Home > Property & Casualty > FDA officials warn drug makers: comply or face sanctions

FDA officials warn drug makers: comply or face sanctions

indiadrugsHaving already faced serious legal threats from regulatory agencies last year, India’s pharmaceutical industry is now under additional scrutiny from the U.S.  Food and Drug Administration officials are intensifying investigations into the country’s drug facilities.  In February, this FDA Commissioner Margaret Hamburg met with Indian officials about the safety of Indian drug plants, following multiple reports that the country has sold fake pharmaceutical drugs and produced falsified drug test results.

India is currently the second largest exporter of over-the-counter prescription drugs to the U.S. and supplies 40 percent of generic prescription drugs to American consumers. The country exports about $15 billion in drug products each year and while many Indian manufacturing facilities are of top quality, others are in poor condition. The World Health Organization estimates that nearly one in five drugs made in India are fake.  Counterfeit medicines have been suspected of causing infant deaths in pediatric hospitals, while others were given to pregnant women in post-surgical prevention of infections. In the last year, FDA officials have uncovered serious quality control problems within the firms, from unsanitary conditions at drug plants to Indian manufacturers lying about the effectiveness of their products.

Hamburg’s visit was part of the agency’s increased effort to monitor food and drug products coming into the U.S.  Since passing a law in 2012 requiring increased scrutiny of foreign drug plants, the FDA has banned the import of drugs from several leading Indian pharmaceutical companies and issued heavy fines against others. The recent inspections were financed with nearly $300 million collected in annual fees charged to generic drug makers from the law. Ranbaxy, one of India’s biggest drug makers, was fined $500 million after pleading guilty to felony charges related to its products.

Drug manufacturers in India worry that the new U.S. compliance laws could force the shut-down of their facilities, mainly because they cannot afford the cost of increased oversight. Although many of the state health departments in charge of monitoring drugs are corrupt and lack expertise, the absence of government market regulation has allowed Indian drug makers to produce sub-standard products. Furthermore, The India Central Drugs Standard Control Organization, which oversees drug regulation, is just 2 percent of the size of the FDA, which has likely drastically reduced the amount of time and money spent policing the industry. But going forward, the threat of U.S. sanctions, banned imports, and the cost of hiring external consultants to ensure compliance with the FDA regulations means India’s previous cost-advantage on the market could lessen.


About the Author

Amy Sinclair is an Executive Vice President and co-leader of the Life Sciences Practice in WGA’s Property and Casualty Group. She negotiates, implements and manages comprehensive insurance programs for a variety of clients, ranging from venture-backed start-up organizations up to publicly traded companies.

617.646.0229 | Asinclair@wgains.com | Connect with Amy on LinkedIn
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