 2013 has a separate chapter (Ib) on Clinical trials triggered by reports in the media alleging unethical and uncontrolled clinical trials being conducted in India. Such concerns which have been endorsed by many public bodies and even by the courts are however, based on mis-information. Majority of trials conducted in India are Phase III trials which are concurrently conducted in several countries and large number of centres.

All responsible trials follow globally harmonised protocols dictated by the ICH/GCP guidelines. The number of trials carried out in India constitute only 1.5 per cent of trials carried out world-wide. The new stipulations for approval of clinical trials in India by the Central Drugs Authority to be set up in place of the CDSCO include prior approval by the Ethics Committee (EC) constituted under Section 4T , registration of the EC and registration of the trial in the Central Registry.

The number of approvals in 2013 has come down dramatically as a consequence which is unfortunate since it is obvious that India should be an active partner in this activity if at all it is ever going to be a major player in drug discovery and development. While controls and monitoring are essential, it is equally important that decisions by the regulatory agencies are subject to defined and reasonable time frames to enable early introduction of much needed new drugs. In a recent Supreme Court Judgement, the Government has directed the Health Ministry to relook at 157 of the 162 0f the global clinical trials approved and get them examined by an apex committee appointed for that purpose . The decision of the committee is to be based on a careful assessment of the risk benefit ratios to ensure that patient interests are not compromised for commercial benefits to corporations.

Manufacturing
The largest number of violations in the pharmaceutical industry has been in the area of GMP deviations and quality issues. Several Indian companies’ facilities which were producing generic drugs for the global markets have been blacklisted by U.S FDA for serious defaults in this area.

Essential drugs
In 2011, the Health Ministry brought out a National List Of Essential Medicines (NLEM) needed for healthcare in the country and promised to make the 348 drugs in the list available virtually free of cost to the poor and needy. This is indeed a challenging job and considering that health sector is in the state list of responsibilities, ways and means of funding such a massive project needs to be worked out.

Pricing policy
Medicines sold in India were subject to the Drug Price Control Order 1995 until June 2013. The list of drugs included in the category of price controlled drugs had been progressively reduced to 74 since the introduction of price control 50 years back. In 2013, the new Drug Price Control Order reversed this trend and introduced price control on all the 348 drugs in the NLEM.

The formula for fixing the prices was changed from a cost based method to a market based approach. Under the new dispensation, prices are fixed on the basis of the weighted average prices of the formulations which have one per cent or more of the market share. If the prevailing prices are less they are not allowed to increase prices, if they are more, they have to be reduced. No clear estimates are available on the impact, but it is felt that as a consequence, the CAGR in value terms of the industry will come down from the earlier estimate of 13-14 per cent to nine to 10 per cent in the coming years.

Drugs And Cosmetics Act 2013
The major amendments in D&C Act 2013 are related to inclusion of medical devices within its purview and to introduce a new Schedule Y1 dealing with clinical trials. The other important schedules are Schedule D dealing with imports, Schedule M for GMP requirements Schedule T for GMP for Indian Systems of Medicine, Schedule Y on New drugs and their approvals. Other statutory requirements are spelt out under the Narcotics & Psychotropic Drugs Act, the Magic Remedies Act, apart from legislations common to all industrial sectors.

Marketing
The pharmaceutical industry has been criticised for its alleged unethical marketing practices.

The major criticisms have been on giving unethical incentives to medical profession, suppression of negative reports on the drug, promotion of off-label use and exaggerated claims on efficacy and safety.

The International Federation of Pharmaceutical Manufacturers (IFPMA) has clear guidelines to ensure fair practices. Recently in India the Department of Pharmaceuticals also has come out with explicit guidelines. Much more needs to be done in this area. So too in the area of dissemination of accurate medical information and reporting of Adverse Drug Reactions of marketed drugs. A new programme of Pharmacovigilance has been initiated by the DCGI, so too Post-Marketing Surveillance (PMS) of marketed drugs.

Investments
The 2013 Finance Bill had recommended automatic approval for 100 per cent Foreign Direct Investments in this sector. However in view of the number of mergers and acquisitions of Indian companies and business segments by MNCs made the Government revisit these proposals and recommend 100 per cent fresh investments only in greenfield projects involving high technology content and not for brownfield projects. Now it appears that each investment proposal in this sector will be considered on its merits before they are approved.

All in all, the number of restrictions on the industry imposed through regulatory controls and monitoring has considerably increased over the years. The industry needs to meet these challenges through adoption of appropriate strategies.