For Quality, Essential, Generic Medicines
Ethical Issues in Low Cost Drug Manufacturing1
Choice of Products, Pricing and Ethics
Another model of milking the state, if ever there was one.
Paradigm Ethics
Quality Control
Ethics appears to deal with, among other things, the problem of right and wrong conduct, intrinsic good and evil and relevance of means to ends. All these three imply a certain world view; and in turn imply a certain consistency of one's actions to this world view.
We 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.
LOCOST has survived, and has, by and large, shown that low priced quality formulations can be an economically viable idea.
Survival, 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.
On Being Clean
Voluntary organizations like LOCOST that are into business operate under twin compulsions: to be 'business like' and to adhere to the ethos of voluntary organization, and in our case of non-profit trusts.
One 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 requirements.
Have 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.
Some 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 'observations' in the 'Visit Book'. The 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.
An 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 ki davaee' 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".
Regular 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 requirements.
We 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.

And 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 so-called compliance?

But 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 trouble' and 'getting on 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?
A 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 wrong?
Probably 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.
If 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.
So 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.
Choice of Products, Pricing and Ethics
Any 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.
It 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.
At 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.
Being 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.
In 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 'sharing the proceeds' 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.
Another model of milking the state, if ever there was one.
However, 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.
One 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 same place).
Increasing 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?
And 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.
Let 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?
Clearly 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.
What 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.
These 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.
While 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 value' when we know well that the invisible hand of the market tends to tilt towards those already well-off.
Reverting 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 pricing?
What 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.
How 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 outside?
More 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.
After some discussion, LOCOST on its part has decided on the following as its current research priorities.
Production and Study of Manufacturing Processes
Occupational health hazards
Drug Laws (a critical review)
Pharmacy Management Issues
Researching partners' experiences
Drug utilisation patterns of partners
Baseline health survey of our workers as responsible manufacturers
Effects of LOCOST activities on partners
Understanding of how atmosphere in factory has improved
Detailed study of drug information in the market
Analysis of advertisements
Ayurvedic preparations- their rationality
Creation of knowledge related to drug s and medicines but not related to the above five areas explicitly.
Quality Control
If 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?
No, it is not. It is misguiding the customer just as claiming extra advantages of branded over generic drugs is misguiding the public.
The 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.
There 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?
No. We do not manufacturer even at the risk of appearing cruel. Even if you know that other manufacturers are making a killing on faulty raw material.
There 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 mechanism' 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.
There 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?
This 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.
There 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 functional.
An 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:
  1)   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
Operationally, the following values and processes would sought to be actualised in phased manner:
Encourage people to be as free and autonomous, as possible, with increasing sense of self-responsibility and self-discipline.
Clean, non-bribing culture with transparency and openness in all matters.
Participation in decision making processes and a culture of egalitarian and humane ethos.
Simplicity in every aspect of working, organising meetinngs, presenting ideas in speech and in writing.
Internationalising of LOCOST by all employees as an alternative organisation with larger societal and personal goals.
Specifically the following shall be sought to be implemented in a period of 5 years to the extent possible:
Reduction 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 show difference.
Reduction of differences between leaders and the led, and empowering of those who work to take decisions.
Financial decisions must be taken after considering quality, price and market constraints.
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).
Reach 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 in truth' 1
Paradigm Ethics
There 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.
At 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?
At 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