Ranbaxy decision shows why FDA reluctant to rely on European inspections

Economist Roger Bate

Europe has been pushing the U.S. in trade negotiations to accept their inspections of European drugmakers in lieu of doing their own, and vice versa, but the approach the FDA and European regulators have taken to problems at a Ranbaxy Laboratories plant illustrate why this has become a contentious issue.

The European Medicines Agency (EMA) Thursday said it was lifting a ban on a Ranbaxy Laboratories plant in India whose products the FDA also has banned and is not ready to accept.

Roger Bate, an economist with the American Enterprise Institute who has been critical of quality standards in India, thinks the country will use the EMA's decision as a platform from which to argue its case that the U.S. is just picking on it. The FDA in the last year has placed import alerts on half a dozen Indian facilities owned by its biggest players.

"In that sense I see this as being very negative," Bate told Reuters. "It would have been far more useful if Europe and the U.S. had walked the same line."

The EMA conceded that its inspectors reported there were quality problems at the plant, but the agency decided these problems did not endanger patient safety. Medicines tested met standards, it said, and the fixes Ranbaxy has promised to make has convinced regulators it can resume sending the four products the plant produces for the EU. It did say it will continue to keep a close eye on the facility.

The FDA on the other hand said no way is it lifting its ban. It pointed out to Reuters that both it and EMA found problems. They are just applying their different regulatory and legal standards. "EMA and FDA inspected the Toansa facility using similar quality standards and underlying principles of current good manufacturing practices," the FDA said in a statement. "Both regulators identified significant manufacturing and other violations that needed to be addressed, and both placed restrictions on the Toansa facility."

FDA inspections found the company faking test analysis and then hiding the fact by deleting data from computers, problems similar to what it had pleaded guilty to last year at two other plants in a case it settled with a $500 million payment. Problems with the FDA have plagued Ranbaxy for years, finally convincing Japan's Daiichi Sankyo, which owns a majority stake in Ranbaxy, to sell it off to India's Sun Pharmaceutical. A stock swap valued at about $3.2 billion is expected to be completed by the end of the year.

It also points to why the FDA has balked in recent trade negotiations to agree to accept the inspections of EU countries instead of doing its own. Industry experts have pointed out that that the U.S. is not comfortable with an agreement that would have it relying on regulators from countries diverse as Romania, Greece and Estonia, and the U.K., France and Germany. In the case of the EMA Ranbaxy inspection, the agency sent inspectors from Germany, Ireland and the U.K., who were joined by inspectors from Switzerland and Australia. Despite finding problems the EMA decided to give Ranbaxy a pass.

The U.S. has pledged closer cooperation and info sharing with Europe in oversights but drugmakers there, including some U.S.-based companies, have been disappointed that it won't free them from the time and expense of redundant inspections. "We see a lot of duplication of resources, as a high level of domestic inspections in the EU member states coincide with a high level of foreign inspections," the European Federation of Pharmaceutical Industries and Associations, said in a statement last month. Members of the federation include U.S. firms like Merck ($MRK) and Pfizer ($PFE), as well as EU-based companies.

- here's the EMA announcement
- read the Reuters story

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