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Critical condition

Drug majors are shifting clinical trials out of India as lawmakers turn on the heat

They will come to inspect after the horse has bolted from the stable,” grumbles a visibly miffed Kiran Mazumdar-Shaw. The chairman and managing director of Biocon is seated in her tastefully decorated meeting room at the Bengaluru headquarters, where the walls are adorned with paintings by Scottish artist Tom Robertson and bright sunlight pours in through the large windows. The Watson & Creek meeting room is named after the Nobel laureates who discovered DNA; in fact, all meeting rooms at India’s largest biotech firm are named after Nobel Prize winning scientists. This is just another sign that Biocon takes its research seriously, the biggest indicator, of course, being that like most other large Indian pharmas, it is working at breakneck speed to be the first to launch an Indian blockbuster drug. And that explains why Mazumdar-Shaw is unhappy.

Over the past year, regulatory hurdles seem to have thrown cold water all over the industry’s plans, including Biocon. “In our country, regulators have always failed us, be it in aviation, telecom or now, pharma. The regulatory landscape is not thought through in a holistic manner and regulation is often a knee-jerk reaction. Today, regulation has been hijacked by activism,” she says. Mazumdar-Shaw isn’t alone. Most pharma players are loudly expressing their displeasure with restrictions introduced on clinical trials last year, which they claim is stifling innovation and drug discovery in the country and slowing down expansion. What has them so hot under the collar and where does Indian pharma go from here?

Systemic malaise

It all began in January 2013, when the Supreme Court revoked the power of the Drugs Controller General of India (DCGI) to approve clinical trials after finding glaring irregularities in some of the clinical trials approved. Serious lapses had been found in some clinical trials in Madhya Pradesh and in a trial in Andhra Pradesh and Gujarat to evaluate a cervical cancer vaccine. The latter was carried out in 2009 on tribal girls by a US-based NGO Path, which tested cervical cancer vaccines by Merck Sharp & Dohme and GSK, in collaboration with the Indian Council of Medical Research. The trial, which was abandoned in 2010 after the death of seven girls, was held to have violated several norms: in Andhra Pradesh, of the 9,543 consent forms, 1,948 had thumb impressions and 2,763 had the signature of hostel wardens.

The matter reached Parliament and things came to a head when Indore-based NGO Swasthya Adhikar Manch filed a public interest litigation in the Supreme Court in January 2012 based on an Economic Offences Wing report citing gross slip-ups in the Madhya Pradesh trials. “There were several instances where informed consent was not taken before including the patients in clinical trials. Many of them didn’t even know they were taking part in a clinical trial. And after finding the doctors guilty of gross malpractice, they were let off with a minimal fine. There was no accountability at all,” says Amulya Nidhi, co-founder, Swasthya Adhikar Manch, the NGO that approached the apex court asking for a strong regulatory framework.

In May 2012, a Parliamentary panel report rapped the regulator on a number of issues: approving a drug without prior trials; allowing clinical trials where less than the stipulated number of patients were tested; missing drug-related documents; and okaying controversial drugs that weren’t cleared for sale in developed markets. Reprimanding the regulatory body for treating Indian patients as guinea pigs, the responsibility of approving trials was passed on to the health ministry and the Drugs and Cosmetics Act was amended by a gazette notification dated January 3, 2013 to bring in tighter regulations. 

And that’s where industry is feeling the pinch. The new regulations state that patients in clinical trials should be given free treatment by the pharmaceutical company as long as required, irrespective of whether or not the ailment was a side-effect of the drug. Moreover, compensation should be paid in case of an injury or death due to a placebo-controlled trial or if the product did not have the intended therapeutic effect. In contrast, so far, compensation has been paid to research participants only if death or adverse effect was due to the drug being tested.

Contract research organisations and pharmaceutical companies started pulling out of trials almost immediately, claiming the new rules went against the tenets of science and the liability of compensation being an unknown number was too risky. “If, by definition, a clinical trial is to see whether a drug will work or not, how can we be expected to compensate patients if the drug does not have the intended therapeutic effect? This is not in consonance with global standards,” says Swati Piramal, vice-chairperson, Piramal Enterprises. 

Meanwhile, in February 2013, the health ministry appointed a committee to prepare guidelines to improve the regulatory process of clinical trials. Ranjit Roy Chaudhury, chairman of the committee, believes this was a much-needed step. “Those who are unhappy have reason to be unhappy. All of us haven’t done our jobs. Monitoring was not done properly so there were some bad practices. Informed consent was not taken and monitoring by the ethics committee was never done,” he points out. 

That casual attitude towards clinical trials has taken a toll, both on the industry and, more importantly, on the people who participated in the trials. According to the health ministry, between 2005 and 2012, there have been 11,972 cases of patients suffering adverse effects excluding deaths, with 506 of them being directly attributable to clinical trials. Of the 2,644 deaths reported during the same period, 80 were attributed to clinical trials. That is why the government is rightly determined to ensure patient safety is the first priority in clinical trials and poor, illiterate sick people aren’t taken advantage of. 

The Roy Chaudhary committee, accordingly, has come up with a number of recommendations to safeguard the interest of patients participating in the trials. Among them: the ethics committee that clears clinical trials, the centres for clinical trials and the investigators who conduct the trials, all of them must be accredited. All trials must be conducted only at centres approved by the DCGI. While the committee says that there is no need for compensation in case of deaths not related to trials, or if the drug does not work as intended, it recommends that companies take care of any medical expenses if patients face adverse effects during a trial. A change in the formula for calculating compensation — currently ranging from ₹4 lakh to ₹74 lakh — has been suggested, as has a time-bound approval process for trials.  

“We believe that patients are partners and not just subjects and clinical trials are a kind of partnership. If something happens to the partner, you must take care of them,” says Roy Chaudhary. “Today, clinical trials is a bad word and I want to change that. If we don’t change our system, we can’t expect that stringent measures against clinical trials won’t be implemented by the government. Tomorrow, civil society will come up and say we don’t want clinical trials,” he adds.

Drying up

As it turns out, the flood of clinical trials has already dried up to a trickle. For the first six months after the health ministry took over, the approval process froze and not a single approval was given. When the gates opened, the ministry speedily passed 162 trials between July and August 2013, prompting the Supreme Court (in response to the Swasthya Adhikar Manch PIL) to ask the ministry on what basis the trials had been approved.  Earlier, clinical trials were approved by a single body, the New Drug Advisory Committees (NDACs), but under the new regulatory regime, there is a three-tier process of NDAC, technical and apex committees. When the ministry clarified that only five trials had been put through the three-tier process, the court suspended the other 157 trials, asking them to be re-evaluated under the new process.

Research interrupted

Clinical trials in India have come to a  near-halt post the change in regulations

This back-and-forth was enough to spook most pharma companies and international sponsors, many of whom pulled out their trials from India. Roy Chaudhury says a robust clinical trials environment in India is possible if the recommendations of his committee are put in place. “I read in the papers every day that Indian pharma companies are taking their trials overseas. Instead of threatening to leave, they should help us reform the system and make it work,” he declares. “Pharma companies have no reason to be worried.” For the industry, though, that’s not reassurance enough.

From 500 approvals for clinical trials in India in 2011, the number dropped to just 19 in 2013 and, as companies continue to pull out of trials, the number of new drug approvals also saw a slump, falling to 23 in 2013 compared with 270 drugs in 2008. According to industry analysts, the $500-million clinical trial business has already lost on business worth $150-200 million. Apart from the revenue loss, the industry has taken a beating on other fronts as well. “India has been largely dependent on international trials for upgrading the skill sets and infrastructure required for good clinical research, and this has taken a hit as companies have pulled their international trials out of the country,” points out Jamila Joseph, head of clinical research services, Reliance Life Sciences. That is one more reason why, while research firm Frost and Sullivan had predicted that industry would grow to $1 billion by 2016, the change in regulations means it will take the industry longer to reach the milestone.

It isn’t just pharma companies. International sponsors that heavily fund academic research, such as the US-based National Institutes of Health, have pulled nearly 40 clinical trials from the country since last year. “Academic research will also be severely impacted as the research institutes do not have the funding that will be required in the light of new regulations,” says Ranjit Shahani, managing director, Novartis India. The company hasn’t pulled out any trials from the country, but its ongoing trials have been delayed because of the change in regulations.

Others echo Shahani’s thought. The UK-based Medical Council of Research pulled back on its trial to determine whether aspirin works as an anti-cancer agent, which it was developing together with the Mumbai-based Tata Memorial Hospital. “As far as academic research is concerned, India was already at one-tenth of where we should be and now even that has been impacted. Just because the government has not been able to monitor the trials and there have been trials that have not been conducted properly, by enforcing draconian laws, the problems will not sort themselves,” says CS Pramesh, professor and chief, thoracic surgery, at Tata Memorial Hospital. According to him, almost 20 trials have been called off in the past year at the Tata Memorial Hospital, which specialises in cancer treatment. 

A bitter pill

Why does the standstill in clinical trials in India matter so much to the pharma industry? To understand that, you need to go a little deeper into the kind of trials conducted here and abroad. For new drug substances discovered outside India, phase I trials (which test the safety and side effects of a new drug) are not permitted in the country. After the submission of phase I data, though, DGCI allows phase II and III trials (where the drug is given to ever-larger groups of people to check its effectiveness and evaluate its safety) to be conducted concurrently with other global trials for the drug. Predominantly, India is part of global phase III trials, which are typically large-scale projects, involving several thousand patients in different countries. Phase III trials usually account for about 40% of total drug discovery costs — a large trial involving 10,000 patients and 300 sites can cost up to $300 million. 

Different stages of a clinical trial

The choice of location for clinical trials and the size of trial depends on the drug being tested and its treatment. For instance, drugs to treat infectious diseases will require a large pool of patients, with a larger proportion of them coming from emerging markets where the incidence is high. For instance, GSK conducted phase III trials for its malaria drug, Tafenoquine, in Brazil, Peru, India and Thailand with about 900 patients globally, of which 450 patients are in India. The sample size is smaller in cancer trials. For instance, Novartis’ leukaemia drug, Nilotinib, as part of its phase III trials was tested on 400 patients globally, of which 25 are in India.

So, clinical trials in India are just one more location at a later stage in new drug discovery and, as Roy Chaudhary says, “Only about 1-2% of clinical trials are done in India. It is not that everyone is rushing to do clinical trials here.” But since global trials are done simultaneously across markets, a delay in approval in India would mean that the company cannot file for a new drug approval till the studies are completed in India. At Novartis, for instance, which currently has drug trials underway for cancer, diabetes and pulmonary diseases in India, about 10-15 studies have been delayed due to increased timelines for approvals. “Overall patient recruitment as well as the ability to initiate new studies has been severely affected,” says Shahani.  

Moving on and away

The delays are forcing companies to move trials to Singapore, Malaysia, Vietnam and some countries in Eastern Europe. “International pharma firms don’t need to do clinical trials here — they are happy to move abroad and conduct the clinical trials elsewhere. It is the Indian firms that are hurting because they were depending on their home country to do the trials and now they have to go overseas where costs are much higher,” says Shoibal Mukherjee, chief medical officer, Quintiles, one of the world’s largest contract research organisations. 

Certainly, taking trials overseas can bump up the cost by two to four times, depending on the research programme. For Indian companies, most of which are taking the co-development route to launching a new drug, it doesn’t help that the odds are increasingly not in their favour. Drug research in India has a chequered track record. Dr Reddy’s Laboratories (DRL) was the first company to start a research arm as far back as 1993-94 and it was the first company to out-license a molecule, Balaglitazone, to Novo Nordisk in 1997. (Outlicensing is when a pharma company licenses out its new molecules to global innovators in return for milestone payments according to the progress made at various stages of drug development.) In 1998, Reddy out-licensed Ragaglitazar, another diabetes molecule, to Novo Nordisk and in 2001 out-licensed a third molecule to Novartis Pharma for $55 million. All of them were eventually discontinued as the results from clinical trials were unsatisfactory. Now, Glenmark has out-licensed six molecules and earned $221 million. Two of these molecules have progressed to phase II, while Crofelemer, a drug to treat HIV-induced diarrhoea that has been in-licensed from Napo Pharma, has been approved in the US. But an international launch of a novel blockbuster drug continues to elude the industry. 

Meanwhile, lower drug development costs can possibly result in cheaper medicines and reduce our dependence on the West for new drug therapies. Take Biocon’s Canmab, used to treat breast cancer. Developed jointly with Mylan, the drug is a biosimilar (a generic equivalent of a biotech drug) of Roche’s Herceptin. In anticipation of the Biocon launch, Roche slashed its prices by 50% and Canmab is priced 25% lower than the discounted price of the innovator drug. 

But now Biocon may not have the same cost advantage for its eagerly-awaited oral insulin. The company has already taken trial of the drug overseas due to delay in approvals. “There is no reason for us to take these products out of the country but the uncertainty gives us no choice,” says Mazumdar-Shaw. The company also plans to take some of its other programmes overseas, including its novel Anti-CD 20 molecule for Non-Hodgkin’s Lymphoma. Apart from this, Biocon has about four new chemical entity (NCE) molecules at various stages of clinical development in oncology, opthalmology, autoimmune diseases and diabetes, and six molecules in the biosimilars pipeline under development. It plans to move some of these programmes overseas as well if the uncertainty in India continues.

Biocon isn’t alone in moving abroad for clinical trials. Several Indian pharma companies such as Piramal Life Sciences, Lupin, DRL and Sun Pharma are also taking the overseas route. Piramal, which has 8-10 molecules in various stages of clinical development in the areas of oncology, diabetes and infectious diseases, has transferred five diabetes and oncology molecule trials to the US, where Swati Piramal says the regulatory timeline is only 28 days. “We just gave up and said we will not do trials in India. In the US, they see this as increasing the country’s innovation capacity; they put everything behind it to ensure that as long as companies follow the rules, the approvals come through. The rules are very clear and the timeline is laid out,” she explains. “In India, everything is obscure — the rules and standards that are required for an approval and, once you have all the requirements in place, how long will it take for an approval.” 

For its part, Lupin is going one step further and has taken all its NCE programmes overseas, despite higher costs. “We got an approval for phase II trial in the UK in 15 days. Why would I wait for nine months in India for an approval?” asks Dhananjay Bakhle, executive vice-president, Lupin. “We have no issues with additional safeguards for India and we are interested in protecting our patients. Just because they gave us approval in two weeks in the UK, it doesn’t mean they are willing to treat their patients as guinea pigs there. They are able to validate and evaluate the process in such a short time and so should we,” he adds.

Indeed, the grouse for most pharma companies in India isn’t so much the stricter regulations as it is the delay in getting approvals. For instance, Lupin got approval for a biosimilar trial after two years of waiting; now the company has been asked to get the proposal re-evaluated under the three-tier committee. “The three-tier committee was put in place only a year back and we had started two years ago. We were told we have to get the approval under the new regulation, which means we have to change all our protocols and go back a phase, which doesn’t make sense at all,” cribs Bakhle. The company is now looking to take its biosimilars programme overseas as well. 

The end of innovation?

The uncertainty and the flight of clinical trials overseas doesn’t bode well for innovation, according to Satish Reddy, vice-chairman, Dr Reddy’s Laboratories, the company seen as the pioneer of clinical research in India. “Activism and misplaced debates on certain provisions related to clinical trials has taken over any chance of defining a long-term vision and developing an ecosystem that fosters innovation and R&D, which is rather unfortunate for India,” he says. And without that ecosystem, drug discovery will be a non-starter in the country, believes Reddy — which is why DRL has altered its R&D strategy to leverage research skills overseas. “Earlier, we were doing R&D internally. But now, we are moving into programmes that are partnered externally. We will partner with people if we don’t have the technology. If we don’t have technology and there is a platform available we will acquire the technology,” says Reddy. “We are broadbasing and globalising our R&D. That’s what you see with our acquisitions of Chirotech and Octoplus [in the UK and Netherlands, respectively], which bring in certain strengths. We are also expanding our R&D footprint in the US, where innovation is high.” 

Reddy feels the risk-reward equation is definitely not in favour of companies pursuing research. “Earlier not having a product patent law meant there was little incentive for innovation, but even when things changed, innovation is a risky and uncertain terrain and is expensive by Indian standards. It may be cheaper compared with global standards but there is still a lot of money at stake,” he says. Accordingly, DRL has altered its R&D strategy to look at areas where the risk is lower and where the translation from lab to commercial products is higher, such as anti-infectives, pain management and dermatology, rather than diabetes and cardiovascular therapy. The company is also now looking at incremental innovation, which involves taking an existing molecule and changing the way it is delivered so that unmet clinical needs are met. DRL currently has six molecules in clinical development in the areas of cardiovascular disorders, pain management, psoriasis and migraine. 

For smaller pharma companies, which can’t afford to move either trials or research overseas, the options seem limited. “Overly stringent regulations will hamper all innovative work in drug development because if it takes so long to get an approval and launch a drug, then people will think twice before putting money into research. They would rather go after low-hanging fruit such as generic drugs,” says KV Subramaniam, president and CEO, Reliance Life Sciences. According to him, even foreign capital investing in research will start to dry up if the return on capital starts to look unattractive. 

Bathwater, yes. Baby, no

Where does the pharma industry go from here? The government has accepted most of the recommendations of the Roy Chaudhary committee, barring those suggesting an audiovisual recording of informed consent, a cap on the number of trials per investigator (a maximum of three) and that all drugs to be marketed in India should undergo trials here. The committee had recommended that, in special cases, an audiovisual recording of the informed consent can be taken in addition to the written informed consent, but the Supreme Court has extended that requirement for all cases. And where the committee had proposed a timeline of three months for approval of clinical trials, the ministry has extended that to six months. 

Some of these changes will have to come through as amendments to the Drugs and Cosmetics Act and that could take several months at the minimum. Moreover, while the rules have been framed in good faith, it is often at the time of implementation that the regulatory body falters. “My biggest concern is implementation. The regulatory body is not in a position to implement all this because they are short-staffed. They are fire fighting, so implementation will be delayed. My hope is that everything will be outsourced because once we keep it within the government, it won’t work,” confirms Roy Chaudhary. 

Operational issues have already started to crop up. “The new regulations have come without implementation plans and have given little time to tweak our procedures,” says Suneela Thatte, president, Indian Society for Clinical Research (ISCR). For instance, consider the now-mandatory audio-visual recording of informed consent by trial participants. While that is possible in clinical trials involving smaller groups of patients, in the case of larger phase III trials involving thousands of patients, many of whom may be in smaller cities, the process of getting informed consent could take months. Similarly, while the regulation calls for accreditation of centres, the 800-odd investigators and 600-800 ethics committees in the country, not only will the process take time, it is also unclear who will do the accreditation.

Of course, teething troubles are bound to crop up. In Europe, between 2007 and 2011, several new regulations were brought in and the number of clinical trials fell by 25% during the period as a result of new stringent norms. “Clinical research is an evolving industry and these regulations have come at the right time. At the end of the day, we are looking to protect lives. The recent regulations will make the process more stringent and the sieve tighter. The good ones will push through the sieve and survive,” says Saurendra Das, executive director, Excel Life Sciences, a contract research organisation. “In the end, it will make the trials more efficient and the common man should have confidence in clinical trials and new drugs.” 

The pharmaceutical industry’s point of view is that while there is no doubt that several pharma companies have been taking advantage of the loopholes in the system and violating norms when conducting clinical trials, the solution lies in fixing those lacunae and punishing the guilty, rather than clamping down on an industry. “We want clear timelines. We want to be better regulated so we can move forward. We don’t want to pay for somebody else’s mistakes,” says Piramal. 

In the short term, though, there is little doubt that the clinical trials industry will be under the weather. But the hope is that pharma companies with long-term plans for the Indian market will continue to invest here. As for Indian pharma companies, yes, the trials overseas will bump up costs but if that speeds them along the long road of blockbuster launches, it will be worth it.