Government Waives Clinical Trial Requirement for Several Drugs Approved in Select Countries: An Economics Perspective
–Aishni Kalra
Introduction
In the pursuit of finding an answer to the dilemma of affordable medication and increased accessibility of healthcare, the Indian government recently introduced a policy to waive the local clinical trial requirements for drugs already approved in certain selected jurisdictions. This policy change, lauded for its potential to expedite lifesaving medications to the market, also sparks debate for safety, public trust, drug quality, market incentives, and balance of regulatory standards. Hence, the blog further explores more on the policy change along with a cost-benefit analysis and implications of the same.
Traditionally, India’s drug regulatory framework mandated a rigorous clinical trial before a new drug was approved. Under the Drugs and Cosmetics Act, 1940, all new drugs must undergo stringent trials to ensure safety and efficacy before market entry. The Central Drugs Standard Control Organization (CDSCO), overseeing the Drugs and Cosmetics Act, 1940 is a regulatory body designed to ensure any drug entering the market is critically assessed to meet the safety, efficacy, and medical standards. It is vital to ensure protect public health even though it might delay the availability of innovative and new treatments. The several phases of the clinical trial – from preclinical testing to the Phase III trials – involve a combination of tests and evaluations which might stretch to a span of several years as well as drain substantial financial resources. It is a resource-intensive process to prioritize the health and safety of the public at large. This poses a challenge to pharmaceutical companies in rolling out new innovative medications and treatments promptly.
With the incorporation of the waiver policy, it deviates from the norm in Rule 101 of New Drugs and Clinical Trials Rules, 2019. This policy change was made after modifying Rule 101. The Drugs Controller General of India (DGCI) stated that as per the Rule 101 of the New Drugs and Clinical Trials Rules, 2019, the Central Licensing Authority, with the approval of the Central Government, can bring certain categories of drugs into India if they are approved in US, the UK, Japan, Australia, Canada and the European Union (EU).
In doing so this policy It has been beneficial in expanding the reach for treating diseases like cancer and rare disorders like Spinal Muscular Atrophy (SMA) and other autoimmune conditions in India. This move by the Indian Government reflects a regulatory movement to harmonise countries in the context of health emergencies. International bodies like the World Health Organisation (WHO) also encourage setting standards and streamlining procedures. The harmonization enables faster accessibility but it is a double-edged sword as it might raise significant doubts about the applicability in different foreign safety standards of countries as well as the effect of dosage of medications and treatments in different populations.
Economic Rationale
Cost-Benefit Analysis
A cost-benefit analysis is the process of comparing the projected or estimated costs and benefits (or opportunities) associated with a project decision to determine whether it makes sense from a business perspective. It provides a systematic framework for evaluating the decision’s impact.
The Benefit
The waiving policy significantly increases patient accessibility to essential medications -This is beneficial for those severe, rare, or urgent health conditions where existing treatments are ineffective or unavailable. Providing a facility for quicker approval translates to more accessibility in the Indian Market which improves public health at large. It also significantly saves time and cost typically associated with conducting multi-phase clinical trials. The delay in launching a new or novel medicine is between ten to fifteen years before a pharmaceutical company can apply for the approval of the drug.
The key push for approving such a policy to waive local trials was the exorbitant decrease in time and cost for the stakeholders here. It is provides quicker access to cutting-edge therapies. The Pharmaceutical companies and players in the market incur significant costs associated with research and development to potentially introduce any new drug in the market. Now, the Central Drug Standards Control Organisation (CDSCO) has the authority to decide whether the Drugs Controller General of India (DCGI) will accord approval or whether the application needs to be scrutinised once a company applies for such approval. This will also be effective in bringing more affordable medications and treatments to the Indian market. India is now potentially reducing these barriers, allowing faster, more economical access to a broader range of medications.
This chunk of unrealised savings can be an incentive to innovate and bring out new drugs in the Indian market. Lower regulatory hurdles and an expedited approval process boost the market image and attract more pharmaceutical companies into the Indian market. This makes the Indian Pharma space more susceptible to bringing innovation and new treatments and drugs to the Indian market as at par with more developed economies like the USA and the EU. There can be better drug pricing with an increased variety of medicines and improved access. It is also a movement in aligning the Indian pharma regulations to a more standardised one. Leveraging such approvals of approved drugs from other international regulators for selected drugs harmonises the market approval process. It deletes a redundant process and brings new drugs into the market that have already met the rigorous international test, thus thereby saving resources as well and as increasing inefficiency.
The Cost And Risks
If you take shortcuts, you get cut short. The waiver policy on the five specified categories of drugs can join hands to potentially risk safety and pose risks for the public health at large. The clinical trials conducted in any other country except India may not reflect and rightfully determine India’s unique blend of population characteristics such as genetic diversity, lifestyle, and dietary habits, the environment, and any other significant factors which can alter the drug’s safety and efficacy on the patient. It can have a detrimental impact on the community, posing a significant health risk and undermining public trust at large. Waiving such an approval process might add a social cost of public concerns about the rigor of the approval process and question the quality and safety of drugs that bypass the local testing and trials. In the long term, it can affect the stakeholders themselves by causing lesser consumption of newer medications due to the hesitancy brought in because of a botched or hasty approval process.
In the long run, if a drug approved through such a bypassed procedure faces adverse reactions by patients, it will cause significant costs to the government and the company producing it. If the drug unfortunately has adverse effects, tThe societal cost to both the companies and the government with their trust and reputation suffering and the companies losing out on their market. Further, the local research and trials are disincentivised leading to a decline in India’s own indigenous innovation, affecting research and development in the clinical sector. Such dis-investment in local research and the influx of drugs from the international market will marginalise the smaller homogeneous pharma firms that cannot meet the large-scale big pharma bulldogs by allowing faster market entry and disproportionately benefitting these MNCs. Thus, it will cause disruption in the Indian economy by such monopolistic practices and markets.
Game Theory
In terms of strategic scenarios, the waiver of clinical trial requirements gives way to a Prisoner’s Dilemma situation, where pharmaceutical companies, government regulators, and consumers are locked in a decision that requires them to opt either for cooperative or defecting strategies. Companies have, in effect, to choose between strict safety standards despite the waiver of trials or defect from this behaviour in the sense that they take advantage of a chance to cut costs and rush into markets. With firms cooperating and maintaining quality controls, the market will still win back public trust over time. However, when they defect and provide the least amount of compliance, there could be public outcry and health risks, wherein the credibility of the industry is damaged, and in turn, produces regulatory pressures that impair profitability. If the two firms have different designs, such that one defects while the other cooperates, then the latter is likely to suffer from a cost disadvantage in the very beginning while the former has a profit advantage in the long run. However, if there is a defect, incidences of safety issues could prove disastrous for the entire industry. Regulatory intervention might help in shifting this equilibrium from defection by penalising it and rewarding quality-orientated practices, encouraging cooperation. Drug regulators working in tandem with the pharmaceutical companies, will assist in boosting public health and in long term public trust at large. Consumer trust and welfare constitute essential economic resources; only constant high standards can generate stable demand and improve public health, while extensive defection undermines trust and portends consumer welfare and long-term industry viability.
Conclusion
Waivers can have a dual effect on pharmaceutical innovation. On one hand, reduced entry costs may encourage innovation by lowering the financial barriers for companies. On the other, they risk incentivizing lower-quality drug development if regulatory oversight is insufficient. The policy needs to be delicately balanced enabling innovation as well as not restricting the right to affordability and accessibility to medicines to the public at large. Countries such as the U.S., Japan, and the EU have adopted expedited approval processes under specific conditions, and they often achieve a balance between market speed and safety. Such a policy adopted by the government does require robust surveillance and risk management measures to ensure consumer protection. Implementation of conditional waivers that may mandate robust post market surveillance and regular monitoring of drug safety effectively is an advisable approach. A novel way of altering and modernising the drug post approval to cater to the Indian population will also be on track to ensure more drug safety and efficacy, safeguarding the Indian population at large.
India’s policy strives to bolster its healthcare system, but it is crucial to weigh-in the urgency of drug accessibility against value of public trust and safety. This waiver policy can serve as a bridge to affordable healthcare while respecting the foundational legal and ethical standards that protect the public if regulated properly.
Author is a student of Gujarat National Law University, Gandhinagar.