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Business News/ Home-page / Fake drug industry operates openly

Fake drug industry operates openly

Fake drug industry operates openly


New Delhi: The first occupant of Bhagirath Palace, built in the 1820s in what was then central Delhi, was Begum Sombre, a mercenary queen. “Sumroo," as her name got corrupted locally, lent her forces to the last feeble Mughal emperors to help drive away invaders and quell minor rebellions.

Nearly two centuries later, today’s crowded Bhagirath Palace in Chandni Chowk, a bustling locality in Old Delhi, still has its soldiers of fortune. Mercenaries who make and sell fake drugs, copies of the most complex medicines, for any distributor and retailer who wants to make a quick buck or exporters who sell them to unsuspecting health administrators in Sub-Saharan Africa, who receive some of the millions in aid money that is trying to fight HIV/AIDS, malaria or tuberculosis.

Nobody is sure of the extent of India’s fake drugs industry, but what is for sure is that the country neither has the enforcement resources nor, as it increasingly appears, the political or corporate will to stop such practices. India has only about 1,200 drug inspectors to monitor drug manufacturing firms that, depending on who you ask, number anywhere between 6,000 and 15,000.

Just miles from Bhagirath Palace, already watered-down federal legislation that seeks to impose fines and prison terms for those who make and sell counterfeit drugs is gathering dust in the Parliament since 10 May 2005.

India’s drug giants—often cited as global success story in making cheap drugs—as well as their foreign rivals don’t want to talk openly about the fake drugs problem for the fear that their own brands get bad publicity. They point the fingers at the government, which in turn, points the fingers straight back at the drug industry.

Health minister A. Ramadoss and other ministry officials didn’t respond to several attempts by Mint to discuss the fake drugs situation or reasons why legislation isn’t moving forward. “The Drugs and Cosmetics Act (the law that lays down punishment for such offenders) is a social legislation where everyone has a responsibility, from the manufacturers, suppliers, consumers to the government, that counterfeit drugs don’t enter the market," says M. Venkateswarlu, the drug controller general.

But, at a licensed medical store in the narrow by-lanes of Bhagirath Palace market, all a reporter had to do was ask for a cure for an ebbing libido.

“Have it after dinner, just before you start you-know-what," said the drugstore owner, pushing across a a packet of four red, triangular tablets of “sildenafil citrate," the chemical name of Viagra, Pfizer Inc.’s blockbuster erectile dysfunction drug. These tablets, sold as Vigora, in a graphic blue and black box that doesn’t leave the affect of the drug to imagination, comes with a clear warning that the Schedule H drug is “to be sold by retail on the prescription of a Registered Medical Practitioner only." A maximum retail price of Rs106.33 is also clearly marked on the side.

“How much?" “

“Tees rupiya (Rs30)," the store manager said. The transaction is over within minutes. No questions asked, no prescription needed, no receipt provided.

Vigora is actually a genuine generic version of Viagra and marketed by German remedies division of Cadila Healthcare Ltd, an Ahmedabad-based company that in turn gets the drug from HAB Pharmaceuticals & Research Ltd in Dehradun.

A spokesperson for Cadila said the genuine Vigora is usually sold for about Rs110 and as a prescription drug. While the one obtained from Bhagirath Palace does have a batch number as well as both a manufacturing and expiry date, its cut-rate price suggests it is quite unlikely to be the real Vigora but more likely to be a knock-off that is extremely well packaged, down to the printed laundry list of instructions to patients inside the box.

“There is a big menace of spurious drugs," says a senior Cadila executive who did not want his name used. “Discounts can make a drug that costs Rs106 cheaper by around Rs20-Rs25, but if it is selling at Rs30, then there must be something wrong with it."

Indeed, a 2004 survey by the Delhi Medical Association found just four of 53 drugs they sampled from Bhagirath Palace, perhaps the biggest medicines bazaar in the India, to be genuine. That is not to say everything at this market is fake. Bhagirath Palace is actually home to hundreds of wholesalers who sell medicines to retailers from most of north India and some states in the northeast.

But allegations of counterfeit medicines being supplied through this bazaar have been levelled by many a pharmaceuticals company for years though action against suspected traders seems spotty. “The crime branch has registered a few cases against some drugstore owners associated with Bhagirath Palace," says one senior Delhi Police officer who didn’t want to be named because of pending cases.

It is not easy to get one’s arms around the extent of counterfeit drugs in the country. One government study suggested counterfeit drugs were just 0.5% of the industry while a study by Assocham, the body that represents chambers of commerce in India, recently put it at a high 30% of all drugs sold in India, or about Rs10,200 crore out of an industry that sells Rs34,000 crore each year.

Harinder Sikka, whose public interest litigation against the government that is partly about this same issue and was admitted by the Delhi high court, puts the market for spurious drugs at Rs4,000 crore. Sikka filed the litigation in his personal capacity though he is also a senior president withdrug giant Nicholas Piramal India Ltd.

Praful Sheth, vice-president of the International Pharmaceutical Federation (FIP), a trade group, says there is no accurate or verified data on how many people could have been affected or have died on account of fake drugs. “No one knows the extent of damage and you get figures all over the place," says the industry veteran, likening it to the Vietnam war.

While these numbers might be exaggerated, what is certain is that almost every drug in the country is being duplicated and sold. All the top medicines sold in India, as tracked by medicine sales tracking agency ORG IMS, are prone to fakes as they sell in large volumes, or are expensive or have a steady stream of users, say industry insiders.

These include insulin of Novo Nordisk India Pvt. Ltd, Wockhardt Ltd, Eli Lilly and Co. (India) Pvt. Ltd; Novartis India Ltd’s pain relief pill Voveran; Pfizer’s cough syrup Corex and vitamin tablet Becosules; Cifran and Sporidex of Ranbaxy Laboratories Ltd; GlaxoSmithKline Pharmaceuticals Ltd’s Augmentin and Zinetac; Combiflam of Aventis Pharma Ltd; and Cipla Ltd’s Ciplox and Asthalin. Most of these firms didn’t want to comment on specific brands and associated counterfeit problems.

Global problem

With India’s growing reputation—much of it genuinely attained—of being a low-cost drug manufacturer, India’s fakes are also having global ripples. The Narcotics Control Bureau (NCB) here in Delhi is concerneed that drugs sold online from India to the US customers, for instance, may be spurious. “The market for cheap imported drugs in the US is growing by the day and is now valued at around $50 billion. There are bound to be more racketeers in India who would want to make money," says A.P. Siddiqui, deputy director, NCB. “We still do not know if the racketeers sourced the medicines from dubious distributors."

Says FIP’s Sheth, who is currently doing a study on fake drugs for the World Health Organization: “Tracking a counterfeit drug-maker is like stalking a shadow. They work in small pockets of organized crime and keep moving?from one place to another."

But these small pockets have now grown large enough to cause considerable embarrassment for India, often seen as a dependable source for medicines to fight diseases in Africa and poor parts of the world. According to Medecins Sans Frontiers, India ranks second, after Belgium, on the list of countries from which Unicef purchases medical supplies. While there is no evidence that any of these world bodies are concerned about such drug supplies, there have been instances where fake drugs from India have made their way to, as far as, Africa.

Nigeria’s drugs regulator, the National Agency for Food and Drug Control, in one of its presentations before the World Bank in 2003 said a large consignment of a controlled narcotic analgesic was concealed in T-shirts and imported from India via Lagos airport. In 2004, the agency said, 32 containers of various pharmaceuticals were smuggled in as motor vehicle spare parts. A year later, Nigeria blacklisted purchases from 14 Indian drug companies, including Kamala Overseas Bombay, Welcure Drugs and Pharmaceuticals, Wardex Pharmaceuticals, Unibios Lab, Shreechem Pharmaceuticals and Merit Organics, on charges of counterfeit and substandard supply of medicines. “No country is immune to counterfeiting of drugs due to inter-country commerce and porous borders," maintains Sheth. “Though associated with India and China, there are manufacturing hubs in eastern Europe, Latin America and South Asian countries, too." The New York-based Centre for Medicines in the Public Interest estimates that global counterfeit drug sales will reach $75 billion by 2010, nearly double from 2005.

Regulatory issues

The regulatory agency, Office of Drug Controller General of India, admits it is ill-equipped to handle the extent of vigilance required to comb a vast country with just 35 drug inspectors at the central level and 1,100 in the states. The All India Drugs Control Officers’ Confederation (AIDCOC), a representative body of drug inspectors, estimates that India needs at least 4,500 additional drug inspectors to monitor 15,000 drug manufacturing units and more than half a million retail outlets. The drug control regime is “crippled," says Ravi Uday Bhaskar, AIDCOC secretary general. “There is inadequate manpower, infrastructure and auxiliary staff. This issue of upgradation has been in a limbo for 25 years now," he says, but bristles at the notion that drug inspectors, sometimes suspected of being part of the problem, are also to blame for the spread of counterfeit drugs.

Meanwhile, a multiplicity of regulatory agencies leave loopholes that rogue drug makers exploit. A manufacturing licence for a drug unit is given by state drug authorities, licences for different drugs by the Central government, and checks for quality compliance is done jointly by the two. The law mandates one annual inspection at each unit, but for effective monitoring, up to 20-30 checks may be required, admits AIDCOC’s Bhaskar.

The fake drugs cell of the Indian Pharmaceutical Alliance, a lobby group representing large Indian drug makers, has been tracking and investigating spurious drugs since 2001 but its effort has been too small to make a dent. The cell is part of raids conducted almost every other month and has participated in over 70 raids that seized goods worth Rs17 crore. There have been 106 arrests through such raids, but most of those arrested typically manage to promptly secure bail.

“We face resistance from distributors and can only flag these cases to the police who then have to take action. Even if we catch them red-handed, they slip out on bail," says P.N. Bhargava, a retired intelligence officer who now works with the cell.

In February 2006, for instance, the Alliance’s anti-piracy team helped raid a Sonepat, Haryana-based medicine company and found two large rooms filled with cartons of fake drugs. Cifran, Voveran, Crocin, drugs of many big brands, worth about Rs3 crore, were seized. The drug maker, which operated with a licence to manufacturer ayurvedic medicines, was actually a repeat offender: It had been busted in 2001 for making spurious drugs.

Bhargava recalls instances where they raided unlicensed drug godowns in Agra only to see entire warehouses cleared overnight before the police could act. Recently, the Karnataka state drug controller found fakes of Nicholas Piramal’s Stemetil and is initiating legal proceedings.

Novartis India chairman Ranjit Shahani dubs counterfeit drugs the perfect murder weapon “as the evidence disappears once you take the pill and you die of the disease, not the pill". He says that just one counterfeit drug maker, making thousands of strips of drugs for malaria that is consumed by hundreds of unsuspecting children, can cause deaths within 48 hours because the medicine doesn’t work. “Now multiply this toll for as many life-threatening diseases across patients: it is like three jumbo jets crashing every day," he says.

Novartis, like most drug companies, conducts checks and is part of raids, sometimes two a month, in search of fake Novartis drugs. Ranbaxy says it is making counterfeiting harder by using sophisticated packaging technologies that are hard to mimic. These include the use of holograms, innovative printing inks, optical character recognition and smart card technologies.

Kewal Handa, Pfizer’s managing director in India, says his company retains samples from each batch of medicine sent to distributors. This helps differentiate between the original and the counterfeit product.

Most of the counterfeit drugs allegedly peddled in wholesale drug markets such as Bhagirath Palace and the Dawa Mandis in Agra and Kanpur are sourced from small units situated in industrial clusters in Haryana and the national capital region in areas such as Okhla, Mayapuri and Ghaziabad, all the way up to Meerut in western Uttar Pradesh, say observers.

A counterfeit drug travels across several states, moving from a manufacturer to another city in North India for packing, complete with fake holograms, and is then sold in a dawa mandi in a third city. The content of such drugs could involve the actual chemical that goes in the drug, but in smaller potencies or raw lime and even just water (for, say, insulin).

According to one veteran trucking company owner in Delhi, most of the shops that sell fake drugs have an “arrangement" with a transporter. “In every consignment, they carry a percentage of genuine drugs, which are backed with proper documentation such as tax receipts and invoices, while the fake medicines would be backed by fake papers. If they are hauled up, they would show the genuine goods and papers to ‘convince’ authorities that the goods were all “pucca (in order)," he says, preferring to remain anonymous. Transporters charge a premium for carrying counterfeit drugs and earn even more if they actually prepare and forge documents.

Industry insiders note that some 750 small drug units have gone out of business over the mandatory implementation of “good manufacturing practices" two years ago or because key customers switched to drug units operating in benign tax regimes of Uttarakhand and Himachal Pradesh. As a result, many of these firms, which have the necessary equipment, could be susceptible to fake drug manufacturing, these people say.

Some doctors say they have begun prescribing medicines that are not available very easily to avoid fakes. Arjun Rastogi, of south Delhi’s Geetanjali Hospital, say doctors can never be sure if a drug is spurious. “The drug could be fake or the patient could be resistant to the drug," says Dr Rastogi.

Organized pharmacy chains, such as Apollo Pharmacy and Fortis HealthWorld, have centralized procurement directly from the companies to counter this threat. “We deal with large established distributors representing big companies only, physically check every strip and bar code them so that no unwanted supplies can trickle in," says Ashish Pandit, chief executive, Fortis HealthWorld.

Sikka, whose public interest litigation is also based on the premise that spurious drugs violate the fundamental right to life under Article 21 of the Indian Constitution, says that a lot of fakes make their way into the government medicine programmes becacuse it buys on the basis of lowest cost rather than quality.

Legislation on fake drugs meanwhile appears stuck in Parliament for nearly two years. An amendment bill was drafted after a 2003 committee report suggested the death penalty as punishment for offenders. That report also noted that just seven among 17 government laboratories for drug testing in 31 states and union territories were reasonably equipped.

Sushma Swaraj, the former health minister who helped draft the counterfeit amendment to the Drugs & Cosmetics Act, is furious that the current government has watered down the death punishment to life imprisonment and a fine of Rs10 lakh or three times of the value of goods confiscated, whichever is greater. “This is mass murder and done for the most guileful reason (of profit). I had wanted the extreme punishment of a death sentence for the offender. The new minister (Ramadoss) is still sitting on the bill," she says. While Ramadoss didn’t respond, Gurdial Singh Sandhu, joint secretary (pharmaceuticals) in department of chemicals and petrochemicals, said Parliament may take up the amendment bill in “the coming sessions."


(Y.V. Phani Raj in Hyderabad contributed to this story.)

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Updated: 13 May 2007, 05:32 PM IST
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