All of a sudden, Indian regulators in at least two sectors find themselves under the spotlight: civil aviation and pharmaceuticals. Recent events have shown how they are ill-equipped to regulate the two rapidly-growing sectors. These also happen to be sectors where lapses can be fatal. This is in sharp contrast to the country's financial sector regulators, in particular the Reserve Bank of India which has won global acclaim for monitoring the health of banks regularly and taking timely remedial action whenever needed. While Indian drug makers have been accused of paying lip service to good manufacturing practices for some time now, the lapses in aviation come as a surprise.
A few days ago, the Federal Aviation Administration, or FAA, the United States regulator, downgraded India's flight safety rankings from category I to category II, at once putting India in the same class as Ghana, Uruguay and Zimbabwe. The downgrade means that Indian carriers flying to the US - state-owned Air India and Jet Airways - won't be allowed to expand their flights and their existing flights will be checked more rigorously. Following this, Singapore has said that it will conduct more ramp checks of flights coming from India. What went wrong?
Sector experts say that while the industry saw unprecedented growth in the past several years, the Directorate General of Civil Aviation, or DGCA, was severely neglected by the government. In 2009, FAA, concerned by what it considered to be gross understaffing, particularly in the directorate that determined a craft's airworthiness, had threatened to downgrade India to category II. There was a brief flurry of activity, and following the implementation of several remedial measures and after the Union cabinet committed to recruiting more than 500 additional personnel, India passed the next FAA audit and retained its category 1 status. However, once the threat of a downgrade was averted, complacency returned and the momentum was lost. The situation has not been helped by the fact that the regulator has had four heads in as many years.
According to information provided by the Center for Asia Pacific Aviation, DGCA had estimated in 2009 that it required 928 positions to adequately oversee the level of activity in the sector, compared to its actual workforce of 400. Of this shortfall, a critical 427 vacancies were for 'A' grade officers. The shortage was particularly acute in the directorates of airworthiness, flight standards and air safety where there were just 79 'A' grade directors and officers as against the sanctioned strength of 330. Most of the positions created still remain vacant. Since 2009 DGCA has recruited just 67 full-time employees and 62 consultants and "secondees" (on deputation). The cabinet, on January 29, approved the appointment of 75 officers who will be paid global salaries - but this seems to be a case of too little, too late.
Officers in the Union civil aviation ministry, on their part, say the problem is an administrative hitch. "Posts have been created in DGCA but have not been filled up. The process of filling up the posts is a lengthy one. The vacancies have to be filled through the Union Public Service Commission. Even those due for promotion have been waiting for years," says an officer. "Safety was never compromised and all mandated inspections and surveillance of airlines and airports are being carried out." FAA, in its audit, had particularly pointed out that pilots from airlines were deputed to DGCA for inspection, which created a possible conflict of interest. However, ministry sources say the conflict is notional. "A pilot from an airline is not tasked to carry out inspections in his or her airline. The government has now sanctioned posts of 75 full-time inspectors and this will be implemented soon," says another officer.
After FAA dropped the bombshell on the downgrade, the government issued a press release to say that the country's aviation safety record was better than the global average. "The assessment of India by the International Civil Aviation Organisation, or ICAO, on universal safety oversight audit programme is much above the global average. Under this, ICAO has identified eight critical elements: legislation, organisation, licensing, operation, airworthiness, accident investigation, air navigation and aerodromes," the statement said. "According to ICAO 2013 Safety Report based on audit results as on 31 December 2012, India figures among the states having effective implementation above the global average, which is 61 per cent. India's effective implementation stands at 79.1 per cent."
Some observers insist the downgrade is a fall out of the Devyani Khobgrade issue. (DGCA, as Business Standard has reported, has now decided to step up inspection of all international flights coming to India.)
MNC power at play?
Some drug makers too argue that the powerful lobby of multinational patent-holding pharmaceutical companies, collectively called Big Pharma, is behind the regulatory troubles the sector has faced in recent times. India's Rs 79,000-crore pharmaceutical industry has come under severe attack globally for significant lapses in manufacturing practices. The United States Food & Drug Administration has banned Ranbaxy's four Indian factories from selling in that country (the US is the world's largest market for pharmaceutical products). It has also raised issues with regard to the manufacturing practices followed by Wockhardt and RPG Life Sciences. Some Indian companies have had to recall their products from the US. Not only domestic but even multinational companies operating in India have faced scrutiny and criticism.
There are problems in other parts of the supply chain too. A 2010 report by the International Policy Network found that 7 per cent of drugs purchased from wholesale traders were substandard, and 3.6 per cent of the drugs from traders contained no active ingredients whatsoever. Some of the spurious drugs contained chalk or talcum powder mixed with a pain reliever to trick and defraud the patient. As many as 92 per cent of pharmacists said they have been offered substandard or spurious drugs at cheaper prices. The Parliamentary Committee on Health and Family Welfare found that expert opinions necessary for drug approvals were ghost-written by the companies that had sought the approvals. Reports sent in by different experts on the same drug were found to be exact copies of each other, with the same grammatical errors! Documentation maintained by the companies is often inadequate. Audits of factories and their processes seldom happen.
All of this points to inadequate regulation. The country's pharmaceutical sector is monitored by two different Central regulators: the Drugs Controller General of India, or DCGI, to monitor quality and efficacy, and the National Pharmaceutical Pricing Authority, or NPPA, to keep prices of essential medicines under check. However, both the regulators, struggling with challenges such as inadequate human resource and infrastructure, are unable to monitor the illegal, unethical and non-compliant practices prevalent in developing, manufacturing and marketing of medicine in the country. Documents and data are not evaluated properly. Regulators even fail to collect samples in the supply chain because of the lack of infrastructure and logistics. They lack proper labs to test samples.
The case of clinical trials
Till a few months ago, when the Supreme Court took DCGI and the Union health ministry to task regarding the illegal and unethical clinical trials in the country, it came to light that the regulator hardly possessed any data, guidelines or norms for monitoring such trials. Till date, there is no mechanism to audit human trials going on in different parts of the country. Moreover, the two regulators - DCGI and NPPA - are under two separate ministries: health, and chemicals and fertilisers, respectively. Moreover, they have to depend on state drug regulators who report to respective state governments. Non-cooperation is often the norm. This anomaly is also a major roadblock in the country's drug regulatory system.
To correct the situation, the industry has proposed that India should become a member of the Pharmaceutical Inspection Convention, an association of drug regulators who agree to stick to certain standards. It is estimated that it will take India five years to raise its regulatory ecosystem to that level. Only when that happens might the mess be cleaned up.