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The Problem of Substandard
Medicines in Developing Countries
By Laura Christian, Linda Collins, Maythiwan Kiatgrajai,
Agathe Merle, Nayantara Mukherji, Alissa Quade
• Methodology
• Overview
o Definitions
o Harmful Effects
• Extent of the Problem
• Framing the Problem
• Supply Chain Overview
• Case Studies
o Manufacturers
o International Organizations
o National Governments
• Recommendations
• Literature Review to determine
scope and extent of the problem
• Systematic selection of case
o 2 manufacturers: Novartis,
Vietnamese manufacturers
o 7 international organizations:
o 6 countries: China, India,
Thailand, Nigeria, Ghana,
Overview: Definitions
• Substandard medicines:
o Pharmaceutical products
that do not meet quality
standards and
o Made by licensed
o Arise due to human error,
negligence, or resource
• Counterfeit medicines:
o Products deliberately
and fraudulently
mislabeled with respect
to identity and/or source
o Made by non-licensed
o Arise as a result of illegal
Overview: Harmful Effects
• At best, ineffective; at worst,
• Health effects:
– Increased mortality and
– Harmful side effects or
– Drug-resistance
– Poisoning
• Social effects
• Political effects
• Economic effects
Extent of the Problem
• Difficult to assess
o Lack of systematic information
o Inconsistent definition of substandard
• Literature review shows trends
o High percentage of substandard medicines in Nigeria,
Ghana, Kenya, Indian exports to Africa, and China
Framing the Problem
• Core problem: while procurers and consumers of medicines
have an incentive to buy and consume high-quality products,
producers have an incentive to maximize profits
• Misalignment of incentives produces market and government
• Information asymmetry market failure requires government
intervention (regulation)
• Governments fail to regulate perfectly because they lack
sufficient incentives from medicines consumers and suppliers,
or from international community
Supply Chain
• We used a two-tiered approach to look at manufacturers
o Large multi-national manufacturers
o Small manufacturers mainly from developing countries
• Three main sources
o Fortune 500 List of Global Pharmaceutical Manufacturers
o USP Medicine Quality Database
• Contained over 4,500 samples of medicines
• Organized by country of sample and country of manufacturer
o WHO Prequalified Medicines List
• Two Case studies: Novartis and Manufacturers of Vietnam
• Fortune 500 top pharmaceutical manufacturer
o 41 billion dollars of revenue in 2009
o Produces main anti-malaria medication
• Found both on WHO PQM and on USP substandard sample (2009
• Participates actively in production and procurement of anti-malaria
medicine from plant grown and harvested in China to production of
medicine in the United States
• Effectively monitors supply chain and sends technical advisors to
• Good example of manufacturer monitoring standards
Manufacturers from Vietnam
• Manufacturers become a problem because
o The transition of the industry from state monopoly to a
competitive market
o 15-20 % annual growth rate of the pharmaceutical industry
o lack of government regulation on quality control
• The situation started to get better when the government
implemented a policy that forced every local drug manufacturer to
meet the WHO’s GMP standards by 2008.
• Manufacturers continue to have a problem with the use of
unqualified medicine packages
International Organizations
•Among the main funders of medicines as humanitarian aid
•Oversee medicine delivery in emergency situations
•Collaborate to obtain medicine donations
•Propose solutions, analyze problems within supply chain, develop
methods of collaboration among actors
•International organizations are limited in their ability to regulate the
spread of substandard drugs
International Organizations
Regulations and Safeguards
Long Term Provider
● Consistently work with same
programs and manufacturers
● Substandard medicines issues
because lack tracking of medicines
Emergency Relief
● Time-sensitive situations
● No or not enough time to track
● Substandard medicines issues
because of time constraint
Long Term Providers
•WHO’s Prequalification of Medicines Program (PQP) is followed by many
•PQP maintains and updates list of acceptable medicines/laboratories
•Main criticism of PQP: too heavily focused on counterfeits
•UNDP, UNFPA, and UNICEF are subsidiary bodies of the United Nations
•Heavy focus on transparency
•UN funds numerous programs: difficult to keep track of medicine
purchases and destinations
Emergency Relief
•International Red Cross and Red Crescent Movement (RCRC)
•Provide people in conflict areas with basic preventative and curative health
•Share ideas and improve procedures and delivery of medicine
•MSF stresses the importance of clarifying the differences between
substandard, counterfeit, and generic drugs
•MSF believes in the need for tailored solutions
National Governments
• Responsible for domestic regulation
• Six case studies: China, India, Thailand, Nigeria,
Ghana, and Kenya
Substandard medicines in China
Major regulatory
Weaknesses in
State Food and Drug Administration (SFDA)
- Better implementation of existing regulatory agencies
- Incentivize local leaders to enforce regulatory standards
- Increased regulation of chemical manufacturing
- Inconsistent regulation and enforcement
- Counterfeiting is big issue, and counterfeiters are not subject to
- Government and local corruption impedes regulation
- Lack of accountability and oversight, as local leaders are not
incentivized to enforce standards
Substandard medicines in Nigeria
Major regulatory
Weaknesses in
regulatory regime
Proposed solutions
National Agency for Food and Drug Administration and Control
- Enforcement weak due to low human resources, decentralized
supply chain, and corruption
- Lack of transparency enables corruption and low compliance
- Establish and enforce conflict of interest guidelines
- Publish internal/external audits
- Publish professional requirements for agency positions
- Improve staff training and material resources
- Regain access to ports with agreement with Ports Authority
- Produce good practice guidelines for supply actors
Recommendations: Policy Goals
• Align Incentives
o National Governments
o Manufacturers
• Better Supply Chain Monitoring
o Manufacturers
o Procurers
o Distributors
• Clarify Definitions and Increase Emphasis on Substandards
Recommendations: Align
• Incentives for National Government to tighten regulation and
o Aid and funding to implement GMP and GPP
o Ongoing research by WHO
o Use of monopsony power
• Incentives for manufacturers to self-regulate:
o Use existing tools for evaluating manufacturers
o Patronize based on transparency
o Create competition from developed world
Recommendations: Improved
Supply Chain Management
• Manufacturers and procurers:
o Routine and surprise testing
o Communicate dosage, usage, and storage information
o Increase transparency
• Distributors:
o Competitive grants for local organizations and NGOs
involved in:
• Informing consumers
• Implementing awareness campaigns
• Publicizing available resources
Recommendations: Clarify Definitions and
Emphasize Substandards
• Clarify definitions:
o Forum to discuss WHO definitions
o Follow up: make medical aid conditional on adopting
• Emphasize substandards:
o Conference for researchers and grant-making foundations
o Competitive grants to study substandards independent of
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