Biotech Values

[DewDiligence]

(ABT) India's Fake Drugs Are a Real Problem

[This WSJ article is highly germane to ABT’s acquisition announced today (#msg-50436738) and it shows why I like the deal a lot. Branded generics in India are especially attractive for a company like ABT because a shockingly high proportion of the prescription drugs made by local companies consists of poor-quality products and outright counterfeits. Thus, self-pay individuals in India (70% of the Indian Rx market—see #msg-50438863) have a strong incentive to pay a premium for a product they can trust to be what it claims to be. The consequence is that ABT’s profit margin on branded generics in India is expected to be higher than ABT’s overall corporate-wide margin from all business segments and geographies! On today’s CC, several analysts had trouble understanding this because they just don’t get what branded generics are all about.]

http://online.wsj.com/article/SB10001424052748703315404575249901511960396.html

›By ROGER BATE
MAY 19, 2010

The Food and Drug Administration of the Indian State of Uttar Pradesh recently conducted a series of raids throughout its region to uncover counterfeit drugs. The raids yielded large quantities of substandard medicines and resulted in several arrests.

This evidence of India's fake drug trade jibes with what I've found in several surveys. In 2009, I looked at five important medicines being sold at 52 different pharmacies in Delhi and Chennai, using covert shoppers. In Dehli, 12% of the pills were substandard, as were 5% in Chennai. About 2% of the pills contained no active ingredient. The others did but it had degraded, probably because the pills had expired and been repackaged with new labels; some may have degraded through poor storage.

According to an investigation I just conducted with the Legatum Institute and the International Policy Network, the situation is as bad with at least some of Delhi's wholesalers. We found that 7% of all tested samples were substandard and 3.6% were likely counterfeit. It's probable that the drug supply in poorer areas is even more contaminated.

A strong majority of Indian pharmacists interviewed in our investigation admit that fellow pharmacists knowingly profit from the sale of counterfeit drugs. Nearly all of the pharmacists interviewed claimed to have been propositioned by counterfeiters at one time or another. Last year alone, counterfeit drugs were seized by authorities in Bangalore, Mumbai, Delhi, Jaipur and many other Indian cities. In 2008, about half of the medical products that were confiscated by European Union customs officials originated in India.

Since drugs made in India are sold around the world, the country's substandard drug trade represents a grave public health threat that extends far beyond the subcontinent. Unless serious steps are taken to improve the quality of the Indian drug supply, the global spread of unsafe pharmaceuticals will persist.

It's no wonder the counterfeit drug trade thrives in India. The profits are enormous. The global trade runs into the tens of billions of dollars. Meanwhile, the penalties for making and selling knock-off medicines are minimal. Those fake drug offenses that are prosecuted spend years winding their way through the Indian legal system. According to the Confederation of Indian Industry, "counterfeiting rarely produces dire consequences in terms of incarceration or redress."

By way of comparison, the penalties for selling narcotics such as cocaine and opium are incredibly steep. India has a separate law enforcement agency—the Narcotics Control Bureau—for crimes of this sort.

The public-health consequences of the counterfeit drug trade are serious. These products, often adulterated with road paint and chalk, look identical to the products they pretend to be. Thousands of people probably die every year either because they're poisoned by bad ingredients in counterfeits or because the counterfeit doesn't treat the victim's malady. Estimates of substandard drugs reach as high as 30% of all medicines sold in parts of Africa, Asia and Latin America. But the truth is we don't really how bad the problem has become.

These bad drugs don't just threaten lives. They undermine the legitimacy of the entire Indian medical system, discourage patients from using life-saving pharmaceuticals, and threaten the economic livelihood of legitimate pharmacists and drug makers.

To counteract the spread of counterfeit drugs around the globe, several steps must be taken. First, Indian officials need to be more honest about the extent to which bad medicines have contaminated their drug supply. In a 2003 report, India's Ministry of Health and Family Welfare stated that between 8% and 10% of India's pharmaceuticals are "substandard." Yet recent media reports quote unpublished government studies claiming the rate is far below 1%. No one I've spoken with believes these figures.

India's leaders must also do more to enforce the anti-counterfeit laws already on the books. The penalties for making and distributing bad drugs should be serious and perpetrators should be brought to justice swiftly.

New technologies also have a role to play in ensuring the safety of India's pharmaceuticals. Some drug companies have begun assigning packages—and even individual pills—unique serial numbers. Consumers can check the legitimacy of their medicine by text messaging these serial numbers to a central database and getting a quick and accurate answer.

Other quality control solutions involving bar codes also show promise. But any technology will prove effective only if part of a broader political effort to rid India of substandard medicines. Action is urgently required or thousands of annual avoidable deaths around the globe will continue.‹