Bottle of Lies: What’s behind the Pharmacy of the World
Millions of lives all over the world have been saved by the innovation of Indian generic pharma companies. With a majority of pills consumed around the globe being manufactured in India, global healthcare depends on Indian pharma manufacturers for its very existence. As a result, India is widely regarded as the ‘pharmacy of the world’. Companies like Cipla revolutionised global healthcare by ensuring that everyone, not just the rich, have access to medicines. Fire in the Blood, a movie by Dylan Mohan Gray, documents the story of how Cipla innovated to ensure that HIV AIDS can be successfully combated all over the world, starting with in the developing world and now globally. In the book, Dr RA Mashelkar describes this as “Gandhian Innovation”—frugal in cost but efficient and progressive. 
 
The book describes that development of the regulatory framework of USFDA (US Food and Drug Administration) over the past century and the various tragic events that resulted in the USFDA gaining more and more authority to regulate medicines to ensure that they worked to cure patients. However, it was the Hatch—Waxman Act that opened the floodgates for generic competition to branded drugs in the United States. As a result, generic drugs are often 90% cheaper than the patented branded drugs in the United States and now account for about 90% of drug sales (by volume). When US doctors prescribing generic drugs realised that they were not seeing patients respond to treatment in the same way as they did to branded (i.e., patented) drugs, they and patient advocacy groups realised that something was wrong, but the USFDA assured them that generic drugs were chemically the same as branded drugs. This explanation did not make sense to them and was the cue for the author to investigate the generic pharma industry.
 
Katherine Eban (Bottle of Lies; Harper Collins; Rs1,500) investigates the rise and growth of generics, especially the dominance of Indian and Chinese generic pharma companies and finds some bitter truths. She find a culture of jugaad with not even a remote connection to anything either Gandhian or innovative. Her extensive research, review of regulatory materials from the USFDA and interviews with FDA inspectors, regulators, doctors and employees of pharma companies paints a scary picture for all of us. She describes the terrible conditions in many factories which manufacture our medicines, the poor employee training, lack of quality standards and worst of all, the reckless attitude of pharma companies towards patient safety. There are several examples of dirty manufacturing plants with insects, birds, vermin and even a monkey living there, poor employee hygiene, unsafe manufacturing and quality control practices, unacceptable storage conditions and falsification of data—all pointing to a massive concerted cover up at the highest levels of pharma companies—to try to hide all these from drug regulators. She describes, in vivid detail, almost like a movie script, the various events—corporate meetings where major issues were highlighted and cover-ups planned, FDA inspectors experiences of visiting Indian factories, the working of the USFDA and at the heart of it all, the life of Dinesh Thakur, the most famous whistleblower whose testimony and evidence led to the eventual demise of Ranbaxy and the highlighting of the underbelly of Indian pharma companies. 
 
If the story is about the USFDA and generic drugs in the United States, why should this bother Indians? The story of manufacturing for India and other 'third world' markets is even more shocking, if that is possible. The quality of raw materials used, the manufacturing processes and lower standards, and the resulting drugs for the Indian and third world markets are even worse than those for the US markets. Doctors in India and Africa are sceptical about unbranded generic drugs in the same way as the doctors in the United States are and now we know why! 'Export quality' still retains its significance—it is reverse racism and it is shameful! If the USFDA is described as 'weak kneed, incompetent and corrupt', there are not enough words to describe the state of the Indian regulator. There are several instances of powerful executives in large pharma companies being able to ignore with impunity the little regulation that there is in India and even take pride in being able to get away with it.
 
Over the past few decades, as Indian pharma companies have risen up the value chain, they have been importing raw materials that they were previously manufacturing, from China. As the author investigates these suppliers, she finds that the situation in China is much worse than in India! This should worry us too for two reasons: however good the manufacturing process, it cannot make good products with poor quality raw materials and the Indian pharma industry is entirely dependent on China for its raw materials. Although the government is aware of this issue, very little has been done to address it. One only has to travel to the pharma clusters like Dahej, Ankleshwar, Baddi and Pitampur to get a sense of what the ‘rust belt’ would have looked like in the United States. Poor infrastructure and the lack of civic amenities is shocking. One really can’t expect a global business to be able to function in this environment which forces the culture of jugaad which is anathema to GMP (good manufacturing practices), the foundation of drug regulation. 
 
Indian pharma companies are essential to global healthcare but, unless they address all the issues that the book identifies, there is a real risk to lives around the world. At the heart of it is the corporate culture of non-compliance, built on unquestionable hierarchy and personalities rather than strict rules that are non-negotiable. If India is to play a major role in world affairs and be relevant in this millennium, healthcare is a great opportunity – it’s an opportunity that has been developed over the past three decades but could easily be its greatest weakness if it does not honestly face up to its issues. It is in the interest of all stakeholders to do this but will they? Will the government wake up and do more than issue meaningless policy statements? Is there is a strategy for India to be relevant in global affairs and does it include healthcare? These are some questions for the new government and the timing of the book couldn’t be better.
 
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    COMMENTS

    atul naik

    6 months ago

    Propaganda book to put Indian pharma companies in bad light.Trying to scare away patients from buying economical generic medicines.

    Anil Kumar

    6 months ago

    Thanks. Great summary and information.

    AMIT KUMAR

    6 months ago

    Indian Pharma sector has been in doldrums for at least last 3-4 years. But not much has changed in the sector. Can you really expect anything worthwhile from this new-old govt? All they know is to run election campaigns.

    For a Few Dollars More…
    Bad Blood is a story that has been be told, thanks to the courage, persistence and methods of John Carreyrou, a twice Pulitzer Prize-winning journalist of The Wall Street Journal
     
    It took him over three years of intense follow-up, standing up to the pressures from law firms, surveillance and the fact that the owner of the firm was a personal investor in the fraud that he exposed. 
     
    The book tells us that money is the greatest invention of man and is beyond the realm of right and wrong, when it comes to lawmakers.
     
    John unveils the story of a bio-tech start-up named Theranos headed by a charismatic Ivy League dropout whose ambitions were, perhaps, surpassed only by her deviousness and viciousness in trying to keep the fraud going. 
     
    Elizabeth Holmes, charmed potential investors with a story about her technological capabilities that would bring affordable and miniaturised diagnostics in the area of blood testing. Her skill and strategy can be inferred from the fact that she started the story in 2003, at the age of 19, and succeeded in raising nearly a billion dollars from investors and got a ‘valuation’ that was close to 20 billion dollars!
     
    The book is a page-turner. With each page, the greed and desperation of Elizabeth Holmes keeps getting firmer and the methods used to suppress staff and disbelievers is nothing short of ‘mafiaesque’. Using the legal system to threaten dissenting employees, using greed to make the partner of a hotshot law firm a director and attorney after giving him stocks, using outright subterfuge and threats to cover her tracks, the story is thriller.
     
    The charm and deviousness of the lady is evident from the marquee names that were persuaded to join her board—Henry Kissinger, George Schulz (former US Secretary of State), William Perry (former US Secretary of Defence) as well as a former senator, a retired admiral from the US Navy, a retired general from the US Army, the former CEO of Bechtel, ex-chairman of Wells Fargo and, last but not the least, David Boies, founder and chairman of Boies Schiller & Flexner, a top notch corporate law firm. 
     
    Most board members were given stock options and their greed kicked in to ensure that they worked to protect her from attack. The lawyer was used to silence employees who figured out what was happening and left, taking heed of the voice of their conscience.
     
    Another important player in the story is her boyfriend, Ramesh Balwani, 20 years her senior, who joins the executive management to help keep mouths shut through terror and threats. 
     
    Apart from the story of greed and fear, what is amazing is that the con game went on for nearly 15 years. 
     
    The big takeaway, for me, is not in the storyline. This book is calls for serious introspection by venture capitalists (VCs) and private equity investment managers and investors. 
     
    In May 2018, John Carreyrou reported that American business and government leaders lost more than $600 million of private investments in Theranos. Major investments had been made by the Walton family ($150 million), Rupert Murdoch ($121 million), Betsy DeVos ($100 million) and the Cox family (of Cox media group - $100 million). The final liquidation of the company in September 2018 rendered these investments completely worthless.
     
    Venture capital is essentially an adventure in action. They back an idea that has potential and can be scaled up big time. Often, VCs end up seeing stories where there is none because their focus, often, is on the promoter and his/her passion. A charismatic promoter can sidestep all due diligence, as happened in the case in Theranos. 
     
    Law firms drafted reports; accountants must have seen the numbers; and not one of them showed an iota of common sense. Of course, no law touches these intermediary enablers who seem to sign on the dotted line, provided the fee is right. VC investment managers seem to have been overcome by their fear of being ‘left out’ and eschewed asking tough questions. Some of the marquee investors took big calls based on their ‘gut feel’ and were probably swayed by the charisma of Elizabeth Holmes. What is truly surprising is that most of them seem to have just invested on the basis of a storyboard; and, even after putting money in, never bothered to find out what was happening. So long as new money was coming in at higher valuations, the party went on. Human greed has no boundaries. 
     
    The term ‘Wild West’ refers to America in the late-19th and early-20th century, a time when rules did not apply and scores were settled with guns. The period from 2000 onwards is a kind of ‘Wild West’ for the financial sector. There is no punishment for the perpetrator. Globally, countries seem to be competing with each other to attract and retain capital, with no questions asked. The punishment that was meted out to Ms Holmes—a two-year ban on participating in the blood-testing business—is absolutely laughable. Clearly, the odds are in favour of Bernie Madoff, Elizabeth Holmes, Enrons, World Coms and the VC industry that rolls the dice with other peoples’ money.  
     
    In our childhood, when we played cricket, the boy who owned the bat, ball and stumps made the batting rules. It is the same with capitalism, where the high priests of finance write the rules. I doubt if the Theranos story offers a lesson for anyone. There will be others like it and investors will pile on to them again. We see the foolishness of money managers from the fact that, even after the fraud was discovered, a distressed fund invested in Theranos in the hope of making a killing. The eminent board got away without any prosecution. The two main characters, Elizabeth and Ramesh Balwani, could get 20 years in prison, IF they are convicted. The firm of David Boies continues with its high-profile representation of the rich and the famous (https://en.wikipedia.org/wiki/Boies_Schiller_Flexner_LLP). 
     
    The book is being made into a movie and I suspect, rather sadly, that the character of Elizabeth Holmes will be an inspiration for many.  
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    COMMENTS

    AAR

    11 months ago

    Jews are an "entrepreneurial" lot. They monopolize the wall street. The Jewish investor group know their clan and how to support them.

    All major tech companies had support from their own investor group - Apple, Microsoft, Paypal, Ebay, Facebook, Amazon, Oracle, Google, Whatsapp....

    Bernie Madoff another Jew cleaned up Wall Street for decades. So is Elizabeth Holmes. If you see her board of directors most of them are Jews.

    My point is its not that nobody other than Madoff/Holmes are not aware of ponzi scheme. Every one knows. They keep supporting their own kind until it becomes so huge that they couldn't handle it anymore.

    Aditya G

    11 months ago

    It's a good book, but it could have been better. The second half felt rushed, IMO.

    How Western Institutions Help To Hide Dirty Money
    Corruption is everywhere. ‘It a global phenomenon’—the words of former prime minister Indira Gandhi. It could be by corrupting someone to part with an asset below fair price, or to be able to grab an asset in preference to someone else, or to snag some contract to make money. There are two parties in this: One, who gives a bribe to get something which is dispensed by someone who is in a position to do so; two, is the person who receives the bribe. Being in the government is a privileged position to abuse power and it is natural that a lot of corruption flows from the wielder of authority. 
     
    Most of us are used to paying ‘speed money’. Whether it is to get a simple birth certificate or a driving licence. This is petty corruption. At the other end are folks who hand out national assets—coal mines, telecom licences or permits like banking licences. Others frame laws and rules designed to favour someone. 
     
    And then we have businessmen who siphon off money from companies by billing personal expenses to the company’s account, routing sales proceeds elsewhere, writing off bad debts, etc. And then we have employees who take money because they are in a position to influence a business decision. Every sphere of life in India has the shadow of corruption over it. Then there is the irksome matter of ‘taxes’. Everyone wants to lower this burden as much as possible or totally evade it. There are petty evasions running into a few thousand rupees a year, to larger ones running to a few hundred crore rupees.
     
    Corruption on a small scale is not noticeable or traceable. On the other hand, those who skim off crores of rupees need a safe haven as well as safe assets to park the money. If they do it within the home country, there is the risk of getting caught. Of course, India is safer than many other countries, because India itself offers a safe haven for a lot of ill-gotten assets, aided by a legal system that is managed by the ‘rich and powerful’. 
     
    When the cop is corrupt, he will deal with corruption offences or complaints with kid gloves. All this helps the corrupt Indian to flaunt wealth within India itself. The legal experts and the accounting wizards help to launder a lot of money very easily. Plus, the well-designed loophole of tax-free agriculture income is another design in the legal architecture to help facilitate parking the dirty money.
     
    Apparently, one side of corruption is carefully and deliberately hidden from debate. Moneyland, a delightful book by Oliver Bullough, rips the mask of the Western world which gives illicit money a haven. While they rail against corruption in other nations, their bankers, lawyers and governments are working overtime to ensure that crooks and their money have a safe haven in their own geographies. 
     
    This is highly remunerative for their countries. This pool of external money also keeps the asset prices high, creating a sense of well-being among their citizens. Oliver Bullough has meticulously documented the efforts that UK, USA and a few other small and obscure countries like St Kitts, Nevis, Lichtenstein, etc, have done to facilitate global corruption. Cities, like London, are virtually owned by corrupt money from across the world.
     
    As he says very tellingly, “Money flows across frontiers, but laws do not. The rich live globally, the rest of us have borders.” If India has to bring Vijay Mallya or Nirav Modi home, the Indian courts cannot do it. The rich and powerful are well protected by these havens which offer a cosy nest for their ill-gotten money and also the freedom to spend and buy assets in those nations.
     
    So, who is more corrupt: The US, which now has the most liberal of laws to hide money from across the globe, or Ukraine or Nigeria? Ukraine cannot be corrupt without ample help from USA, UK and the Swiss. The US has played a clever game. It has unseated the holy Swiss bankers from their perch for being a haven for crooked money. And the legal framework it has thrust upon the Swiss is wonderful.  
     
    The Swiss, and a few other countries, are signatory to a delightfully one-sided agreement that makes it compulsory for the Swiss and others to disclose full details of bank accounts, if the US asks. However, if you ask the same thing from a US banker, he is not obliged to do disclose the details. Each state in USA has its own additional attractions too. Nevada has ‘asset protection’ ordinances that give a law of limitation of two years to claw back any ill-gotten money. 
     
    The author has also talked about ‘structures’ used to mask the ownership of assets; these structures are actively encouraged by the UK and the USA. Of course, the Swiss were the pioneers in the field; these two nations have taken it to a different league. The enablers (lawyers, accountants and bankers) are never harmed by these Western nations and have created an industry where they are ready to sell citizenships and passports at a price. Of course, no questions asked about the source of money. You read about how banks, like Citibank, have actively canvassed for such money without bothering about morals or legalities. And how the legal system lets them off with a token fee. 
     
    So, how come on the Corruption Perception Index, the USA is 16th and India is 81st in the corruption ranking? Or how is Switzerland ranked 3rd and UK is ranked 8th? Clearly, the Westerners have manipulated perceptions of corruption and are past masters at making themselves look holy, argues the author. They have no morals but have given themselves the exclusive rights to preach to others. The author lays bare the double standards of the US and the UK in trying to tell the world to be honest. 
     
    The book is fast-paced. There are a lot of examples from Ukraine, Russia and a few other countries. Some of them would probably make our politicians look like beggars. This book will make you angry. Of course, given the nature of humans, it may also be ‘inspirational’ for some.
     
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    COMMENTS

    Nasir Ahmed Rayadurg

    11 months ago

    The masters are now the manipulators and that too they perfected this art and makes them look saint in the eyes of other nations. Sophisticated hypocrisy

    Nikhil Vadia

    11 months ago

    Wonderful review. Always felt that US and UK are not so honest as made out to be. Heard lot of stories from friends there. Though petty corruption is less there, high level (business and politicians) much more.

    Anil Nagesh

    11 months ago

    Nice article sir! i ordered the book.

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