NCPA - National Center for Policy Analysis

Foreign Discount Generic Drugs Lacking in Quality and Oversight

February 25, 2013

Though consumers may receive significant savings, overseas pharmaceutical companies in developing countries offer products of questionable integrity. With the rise in online pharmacies, the U.S. Food and Drug Administration (FDA) cannot monitor all incoming pharmaceuticals. This means that consumers need to be more careful and pharmaceutical companies need to divulge more information about the quality of their product, says Roger Bate, a resident scholar at the American Enterprise Institute.

  • A Pew survey shows that 54 percent of Americans distrust Indian drugs and 70 percent distrust Chinese drugs.
  • Some companies, particularly in India, substitute cheaper ingredients and skimp on good manufacturing practices in order to reduce costs and drive profits.
  • U.S. consumers and pharmacists have little ability to stay informed as to the quality of the drugs.

The United States should place strict sanctions on companies that fail to keep adequate records of their manufacturing processes. Currently, pharmaceutical manufacturers in developing countries face low demand for quality control, a weak regulator and significant competition, which increases the risk that drugs are substandard.

  • Americans commonly believe that U.S. companies will spot any irregularities and that the FDA is able to regulate the incoming drugs.
  • Unfortunately, the FDA cannot regulate everything, and the process of regulating overseas in one of its 15 worldwide offices is complicated by local governments and advance notice to manufacturing plants, which allows them to cover up some problems.
  • In 2012, Ranbaxy, one of the largest and most respected Indian drug companies, recalled its generic version of Lipitor after possible glass particles were found in the medicine.

With a long history of questionable drug manufacturing, the case of Ranbaxy raised concerns about Indian regulators. The Indian government found in its own report on India's regulator, the Central Drugs Standard Control Organization, that substantial corruption exists in the Indian pharmaceutical industry, though the finding was disputed.

  • One source of the problem is Indian patent law, which protects Indian interests at the cost of foreign pharmaceutical companies and regulatory oversight.
  • In order to improve quality for U.S. consumers, Bate calls on Indian companies to self-regulate and disclose information to the end consumer, but he is skeptical this will happen.
  • To create additional pressure, poor-quality drug manufacturers should be threatened with banishment from the marketplace if quality does not improve.

Source: Roger Bate, "Cheap Indian Generic Drugs: Not Such Good Value After All?" American Enterprise Institute, February 19, 2013.


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