We have come to expect change in almost every aspect of our lives, and the pharmaceutical industry has surely contributed to this expectation with fast-paced development of innovative products and technologies. In this environment, it is crucially important for drug regulators to be aware of the profound transformations that are taking place within the industry, and to evaluate them in context with the broad national and global trends that affect the Pharmaceuticals market and, by consequence, the task of regulation.
Pharmaceutical markets will continue to grow both in size and value as a result of two major factors (i) the ageing of populations - which will account for 1000 million people of 60 years or older by the year 2020 - and (ii) increased urbanization, whereby, for example, 75% of Latin Americans will be living in urban areas by the year 2000.
In the Americas, all but one government now has a democratically-elected government. Similar developments are taking place throughout the rest of the world, and the opening up of societies has brought with it a debate on the role of the state. Abroad consensus has emerged supporting a centralized policy-making and regulatory apparatus, while other activities are delegated to local governments, and greater participation is sought from the private sector and communities.
Much has been written about emerging and re-emerging infectious diseases, including the reappearance of cholera and the spread of dengue in Latin America. Similar problems occur in other regions. Of particular concern is the development of resistance to antimicrobials, and new products and expensive treatments will soon be available to defend against this new threat. However, these products will need careful regulation in order to ensure their rational use. Similarly, the growing understanding of biological processes at the cellular and molecular levels has provided a new generation of biotechnology-derived products that will need specialized knowledge for their evaluation.
Paradoxically, in a growing market, and with greater knowledge of the disease process, the actual number of companies with research and development capability and with international marketing capacity has decreased. During the late 1980s and 1990s, there has been a veritable epidemic of mergers, acquisitions and strategic alliances. This process of consolidation has been accompanied by a streamlining of operations, which has meant the closure of many research and operational facilities, and significant reductions in personnel. This trend is propulsed by open market policies that allow the international companies to supply their markets from their most cost-effective plants, a situation which leads to the closure of less attractive sites.
The WTO/GATT agreement now provides for patent protection worldwide. The research-based industry claims this will further stimulate research, but local industries that prospered under pre-GATT conditions claim that the subsequent lack of competition will result in higher prices for new drugs. Implementation of this agreement has been a particularly contentious subject throughout Latin America and a source of old-fashioned North-South confrontation. The main battle is now over and legislation complying with the agreement has been approved in all major countries. None the less, this radical change will force the locally-owned companies to develop new strategies to enable them to participate in the profitable market of new products.
During this decade, patent protection will come to an end for many important best-selling products. This has led to increased production of generic products, a market area which ten years ago was of limited interest to multinational corporations. Today, all major companies have generic product lines, and governments are finding generic drug policies to be a valuable instrument in controlling drug costs.
Free-market policies and the integration of regional and world economies have provided great impetus to regulatory harmonization. The ICH, which brings together industry and government representatives of the European Union, Japan and the United States, is the best known process, although harmonization efforts are also under way in other parts of the world. The standards for quality, safety and efficacy agreed upon by the ICH will become de facto standards for the rest of the world. Local companies are rightly concerned that they may not be able to meet standards which seem to be driven by what is technologically feasible rather than what is clinically necessary.
The main impact of a market-driven environment is the pressure to decrease or limit the regulatory role of the government and, as some extreme groups say, to "let the market decide". This is an absurdity when applied to Pharmaceuticals for obvious reasons of safety and the protection of public health. This pressure is reflected by proposed or actual legislation and regulations aimed at facilitating and expediting the approval of Pharmaceuticals. Deregulation has been carried to the limit by some governments that automatically approve products according to their approval status in selected reference countries.
Drug regulation essentials
What must a drug regulatory authority do to function effectively under political conditions that give priority to economic considerations and favour a diminished role for the central government? First and foremost, there is a need to focus on essentials. Governments should not lose sight of the central mission of the drug regulatory authority which is to protect public health. There should be no compromising on this.
Of course, the regulatory agency also contributes to promoting public health by approving in a timely manner drug submissions, expediting those that represent significant contributions and encouraging the marketing of well-known essential drugs, as well as orphan drugs. And, of course, the regulatory agency should also be responsive to the legitimate needs of the industry, providing an efficient and transparent service. We are obviously far away from these goals in most developing countries. In a 'recent working group sponsored by the World Bank and including representatives of WHO, UNICEF and other Organizations, possible barriers to effective regulation were identified as: insufficient human resources; absence of policy, weak legislation and regulation; lack of political support/will; flawed information flow; lack of financing; absence of transparent procedures; corruption; poor attention to cultural constraints; weak or nonexistent consumer and professional associations; and absence of priorities.
I am very aware of the day-to-day shortcomings of most regulatory agencies in Latin America. They range from a shortage of qualified staff for the review of applications for drug approval, to a lack of enforcement in removing from the market unsafe or ineffective products. I have come to the conclusion that the regulatory situation in any given country will not improve unless there are radical changes in the structure, staffing and operation of the agencies. This requires a government willing to invest the necessary political capital to bring about the required changes. Unfortunately, support for strengthening the regulatory role of a government seems to come about only after major tragedies occur, as we have seen this decade in Argentina and, more recently, in Haiti. Effectiveness can most easily be assured, therefore, when the following conditions are met.
A visible agency and qualified regulatory officials
An effective regulatory department cannot be buried in the Ministry bureaucracy - it must be visible, have presence and an identity. This can be achieved by upgrading the status of the responsible department within the official structure or, better still, establishing a semi-autonomous agency with authority and responsibility for all aspects of drug regulation, which must avoid dispersion of, and competition among, the available personnel.
This ideal agency would have administrative and financial flexibility to enable it to carry out its work, including the authority to hire a core of qualified full-time staff at competitive salaries. Full-time regulatory personnel require a salary which is reasonable enough to waylay corruptive influences and conflicts of interest: a reality which needs to be addressed in many societies.
Where agency staff and expertise are limited, certain functions can be contracted out. Recent legislation in Colombia allows inspections, analysis of samples, and evaluation of the drug applications to be carried out by accredited institutions, though final approval rests with the agency. Very clear and transparent arrangements are obviously required when delegating such responsibilities. Most importantly, the agency and its staff must be supported by adequate legislation and regulations - although in reality this situation can often be the other way round. Regulations abound, but they are not enforced - partly due to a lack of motivated and qualified staff.
Financing regulatory activities
Inadequate financing of regulatory agencies has been a major factor in limiting their performance. It would not be realistic to expect that the regular government budget should be used to provide funding for the kind of agency described above. A viable alternative is the implementation of user fees. This concept has been widely accepted in the developed world, where significant fees are charged for the registration of products and inspection of plants. By contrast, in the developing world the charges are very low. Such low fees are, in effect an incentive to submit applications for products of little or no therapeutic significance. The Pan American Health Organization/AMRO has consistently advised Member States to increase their fees to a degree that they would significantly contribute towards financing regulatory activities for the duration of the approval period. Brazil is following this advice with a recently established fee of $8000. Responsible pharmaceutical companies do not object to increased registration fees if these are used to provide a more effective service.
Transparency of the drug review process
The procedures and criteria for drug review and approval should be public, as well as the results of the process. This is an obvious but, in practice, frequently violated principle in many countries, especially where political pressure and personal favours influence the regulatory process. A drug registration software package developed by the World Health Organization and the Pan American Health Organization has now been installed in over ten Latin American countries. Computerization will facilitate monitoring of the review process and the use of a common software will facilitate the exchange of information among countries. Consumers and, of course, industry must be able to inform the agency about their concerns and priorities and the agency must provide feedback on its operations and decisions. This must be done in an open manner through committees and other processes accessible to the public.
Application of international standards
The capability to evaluate pharmaceutical, toxicological and clinical data varies from country to country. At a time when efficiency is demanded from the public sector, it makes no sense to duplicate work. Thus harmonization efforts are welcome both by industry and regulators. However, there is a facet of concern here. The International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use - mercifully known as ICH - is expected to have a major impact on standard setting. Though the emphasis has been on harmonizing registration requirements of new drugs, many of the criteria established are applicable to other pharmaceutical products. In the real world, this means that the standards accepted by the ICH participants - the European Union, Japan and the United States of America - will become de facto international standards which developing nations are expected to meet if they want to participate in the global market. From the developing countries perspective, this may seem like non-tariff barriers, and will constitute another obstacle in the development of their own national industry.
Harmonization efforts are also under way in Latin America in response to the formation of free-trade zones in Central America, the Andean region and MERCOSUR. The harmonization process requires countries to look beyond traditional ways of doing business and to examine what is happening in the rest of the world. As a result, there is a growing understanding among regulatory officials and forward-looking national companies that the acceptance of recognized international standards for drug quality and for the drug approval process are prerequisites to participation in the global market. On the other hand, many local companies, worried about their ability to meet such standards, are fighting to delay change.
WHO has developed useful instruments to assist agencies in their work, such as the WHO certification scheme for pharmaceutical products moving in international commerce, good manufacturing practices, and ethical criteria for medicinal drug promotion. These guidelines are particularly useful for developing countries engaged in harmonization efforts. As countries are bound to re-examine their outdated and at times contradictory regulations, they will find the WHO recommendations to be acceptable to the different parties involved.
Interagency and international cooperation
The facilities provided by new communications technology can offer advantages to the work of regulatory agencies worldwide. In principle, an electronic network can now easily be put in place to disseminate information regarding approvals, withdrawals, warnings, etc. Of equal importance, agencies - and particularly those with limited resources - can post their questions on the network, requesting assistance for specific problems. This is within reach of many agencies and would be cost effective. Why, then, has such a network not been established at global level?
The reality is that many regulatory authorities have no direct access to a fax machine or to the Internet. The lack of a telephone line or budget for Internet connections are indicators of the low priority assigned to their work within their Ministries. I believe that if this Conference explicitly recommends that priority be given to the establishment and maintenance of an electronic network for regulatory agencies, the funds required could be mobilized from international development agencies or from the pharmaceutical industry, which has always expressed interest in strengthening drug regulation in the developing world.
During this conference, we will be examining numerous issues that face regulators. None is more important than ensuring that the central public health mission of regulatory authorities remains unchanged in a global environment that favours economic priorities. If this is not done, we may as well turn over responsibility of the pharmaceutical market to the Ministry of Industry or Commerce.
* * *