Podcast | Pick of the day: What Scott Gottlieb's exit from USFDA means for the Indian pharma sector

One interesting aspect of Gottlieb’s time at the FDA - even Donald Trump liked him, despite their differences! Gottlieb was nominated by President Trump in part to aid in his anti-regulation agenda, but Gottlieb took an aggressive stance toward e-cigarette makers. Yet, Trump tweeted, “...Scott has helped us to lower drug prices, get a record number of generic drugs approved and onto the market, and so many other things. He and his talents will be greatly missed!” This, for a man who had some policy disagreements with the White House and is also widely respected. Some officials said he could even be asked to take another post.

The FDA and it’s India connection

Here’s why we in India are talking about the change in leadership in an American regulatory body. Indian drug makers exported medicines worth about $5.1 billion in FY18, making medicines around 30 percent of total exports. The FDA’s actions impact Indian drug companies which generate significant revenues by selling copycat drugs at a fraction of the cost in the world's largest market for medicines.

The Economic Times reported that India has the maximum number of US FDA-approved manufacturing sites outside the US and supplies 40 percent of the generic formulations marketed in the US. What that means is, any major changes in the FDA will have an impact in India as well. The past two years have been a difficult phase for Indian pharma companies. While it is a positive that the FDA under Gottlieb approved a record number of drugs, the pressure on drug pricing also peaked in his tenure. Several Indian drug firms had to recall medicines – especially those used for treating hypertension – after a clamp down by the US regulator. The Trump administration is quite keen on bringing down the prices of medicines and containing the opioid crisis in the US, so it remains to be seen whom the administration chooses to helm the agency. As of now, media reports indicate that the next FS chief will have to be, and seen to be, hard on the opioid problem. Some media reports claim that the head of the America’s National Cancer Institute, Norman ‘Ned’ Sharpless, has been tapped as the acting head of the FDA.

One USA Today piece was particularly acerbic about Gottlieb, claiming: “When Scott Gottlieb was sworn in as Food and Drug Administration commissioner in May of 2017, many advocates hoped to finally get a bulldog who would take on the opioid crisis with the urgency it deserved. But Gottlieb proved to be a better friend to big pharma than to the roughly 85,000 people who have died from opioids since he took office on May 11, 2017. Which is why, when he announced his resignation last week, it was met with standing applause by many affected by America’s addiction crisis.”

That harsh indictment aside, Gottlieb was a fairly popular commissioner. Why? Here’s another way to explain it - Wells Fargo analyst Bonnie Herzog said, his exit “will be broadly viewed as a positive for the tobacco industry, although this introduces some uncertainty.” This popularity was due to Gottlieb using his post to tackle public health issues like youth vaping to the opioid addiction – in fact, early skeptics worried about his close ties to drug industry or the evil ‘big pharma’. But those fears were assuaged after it became clear that Gottlieb was a vocal critic of popular e-cigarette startups like Juul, which he has repeatedly slammed for its popularity among teens. Earlier this month, he pulled up 15 retail businesses including Walmart for illegally selling tobacco products to children.

Gottlieb, a qualified doctor himself, played a role in initiating the generic drug user fee program. One ET report explained that, according to data from Bloomberg, the FDA approved a record 971 generic drugs in the fiscal year ended September 30. The total number stood at 937 in fiscal 2017 and 835 in fiscal 2016. Also, the FDA conducted 11 percent fewer surveillance inspections of drug manufacturers in fiscal 2018 from a year ago level. Surjit Pal, a pharma analyst with brokerage firm Prabhudas Lilladher, told ET, “Gottlieb had approved drugs faster, laid down a foundation to make the FDA more communicative that helped companies expedite drug launches. Now it goes back to the square one.”

Pal’s reservations are not without basis. A slowdown in the approvals could indeed prove to be a negative for Indian pharma that, in the words of that report by ET, “is busy building a pipeline of limited competition products to be launched in the US. Companies would also be apprehensive of an increase in FDA inspections and renewed pressure on drug pricing.”

Scott Gottlieb, friend of Indian Pharma or friend of fairplay?  

Indian drug companies are fond of the outgoing FDA commissioner. Here’s why: Indian drug manufacturers received a shot in the arm when the FDA chief came out in support last month of generics manufactured in India and the US to dispel fears over such medicines.

Gottlieb wrote in a newsletter on February 22, “Generic drugs are just as safe and effective as their branded drug counterparts… Generic medicines use the same active ingredients as brand-name medicines and work the same way, so they have the same risks and benefits.” he also wrote that his agency’s rigorous standards and inspections apply equally to both generic and branded drugs, irrespective of where the medicines are being manufactured  - Shandong, India, or Indiana.

In FY2017-18, the FDA tested 323 products from around the world, including over 100 products from India, to examine if foreign manufacturers had a higher incidence of product failure. The FDA said all 323 samples met the US market quality standards using testing standards set by the United States Pharmacopeia or submitted in marketing applications. Though the inspections by the USFDA declined slightly in China from 2017-18, inspections in India increased substantially, according to Gottlieb. Indian drug makers, who are affected by such regulatory action on their manufacturing factories, finally began seeing a recovery with most of their factories being cleared by the FDA.

One important statistic to bear in mind here is that generics account for 90% of the US drug market, a huge rise from the 33% three decades ago. Indian phramaceutical companies, for whom a major part of business comes from the sale of generics in the US, embraced Gottlieb’s endorsement statement which gave them a respite from the poor perception of generics as well as Indian-made drugs.

Under Gottlieb, the USFDA in 2017 permitted a record 844 generic drugs, a 36 percent rise compared to previous year. Indian companies alone accounted for 42 percent of all those approvals. In 2018, the regulatory body approved 810 generic drugs, out of which India's share was a substantial 40 percent.

That said, as Moneycontrol reported, a higher number of approvals was not necessarily great news for Indian generic drug makers. That only meant more intense competition and much lower realisations at a time when the trade was impacted by consolidation of buyers and distributors in the US.

Another of Gottlieb’s moves that Indian drug makers appreciate is his effort to bring low-cost generic versions of complex drugs such as inhalation drugs, transdermal patches, injectables and biosimilars faster to the market, which have long avoided competition. Complex generics are drugs that are harder to copy under traditional approaches. As a result, these drugs often face less competition and are more expensive. Further, branded drug makers are known to use citizen petitions in order to make it difficult for generic drug makers to access samples of the original drug product. Under Gottlieb, the FDA released guidance for dozens of such drugs, providing much needed clarity on what the regulator expects from a generic filer when they file for such product. In particular, Natco Pharma and Biocon are two the Indian companies that benefited from the outgoing commissioner’s efforts to bring complex and biosimilar products faster to the US market. Following his resignation, the mood in India’s pharma sector is one of trepidation. To quote Surjit Pal once again, “Now it goes back to the square one.”