Good Move on Bad Drugs
The Ranbaxy Scandal

Resident Fellow
Roger Bate
The U.S. Food and Drug Administration has just banned 30 drugs from India's giant Ranbaxy Laboratories because of quality fears, but the move is long overdue and Ranbaxy continues to supply the developing world with other drugs that are not checked for quality.

The U.S. President's Emergency Plan for AIDS Relief (PEPFAR) later suspended purchases of Ranbaxy drugs too, after buying US$9 million last year, but this has not been matched by the other agencies and countries that supply low-quality drugs to poor countries--supplied in line with World Health Organization (WHO) recommendations.

Deficiencies in HIV anti-retrovirals (ARVs) or in malaria drugs can increase patient resistance to drugs and help the disease mutate into new and virulent forms. Rising resistance in sub-Saharan Africa, Thailand and Cambodia is a time-bomb that will increase deaths from AIDS and will multiply the cost of treatment many times over.

As the contaminated milk horror grows in China, quality control in food and drug manufacturing in the rapidly-developing world is a matter of life and death.

The FDA says its action against Ranbaxy's Paonto Sahib and Dewas plants is "preventive." It has known about problems at Ranbaxy's plants for several years but it "recommends that consumers continue taking their medications manufactured by Ranbaxy," so the ban seems to be a punishment for Ranbaxy refusing to allow an audit rather than any immediate fear about drugs sold in the U.S.: None of those have failed quality tests.

But back in 2005, a whistleblower from Ranbaxy contacted me with evidence of safety-data manipulation, including data on HIV drugs for Africa. We forwarded this to U.S. authorities and the WHO. In June 2006, the FDA warned Ranbaxy that it would "recommend withholding approval" of Paonto Sahib products until deficiencies were corrected. Nearly a year later the company's counsel admitted "that it had not yet addressed all of the FDA's concerns." Early this year, the FDA inspected both suspect plants and found "serious violations."

Then, in July this year, the U.S. Department of Justice said "allegations from reliable sources and supporting documents indicate a pattern of systemic fraudulent conduct." It said Ranbaxy uses active pharmaceutical ingredients (API) "from unapproved sources, blends unapproved API with approved API, and uses less API in its drug than had been approved by the FDA."But since its investigation began in early 2007, the FDA has approved 18 Ranbaxy drugs for the U.S. PEPFAR has bought US$9 million of its HIV drugs (not certified in the U.S.), and distributed more than 1.8 million packages to 15 countries, mainly in Africa.

Part of the reason for FDA inertia may be the stature of Ranbaxy, the largest Indian drug maker, valued at over US$4 billion (although shares fell roughly 10 percent after the FDA announcement), and probably the tenth-largest maker in the world of generics (copies of formerly-patented drugs). The U.S. accounts for 28 percent of its sales.

Ranbaxy says that "except for issues that have already been fully aired" with the U.S. government, it "knows of no evidence to support" the Justice Department case--and no charges have yet been laid.

The Indian Government has called for a swift resolution and the Commerce Department has hinted it will complain, perhaps through the World Trade Organization. But speed is not as important as establishing good precedent.

The FDA is right to insist on upholding standards: Badly made life-saving drugs can create life-threatening resistance.

It throws down the gauntlet to the Global Fund, the European Union, the Clinton Foundation and all the agencies and countries using the WHO's "pre-qualification" list of medicines, which are approved for developing countries, but which have not passed the tests demanded in rich countries: The list is designed to encourage local production rather than to save lives.

These donors and governments know about the FDA allegations against Ranbaxy and the long-standing deficiencies of other suppliers, but have not yet altered procurement. The WHO did suspend Ranbaxy anti-retrovirals from its pre-qualification list in 2004, but re-instated them in 2006.

As the contaminated milk horror grows in China, quality control in food and drug manufacturing in the rapidly-developing world is a matter of life and death. India already supplies 75 percent of the world's counterfeit and sub-standard drugs.

U.S. patients have the FDA on their side, but no one is protecting the interests of the poor in developing countries: This scandal must be seized by governments, charities and pressure groups to impose quality control on the WHO's "pre-qualification" list and save patients in Africa and Asia.

Roger Bate is a resident fellow at AEI.

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