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The framework for local production and technology transfer in Bangladesh

Case study 2

5. The framework for local production and technology transfer in Bangladesh

5.1 National Drug Policy and regulations

As in all countries, medicines must be registered in order to distribute them in Bangladesh. Bangladesh’s National Drug Policy in 1982 changed the broad framework for pharmaceutical production in the country by deregistering medicines considered unnecessary or useless by the health authorities.26 It also prohibited all prescription chemicals not included in the latest edition of the British Pharmacopoeia or British Pharmaceutical Codex as medicine.27 Subsequently, and for the first time, a list of 150 essential medicines and 100 specialized drugs was established.28 The policy was motivated largely due to the lack of essential medicines in the market resulting from high prices of medicines being sold locally. These factors have been attributed primarily to certain restrictive business practices of multinational corporations at that time, the need to purchase raw materials at inflated prices from tied sources by multinational corporations, and the inability to access appropriate technology for local production at reasonable costs.

The multinational corporations, which lost a significant part of their product portfolio due to deregistration of products, were further de facto restricted to producing injectable vitamins for local supply by the 1982 National Drug Policy. Bangladeshi companies were also restricted from producing pharmaceuticals for multinationals under contract manufacturing or licence.

As a result of these new restrictions, several multinational corporations sold out their companies to local entrepreneurs. For example, Pfizer (Bangladesh) is now Renata Limited, Imperial Chemical Industry is now Advanced Chemical Industries Limited (ACI), and Organon is now Nuvista Ltd, all of which are fully owned by Bangladeshis (Chowdhury & Rahman Kabir, 2009). The restrictions on alliances between local and multinational companies forced companies such as Square and BPL to adjust their businesses accordingly and to launch their own brands. Finally, the policy also set out a strategy for importation of

26 The Drug (Control) Ordinance, 1982 (order number VIII of 1982) deregistered and removed from the market medicines considered unnecessary and useless, including vitamin mixtures, tonics, alkalizers, cough mixtures, digestive enzymes and palliatives.

27 Bangladesh, National Drug Policy (1982), Annex III, no. x.

28 Bangladesh, National Drug Policy (1982), Annexes I and II.

APIs at an acceptable quality and at a competitive price. In any event, the 1982 policy appears to have had a major impact on the composition of the market:

before 1982 multinationals controlled 70% of the local market, but now the position has been reversed, with local firms controlling the market.

The 1982 National Drug Policy was revised in 2005 and relaxed some of the earlier restrictions. For example, the 2005 Policy permits multinational corporations producing in Bangladesh to manufacture any pharmaceuticals for export to international markets. The 2005 Policy also lifted the ban on Bangladeshi companies to manufacture under contract and license for multinational corporations.29 This served as a boost to local companies such as Beximco, which has now started contract manufacturing for the research and development (R&D)-based pharmaceutical transnational corporations.

A key restriction of the 1982 Policy has been retained in the 2005 version, however, and this relates to the restriction on importation of a pharmaceutical product or a close substitute of any pharmaceutical product thereof, so long as the pharmaceutical product is being produced in the country. This provision, originally intended to support local production, has now rendered the local firms controlling the market with no threat of any price-based competition from outside. The absence of any external price-based competition and the increasingly concentrated internal market leave the top local firms with ample scope to establish prices and engage in other potentially anticompetitive practices, to the detriment of the interest in greater access to medicines (Gehl Sampath, 2007; World Bank, 2008a; Bangladesh Health Watch, 2010).

The development and revision of the drug policy was led by a National Drug Policy Review Committee, with members from all relevant sectors. From the interviews, the local pharmaceutical industry took a lead role in determining the scope of the revised National Drug Policy of 2005. The industry is consulted through directly participating in various decision-making processes or through its representation by BAPI, although many dispute the effectiveness of the latter due to rivalries among its members.

The 2005 National Drug Policy also seeks to enforce cGMP. WHO promotes cGMP for good-quality production of medicines in developing countries. The responsibilities of assessing GMP compliance lie with the DGDA. The DGDA is the main body in Bangladesh empowered to supervise and implement all prevailing regulations related to importation, production and export of pharmaceuticals, in addition to promoting cGMP. It was upgraded from

“department” status under the Ministry of Health and Family Welfare to

“directorate general” status after the adoption of the 2005 revised National Drug Policy. The new status is supposed to provide the DGDA with full regulatory authority and responsibility in matters of drug registration and control. However, the DGDA suffers from extreme funding, staffing and technical competence constraints. During interviews, DGDA officials indicated that more than half of the currently government-approved posts for human resources necessary for the running of the DGDA are vacant and unlikely

29 Bangladesh, National Drug Policy (1982), Annex III, no. xii, xiii, xiv, xv and xvi.

to be filled soon. The civil service recruitment policies are said to be the bottlenecks in implementing DGDA capacity-building efforts. There are two government drug-testing laboratories, one in Dhaka at the Institute of Public Health and another in the Chittagong region. However, these laboratories have extremely limited capacity, with three technical staff in the Chittagong laboratory and eight technical staff in Dhaka. The entire country has only 28 post-surveillance personnel, of which 12 are active in Dhaka alone.30 None of the DGDA laboratories has the capacity to test drugs for safety, efficacy or bioequivalence. There is neither a central reference laboratory nor any independent contract research organizations in the country. Companies that are exporting to international markets have their products tested and certified in established laboratories in other countries (for example, Square sends its products regularly to Malaysia) (Alam, 2009). The problem of pricing and quality of drugs is therefore very acute in the absence of any mechanism to check the efficacy of all the drugs being sold in the local market.

The DGDA’s effectiveness is further constrained by the administrative quagmire of various organizations and committees involved in the relevant regulatory processes. The recommendation for registration of drugs by the DGDA comes from the Drug Control Committee. The National Drug Advisory Council advises on implementation of the National Drug Policy and the promotion of local pharmaceutical industries. There are also a Pricing Committee (which approves pricing decisions on medicaments) and a Standing Committee for Procurement and Import of Raw Materials and Finished Drugs (GIZ, 2007). Adding to this structure, the National Research Ethics Committee is responsible for reviewing all clinical trials of medicinal substances and advises the DGDA to ensure that the drugs available in the country fulfil the necessary requirements for safety, quality and efficacy. There is a clear public health need, therefore, for this governance structure to be reconciled with the changes introduced since 2005, especially in making the DGDA a full regulatory body, in ensuring the necessary facilities are available to the DGDA, the office is fully staffed and its authorities are not diluted. This is also important when considering the wide practice of self-medication by poor people who cannot afford physicians, and overuse of drugs, including in children.31

At the time of the field interviews, a new drug policy (2010) was being formulated for introduction in the country later in 2011. Some of the aforementioned issues could be tackled through this new drug policy.

30 Source: field interviews.

31 During interviews, the Child Health Unit, International Centre for Diarrhoeal Disease Research (ICDDR) stated that children take a lot of antibiotics, higher than the amount recommended by WHO, and are rapidly developing resistance. Marketing of drugs would need active regulation, as businesses are pushing drugs to each home and there are more unlicensed vendors than licensed drug stores in Bangladesh. Here, the work of the Child Health Unit, ICDDR on the social marketing system and treatment guidelines for pubic sector hospitals would need to be supported by the drug regulatory system.

5.2 Intellectual property

Bangladesh is among the few LDCs utilizing to some extent the various flexibilities provided for LDCs by the World Trade Organization (WTO) that support pharmaceutical production and marketing. The transition period lasting until 2016 (WTO/IP/C/25) exempted Bangladesh and other LDCs from implementing the provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) on patent and protection of undisclosed information with respect to pharmaceutical products. The transition period also includes a waiver from obligations to provide exclusive marketing rights, granted by the WTO General Council in a separate decision in 2002.32 According to the Bangladesh Patent and Design Law (1911), patents are available for new processes for the manufacture of chemical compounds, pharmaceutical compositions and microorganisms and for the article prepared or produced by the process. This provides a process patent regime in accordance with the flexibility provided for LDCs.33 The Bangladeshi Government has issued an order for suspension of granting patents for pharmaceutical products, despite the fact that the Patent and Design Law does not provide for such patents.34 In addition, the order introduces a “mailbox” for receiving patent applications during the time that pharmaceutical product patents continue to be unavailable (WTO, 2010). According to the Registrar of Patents, Designs and Copyrights, the mailbox system contains several pharmaceutical patent applications (Gehl Sampath, 2010b). If these applications are granted after 1 January 2016, any pharmaceutical substances addressed in granted applications could become unavailable to local generic producers (see also Box 1).

Bangladesh does not provide protection for undisclosed information submitted for pharmaceutical product approval/registration purposes concerning new chemical entities (WTO, 2006). Bangladesh currently does not provide exclusive marketing rights for pharmaceutical products, which is fully consistent with the flexibility provided for LDCs under the WTO General Council waiver decision from 2002 on exclusive marketing rights (see above).

Another transition period allows LDCs to delay compliance with the rest of the provisions of the TRIPS Agreement until 2013.

32 WTO General Council decision: “Least-developed country members – obligations under Article 70.9 of the TRIPS Agreement with respect to pharmaceutical products”, 8 July 2002, WTO document WT/L/478, 12 July 2002.

33 See Article 2(8), which defines “invention” as any manner of new manufacture and includes an improvement and an alleged invention, and Article 2(10), which defines “manufacture”

as inclusive of any art, process or manner of producing, preparing or making an article, and also any article prepared or produced by manufacture (Patent and Design Act, Bangladesh, 1911). A similar conclusion is made on the interpretation of Bangladeshi legislations by the GIZ (2007) study.

34 It is not clear to the drafters of this study whether the Bangladeshi Government is of the view that pharmaceutical product patents have been granted before issuing the suspension order. Nor is it clear whether there are any actually granted patents on pharmaceutical products in Bangladesh. For these reasons, our analysis will be based on the provisions of the Bangladesh Patent and Design Law (1911), which excludes pharmaceutical product patents.