FDA Lawyers Blog

by Howard E. Rosenberg, Ph.D.

The rapidly increasing flow of foreign drugs into the United States is illustrated by the fact that nearly 40% of the drugs Americans take are made overseas, and about 80% of active pharmaceutical ingredients are imported. Approximately half of medical devices used in the United States also come from abroad. These foreign goods often follow complex paths through multi-step supply chains to reach the United States.

This dynamic is very evident in the U.S. trade with China. From 2007 to 2011, the number of shipments of FDA-regulated products from China increased by 62 percent. This represented a fundamental change in both the economic and security landscape, and, as a result, FDA is requesting a budget authority increase of $10 million to strengthen the safety of foods, drug products, and ingredients exported from China to the United States.

The increased budget would allow FDA to improve its food and drug inspection and analytical capabilities by increasing its presence in China with 16 inspectors, and by adding three U.S.-based analysts. The Agency currently has eight staff members working in China. They serve at posts established in 2008 and 2009 in Beijing, Shanghai, and Guangzhou. In addition to inspecting Chinese facilities that manufacture food and medical products for export to the United States, FDA will inspect sites of clinical trials. FDA will also conduct follow-up inspections to ensure that firms continue to manufacture food and medical products under safe conditions.

by Howard E. Rosenberg, Ph.D.

Last week, India proposed a new National Pharmaceutical Pricing Policy. Price control for drugs was first introduced in India in 1963 and over time modified on various different principles but remained broadly based on the principle of effecting control over the prices of essential drugs. The most recent Drug Policy of 1994 focused on controlling bulk drugs. In the Drug Policy of 1994, a list of 74 bulk drugs was identified and those drugs, as well as the formulations, based on these drugs (currently about 1577 in number) were brought under the price control regime.

India is now the 3rd largest producer of medicines by volume but is only 14th in terms of value globally. The industry's production turnover has increased from Rs 51 billion in 1990 to around Rs 1 trillion in 2009-2010 of which Rs 420 billion is exported. After liberalization of the economy and when Foreign Direct Investment in the pharmaceutical sector was brought in, a new pharmaceutical pricing policy was introduced in 2002 but was challenged and thus never implemented, so the 1994 Drug Policy continued in force. However, the National List of Essential Medicines ("NLEM") of 1996 was revised and the list notified as NLEM- 2003 and again in 2011 as NLEM- 2011. Various drug policies adopted from time to time have tried to cope with the challenge of striking a balance between enabling industry to grow and at the same time ensuring affordable and reasonable prices to the consumers, particularly the poorer masses.

The principles surrounding the new proposal for regulation of prices are: (1) Essentiality of Drugs, (2) Market Based Pricing, and (3) Control of Formulations. The new policy is based on regulating the prices of the formulations only. This is different from the earlier principle of regulating the prices of specified Bulk Drugs and their formulations. Bulk Drugs are not considered to fully reflect the "Essentiality" of the actual drug due to the possible applicability of the Active Pharmaceutical Ingredient ("API") in manufacture of various other formulations which may be non-"Essential" for the larger healthcare requirements of the population.

by Howard E. Rosenberg, Ph.D.

Novartis's patent application for a novel crystal form of the cancer drug imatinib mesylate was rejected in India by the Chennai patent office back in 2006, citing that Indian patent law does not allow patent exclusivity for derivatives or marginally innovated forms of known drugs unless it is proved that it enhances the treatment value substantially. The issue concerns the interpretation of Section 3(d) of the Indian patent law, a clause peculiar to India and also potentially at odds with the Agreement on Trade Related Aspects of Intellectual Property Rights ("TRIPS").

Section 3 (d) of the Indian patent law lists out one such non eligible patentable subject matter:

d) the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such process results in a new product or employs at least one new reactant.

For the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy.

by Howard E. Rosenberg, Ph.D.

According to Shanghai Securities News last week, China will allocate billions of yuan to support domestic chemical and pharmaceutical companies in their development of overseas markets. The Chinese government has outlined a draft of the new policy where it may invest up to 5 billion yuan ($759.29 million) in the sector. According to reports, the policy will be released in the first half of this year.

During the 12th Five-Year Plan (2011-2015), China is expected to support more companies in their overseas certification to export products to the U.S., Japan, and Europe. The focus will be on improving companies' current good manufacturing practices ("cGMPs") to the levels adopted in these countries. Over 20 companies met the cGMP standards during the 11th Five-Year Plan, and it is thought that the future prosperity of China's chemical and pharmaceutical companies will depend on more of them meeting cGMPs. During the next five years, over a hundred companies are predicted to obtain these levels.

Yu Mingde, President of the Chinese Pharmaceutical Enterprises Association said, "In the next five years, the government will assist some 60 producers in the sector with the goal of reaching international quality standards of manufacturing, and also help the sector realize total export volume of more than $4 billion." The cGMP requirements adopted in Europe and the U.S. will be harder for Chinese drugs to meet, but, at the same time, once met, will benefit them more, added Yu.

China produces most of the world's active pharmaceutical ingredients ("APIs"), Guo Fanli, a pharmaceutical analyst with CIC Industry Research Center, was reported as saying last Thursday. "The majority of the API drugs produced in China are exported to Africa, since it is hard for Chinese drug producers to comply with the quality standards of Western countries," Guo said.

For a country the size of China to have just 20 companies producing APIs to cGMPs and to aim for only another 100 companies to achieve that standard over the next 5 years is surely inadequate. A vast amount of pharmaceutical intermediates already come out of China and presumably this suggests they are not being made to cGMPs. There have been several instances where contamination by impurities in Chinese APIs has led to deaths. For China to allay fears, not only domestically, and to restore confidence with the FDA, the European Medicines Association, and other health authorities, far more of an effort must be channeled locally into regular inspections of all those companies wishing to market pharmaceuticals and to ensure they always meet cGMPs.

by Howard E. Rosenberg, Ph.D.

Whenever the U.S. or the European Union ("EU") discuss entering into Free Trade Agreements ("FTA") with other countries, they always press for the inclusion in any agreement of a data exclusivity period for pharmaceuticals. The current discussions by the EU with India are no different, and it appears to be one of the proposals that is still holding up any agreement.

The Trade Related Aspects of Intellectual Property Rights Agreement ("TRIPS") requires that data disclosed during registration of pharmaceuticals should remain undisclosed to third parties. TRIPS is an international agreement administered by the World Trade Organization ("WTO") that sets down minimum standards for many forms of intellectual property regulation applied to nationals of other WTO Members that was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade in 1994. However, the EU is going one step further in requiring a time period restricting use by the Indian pharmaceutical registration authority in accessing the data in support of generic medicines. The EU state in the draft:

The Parties shall guarantee the confidentiality, non disclosure and non reliance of data submitted for the purpose of obtaining an authorisation to put a pharmaceutical product on the market. For that purpose, the Parties shall ensure in their respective legislation that any information submitted to obtain an authorisation to put a pharmaceutical product on the market will remain undisclosed to third parties and benefit from a period of at least [...] years of protection against unfair commercial use starting from the date of grant of marketing approval in either of the Parties.

In general terms the EU's own data exclusivity period is around 10 years with the US around 5 years for new chemical entities.

The EU Commission states it is ready to show the necessary flexibility and fully take into account the specificities of the Indian legal system, the policy developments on this issue within India, its developing country status and the role it plays with regard to production of essential generics for the developing world.

by Howard E. Rosenberg, Ph.D.

Last July, the Drugs Controller General of India ("DCGI"), which is akin to FDA, proposed to implement overseas inspections of manufacturing sites as a consequence of the banning of the import of raw materials from ten Chinese drug companies that supplied products without having the mandatory drug manufacturing standards. It has now been reported that in about two weeks the DCGI will begin inspections of manufacturing facilities from where Indian companies source their active pharmaceutical ingredients and intermediates for pharmaceutical production. The pilot program will initially focus on Italy and China and, if successful it will then be extended and introduced for all countries.

The Central Drugs Standard Control Organisation is already in the process of pulling together a team of fifteen to twenty drug inspectors, trained in auditing and inspection of sites in accordance with international standards.

Dr. Surinder Singh, Drugs Controller General of India, said, "Currently there are 1364 sanctioned posts, and around 864 are filled up. We need at least 3,100 drug inspectors in the country." http://www.business-standard.com/india/news/dcgi-plans-to-raise-drug-inspectors-tally-in-india/417975/ Dr. Singh has already pointed out that there was a need for overseas inspections, saying that it is the responsibility of the indenting agents to make the manufacturers aware of the rules and regulations of the country. "As of now they have poor knowledge of the Drugs and Cosmetics Act, poor understanding and interpretation of the drug rules of the country. In fact, surprisingly at times, even their submissions are not complete. It is the responsibility of the indenting agents to make them aware of these laws and also to ensure that these companies follow the rules and regulations of the country if they want to do business in India."

If successful, India's move to inspect manufacturing sites may lead to greater cooperation with FDA inspectors for pharmaceutical products imported from India.