How far does “The Rot” extend in the pharmaceutical sector?


While eliminating corruption is a daunting challenge, particularly in the pharmaceutical industry, there must be a willingness to implement the ‘checks and balances’ already in place. Corruption in the pharmaceutical industry is not new and recent reports of unethical, illegal and fraudulent activities in India have, indeed, tarnished the image of the industry in the global sphere. Let’s revisit some recent corruption threads and find out what industry insiders have to say.

Public health is in limbo and India’s ‘Pharmacy of the World’ label is in dire straits with the latest happenings in India’s pharmaceutical sector. Things unfolded recently with the Central Bureau of Investigation (CBI) arresting a top Biocon Biologics executive, a drug inspector and a co-controller of drugs for alleged bribery. According to media reports, several people have been booked for alleged kickbacks to gain approval for insulin injections for diabetic patients developed by Biocon.

Biocon, however, came with clarifications to protect itself and tried to come out clean. The National Stock Exchange (NSE) has sought clarification from Biocon over the company’s subsidiary caught by the CBI for allegedly offering bribes to back out of a trial of a new drug, according to media reports.

Recently, the offices of Micro Labs were raided by the Income Tax Department for tax evasion. It should be noted that this is the same company that provided the Dolo-650 that saved lives during the COVID-19 pandemic. In this case, however, there was no reaction from the company.

All of these events have called into question the functioning of the regulatory body and the deep corruption that plagues the pharmaceutical sector.

Corruption in the pharmaceutical sector is not new and the recent episode has opened a Pandora’s box where drug regulatory agencies are hand in hand with pharmaceutical companies on various occasions.

It should be noted that nine years ago, in 2013, the Parliamentary Standing Committee on Health, in its 118-page report, found shortcomings in the functioning of the Central Medicines Control Organization (CDSCO) and blamed the department citing instances of lapses, irregularities and opacity. According to the committee, it is a strong belief that most of the evils that beset the drug regulatory system in India are mainly due to CDSCO priorities and biased perceptions.

Dinesh Thakur, Founder, Thakur Family Foundation, a pharma crusader and whistleblower, who worked with Ranbaxy and eventually exposed fraud within the company, said: “Regulatory capture, as far as the pharma industry is concerned, is not a new phenomenon. It exists both in India and globally. However, the level of catch is by far an order of magnitude worse in India than elsewhere.

Some pharmaceutical companies indulge in giving gifts, cash, and paying for trips to attend medical conferences. This is done to potentially influence a physician to be favorably inclined to prescribe the Company’s products.

Said Girdhar Balwani, Professional Mentor and Independent Director, Cadila Pharmaceuticals said: “All businesses and all doctors must operate within the legal domain of the country. Although there are several laws and codes, it is important to consider the best way to ensure compliance. The Prevention of Corruption Act stipulates that legal persons must put in place compliance procedures to prevent their employees from engaging in any act that may be characterized as corruption or bribery. Subsidiaries of foreign companies must also comply with the applicable laws of the jurisdiction where the parent company is located.


Recently, the Supreme Court asked the Center to file a plea affidavit alleging unethical marketing practices by pharmaceutical companies in their dealings with healthcare professionals, resulting in excessive or irrational drug prescribing and a push towards expensive or overpriced brands. The plea was filed by the Federation of Medical and Commercial Representatives of India (FMRAI) asking for a Uniform Code of Pharmaceutical Marketing Practices (UCPMP) and making it effective by providing oversight mechanism, transparency, accountability as well as the consequences of violations.

The Hisar Vigilance Department recently arrested the Deputy Chairman of the Haryana State Pharmacy Board (HSPC) for bribing officials related to certain registration-related activities.

An article published in Frontiers in Research Metrics and Analytics talks about phantom management of medical research, a process by which industry representatives develop and publish research on behalf of physicians and psychiatrists. There have been instances where pharmaceutical industry sponsorship of clinical trials has influenced outcomes, putting evidence-based medicine into question.

Telangana’s Pharma City also made headlines when a state MP met with the Prime Minister of India over the cancellation of permission for the establishment of Pharma City due to some corruption .

Take for example Ranbaxy. A few years ago, the company, which pioneered the generic drug revolution in India, had to pay damages to the tune of $500 million to settle a commercial fraud linked to the unethical production of drugs compromising quality.

Global corruption in the pharmaceutical sector

A few years ago, U.S.-based, China-focused SciClone Pharma had to pay more than $12 million in fines, sanctioned by U.S. prosecutors after violating the Corrupt Practices Act in China. ‘foreign. Many years ago, the American company Purdue Pharma was fined $600 million for mislabeling its blockbuster painkiller, OxyContin. The most recent concerns corruption charges against GlaxoSmithKline in China. The UK-based pharmaceutical giant has been sued by local authorities and found guilty of bribing doctors and hospitals to promote products. The company subsequently paid $490 million in fines.

The recent opioid crisis in the United States where more than 50,000 people died from overdosing on drugs like oxycodone, fentanyl, etc. as these were often over-prescribed giving doctors incentives , is a classic example. Off-label promotion of a drug for an indication not approved by the US FDA is also another form of corruption.

Similarly in the UK, the National Health Service (NHS), often touted as a model healthcare system in Europe, reported fraud losses in 2016-17 of £1.25bn per year. year.

The outcome

Technology can play a huge role in preventing corruption in the pharmaceutical sector. Technologies such as artificial intelligence (AI) and blockchain can help eliminate loopholes that can lead to bribery/corruption and improve transparency and accountability within the industry. The faster AI and blockchain are implemented in the industry, the more we can prevent certain corruptions in the sector.

Said Dr. Ajit Dangi, President and CEO, Danssen Consulting“Cutting out middlemen through extensive use of digitization is a way to reduce corruption, as we have seen in the success of the center’s direct benefits transfer program. The Right to Information and whistleblower policy are also other tools to reduce corruption.If the new drug approval process had been fully digitized, there would have been less chance that the recent example of approval of a Biocon’s new drug by allegedly waving the phase three trial through the Deputy DCGI (Medicine Comptroller General of India) for review, may not have happened.”

The UCPMP guidelines and the recently enacted National Medical Commission Act 2019 could usher in a new era of cleaning up the rot in the healthcare sector.

According to Gunjan Bhardwaj, Founder and CEO of Innoplexus, the integration of blockchain in the pharmaceutical industry will lead to reduced drug development costs, effective clinical trials and an effective and efficient system of secure spending, transparent data and more medicines for patients and consumers around the world. .

Need for repression

There is much more to this threat and only strict government regulations will help eliminate corruption. As officials from CDSCO, DCGI and some members of the pharmaceutical fraternity are known to be well involved in these activities, stricter laws could help in the long run. Putting the culprits behind bars will send a strong message to those considering engaging in such activities.

The Union Department of Health is said to have taken steps to improve compliance and crack down on corruption. There is news that the Center has decided to introduce QR codes to ensure the authenticity and traceability of 300 common drug brands, including painkillers, vitamins, diabetes and hypertension drugs, etc. . This step aims to prevent the circulation of fake drugs. The Department of Health made the necessary amendments to the Drugs Rules, 1945 to implement the rule.

While eliminating corruption is a daunting challenge, particularly in the pharmaceutical industry, there must be a willingness to implement the ‘checks and balances’ already in place.

Sanjiv Das


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