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Fake or faulty pharmaceuticals cause many deaths primarily due to their ineffectiveness at treating disease. Some of these fake drugs can also breed drug resistance due to poor production techniques. The industry behind these toxic drugs poses an enormous threat to public health.
Estimates of the amount of counterfeit or substandard drugs in some parts of the developing world range from less than one percent to over fifty percent. Poor countries such as India and many African nations are particularly struggling with this problem, as efforts to reform the pharmaceutical industry have focused on counterfeit medicines and ignored substandard drugs. Until governments and industry significantly lowers substandard drugs in developing world markets, a significant health threat remains.
Strong well-funded institutional systems tend to protect pharmaceutical markets in developed countries. Customs agencies guard against counterfeit smuggling, while standards agencies demand good manufacturing practices. All agencies are well supported by legal and judiciary systems. As a result, although pharmaceutical producers often target markets in developed country because of the potential for higher profit margins, infiltration of counterfeit drugs generally amounts to less than one percent of the drug market. By contrast, developing countries tend to lack essential regulatory institutions and several preventive social and commercial expectations of the pharmaceutical industry, leaving consumers vulnerable to all types of poor quality medicines.
Counterfeit drugs vary greatly according to market type. While anyone with an email account is likely familiar with the products and methods favored by counterfeit drug producers in developed countries, most potential buyers understand the risks involved. Buyers in developing countries encounter more insidious dangers. Destitute and uneducated people who neither know the risks involved in buying fake medicines, nor can afford proper treatment for their illnesses typically purchase counterfeit drugs disguised as antibiotics, anti-malarial medicines, and other anti-infective drugs. Sometimes legitimate products in developing country markets pose as great a risk as their fake counterparts given the poor quality of drugs.
Indian Drug Quality
India provides a rather important case study on faulty pharmaceuticals. Drug production ranges from medicines manufactured at the highest level of sophistication to drugs produced in filthy shacks, where they shovel ingredients into a cement mixer and fill capsules by hand. India exports increasingly large quantities of finished pharmaceuticals as well as active ingredients, although its home market is steadily expanding. Infectious diseases are prevalent within the country’s borders, and “rich world” illnesses such as diabetes are affecting more people each year. Indian consumers range from the rich and highly-educated, to a burgeoning middle class, to slum dwellers.
While politics, corruption, and bureaucratic inertia hobble progress, those at the highest levels of the Indian government now appreciate the urgent need for pharmaceutical industry reform. Until the last decade , many condoned lax pharmaceutical standards as a means of providing the poor with access to cheap medications. The issue of quality control did not factor into the debate, as officials assumed that people received the same medicines at cheaper prices. However, a recent campaign by the World Health Organization (WHO) raised awareness regarding this critical issue.
Trouble at Home
India is an increasingly influential actor in the global pharmaceutical market. Malaria and tuberculosis remain endemic, while heart disease and diabetes cause the country’s growing middle class to demand newer and often more expensive medications. India has also emerged as the world’s fourth-largest producer of drugs by volume. Together with China, it produces 20 percent of all finished medicines and 40 percent of all active pharmaceutical ingredients used in the United States alone. Politicians and analysts frequently cite India’s low-cost generics industry as a way to improve access to medicines, especially in the developing world.
However, although India’s generics industry has gained international approval and its best firms produce top quality products, counterfeit and substandard drugs still plague the country. In 2002, the WHO reported that according to Indian pharmaceutical manufacturers, substandard or illegal drugs accounted for 20 percent of medicines available in major Indian-city markets. Research conducted to assess drug quality in two Indian cities, Delhi and Chennai, found that respectively 12 percent and 5 percent of samples bought from pharmacies in those cities failed quality tests.
Substandard drugs, which contain too little active ingredient or the wrong active ingredient, cause sickness or death and can exacerbate drug resistance, consequently rendering drugs or entire classes of drugs useless for patients in the future. For example, the high prevalence of a strain of tuberculosis that is resistant to all existing treatments is partially attributable to fake or faulty drugs. The danger still exists that within a century, we will once again have no cure for tuberculosis.
Controversy over the Causes
The Indian government acknowledges that the country has a problem with substandard drugs, but there is little agreement among policymakers regarding the size of the problem or its global impact. Studies often rely on small, drug-specific samples or government data that requires independent verification. Before civil society groups can join pharmaceutical companies to prevent the production of all faulty pharmaceuticals, relevant actors must determine whether fake drugs or substandard drugs pose a bigger problem for the poor. From a public health standpoint, a drug’s intentional or unintentional harmfulness doesn’t matter. However, one can view the issue differently from a policy perspective. Courts require strong laws, police action, and jail for counterfeit pharmaceutical producers, whereas overcoming substandard drugs requires improvements in education for manufacturers, wholesalers, pharmacists and consumers (and medicines regulators).
Both fake drugs and substandard drugs flourish in poor markets. Some manufacturers make low-quality medicines without due care and attention to hygiene, and lack proper manufacturing practices. As a result of overexposure to lightheat or humidity, the quality of many medicines deteriorates during the distribution and retail process.
There is also little agreement on the primary cause of the problem. Is it India’s chaotic distribution system, a lack of awareness among pharmacists and consumers, weak regulation, or some combination of these factors?
Pharmacies in India, as in most Asian and African countries, are where most consumers purchase their medicines. Few countries have public health care systems. Doctors and hospitals are scarce and expensive. For common infections, like malaria, most patients self-prescribe medications, and the person who sells their medicine, who may not be a pharmacist, acts as the only source of advice to the consumer.
The question remains whether bad drugs are primarily a problem with India’s pharmacists, or an issue that originates further up the supply chain. No one knows whether counterfeit manufacturers sell directly to pharmacists or whether wholesalers in major markets play a major role in the distribution of substandard drugs.
Researchers seeking answers to this question conducted a pilot survey in Delhi. Local people posed as drug buyers approached wholesalers in Bhagirath Place, the largest drug wholesaling location in Delhi. The undercover “buyers” purchased a sample lot of an antimalarial drug (chloroquine), two antibiotics (ciprofloxacin and erythromycin), and two antimycobacterials for treatment of tuberculosis (isoniazid and rifampicin) without a prescription. All of these drugs are included on the World Health Organization’s Model List of Essential Medicines.
The results of this experiment suggested that poor-quality drugs sold on the domestic market are not exclusively–or even primarily–a pharmacy-level problem. Drugs procured directly from wholesalers in the Delhi area failed at an unnervingly high rate (10 percent). The rate was slightly lower than the failure rate of the same bundle of five drugs observed in a separate study of Delhi-area pharmacies (12 percent).
The failure rates across drug types were similar among both pharmacies and wholesalers. This implies that while fake drugs of all types are produced, not all pharmacies or wholesalers sell them. That some wholesalers and pharmacists had no failures while some had many suggests that the presence of bad drugs is not accidental; some sellers knowingly participate in illegal fake drug sales, and inadequate storage consequently does not emerge as the primary problem. Thus, although there are storage problems in India which can be overcome by educating pharmacists and cracking down on sales of expired drugs, most of the problem is due to illegal activity.
Studies show that drug regulation issues in India vary widely by region. Generally, data shows drug quality as higher in the southern part of India. This regional variation seems to indicate that some areas manage their local pharmaceutical industries and drug distribution systems far better than others. It also makes allocating responsibility for drug regulation between Delhi and the states more difficult.
At present, India has not established a unified, comprehensive drug regulatory authority. The Drugs Controller General oversees drug quality across India, but individual states issue production licenses. Corrupt state officials do not wish to give up the revenue stream from licensing production, which limits the effective power of the DCG to oversee drug quality.
Over the years, various government commissions have called for a central comprehensive regulatory authority, and have made recommendations for legal reform, as well as improvements in monitoring and enforcement. Although they have passed some reforms, their enactment remains inconsistent. For example, a government task force set up in 1982 recommended a ratio of one inspector to every twenty-five manufacturing units, and one to every one hundred sales premises. While the number of inspectors for India’s manufacturing units has improved, analysts report that there are only 935 drug inspectors for every 300,000 sales premises–or 320 premises per inspector. In Delhi, twenty inspectors are on duty for 8,000 registered chemist shops, which means one inspector for four hundred shops.
India’s pharmacy system lacks several features present in other countries. Pharmacists need not register with professional bodies or state boards, nor must they acquire additional education after initial qualification. Every year, more than three-quarters of new pharmacists qualify with the Diploma of Pharmacy degree, which generally takes only two years to complete. The United States and Japan, by contrast, require a minimum of six years of instruction; the United Kingdom requires four years. Pharmacists with no credentials at all serve nearly one-half of community pharmacies in India. Other studies suggest that pharmacists frequently do not dispense sufficient medical advice and allow drugs banned by the government to remain on shelves. Even for consumers who do see doctors regularly, over-prescription runs rampant, and the clarity of written instructions is often “inadequate.”
Current and Necessary Responses
Substandard drugs exist in significant numbers in the domestic Indian market and are purveyed by some pharmacies and wholesalers. The amount of substandard drugs provided by wholesalers implies that their prevalence in the domestic Indian market is not primarily the fault of pharmacists. However, as high-quality Indian producers flourish internationally, Indian citizens should join them in demanding that all manufacturers receive education on how to produce high-quality products. Reckless or illegal manufacturers not only put the reputation of high-quality producers at stake, but they also cause considerable harm to the public.
The emerging middle class has increased the demand for and supply of quality drugs, which is shaping the issue as well as potential solutions in new ways. In response to these demands, large Indian companies have begun to use vertical integration for their pharmacies. For example, a national hospital chain has expanded its in-house dispensaries into a chain of pharmacies, which also provides some clinical services and medical advice. A large national grocery retailer has similarly developed its own pharmaceutical manufacturing and retail branches, and a major drug manufacturer has developed a distribution and retail business. Traditional pharmacies typically do not employ licensed pharmacists, and are often small stores that sell other goods as well. Newer pharmacies are bright, western-style stores that sell expensive cosmetics and nutritional supplements, complete with white-coated qualified pharmacist on hand to dispense medicines and advice. Organizations representing small pharmacies and the many distribution networks reacted with great alarm to these recent developments.
When considering the phenomenon of bad drugs, western nations naturally focus on counterfeiting because of the challenges that these drugs pose to their markets. Evidence from India indicates that the sale of substandard and fake products by certain wholesalers and pharmacists is a key part of this problem. Yet because there are plenty of pharmacists selling quality drugs, the problem is not universal. This is good news, because it means that there exists the potential for better enforcement and improved education to squeeze poor quality or counterfeit products out of the market.
Roger Bate is the Legatum Fellow in Global Prosperity at AEI.
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