August 2014 Fleeing India: What Will Make Clinical Trials Flood Back? Ghida HARFOUCHE / Regional Consultant - Asia India s clinical trial industry has seen it all. In less than 10 years, the country has grown to become a leading destination for clinical trials, attracting studies from multinational pharma companies and contract research organizations. This, however, is no longer the case as the once skyrocket growth has now come to a brutal end. If India s clinical trial industry is to pick up again, a major restructuring of its regulatory system will have to take place. India s attractiveness as a hub for clinical trials was mainly fueled by the lax clinical trial (CT) regulatory system which, ironically, is the very same reason why the CT industry is now losing its luster. During the years preceding the 2013 amendment of India s Drug and Cosmetics Act, several improvements have been introduced to allow for more transparency in the CT industry such as the launching of the Clinical Trials Registry of India in 2007. Since then, the CT industry has been growing significantly and was expected to reach over USD 1 billion by 2016, with a record 500 CTs approved in 2010. India had everything to position itself as a hub for CTs, including a large patient pool, an availability of eligible CT patients, skilled medical staff, state of the art medical and pharmaceutical institutions, and Good Clinical Practice (GCP) compliance. In order to capitalize on these factors, the Association of Contract Research Organizations (ACRO India) was founded and registered in 2005 to promote quality research and best clinical practices. In parallel, the Expert Committee set up by the Central Drugs 1
Approved CTs Standard Control Organization (CDSCO) in consultation with clinical experts formulated Indian GCP guidelines for streamlining local clinical studies. These guidelines have evolved in accordance with the WHO, the International Conference on Harmonisation, the US-FDA, and European GCP guidelines, as well as with ethical guidelines for biomedical research on human subjects. Low development and operational costs are also among India s competitive advantages. Indeed, local CT expenses are around one-tenth those of Western countries. As such, the Indian Contract Research Organization (CRO) industry was on a fast track, as international CROs raced to establish local presence between 2005 and 2012. Leading CROs such as Chiltern, Quintiles, PPD, Parexel, Pharmanet, Kendle, i3 Inventiv, Theorem Clinical Research (formerly Omnicare Clinical Research), Inveresk Research, MDS, SCIREX and ICON Clinical Research had extensive operations in the country. In parallel, Indian CROs also enjoyed the booming CT demand, among them Accutest Research Laboratories, Ace Biomed, Actimus Biosciences, Asian Clinical Trials Pvt Ltd, CB Patel Research Center, and Clinigene International, among many others. India also witnessed a spree of multinationals localizing their manufacturing and R&D activities such as Pfizer, GSK, Eli Lilly, AstraZeneca, and Novartis. The Looming Downfall To the misfortune of India, the sudden boom of the CT industry was short-lived. In 2013, the government could no longer turn a blind eye to the increasing number of deaths resulting from CTs. Indeed, several death cases of indigenous female patients on which vaccines were being tested were reported. In addition, the National Human Rights Commission stated that CTs were illegally conducted on thousands of children in three public hospitals in Delhi. In their defense, companies argued that only a small percentage of deaths were proven to be directly related to the trials. Notwithstanding these companies arguments, the Ministry of Health and Family Welfare took the CT industry by surprise when it amended the Drug and Cosmetics Act three times within just nine days in Clinical trial approval in India 600 500 400 300 200 100 0 2009 2010 2011 2012 2013 Jan-May 2014 Source: Central Drugs Standard Control Organisation (2014) 2013. Initially aimed at improving pharmacovigilance, these amendments tightened the regulatory framework, ultimately leading to a whopping 60% drop in CT registration between 2012 and 2013 (Figure). Based on this new regulation, participants in CTs are to be compensated for any injury/illness sustained during the trial, and CT sponsors are to provide participants with free medical 2
care for as long as they need it. The extent of compensation is to be determined by the Drugs Controller General of India, depending on the nature of the health incidence and within 90 days of its occurrence. Companies failing to compensate patients can be permanently banned from conducting local CTs. The law was described by many as ambiguous, as there are no clear definitions for injuries/illnesses, nor is there a clear separation between the harms caused by CTs on one hand, and complications caused by the natural progression of a disease unrelated to the CT on the other. This confusion has, in turn, led to many unreasonable claims by participating patients, burdening multinational corporations and impeding local drug development trials overall. As a result, companies have been fleeing this newly created climate and seeking other Asian countries with a clear regulatory system such as Malaysia. India s government did not stop at imposing unclear compensation rules to safeguard participants but went a step further to prevent the enrolment of patients without their consent, requiring companies to provide recorded videos of patients giving their consent to participate in the trial. Subsequently, CT approval times increased drastically and the initial time frame of 12-14 weeks often gets extended. The recently introduced regulations became cumbersome to the point where Indian companies themselves are relocating their CT activities offshore, despite the higher operational costs. Amidst the upheaval, the American National Institutes of Health (NIH) postponed part of the local CTs it was conducting and stopped enrolling patients for others. Additionally, an international trial sponsored by Canadian McMaster University testing Aspirin and Clonidine as reducers of heart attack after cardiac surgeries was halted after the announcement of the new regulations. Furthermore, a trial conducted by Bayer-Schering to test an anti-clotting drug (Rivaroxaban) was withdrawn from India after the new regulations came into effect. As multinational companies are hitting the brakes on their CT activities, the government will have to strike a balance between protecting the interests of Indian patients and salvaging what it can before the country s attractiveness as a CT hub is severely compromised. Turning the Clamp Down a Notch Well aware of what is at stake, India exerted efforts to clarify some uncertainties surrounding the compensation law. Accordingly, the office of the Drugs Controller General of India (DCGI) issued a draft law in 2013 detailing the calculation formulas used to estimate compensations. The formula takes into account compensation in case of patient death in addition to the percentage of disability suffered by the patient. While, at a first glance, this draft could be viewed as a positive step towards objectivity and clarity, the publication still leaves ground for confusion as it fails to address several other scenarios. For instance, the formula does not determine the amount of loss of wages to be compensated for in case of temporary disability without hospitalization, nor does it clearly determine the compensation amount in case of injury that does not lead to a prolongation of the inpatient hospitalization period. More importantly, the draft does not specify the regulatory body responsible for determining the percentage of disability. The latter being the only variable in the formula, a small variation in the percentage can make a considerable difference in the compensation amount. As such, 3
these important omissions have further created a feeling of unfairness vis-à-vis trial sponsors. The government has indeed emphasized its patient first objective but has almost completely forgotten that by tightening CT regulations and subsequently inhibiting new drug discovery, patients may not be able to obtain innovative drugs as they once did: a situation that would ultimately harm them in the long run. A Predicament Worth Untangling In line with its new regulations, the government has clamped down on CTs, leading to a drastic decrease in the number of trials conducted locally. One would think that these regulations are merely to set standards that would ensure the safety and adequate compensation of trial participants. But should this occur at the expense of innovation, knowing that the problem mostly lies in the very vague outlines of the compensation policy and not in the regulations themselves? According to a 2013 study by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), major companies are now shifting their CTs and R&D activities from India to South-East Asian countries such as Malaysia, Cambodia, Korea, the Philippines, Thailand, and Singapore. In addition to having less regulatory uncertainties, these countries offer patient and disease profiles similar to those found in India. The ASSOCHAM study has also shown that the major concerns burdening multinationals in India are the unclear compensation regulations for investigational drug studies and the lower rate of CT approval. For instance, and according to the Indian Pharmaceutical Alliance (IPA), only 7 new drugs received clearance in the first half of 2014 compared to 35 last year. On the other hand, and also according to ASSOCHAM, India captures 20% of the world s generic drug market and is the world s largest supplier of vaccines, a milestone that could not have been achieved without proper CTs to ensure safety and efficacy. Indeed, drugs developed domestically have to undergo all phases of CTs in India, while drugs discovered elsewhere may either be required to repeat all phases of CTs again or proceed from phase III. India is also the first generic drug producer worldwide, with Indian generics having successfully undergone bio-equivalency tests conducted by the strictest global regulatory bodies. This, in addition to having the highest number of FDA-approved manufacturing plants outside the US, is an indication of the high standards achieved by the Indian pharma industry and the growth opportunities the country offers to multinationals investing in R&D activities. Therefore, government officials may need to address the drawbacks created by these new CT regulations and should strive to strike a balance between controlling unethical trials, ensuring patient well-being, and further enticing multinationals and CROs to conduct CTs locally. Given India s attractiveness as a hub for CTs, it would only take a decision from the government to ease off and loosen its recent regulations for multinationals to flood back and revive the country s CT industry once again. 4
How STEM-Pharma Can Help You Our team helps you identify your investment opportunities in the pharmaceutical industry, supported by evidence-based macro to micro economic and business analysis. We guide your strategic investment decisions by providing a clear roadmap for business growth in Sales, Manufacturing, and R&D, backed by our proprietary economic models. Contact us to know more about our products and services. Contact: Ghida HARFOUCHE g.harfouche@stem-pharma.com www.stem-pharma.com About STEM-Pharma STEM-Pharma is a strategic management consulting firm specialized in healthcare and pharmaceutical market intelligence. The company advises key stakeholders on resource allocation/pharmaceutical growth opportunities in emerging markets, allowing them to take informed business decisions. This article is based on STEM-Pharma s report entitled Opportunities in India, available here 2014 Pharmaceutical Growth 5