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The Massive Failures of India’s Drug Regulatory System

Composite image by Mika Tennekoon.

Recurring exposés reveal massive gaps in drug safety in India’s pharma industry, as regulatory failures, lax laws, loopholes and lobbying leave millions in India, Southasia and the world at risk

In December 2023, the Drugs Control Administration (DCA) for the Indian state of Telangana busted a spurious drug racket in Hyderabad following a tip-off by its Vigilance Cell about a firm named Astrica Healthcare. After a fake address on Astrica’s invoices led to a dead end, the Telangana DCA tracked and raided the courier services the firm had been using. Then, with the help of a courier worker, officials located an unlicensed warehouse in Macha Bollaram, in the north of the city, and kept watch on it for three days before conducting a raid. The agency seized 36 varieties of fake anti-cancer drugs worth INR 4.35 crore, or roughly half a million U.S. dollars. It was the biggest ever drug seizure in Telangana at the time.

The seized drugs carried the labels of nine different companies — including one, called Astra Generics Private Limited, that no longer existed. Astra Generics’s manufacturing licence had been cancelled in 2021, but drugs carrying its name showed a manufacturing date of March 2023. Had the fake drugs made it to market, they would have hastened the deaths of many cancer patients unwittingly consuming spurious medicines incapable of helping them fight the disease.

The case was extraordinary not just for the brazenness and scale of the wrongdoing involved, but also for how the Telangana DCA pursued it. After the raids, the agency — one of the rare state-level drug regulatory agencies in India to be headed by a police officer — filed a First Information Report, registering a cognisable offence.

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Strong enforcement is the exception rather than the rule when it comes to India’s myriad drug regulatory powers — the national-level Central Drugs Standard Control Organisation (CDSCO), local drug regulatory authorities in the country’s many states and union territories, plus two statutory bodies. This was exposed to the world when more than a hundred children died in 2022 and 2023 after consuming toxic cough syrups exported from India to The Gambia, Uzbekistan and Cameroon — yet India is still to take comprehensive action to overhaul its malfunctioning drug regulatory system. Scandalous lapses continue to come to light with shocking regularity. In one case, in 2024, officials in Maharashtra discovered that government hospitals in the state had been supplied with pills made of starch and talcum powder that had been falsely labelled as antibiotics. A chargesheet described how the fake pills had been manufactured at a veterinary medicine laboratory in the state of Uttarakhand and marketed under the names of defunct companies across Maharashtra, Jharkhand, Haryana and beyond. The multi-state racket had reportedly been going since 2021.

This case, like the case in Telangana, pointed to a twin crisis. The first is the existence of a widespread and well-organised market for spurious medicines in India; the second is the massive failure of India’s drug regulatory framework, with its lax laws and countless loopholes. Added to this is a political environment that continues to stymie enforcement and accountability in India’s booming pharmaceutical industry, expected to be worth USD 130 billion domestically by 2030 and with an export market already worth more than USD 25 billion a year.

India has around 10,500 pharmaceutical manufacturing units, according to numbers reported in 2024, with the large majority of them classed as micro, small and medium-scale enterprises. According to the Indian health ministry’s most recent national drug survey, conducted between 2014 and 2016, more than three percent of the drugs sold in retail outlets in the country were substandard or spurious. An inspection report from the CDSCO for March 2023 reported similar findings, revealing little improvement even after the massive scandal of exported Indian-made cough syrups killing children in The Gambia and elsewhere. In 2022, a minister of state for health stated in the Indian parliament that, across close to 85,000 drugs tested by regulators in 2020–2021, more than three percent were substandard and some 0.3 percent — 263 drugs — were spurious.

“I have no confidence in the medicines in the market right now,” a former drug commissioner who retired after more than three decades of service told us, speaking on condition of anonymity. “In fact, the insulin I consume could be spurious too. It upsets me a lot. I feel shame as a regulator at the state of things.”

DRUG REGULATION IN INDIA is primarily governed by the Drugs and Cosmetics Act of 1940 and rules issued under it, which prescribe the powers of the central government in New Delhi to regulate the manufacture, sale and distribution of drugs. This includes setting quality standards, such as those concerning adulterated, spurious and mislabelled drugs. However, “public health” is a state subject under India’s federal constitution, meaning state governments have a significant role in health regulations, including when it comes to pharmaceutical licensing. This system has led to a divided and opaque distribution of powers and responsibilities between the CDSCO and state-level drug regulatory authorities.

For manufacturing, a pharmaceutical company can choose between states based on their regulatory and tax regimes, and often also special incentives. As a result, some states — Maharashtra, Gujarat, Telangana, Andhra Pradesh, Karnataka, Tamil Nadu, Himachal Pradesh, Uttarakhand — have an especially high concentration of pharma manufacturers. Such concentrations, in turn, often give pharma companies significant influence over local state officials.

In some cases, manufacturers looking to take advantage of differing state regulations “don’t even have to switch to a different state,” Murali Neelakantan, the principal lawyer at amicus, a drug regulatory advisory firm, explained. “They simply have to contract an entity in the other state to manufacture what they want. This is third-party contract manufacturing and it is cheaper and has less regulatory issues for manufacturers.” Neelakantan, who was earlier the global general counsel at Cipla, one of India’s largest pharmaceutical manufacturers, added that pharmaceutical companies are also “allowed to loan licences from each other. It is like how restaurants use cloud kitchens to make food when their kitchens are at capacity.”

“Things are so bad that sometimes you cannot even figure out who is really making the drug,” Leena Menghaney, a health-rights activist, said. Menghaney until recently headed the international charity Doctors Without Borders’s efforts in Southasia to improve access to life-saving medical products and affordable drugs for poor patients and countries.

In The Truth Pill: The Myth of Drug Regulation in India, the public-health activist Dinesh S Thakur and the lawyer Prashant Reddy T detail a litany of problems. “For example, inspection reports of pharmaceutical facilities are not made publicly available without which there is no way to assess whether drug inspectors are actually doing their job as required,” they write. “On the jurisdictional issue, since each state and union territory has its own drug controller who issues licences to manufacturing facilities, there is often little information sharing and coordination amongst them.”

Such lack of coherence means that a company rejected by one state’s licensing authority can simply move to a different state to manufacture its product. Thakur and Reddy point out that even if a state cancels a firm’s manufacturing license, it still has to allow the entry of drugs manufactured by the same firm under license in another state.

“Further, inter-state investigations are extremely difficult,” Thakur and Reddy continue, “because a drug inspector working for the Maharashtra [Food and Drug Administration] lacks jurisdiction to enter and inspect Digital Vision’s facility in Himachal Pradesh unless accompanied by a drug inspector from the HPDCA [Himachal Pradesh Drug Controller Authority]. The HPDCA, however, has its own reasons to not permit such inspections, the most important of which is the fact that the state government wants to continue pitching the state as a hub for pharmaceutical manufacturing.”

To compound the problem, the CDSCO and state-level regulators are hugely understaffed. A 2013 parliamentary committee report — reiterating the findings of a 2003 expert-committee report – recommended that India should have one drug inspector for every 50 manufacturing units, and one inspector for every 200 sales units. This would require an estimated 3200 drug inspectors across the country based on 2013 figures — yet their total strength was just 1467 in September 2015. As of December 2023, the CDSCO had a sanctioned strength of 504 drug inspectors but a working strength of just 201. In November 2024, with existing vacancies still not filled, the CDSCO announced that it was creating 250 new positions, including 85 inspectors to focus on medical devices.

The CDSCO, and India’s health ministry, did not respond to questions for this story.

In part as a result of such understaffing, India also suffers from vastly inadequate drug testing. Even the existing infrastructure for this is underutilised. The website for India’s health ministry lists eight drug-testing labs under the central government in New Delhi, and 29 others across various states. According to a 2019 report on drug regulation in India by the legal researchers Shree Agnihotri and Sumathi Chandrashekaran, many states reported that their labs remain largely unused. Uttarakhand, with a stated testing capacity of 750 samples per year, tested only 226 samples between April 2015 and January 2019.

Indian law requires periodic checks by drug inspectors before manufacturing licenses are renewed. If a licensing authority discovers a violation, it can choose between suspending the license, revoking the license or prosecuting the licensee. The law provides no guidelines for the exercise of this discretion, resulting in uneven implementation and violations going unpunished.

License suspensions or revocations are rare. Licensing authorities also rarely initiate prosecutions, and almost never see them through. The 2019 report on drug regulation in India found that of the 10,159 inspections conducted by the CDSCO laboratories between April 2015 and January 2019, prosecutions were initiated in just 142 cases and concluded in only eight. A similar pattern is evident in many states. Telangana found 3853 firms in violation of their licenses but did not conduct a single prosecution. Mizoram, on the other hand, found 141 firms in violation and saw four prosecutions.

Neelakantan recalled seeing an image of a manufacturing site for Maiden Pharmaceuticals, the Indian producer of the cough syrups that killed more than 70 children in The Gambia in 2022, in media reports soon after the scandal over these deaths began. “If you look at the photo of that Maiden Pharma factory, you don’t have to step inside to know this does not meet the standards,” he said. “It is between a cow-shed and an industrial warehouse.” Neelakantan added, “I will not get my window panes made at that factory, much less cough syrup for babies. How could their licences have been renewed?”

Maiden Pharmaceuticals did not respond to questions for this story.

Other major problems with India’s pharma regulatory system include the absence of a proper drug recall mechanism. India has been mulling over legislation for mandatory recalls of substandard drugs since 1976. This, with the required enforcement, would mean that all drug batches found to be substandard could be pulled from the market as soon as a problem is identified. Yet no such law has been enacted to this day. (The Karnataka government has announced that it is working on the country’s first state-level drug recall policy.)

These gaps extend to the recall of medical devices as well. A 2024 paper by the legal scholar Vidya Menon describes India’s response to mass recall of faulty hip implants from the global pharmaceutical giant Johnson & Johnson, first used in the country in 2004. “In response to alarming failure rates and a global recall in August 2010, countries such as Australia, the United States, and the United Kingdom quickly implemented revision surgeries and reimbursement programs to protect patient safety,” the paper states. “In stark contrast, India’s response was alarmingly delayed; defective implants continued to be sold even after the global recall. By the time the import licence was revoked, and the Central Drugs Standard Control Organization issued a recall notice, these implants had already been involved in 4700 surgeries across India.”

Though the Drugs and Cosmetics Act prescribes a zero-tolerance approach to violations of drug-quality norms, in practice Indian authorities are rarely swift to prosecute errant manufacturers. There has been no legal action so far against executives of Maiden Pharmaceuticals, with the Indian government’s inquiry into the cough-syrup deaths still incomplete two years after the scandal. Naresh Kumar Goel, Maiden’s founder, was convicted in 2023 for exporting substandard drugs to Vietnam, but the verdict came a full decade after the offence.

Manmohan Taneja, the drug controller for the state of Haryana, is currently being investigated over an alleged bribe of INR 50 million — roughly USD 600,000 — from Maiden Pharmaceuticals to help switch test samples linked to the toxic cough syrups in The Gambia. Taneja and Maiden have both disputed the allegation, and Maiden continues to deny any wrongdoing in the cough-syrup deaths.

The retired drug commissioner told us he “entirely expected” that test batches had been switched to protect Maiden, as Indian drug regulators act as if their primary responsibility is to protect the pharmaceutical industry – not of patients and consumers. A global health expert who works closely with the World Health Organisation echoed this: “The CDSCO acts like a spokesperson for the industry and not the people.”

In October 2023, in the wake of a global scandal over the cough-syrup deaths in The Gambia and other countries, the Indian government finally made it mandatory for all pharma manufacturers to implement Good Manufacturing Practices – a set of international standards to govern the manufacturing and quality control of pharmaceutical products and medical devices. The government set a compliance deadline of six months for large firms and 12 months for small and medium-scale enterprises, before pushing the deadline for the latter back by another year, to December 2025. According to the CDSCO, as of May 2024 Gujarat had just 1077 out of its thousands of drug firms operating with GMP compliance – and this in the state with the highest number of GMP-certified manufacturers.

Also after the cough-syrup scandal, Indian authorities embarked on what was described as a “crackdown”. Over the course of a year, they cancelled or suspended the licences of over a hundred pharmaceutical companies, suspended drug testing at more than 50 laboratories found to be lacking, and told another 17 to shut down. The government also mandated that all Indian cough syrups destined for export be tested at a government lab before dispatch – a protection absent for cough syrups headed for India’s domestic market, and for all other pharmaceutical products whether for export or domestic consumption.

The retired drug commissioner described any such crackdown as “useless”. “They are done to generate press and don’t address systemic issues in any real manner,” he said. He argued that this “crackdown” was in fact just the authorities doing the job they are meant to do all the time, and that these basic steps did little to change the industry. He equated these sudden measures to putting up roadblocks on just a few streets and expecting them to make driving safer in an entire city.

It is the compounded failures of this system that allowed Astrica Healthcare to flourish at a scale where a single raid turned up spurious drugs worth crores of rupees. “None of these people can operate without a licence,” KM Gopakumar, a legal advisor and senior researcher at the Third World Network, a global non-profit focussed on the needs of the Global South, noted. “If you are a distributor, you have distributor licence, if you are wholesaler, you get a wholesale licence and so on. We are not sure all licences are given after thorough inspections.”

“ONE END IS the crisis of illegal medicines,” Menghaney said. “Drugs that have expired but are re-labeled and dumped in Northeastern states of India, or drugs like the cancer medicine which was all chalk. That is a complete crime under law. The problem with that is that the law is enforced poorly. The other end is what all can be done while staying within legal boundaries.” And those legal boundaries have been largely impervious to progress.

The Drugs and Cosmetics Act was last amended with updated rules in 2019. The inadequacy of this existing legal regime has been repeatedly exposed by the cough-syrup deaths and recurring domestic discoveries of substandard and fake drugs. A Drugs, Medical Devices and Cosmetics Bill, meant to replace the colonial-era Drugs and Cosmetics Act of 1940, was released by the Indian health ministry for public comment in 2022. The revised draft of the bill has not yet been published. The 2022 bill proposed, among other things, to introduce newer definitions, regulate online pharmacies and the entry of modern technology in the pharmaceutical industry, and to give the Indian government greater powers over drug imports. But it has come under criticism for failing to address the country’s needlessly complex regulatory system and entrenched bureaucratic bottlenecks, and for proposing to further relax the legal consequences for manufacturing substandard drugs.

Speaking to The Leaflet, Dinesh S Thakur — who as a whistleblower exposed drug-safety violations at the now-defunct Indian pharma firm Ranbaxy Laboratories — described the weakened legal consequences as “the most devious and underhanded provision of this proposed Bill.” As he explained, “The only remedy available in the new law is to impose a monetary penalty. They are taking away the right of the court to actually imprison manufacturers who make substandard drugs.”

The few recent gestures towards improved standards and enforcement, such as the “crackdown” and the mandated universal GMP compliance, have been reactive, coming only after egregious neglect and malpractice. Alongside these, in 2023, the Indian government passed a bill to promote “ease of doing business” that, among other measures, weakened even the existing legal penalties for the manufacture, distribution and sale of substandard drugs. Now, serious violations of drug standards that could earlier mean jail time are punishable with only a paltry fine of INR 20,000 — less than USD 250. The move followed years of lobbying for reduced penalties by the pharmaceutical industry.

Laghu Udyog Bharati, a group representing small and medium-scale firms, wrote to the government in 2023 to demand that it stop inspections by drug authorities, describing these as a “death sentence” for smaller pharma manufacturers and complaining that such inspections were tarnishing the reputation of Indian pharma. The group later retracted its letter. Laghu Udyog Bharati is affiliated to the Rashtriya Swayamsevak Sangh, the parent organisation of the Bharatiya Janata Party, which has been in national power since 2014.

In 2024, the Supreme Court of India ordered the disclosure of donations made to political parties via electoral bonds — a method of anonymous political financing introduced some years earlier by India’s ruling Bharatiya Janata Party government. The disclosures reinforced suspicions of regulatory collusion between government and the pharma industry. It emerged that 35 pharmaceutical companies had used electoral bonds to make political donations worth approximately USD 112 million. Among the top buyers were the firms Dr Reddy’s Laboratories, Torrent Pharmaceuticals, Natco Pharma and Cipla. At least 22 of the companies had donated to the ruling parties in states where they had their manufacturing units. Seven of them had been under investigation for substandard drugs when they made the donations, and some had also been under scrutiny from India’s tax and financial-crimes authorities.

The connections between the industry and regulatory authorities go deep. The current Drugs Controller General of India — the head of the CDSCO — is Rajeev Singh Raghuvanshi, who earlier spent more than a decade each at Ranbaxy and Dr Reddy’s. He did not respond to questions for this story.

S Eswara Reddy, one of the top officials of the CDSCO, is facing prosecution for allegedly taking a bribe from the pharma manufacturer Biocon Biologics to waive required clinical trials for a new insulin product. A CDSCO drug inspector is also accused in the case. Biocon has denied paying any bribes.

It is common for inspectors leaving the government to start consultancy firms that assist pharmaceutical companies with navigating the bureaucracy. One inspector, who retired from the CDSCO and now runs his own consultancy in Chandigarh, told us it was bizarre to consider this a problem. He said government bureaucrats across the board become private consultants as a matter of course, so “why should drug inspectors be held to a different standard?”

Every new drug coming to market is meant to be registered only after regulators have pored over a dossier of data submitted by its manufacturer. This dossier is to have information about the drug’s active pharmaceutical ingredients, and in the case of generic versions of existing drugs — a major component in Indian manufacturing and exports – also bioequivalence data to prove that the generic version offers the same therapeutic benefits as the original. The dossier also needs to cover shelf life, stability and efficacy, among other things. The Indian government made bioequivalence testing a requirement for generic medicines only in 2017, while still exempting certain categories of drugs.

Under India’s regulatory system, the CDSCO is responsible for granting import and manufacturing licences for new drugs only for the first four years after they enter the Indian market. The process includes ensuring their safety and efficacy, vetting the manufacturer, as well as reviewing clinical trials and bioequivalence data, among other things. During this period, the new drug’s manufacturer enjoys data exclusivity, which means that other companies cannot licence or manufacture the same product. After four years, the regulatory responsibility passes on to state-level agencies, and state governments are free to issue licences for other manufacturers to also produce the drug. This is done without the same level of scrutiny as when the drug is first introduced: state authorities do not require the kinds of dossiers that the CDSCO does for each drug licence.

In effect, India operated with two systems and two sets of safety standards in parallel, each under-resourced and with one undercutting the other. Even as questions remain about the CDSCO’s capacity to fulfill its mandate, the situation at state-level agencies is often even more dire. The World Health Organisation (WHO), tasked with setting norms and standards for global health, uses its Global Benchmarking Tools to evaluate countries’ regulatory systems. In 2024, it reviewed India’s regulatory system for vaccine production and found the CDSCO compliant with its benchmarks on this front. But India has not submitted its drug regulatory system to the same test, even as it continues to manufacture a major share of the world’s generic drugs. “If you look at global benchmarking, WHO is looking at ‘maturity level’ of various nations,” a retired CDSCO official, speaking on condition of anonymity, said. “Now the CDSCO might pass the global benchmarks, but every other state will fail it.”

Once a manufacturing licence is granted, and a company arranges for an export license, an Indian-manufactured drug can be sold freely not just domestically but also to other countries. Many poor countries, heavily reliant on cheap Indian drugs and without strong regulatory systems of their own, are thus at the mercy of the Indian system, as was brutally exposed in The Gambia. In effect, Indian authorities serve as the de facto drug regulators for much of the world.

With India’s refusal to clean up its act, many countries have been waking up to the resulting threats and taking their own protective measures. This is hardest for poor countries, although there are efforts among them to address the problem — for instance, a proposed African Medicines Agency with jurisdiction across all African Union states. The United States, meanwhile, resorts to deploying its own inspectors to enforce its standards at Indian manufacturing units producing drugs for the U.S. market. The U.S. Food and Drug Administration has for years reported serious lapses at large numbers of the Indian facilities it has inspected, and in 2024 the agency announced an increase in such inspections in response to growing concerns over substandard Indian drugs.

This approach may help protect U.S. consumers but it does little to reform the Indian pharmaceutical industry as a whole. “This way, the company can focus on manufacturing for U.S. markets,” Neelakantan, the lawyer at the regulatory advisory firm, said. “It doesn’t make sense for them to make drugs for, say, Gambia, in a U.S. FDA-approved plant if they can just do it elsewhere on a loan licence” — that is, using the practice of third-party manufacturing.

“Some companies, if they want to sell it in the United States, will make drugs following the WHO’s benchmarking standards,” Menghaney said. But “in that same facility, if they are also making medicines that are meant for Indian markets, there won’t be any quality control. What these companies sell to Indians is not the same thing they sell to Americans.”

Menghaney added, “Other countries are wising up to India’s tactics and protecting their markets. The real question is who will save Indians from Indian medicines?”