will examine the subject of low cost drug production with the above
understanding of ethics. Our experiences are centred around LOCOST,
a voluntary agency based in Baroda. LOCOST founded in 1983,
has gone on from trading in formulations, to loan licence and to
manufacture in its own formulations unit. LOCOST has been
also active, now and then, in educational issues and in promotion
of rational drug therapy. LOCOST has also handled project
exports and technology transfer to a neighbouring country for a
major bulk drug project.
has survived, and has, by and large, shown that low priced quality
formulations can be an economically viable idea.
and viable survival at that, tends to generate narratives and discourses
that portray those involved in a favourable, even heroic, light.
This is especially so when the sutradhars are the principal actors
themselves. This narration of ethical issues involved in no exception,
although an attempt will be made at some kind of reflective discourse.
organizations like LOCOST that are into business operate
under twin compulsions: to be 'business
to adhere to the ethos of voluntary organization, and in our case
of non-profit trusts.
of the most important issues in the macro business environment in
India is that of corruption. Have we corrupted and indulged in corruption?
To our best of knowledge we have not. Bribing or speed money is
basically to get your work done fast lest the rug is pulled under
your feet by the many arms of the government. The effect of us not
bribing is that permissions get delayed. Others take 24 hours in
getting things done; for us it takes even 24 weeks at times. This
has led to some inbuilt delays. Our response time is slow in making
changes as per customer's
we indulged in indirect corruption? That is through consultants
and intermediaries one goes through? Here we are not so sure. Except
in one case where we certainly know that our consultant paid Rs.
500/- to a government functionary, without our knowledge, and without
doing which he felt that our temporary electrical connection will
simply not be on. Otherwise we have told our consultants not to
give money on our behalf. Most of the time most of our consultants
privately snigger at our morality. But they put up with us. For
the most part, we try to get deal with those bureaucrats still unbrutalised
by the environment of a government office: Sahib, this is a trust
doing good. They make essential medicines for the poor. The government
functionary let goes, although not without scoring points in a school
masterly fashion. In a few cases, the functionary genuinely believes
he/she should not take money from a 'good-works'
organization. At other times the rent paid by the consultant on
behalf of other clients exonerates us.
friends have counted 35 statutory acts/bodies which small-scale
business organisations in India have to comply with. We reckon that
the regular ones are about a dozen. Most of these statutes have
provision for inspectors who visit you and have the power to demand
compliance, often on some abstruse technically, by putting their
in the 'Visit
attitude of most of these functionaries is you are likely to have
violated some provision, so it is up to you to wriggle out of it.
You are guilty unless you prove innocent. The onus of the proof
lies with you. The easy way is to pacify government visitors from
the start: Send your vehicle to receive them at the railway station
(although they are entitled to TA/DA), give them lunch at a 'decent
place if it is anywhere near lunch time, and in general be very
defferential and do not question their most illogical observations
in your Visit Book. We on our part try to be deferential, within
limits of what we think does not compromise with our dignity although
it may try our patience.
Excise and Prohibition functionary in charge of alcohol quota for
our factory once decided to vent his spleen, not having found any
fault, on the score that our Factory Manager does not serve water
on his arrival. He insisted on taking some 'shakti
and took some three to four bottles of syrups (total cost Rs. 50/-).
More recently, one of the local government functionaries, who presumably
came to advise us on our compliance leading to better manufacturing
practices, brazenly asked for and was given 100 tablets of Chloroquine
(total cost Rs. 53/-). In both cases the writer regrets to report
that we were not strong enough to tell the functionaries concerned,
"No, you cannot take the medicine".
companies have other strategies: of also giving a packet on departure;
this prevents serious comments in the Visit Book and subsequent
queries that can keep you busy at least a month. When it is your
turn to visit their offices, officials tend to extend their 'cooperation'
when you have 'cooperated'.
A businessperson, who has probably put family jewels on mortgage
to complete his/her capital requirements, is threatened, with or
without justification, by a Pollution Control Board inspector that
his/her factory will be closed. The businessperson also tends to
cooperate, though not necessarily to comply with anti-pollution
do not give packets. We are kept busy weeks, and at times, months
on end in trying to comply, or argue out, points made in the Visit
Book by government functionaries or notings otherwise made in files.
ethical response would probably be that we tell the functionaries
off. We tried politely in the beginning. We now find it is not worth
the trouble. Our main business is to produce quality drugs at low
cost, so why invite unnecessary correspondence/meetings regarding
is our main business only to produce quality drugs but not also
to oppose dehumanising tendencies anywhere? Bureaucracy humiliates
and dehumanises. Oh yes, we have not bribed in the classical sense,
but when we know for sure, and have visibly seen, instances of illegal
gratification, of company executives giving licensing authorities
costly presents in cash and kind as Diwali gifts, should we keep
quiet? Surely our short-term expediency of 'avoiding
with our main task'
conflicts with our long-term goals. Also, with what clean conscience
do we continue to advocate the (politically correct NGO) line of
more role for the State in industry and public welfare when we find
the State does not serve anybody but its own minions?
related issue is of size and scale: today our size is relatively
modest. We are able to manage this aspect of our environment because
we are small. What happens when the size triples, demand from our
target market segment (namely those working with the poor) increases?
Should we limit our size only because we cannot manage the spurious
requirements of our statutory functionaries and babus? Is it ethically
right for a voluntary agency to flee from a battle of right versus
no thriving business today in India is run squeaky clean. There
is some yielding of bureaucratic whims in anticipation of bureaucratic
nitpicking; and bending of rules and even laws depending on one's
confidence to 'work'
the system. For ourselves at LOCOST, we are clear we will
close down, even if it causes inconvenience to workers and to customers.
LOCOST, if push comes to a shove, will pull down its shutters.
However, such industrial bravery stories are quickly forgotten and
life carries on. For our response would not have made an iota of
difference to the system.
we are really serious about consistency, of means over ends for
instance, we ought not to be using the services and products of
many of these business concerns; and in case of formulation units
like us, we ought not to be using products of many of these (ethically
and ecologically) not-so-clean bulk drug companies, as also the
services of many of our not-so-clean distributors, agents and brokers1
of bulk drugs that feed our tablets, liquids and capsules? Where
does this logic leave us? In some solipsist hell.
as an alternative, we construct a world, outside whose boundaries
we tell ourselves, we are not going to get bother too much. We will
interact, have commercial exchange with the vast multitudes outside
our boundary. We may even examine their colourful antecedents, making
occasional forays that border on a crusade, but will refuse to let
them make us wholly dysfunctional.
of Products, Pricing and Ethics
business has to make what it considers safe, ethical products. In
drugs, safety is a relative issue. No drug is free from side effects.
In some drugs, certain new side effects and adverse drug reactions
are known only as time passes.
is practically impossible to become expert in the several scientific
disciplines that feed into the pharmacological knowledge of medicines.
This requires that as an ethical group one draws upon accepted standard
sources of national/international expertise. At the same time one
benchmarks available expert information with practical field experience.
In the process, we need to develop awareness about the politics
of the knowledge industry, and of medicine and health. An instinctive
feel of who is saying what and why helps.
a first level, in drawing up a list of drugs for production, one
takes recourse to standard essential drug lists like WHO,
Hathi Committee, etc. and formulates, with the help of more
immediately available local experience, one's
own essential drug list depending on local community requirements.
an ethical drug manufacturer means you make only essential generic
medicines. You are spared of innovating new fixed dose combinations
that tend to mislead uninformed customers. Again among essential
drugs, one makes only what current scientific and clinical experience
considers rational. Thus we make only Amoxycillin and not also Ampicillin;
Doxycycline only and not also Tetracycline. We are also in the process
of weeding out Indomethacin as it has more adverse side effects;
and other analgesics like Paracetamol and Ibuprofen are preferable.
In each of these and a dozen other cases, the drugs not made and/or
being weeded out are not banned, there is a flourishing demand for
all of them, and probably the customer is not going to change his
prescription practice despite our entreaties. And to top if all,
not making them means foregoing that many amount of sales.
the case of LOCOST, we have imposed on ourselves another
constraint: that of supplying medicines only to those working with
the poor. This in principle means only NGOs and social action groups.
Mostly the poor use the government sector. But till date, we have
not been able to make any dent on the government sector. Nor have
we really tried hard. The kind of compromises we need to make, of
with government functionaries, etc. have deterred us. Recently,
one intermediary told us to stay off when he realised we were a
public trust. This intermediary helps procures orders from DGSTD,
defence, railways, etc. He tried to impress us by saying how he
has recently increased the orders from a government department,
for a well-known Baroda based company, from 35 lakh units to one
crore units. His commission, the worthy told us, was 20 percent.
This writer asked him how on earth anybody could be competitive,
let alone make any profit, if he had to pay such a hefty commission
for generic medicines. He told us that some of the supplies are
made only on paper, bills passed and sales proceeds shared. It is
difficult, he assured us, for anybody in the government to physically
check as the orders run into crores of tablets and capsules.
model of milking the state, if ever there was one.
this is not news to us. We often hear many such variants of how
drug companies manage to quote ridiculously low prices. This is
something we live with. In the Indian dream, not unlike the American
dream, nothing succeeds like success.
practical consequence is that not all our customers are willing
to go along with us in examining the total integrity of our competitive
manufacturers, resting content with the end prices and performance
of the products supplied. This is agonising for us. So then, just
to retain goodwill we cut down prices further, which in turn means
generating more sales to even stay at the same level of revenue
as last year (like Alice running twice as hard to stay put in the
sales and maximising utilisation of capacity is desirable for another
reason: we reach out to more of our target market segment. But this
in turn affects the size of our operations: from a small-scale industry
we become medium-scale and further more. With increased size, as
noted before, there is the question, will we continue to be able
to stick to our values?
whether ethics like small is beautiful? Indeed if anything the ethic
of small is beautiful takes a severe beating in a rapidly changing
globalising economy, and especially so in a highly inflationary
environment like the one we have had for the last 4 years.
us take pricing, profits and salaries - factors interrelated to
each other. On the whole our pricing should be lesser than the market
prices of drugs, otherwise it undermines the very rationale and
logic of our existence. We have claimed that good quality medicines
can be made at prices lesser than market formulations. We have done
so in the past. Can we continue to do so? Is low pricing of medicines
sustainable on a long-term basis given the many boundary conditions
of being a voluntary, ethical organization?
how low our pricing can dip, is contingent on how much revenue we
need to generate to keep operations going, the breakeven point.
Minimum revenue to be generated keeps going up every year, thanks
to inflation. Minimum revenue is also contingent on how much or
how little you decide to pay to your workers.
when should our workers get? At the least, they cannot get less
than the official minimum wages. But as anybody who has looked into
the politics of minimum wage announcements knows, minimum wages
provisions are decided by the ruling elite of politicians, bureaucrats
and business lobbies like chambers of commerce. They all need each
other. So the minimum wave fixed is what suits the collective political
interests of this triumvirate.
minimum wages do not buy a decent house, good education for one's
children and a decent quality of life. They probably keep a single-wage
earner family of four from continuous starvation. Clearly then by
just paying as per the statutory minimum wages, one cannot, as an
ethically oriented organisation, sleep peacefully in the night.
this is not the place to give an answer to this vexed question,
we need to work out salary levels that can at least help a worker
enjoy middle-class life style without middle-class consumerism and
vulgarity. In any case it is hardly ethical for a voluntary organisation
to rest content with the statement that 'we
are paying a worker his/her minimum wage',
or worse, his/her 'market
we know well that the invisible hand of the market tends to tilt
towards those already well-off.
back to the issue of pricing, can we say then that one of the major
factors that determine the scale of the organisation is the minimum
comfort wages to be paid to workers which in turn ought to determine
then of surplus? Surplus generation is determined by, and in turn
determines, prices, sales and the scale of a low cost drug manufacturing
effort. Surplus is necessary for funding depreciation, for ploughing
back into capital investments in the future and to inspire confidence
in bankers, funders and one's
own workers. Nobody is going to subsidise a loss-making concern
for long. Adequate surplus can also ensure lower interest burden
in the future which in turn means lower costs of manufacture.
much profit/surplus to make is also determined by other concomitant
requirements like allocating money for research, education and product
development. It is doubtful whether any significant research leading
to product development and product innovation can be done by small-scale
organizations in competitive markets. This is basically because
there is not enough surplus to do so. In LOCOST's
case, our research and education is independently funded. We do
not do any product development. Funding of research is at the best
of times a complicated issue. Current market wisdom is forcing even
CSIR labs to do a bit of their own generation. Can and should a
low cost drug producing unit continue to source money for this from
important is of course the issue of what type of research that a
voluntary drug-manufacturing unit can conduct, assuming that it
should do research. There are no easy answers.
some discussion, LOCOST on its part has decided on the following
as its current research priorities.
and Study of Manufacturing Processes
Laws (a critical review)
utilisation patterns of partners
health survey of our workers as responsible manufacturers
of LOCOST activities on partners
of how atmosphere in factory has improved
study of drug information in the market
Ayurvedic preparations- their rationality
Creation of knowledge related to drug s and medicines but not
related to the above five areas explicitly.
there is one area where ethical standards are visibly called upon
in drug manufacturing, it is in the area of quality control. Today
pressures of competition often force manufacturers to take short
cuts. An ethical organisation cannot afford to do so. The pharmacoepia
often sanctions a 10% tolerance limit. Manufacturers are known to
save on costs by making formulations at the lower end of the limit
(a 500 mg tablet of, say Paracetamol, would contain only 451 mg
of the active substance). Legally, a 451 mg Paracetamol still passes
in quality control. The customer would seldom know. Most Indians
have low body weight, therefore the dossage by weight really does
not suffer. So is it okay?
it is not. It is misguiding the customer just as claiming extra
advantages of branded over generic drugs is misguiding the public.
other area of quality control is to actually to do all the tests
specified in the pharmacopia. Again, if some tests are not done,
it does not really seem to matter. But then in a very real sense,
one is playing with people's
lives. So it is better to do all the tests.
are also expectedly, many grey areas. A raw material consistently
fails in, say, iron content, and on the margins at that. And there
are no other alternative manufacturers of the raw material or in
the case of others, the quality is suspect on several other counts.
Do we take the raw material for manufacture especially as the small
deficiency with respect to iron is not going to make a difference
in the tablet? There is a big demand piling up. Customers are getting
increasinggly irate. Do we manufacture?
We do not manufacturer even at the risk of appearing cruel. Even
if you know that other manufacturers are making a killing on faulty
is a related requirement: if a raw material or excipient fails,
a report is to be sent to the drug authorities who in turn presumably
force the negligent raw material manufacturer to correct his/her
output. When there are serious problems with the quality of the
sourced raw material, we do make a formal report, even if we have
seldom seen any corrective action. Often we find it is more effective
to talk to the manufacturer, apart from returning the failed raw
material. Probably the 'market
of many quality conscious manufacturers returning the faulty raw
material will force the manufacturer to correct his/her manufacturing
process. However there are so many ifs and buts in this kind of
a posture. At best our own stance is wishy-washy ethically. If we
are serious about ethics and systemic promotion of quality, we ought
to be willing to take on manufacturers, suppliers and the Drug Administration
and follow up until we get an appropriate response.
was the time we went to the press by announcing that a nice-looking,
blister-packed Rifampicin 450 mg of a manufacturer in Vapi had only
250 mg. A senior FDA authority later politely told this writer how
we should approach the FDA and assured this writer avuncularly that
if we had such problems,'we
will solve your problems, why go to the press?
is not the place for a critique of the FDA. For a part critique
of the Maharashtra FDA, that licenses many of the major drug units
of this country, the reader is urged to read the Justice Lentin
Commission Report (1989) on the Mannitol tragedy. If only more manufacturers
would come together and share their experiences, one can make the
administration probably less venal and more responsive. But no manufacturer
in the commercial sector would like to put his bottom on the sling;
partly because everybody feels he/she has some skeletons to hide,
or the authorities may create skeletons where none existed before.
So everybody tends to be 'practica',
and life carries on in liberalised India.
are something which intrinsically not done (or 'evil')
like making a substandard drug. During the manufacturing operation,
we can claim to have set yardsticks, which are more stringent than
the statute book, yardsticks, which actually matter. Most manufacturers
with some semblance of a conscience do set for themselves some such
yardsticks. The State authorities related to the 35 acts specified
above, however tend to often look at the letter of the law than
the spirit. In fact, the system lets off the hook those who violate
the real intent of the law. Ordinary, well-meaning persons, can
be made to look guilty offenders by an administrative ruling or
an executive fiat. One develops over time an intuitive understanding
of the relative importance of various administrative actions, often
punitive in intent, and develop ethical ways of coping and yet being
ethical organisation in business by virtue of its existence needs
to cultivate more humane values and ethos internally. Ethically,
anything that conflicts with these values, must not be pursued.
LOCOST after some deliberation has decided that the following minimal
values and processes are important:
Promotion of good quality generic drugs and rational therapy
2) Promotion of health education
3) Influencing national/state level health
policy with a priority on drugs
the following values and processes would sought to be actualised in
people to be as free and autonomous, as possible, with increasing
sense of self-responsibility and self-discipline.
non-bribing culture with transparency and openness in all matters.
in decision making processes and a culture of egalitarian and
in every aspect of working, organising meetinngs, presenting
ideas in speech and in writing.
of LOCOST by all employees as an alternative organisation
with larger societal and personal goals.
the following shall be sought to be implemented in a period of 5 years
to the extent possible:
of salary differences between highest and lowest paid levels, or
atleast paying lower levels better than industry and statutory norms.
Benefits must be same for everyone - even if salaries continue to
of differences between leaders and the led, and empowering of those
who work to take decisions.
decisions must be taken after considering quality, price and market
d) Partner profile: Continue as we do for 2 years and then re-examine
any necessity for change in reaching out to newer consumer segments.
All activities geared towards rational therapy (but not policy influencing
or research) should be built into cost (like quality control).
out in symbolic ways, if be with a measure of tentativeness and
deliberateness, understanding that those who implement must feel
comfortable, even as there are built in limitations of middle-class
elite trying to actualise democratic and participatory goals. The
former has choices and options in life which workers do not as a
rule have. Nevertheless, those who have must consciously strive
to minimise the differences and contradictions between our private
and public lives. Value actualisation is a process that can never
be completely, if not perfectly, achieved. At best, we should consider
our sincere efforts 'experiments
are many other issues that need discussion. But this essay is becoming
long and that increases the risk of it not being read. For the sake
of brevity we will just mention a few other important issues which
bear discussion in a longer effort: ethical issues in promotion,
labelling and marketing of drugs; ethical dilemmas in concurrently
manufacturing and marketing drugs from other systems of medicine;
issues generic to the NGO paradigm of organisation; ethical issues
related to lobbying, public advocacy and our attitudes to the government;
ethical issues in the liberalisation versus regulation debate; issues
of human rights in the manufacture, marketing and use of pharmaceuticals;
gender issues in the choice, manufacture and marketing of drugs;
and how should an ethics conscious person conduct himself/herself
in a milieu of less than perfect people in a less than perfect world.
the bottom of it all, our reading of reality, the frameworks we
use, are often deep ethical issues. Organisations, low cost or otherwise,
making modern medicines, are active supporters of the modern science
paradigm, of a positivist paradigm of a reality out there. Our continuous
ongoing production and distribution of drugs, often to public applause,
comes across as an unproblematic espousal of modern medicine and
modern science. Leave aside the debate of the hegemonic nature of
modern science and medicine, and the violence it has done to a humane
ethos. What is it we can do about the gigantic industrial chemical
complex upon which medicines are based, and about what it does to
our environment? How do we continue to sell medicines endorsed on
basis of double blind clinical trials, or otherwise on research
methodologies, whose ethicality is suspect?
the heart of these dilemmas are questions of method in science,
and of the nature of development and what they together do to human
cultures. Unless one makes some progress in these issues, consistency
of means and ends, one of the pillars of ethics, would appear to
be in some kind of a soup. With it, drug production, low cost or
otherwise, does appear to be a bit of a flawed enterprise.
- S. Srinivasan