LEAD STORY. Non-compliance: bitter pill of the Indian pharma biz

Does quality non-compliance threaten to trip-up the Indian pharmaceutical industry, growing at a steady trot of about 15 per cent in the last few years?

Well, data culled by two recent reports on compliance in this industry is not very comforting. Import alerts against Indian plants in 2013 accounted for 49 per cent of the total 43 imports alerts issued by the US FDA (Food and Drug Administration) worldwide, records an EY report on data integrity compliance.

And a Deloitte report on compliance management points out: “In the last two years, import ban orders have been issued by the USFDA and Canada’s Health Canada to more than 25 Indian API (active pharmaceutical ingredients) and formulations.”

Regulatory action is not unique to Indian drug companies. But in the interest of its own reputation and business growth, the niggling question arises. Why do drug companies find it difficult to comply with quality requirements when they know what’s needed to be able to sell in markets, in India or abroad?

The simple yet complex answer to that is the shortage of skilled manpower. Though not the only reason behind drug companies being unable to keep pace with rapidly changing regulatory environments, it features as a key reason in both industry reports.

“Around 64 per cent of survey respondents have attributed non-compliance to shortage of skilled staff (in their risk and compliance teams), followed by challenges in implementing cGXP guidelines (good manufacturing practices etc, 52 per cent), complying with professional association guidelines (42 per cent), and poor fraud risk management systems (36 per cent),” says the Deloitte survey of 33 organisations operating in India.

Amit Bansal, Senior Director with Deloitte India, finds that good processes tend to lag behind, despite industry’s robust growth. “Are we making the kind of investment decisions needed for compliance,” he asks, indicating that much ground remains to be covered.

“The shortage of skilled people is one of the biggest problems, but it links back to the complex issue of the educational system not being geared to train people who can be employed by industry,” he says.

In the past, several Indian drugmakers have been hauled up by foreign regulators, including erstwhile Ranbaxy (now owned by Sun Pharma), Wockhardt, Ipca, and Sun itself.

Distilling down the violations, the EY report points out to data integrity malpractices and its manpower link. “Shortage of staff and excessive work pressure can lead to inaccurate and incomplete documentation,” it says, listing the reasons.

Quantity is put ahead of quality, as “employees may be forced to compromise the acceptable quality levels in order to meet production targets or dispatch timelines.” The report stresses on the veracity of raw data, which proves that drugs are safe, efficacious and manufactured as per appropriate quality standards. Leading regulators, all of which mandate data integrity, including the FDA, the UK MHRA, Health Canada, Therapeutic Drugs Administration (TGA) and the Indian FDA, consider the violation of data integrity as a grave offence.

Rajiv Joshi, Partner (Fraud Investigation and Dispute Services) with EY India, explains that data integrity requires skills tuned to not just normal compliance but scientific compliance. Besides, knowing the standards is one thing, but understanding and interpreting it is the challenge, he observes. Ronald Piervincenzi, Chief Executive with standards-setting organization United States Pharmacopeial Convention, wonders if the assumption is true that companies know the rules they need to comply with.

“It is a complex world and the global supply of medicine involves different regulatory rules, different countries and those rules change over time. And that first step of understanding what the standards is a very important one,” he says.

“Listing steps towards improved quality compliance, the reports suggest better internal controls, data reviews, improved raw material sourcing and a whistle-blowing mechanism. It is better that employees raise alarms on bad practices and set it right before it goes to the outside world and becomes an embarrassment,” says Joshi.

But it should not be just a tick in the box approach, and should work towards the spirit of the requirement, adds Bansal. Underlining why companies need to sit up and take note of their quality compliance gaps, Joshi says, US, Europe, Canada, India etc, are big markets. And sanctions from any of their regulators would impact business, adversely.