The Problem of Substandard Medicines in Developing

Countries

By Laura Christian, Linda Collins, Maythiwan Kiatgrajai, Agathe Merle, Nayantara Mukherji, Alissa Quade

Outline• Methodology• Overview

o Definitionso Harmful Effects

• Extent of the Problem• Framing the Problem• Supply Chain Overview• Case Studies

o Manufacturerso International Organizationso National Governments

• Recommendations

Methodology• Literature Review to determine

scope and extent of the problem• Systematic selection of case

studies:o 2 manufacturers: Novartis,

Vietnamese manufacturerso 7 international organizations:

WHO, UNDP, UNFPA, UNICEF, IFRC, ICRC, MSF

o 6 countries: China, India, Thailand, Nigeria, Ghana, Kenya

Overview: Definitions• Substandard medicines:

o Pharmaceutical products that do not meet quality standards and specifications

o Made by licensed manufacturers

o Arise due to human error, negligence, or resource restrictions

• Counterfeit medicines:o Products deliberately

and fraudulently mislabeled with respect to identity and/or source

o Made by non-licensed manufacturers

o Arise as a result of illegal activity

Overview: Harmful Effects• At best, ineffective; at worst,

deadly• Health effects:

– Increased mortality and morbidity

– Harmful side effects or allergies

– Drug-resistance– Poisoning

• Social effects• Political effects• Economic effects

Extent of the Problem

• Difficult to assesso Lack of systematic informationo Inconsistent definition of substandard

• Literature review shows trendso High percentage of substandard medicines in Nigeria,

Ghana, Kenya, Indian exports to Africa, and China

Framing the Problem

• Core problem: while procurers and consumers of medicines have an incentive to buy and consume high-quality products, producers have an incentive to maximize profits

• Misalignment of incentives produces market and government failures

• Information asymmetry market failure requires government intervention (regulation)

• Governments fail to regulate perfectly because they lack sufficient incentives from medicines consumers and suppliers, or from international community

Supply Chain

Manufacturers• We used a two-tiered approach to look at manufacturers

o Large multi-national manufacturerso Small manufacturers mainly from developing countries

• Three main sourceso Fortune 500 List of Global Pharmaceutical Manufacturerso USP Medicine Quality Database

• Contained over 4,500 samples of medicines• Organized by country of sample and country of manufacturer

o WHO Prequalified Medicines List

• Two Case studies: Novartis and Manufacturers of Vietnam

Novartis• Fortune 500 top pharmaceutical manufacturer

o 41 billion dollars of revenue in 2009o Produces main anti-malaria medication

• Found both on WHO PQM and on USP substandard sample (2009 Ghana)

• Participates actively in production and procurement of anti-malaria medicine from plant grown and harvested in China to production of medicine in the United States

• Effectively monitors supply chain and sends technical advisors to suppliers

• Good example of manufacturer monitoring standards

Manufacturers from Vietnam• Manufacturers become a problem because

o The transition of the industry from state monopoly to a competitive market

o 15-20 % annual growth rate of the pharmaceutical industryo lack of government regulation on quality control

• The situation started to get better when the government implemented a policy that forced every local drug manufacturer to meet the WHO’s GMP standards by 2008.

• Manufacturers continue to have a problem with the use of unqualified medicine packages

International Organizations

•Among the main funders of medicines as humanitarian aid

•Oversee medicine delivery in emergency situations

•Collaborate to obtain medicine donations

•Propose solutions, analyze problems within supply chain, develop methods of collaboration among actors

•International organizations are limited in their ability to regulate the spread of substandard drugs

International Organizations Regulations and Safeguards

Long Term Provider Emergency Relief

● Consistently work with same programs and manufacturers

● Substandard medicines issues because lack tracking of medicines

● Time-sensitive situations

● No or not enough time to track donations

● Substandard medicines issues because of time constraint

Long Term Providers•WHO’s Prequalification of Medicines Program (PQP) is followed by many IOs

•PQP maintains and updates list of acceptable medicines/laboratories

•Main criticism of PQP: too heavily focused on counterfeits

•UNDP, UNFPA, and UNICEF are subsidiary bodies of the United Nations

•Heavy focus on transparency

•UN funds numerous programs: difficult to keep track of medicine purchases and destinations

Emergency Relief•International Red Cross and Red Crescent Movement (RCRC)

•Provide people in conflict areas with basic preventative and curative health care

•Share ideas and improve procedures and delivery of medicine

•MSF stresses the importance of clarifying the differences between substandard, counterfeit, and generic drugs

•MSF believes in the need for tailored solutions

National Governments

• Responsible for domestic regulation

• Six case studies: China, India, Thailand, Nigeria, Ghana, and Kenya

Substandard medicines in China

Major regulatory agencies

State Food and Drug Administration (SFDA)

Weaknesses in regulatory regime

- Inconsistent regulation and enforcement- Counterfeiting is big issue, and counterfeiters are not subject to regulation- Government and local corruption impedes regulation- Lack of accountability and oversight, as local leaders are not incentivized to enforce standards

Proposed solutions

- Better implementation of existing regulatory agencies- Incentivize local leaders to enforce regulatory standards- Increased regulation of chemical manufacturing

Substandard medicines in Nigeria

Major regulatory agencies

National Agency for Food and Drug Administration and Control (NAFDAC)

Weaknesses in regulatory

regime

- Enforcement weak due to low human resources, decentralized supply chain, and corruption- Lack of transparency enables corruption and low compliance

Proposed solutions

- Establish and enforce conflict of interest guidelines- Publish internal/external audits- Publish professional requirements for agency positions- Improve staff training and material resources- Regain access to ports with agreement with Ports Authority- Produce good practice guidelines for supply actors

Recommendations: Policy Goals

• Align Incentiveso National Governmentso Manufacturers

• Better Supply Chain Monitoringo Manufacturerso Procurerso Distributors

• Clarify Definitions and Increase Emphasis on Substandards

Recommendations: Align Incentives

• Incentives for National Government to tighten regulation and enforcement:o Aid and funding to implement GMP and GPPo Ongoing research by WHOo Use of monopsony power

• Incentives for manufacturers to self-regulate:o Use existing tools for evaluating manufacturerso Patronize based on transparencyo Create competition from developed world

Recommendations: Improved Supply Chain Management

• Manufacturers and procurers:o Routine and surprise testingo Communicate dosage, usage, and storage informationo Increase transparency

• Distributors:o Competitive grants for local organizations and NGOs

involved in:• Informing consumers• Implementing awareness campaigns• Publicizing available resources

Recommendations: Clarify Definitions

and Emphasize Substandards• Clarify definitions:

o Forum to discuss WHO definitionso Follow up: make medical aid conditional on adopting

definitions• Emphasize substandards:

o Conference for researchers and grant-making foundationso Competitive grants to study substandards independent of

counterfeits

Questions?