Access to affordable and safe medicines is the cornerstone of a vibrant public health framework. The cost of medicines substantially depends on the requirement to conduct clinical trials (including conducting bio-availability/bio-equivalency studies) to generate data inter alia required to obtain a licence to manufacture.

The license application for new drugs is required to be made to the central licensing authority and for drugs other than new drugs, an application needs to be made to the state licensing authorities. Under the Drugs and Cosmetics Rules, 1945 (D&C Rules), a drug is considered to be new for a period of 4 years from the date of its first approval and as part of the application for license to manufacture such new drug, the applicant is required to submit clinical trial data, which includes bio-equivalency studies.

Generic drug manufacturers (particularly, for drugs other than "new drugs") are able to deliver affordable drugs since they eliminate investments in research and development and are typically not required to conduct expensive clinical trials for their products. Generic manufacturers manufacturing drugs after the aforesaid 4-year period are allowed to rely on research data generated and submitted by pharmaceutical companies (manufacturing the new drugs) to obtain marketing approvals for their drugs while applying for a license to manufacture. This practice, however, opened up a Pandora's box in India due to questions on the safety and efficacy of generic drugs, as under the D&C Rules, generic drug manufacturers were not obligated to prove that their version of the drug was as safe and effective as a patented drug including by way of bio-equivalence tests.

This debate received major traction in the recent past where, in 2013, the Ranjit Roy Chowdhury Committee Report (RRC Report) had recommended that bio-equivalence and bio-availability studies for generic drugs (that are not new drugs) should be made mandatory. The RRC Report was, however, shelved due to technical difficulty in introducing the reforms recommended by it. The Drugs Consultative Committee (DCC) was of the view that bio-equivalence and bio-availability testing could not be made mandatory by way of a rule to have uniform application since Indian generic manufacturers do not have the necessary infrastructural capability to implement the proposal. The DCC decided that it was sufficient to require bio-equivalence and bio-availability tests only where there are issues relating to patient safety and variable bio-availability.

Dinesh Thakur, in his public interest litigation (PIL) before the Supreme Court, had highlighted the lack of requirement for bio-equivalence studies prior to approving generic drugs as a major lacuna in the drug regulatory system in India. The Supreme Court, however, dismissed the PIL on the fact that the issue was purely academic without any regulatory backing.

The Government has now notified amendments to the provisions of the D&C Rules by way of the Drugs and Cosmetics (Ninth Amendment) Rules, 2017, effective 3 April 2017, to require mandatory bio-equivalency testing in relation to certain classes of generic drugs (including drugs that are not new drugs) even when the manufacturer applying for a license under the D&C Rules intends to piggy back on the past research data submitted by other pharmaceutical companies with the regulator. This represents a significant modification to the Indian drug regulatory framework, as we discuss below.

Salient Features of the Drugs & Cosmetics (Ninth Amendment) Rules, 2017

With the above amendment to the D&C Rules, manufacturers of certain categories of drugs are now required to undertake bio-equivalency studies prior to obtaining a license to manufacture. While the D&C Rules does not define bio-equivalence, the Guidelines for Bio-equivalence and Bio-availability Studies, 2005 (Bio-equivalence Guidelines) state that "bio-equivalence of a drug product is achieved if its extent and rate of absorption are not statistically significantly different from those of a reference product when administered at the same molar dose". The Bio-equivalence Guidelines state that bio-equivalence studies should be carried out with respect to drugs which have the same active substance. The amendment to the D&C Rules now require bio-equivalence studies to be carried out for certain type of drugs falling under certain categories of the Biopharmaceutical Classification System as discussed below, even though they are not new drugs.

Biopharmaceutical Classification System: The amendment has introduced the biopharmaceutical classification system, which classifies drugs into categories based on solubility and permeability. The biopharmaceutical classification system categories drugs into the following categories: (i) category I- high solubility and high permeability; (ii) category II- low solubility and high permeability; (iii) category III- high solubility and low permeability; and (iv) category IV- low solubility and low permeability.

After the amendment, drugs which fall in category II and category IV of the biopharmaceutical classification system, are required to conduct bio-equivalency studies as one of the conditions for obtaining license to manufacture certain drugs from the state licensing authority. Classes of drugs for which bio-equivalency studies are being made mandatory are those which are covered under Schedule C, Schedule C (1) and Schedule X of the D&C Rules.

Khaitan Comment

As highlighted above, generic manufacturers till now had to merely wait for 4 years from the date of approval of the new drug before entering the market with its generic version to side-step the bio-equivalence requirement thereby leading to an affordable price of the drugs.

This amendment comes at a time where Medical Council of India has made it mandatory for doctors to prescribe drugs with generic names. Whilst on one hand, pharmaceutical companies are facing quality issues, on the other hand, there is pressure from the government to reduce the prices of drugs. With the new amendment, there is a likelihood of increase in costs for pharmaceutical companies.

Suffice to state, in terms of drug regulation globally, bio-equivalence tests are mandatory for generic drugs in nearly all jurisdictions and to this extent, the Indian regulatory framework had a serious shortcoming which was putting drug safety in question.

While the amendment has not implemented the full recommendation of the RRC Report and has not mandated a bio-availability test as well, we think that the decision to make bio-equivalence test mandatory for certain kind of drugs (whether a new drug or not) is a step in the right direction which not only aligns the Indian framework with global standards but also ensures safety and efficacy of generic drugs, thereby upholding consumer welfare in the Indian market.

We think that this cost and burden for generic manufacturers is for the greater good of patients in the burgeoning generics pharmaceuticals market and assumes greater significance given the recent drive to get doctors to mandatorily prescribe generic drugs to consumers.

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