A Bitter Pill to Swallow

Katherine Eban's Bottle of Lies uncovers the egregious practices of generic pharmaceutical companies by following the events that led to the conviction of India's generic drug company Ranbaxy.

Tweet Review (50 words or less)

A hard to put-down thriller with a few powerful villains, mafia groups and greedy bureaucrats that make millions by providing sub-standard drugs to patients with little guilt -- and a handful of heroes who fight the corrupt system. Unfortunately, it is not fiction but based on true events.

Longer Summary

In the movie Matrix, the protagonist is offered two pills. If he takes the blue pill — it would lead him back to a ‘happy’ existence. However, if he takes the red pill — it would let him know the reality which might be harsher and more difficult. Reading Katherine Eban’s Bottle of Lies is like taking the red pill (pun intended). The book felt more like a thriller fiction with rich, powerful villains profiteering by providing low-quality products to poor people, rent-seeking bureaucrats who overlooked glaring mistakes, clunky and outdated regulations, and a handful of courageous individuals who fought the system to expose the malpractices in the generic industry. Unfortunately, it is not fiction. And spoiler alert, there are no happily ever after.

The central theme of the book is the events that ultimately led to exposing of Ranbaxy’s malpractices. However, Katherine Eban also provides commentary on the history of the Pharma Industry, the rise of the generic industry, and regulatory flaws that led (and continues to lead) to such egregious outcomes.

But before I provide the details here are 11 things you should know about the book & the Pharma Industry

1. This book is not about ‘A White American ranting about Indian Pharma.’ When I suggested this book to my Indian friend, he angrily mentioned that Americans should fix their industries instead of bad-mouthing Indian pharma. Obviously, he hadn’t read the book. Katherine Eban’s book is balanced, well-researched, and equally trenchant about the American pharma industry. Don’t judge a book by its color or cover.
2. Almost all drugs will harm you. Only those drugs made in a controlled setting and tested rigorously can be beneficial to you. Others are likely to harm you.
3. Remember one acronym — Active Pharmaceutical Ingredients or APIs. It is a fancy term for ingredients (molecules, compounds) required to create the drug. 
4. Sorry, one more acronym — Food and Drug Administration or FDA. An American Federal agency that is responsible for overseeing and approving all the drugs that are sold in the US. 
5. Sub-standard drugs are different from counterfeit drugs. This book is about the former. Counterfeit drugs are fake but look genuine — like muddy water looks (somewhat) like chai. We are outraged when someone sells fake drugs. But sub-standard drugs are like chai made with spoiled milk. It won’t kill but it can make your life miserable. We should be equally outraged but aren’t. And remember point 2. 
6. Sub-standard drugs are very bad in a long run. Since these drugs have some APIs of the original but not everything, it can make pathogens develop resistance to it. In the long run, even genuine drugs will lose their efficacy. 
7. Big Pharma makes branded drugs and has a monopoly over selling them to consumers for X number of years. Since they spent millions in R&D to develop the drug, the governments give them Intellectual Property (IP) to sell in the market for x number of years to recoup the input costs and make profits.
8. Once the patent expires, the brand-name company gives the recipe to the world, the generic company makes the same drug at a cheaper cost since they don’t need to invest in research and marketing. 
9. Point 8 doesn’t happen. 
10. Instead, the Big Pharma resorts to ‘shenanigans’ to stop generic drugs. They patent the manufacturing process, make small changes to the drug and declare them new, don’t reveal the recipe, and hired a bunch of lawyers to stop companies from manufacturing generic drugs. 
11. The generic industry needs to reverse engineer the branded drug, change the manufacturing process and achieve the same results. If Big Pharma follows 1-2-3-4-5 to create the drug, generic companies need to create the drug following different steps like 4-3-1-2-5. 
12. Generic drug testing is outdated and wrong. They focused on the outcome of the generic drug and not how it achieved it. However, the rate and duration of absorption could be different. Let me give an imaginary situation. Assume the branded drug reduces 10 calories by making the patient’s heartbeat a little faster. The generic drug will be approved if it reduces 10 calories even if it doubles the heartbeat of the patient. What are the side-effects of increased heartbeat? Not tested.
    

Rise of Generic Industry in India

One must credit the rise of the generic industry in India to two (relatively) unknown Indian heroes.

Dr. Khwaja Abdul Hamied, inspired by Gandhi’s message in 1920 to serve Indians, studied chemistry in Cambridge, married a Jewish girl with Communist leanings in Germany -- and later, founded Cipla in 1935. His company supplied anti-malarial drugs and vitamin B12 to the Indian Army during World War 2. Despite facing bureaucratic redtape after India’s independence, he worked relentlessly to make drugs that were accessible and affordable to Indians.  

Yusuf Hamied, son of Dr. Hamied, took the baton from his father and changed the image of India and the generic industry around the world. During the 1990s, AIDS was ravaging across Africa. Big Pharma was selling the drug cocktail that controlled HIV at $12000 a year per patient. Yusuf Hamied promised and provided the generic AIDS drug for less than $1 a day per patient. People were outraged that Big Pharma is charging such high prices when it can be developed at such low cost. Eventually, the attitude of the West changed — from ‘we can’t afford to help’ to ‘we can’t afford not to.’

The son of a Gandhi-inspired Muslim freedom fighter and communist jew radically transformed the pharmaceutical industry from profit-driven to care-driven. (I hope a biopic is made about him but I fear it won’t since Muslims and communists are both pariahs in Bollywood).

Rise of Ranbaxy and Fall(ing) of Generic Industry in India

Taking advantage of India’s positive image on the generic industry, Ranbaxy — under the leadership of Maninder Singh — focused on selling generic drugs to the US and other lucrative markets. However, the company focused primarily on profits rather than patients.

It was later found that Ranbaxy was hardly testing drugs — few drugs that were created and sold in India were properly tested. They would either fabricate data or show results from branded drugs while filing their applications. If any drug was rejected in the US, it was usually sold in India or worse, shipped to Africa because — as one Ranbaxy executive put it — ‘who cares about the Blacks.”

But how did they get away with sub-standard drugs?

Lax regulatory policies, political pressure, insufficient capacity

The FDA, which approves drugs sold in the US, visits and inspects manufacturing sites unannounced for assessing quality and standards. With the advent of globalization and the boom in generic industries, most manufacturing sites moved outside of the US. By the mid-2000s, the number of manufacturing sites outside the US was greater compared to within the US. Unlike in the US, FDA had to take formal appointments outside the US — often months in advance — before inspecting the sites. So, you can imagine, generic companies like Ranbaxy had sufficient time to create a facade of high standard when the reality was completely different.

Further, there were only a few FDA officials were willing to visit India. So, some manufacturing sites would be visited once every couple of years.

There was also political pressure to approve generic drugs. Since generic drugs cost a lot less than their original counterparts, the politicians would insist FDA should approve applications faster to make them accessible to millions of Americans. Thus, the FDA was hesitant to deny any application even if they found something suspicious.

Uncovering the Mountain of Lies

The book follows the life of Dinesh Thakur — a US-educated Indian engineer— who returned to India to join Ranbaxy as he was convinced that the generic drug industry can be a force of good worldwide. Initially, he was impressed by Ranbaxy’s style of work with its start-up-like attitude of aggressively testing and filing new drug applications. While there were several red flags like lack of proper data and documentation, Thakur contended this was due to differences in working culture between the US and India.

But things took turn for worse in 2005 when WHO’s Olivier LeBlaye identified and reported fraudulent data on Ranbaxy’s antiretroviral drugs to its AIDS-ravaged population in South Africa. The report concluded that testing data was fabricated. Raj Kumar — Thakur’s boss who recently joined as Director at Ranbaxy — directed Thakur to investigate and uncover the cause of the problem.

However, this was a rabbit hole as more Thakur investigated, more he became concerned with Ranbaxy’s lack of compliance and systematic fraudulent practices. After assiduously documenting all the malpractices, Raj Kumar presented this report called ‘the SAR (Self-Assessment Report) to the top executives. Instead of acting upon this, the executives told Kumar to destroy the report. This report, later, became the key evidence to convict Ranbaxy.

Soon, Kumar resigned while Thakur was threatened before he was unceremoniously fired. Thakur started sending emails to the FDA exposing Ranbaxy’s malpractices as the US was their biggest market. Initially, FDA was slow to respond as they didn’t trust Thakur. Over time, the FDA started investigating further after Thakur shared several damning pieces of evidence of fabricated data by Ranbaxy.

Justice delayed is justice denied

Thakur had thought that once he gives all the evidence to the FDA, his role will be over. But he was embroiled in this investigation for several years. With limited sources of income, he was asked to come to the US, meet state attorneys and submit his evidence. Later, they asked Thakur to get a lawyer to defend himself. (Lawyers in the US are expensive and Thakur was unemployed).
Imagine, you are walking down the street and see a murder. And the murderer is your employer. You capture it on your phone. What should you do?

The right thing to do: Report the incident to the police and share the evidence with them. The police don’t believe initially. After years of conversations and meetings, the police finally write the FIR. But the police ask you to get a lawyer by paying crores to ensure you don’t get sued by the murderer. Meanwhile, the employer (aka murderer) threatens you and your family, fires you from the job with no other sources of income.

You will ask yourself, was this the right thing to do?

Thakur must have asked this question to himself several times. One can imagine the anguish, frustration, and anxiety faced by Thakur and his family throughout this journey.

Arc of the moral universe is long, but it bends toward justice.

Long story short. In May 2013, Ranbaxy pleaded guilty to multiple criminal felonies and agreed to pay $500 million to resolve criminal and civil allegations of falsified drug data and systemic manufacturing violations resulting in substandard and unapproved drugs. But no criminal charges were held against the executives. In other words, the murderer got bail.

Thakur was awarded $48 million as part of the False Claims Act in the US — which awards some percent of the settlement money to whistleblowers to incentivize them to report fraud — for his role in exposing Ranbaxy. But this came at the cost of mental trauma, loss of job, no financial support, family problems for six years. Was this worth it?

All’s Well That Ends Well?

After the conviction of Ranbaxy, one would have imagined that things would have changed for the better. However, Ranbaxy was a symptom of a larger problem — lack of regulatory oversight and capacity by FDA to monitor generic industrial sites outside the US coupled with Big Pharma monopolizing branded drugs. The patients are left with Hobson’s choice — either buy expensive Branded drugs or cheap substandard generic drugs. Either way, the patient pays a heavy price.

A Short Biography of Patna

Amitava Kumar's A Matter of Rats is a short biography of Patna using a combination of personal reflections, stories of people and writings through history to tell a compelling story.

 

 

Tweet Review (50 words or less)

A short biography of Patna filled with potpourri of things like --  nostalgia and reflections, poets and activists, poems and plays, past and present, famous and ordinary people, rats and urine, and some social commentary. Describe a visit to Patna: It is like going to a bus stop for a martini!

 

Longer Review

How did seized liquor disappear from a police station in Bihar? Rats drank it.

What was the reason for flooding in Bihar? Rats broke the embankments.

I am not attempting to make bad dad jokes. Instead, these are actual reasons given by government officials in Bihar for liquor disappearance and flooding.

It should come as little surprise when Amitava Kumar (AK), professor at Vassar College, wrote a short biography of Patna titled, ‘A Matter of Rats.’ But the book (and the city) is more than just about rats.

The author grew up in Patna but settled in the US. It allowed him to document how the city has changed (and not changed) over the years. As the author walks and talks with the city, he provides a nuanced perspective to his childhood memories while experiencing newer ones.

Rats, rats everywhere
Rats are a menace to the people of Patna. Inadequate drainage systems and poor storage of grains have led to a large rat population. Yet, the author couldn’t find a single rat exterminator. Later, he talks to the people of the Musahar community who are known for eating rats. For this practice, the community is discriminated against by every one. But the rats don’t discriminate. They make holes across palaces and pawn shops.

Something in the air
Another thing is as ubiquitous as rats — the smell of urine. The author sees men perform this act in public without any compunction. On the other hand, women walk miles early morning to a nearby forest to relieve themselves. The author shares the story of a bride who refused marriage as her in-laws didn’t provide a toilet in their home (the movie Toilet: Ek Prem Katha is inspired by this incident).

Glorious past unlike the present
The author describes the glorious past of the city. Pataliputra was founded in the sixth century BCE by Ajatshatru and later visited by Buddha. Chandragupta Maurya and Ashoka ruled from Pataliputra. Megasthenes, the Greek ambassador to the Mauryan court describes the city in glowing terms. Later, Chandragupta establishes India's first empire with the help of his advisor, Chanakya from Pataliputra. Nalanda University in Pataliputra had more than 10,000 students at one time and was later destroyed by invaders. The apocryphal goes that its library burnt for months.

It was revived by Sher Shah Suri in the 16th century who moved his capital to Patna, the name he decided to call. It shifted hands to Mughals and was briefly rechristened Azimabad. Later, the British used Patna for commercial operations for opium and cotton. These minor developments didn't stop the decline. The present-day Patna is associated with poverty and unemployment.

Patna in writings
But how do other writers treat Patna in their stories? Indian writings in English haven’t referred to Patna often and when it did, it is used in a cliched manner — Bihar laborers, bandits, etc. Indian writings in Hindi are different. The stories are based on trials and tribulations as well as the simple joys of common people. One story follows a young girl who rides a cycle for the first time and describes the various scenes as she goes to school.

The last category includes only one author, Shiva Naipaul — the author who skewered Patna as a 'junk heap' of crumbling buildings and open sewers. AK talks to Naipaul's guide during his visit to Patna. The guide said Naipaul was in a foul mood throughout the journey. As one author put it, “I disliked Patna when I lived there as a boy but I remember most clearly is how much I disliked myself.” Perhaps, Naipaul described his mood instead of the city.

Three Patnaites
The author contends there are three Patnas or Patnaites. One Patna includes people who were born or grew to adulthood there and later moved away. The author gives examples of two personalities — Subodh Gupta and Ravish Kumar. Subodh Gupta is an artist who used stainless steel plates and utensils to create famous artwork. Gupta tells AK that he remembers the day his family first ate using steel plates and used it in his artwork later. Similarly, Ravish Kumar is a journalist who made reporting in Hindi both fashionable and interesting. AK confesses rewatching reports by Ravish as much for content as for the mastery of language.

The second Patnaites includes people who couldn’t leave Patna. AK describes the journey of Anand Kumar, founder of the coaching program Super 30. Anand had to withdraw from the University of Cambridge to take care of his family. He began by teaching students during his spare time. Once he started earning well, he started Super 30. Every year, he selects 30 students from poor families and prepares them for competitive exams for free.

The third Patnaites are those who travel to Patna. The out-migration is 50 times more than the in-migration. Then who comes to Patna? People from villages to visit clinics, students who are packed into hostels to attend coaching classes or college, and activists fired by political causes. Later, AK narrates a tumultuous love story between two activists who lived in Patna briefly.

In summary, the book is a potpourri of Patna — nostalgia and reflections, poets and activists, poems and plays, past and present, famous and ordinary people, rats and urine, and some social commentary.

Has this convinced me to visit Patna? Initially, I wasn't but one line in the book convinced me. 

A visit to Patna is like going to a bus stop for a martini!

I don’t know what this means. But I want to experience it. 

There is no such thing as a free market

Ha-Joon Chang's 23 Things They Don't Tell You About Capitalism is an engaging, anecdote-filled book that busts myths commonly associated with capitalism. 

 

Tweet book review (50-word review)

It is an engaging, anecdote-filled book that describes 23 statements that free-market supporters don’t tell us about capitalism. No country follows total capitalism. Rich countries are forcing poor countries to practice free-trade that they didn’t adopt during their nascent stage. Hypocrisy!?

Longer review

When I visit India, one of the first things on my checklist is to get a haircut. It costs $30-40 in the US but less than $1 in India. When I told my dad, he remarked, “If it is so expensive, why don’t people migrate to the US and open a hair salon?”

It makes logical sense. In a capitalist economy, one should expect people to take up jobs that are in short supply and reduce the prices. But why doesn't this happen? In the words of Ha-Joon Chang, author of 23 Things They Don’t Tell You About Capitalism, there is no such thing as a free market.

The book lists 23 statements (the author calls them things) that free-market apostles don’t tell us about capitalism. Each chapter starts with a statement that is considered either a feature or consequence of a capitalist economy. It is followed by disputing the statement using data and evidence.

Let me list nine of my favorite chapters and a short explanation for each:

1. There is no such thing as a free market. All countries have some type of government regulation. It could be due to politics (immigration policies), ethics (child labor might be cheaper but immoral), negative externality to society (vehicular pollution affects society), or public goods (public libraries are free and beneficial to society). If there is any regulation, it is not a free market.
2. Most people in rich countries are paid more than they should be. A bus driver in a high-income country is paid 50 times more than a driver in a low-income country. But one can argue that driving in a low-income country requires far superior skill due to poorer roads. Thus, one’s salary is determined not by the skill but by the scarcity of the job. Immigration control (limiting the migrants to a country) and access to technology/ machines allows people in rich countries to be paid more than their counterparts in poor countries. 
3. Free market policies rarely make poor countries rich. Britain from 1720s to the 1850s; the US from 1830s to the 1940s; Japan, Finland, Korea until the 1980s exhibited one common trade policy during their nascent stage. They were protectionist and provided subsidies to build their ‘infant’ manufacturing sector. Now that they have become internationally competitive, they advise developing countries to open their markets and adopt free-trade practices. 
4. We don’t live in a post-industrial age. The developing countries are advised to become service-driven economies to boost growth. However, the services (thanks to immigration and labor policies) is not as exportable as goods. It would lead to lower earnings and slower growth. Instead, developing countries should focus on manufacturing industries. 
5. Africa is not destined for underdevelopment. Several reasons are given for Africa’s underdevelopment. But one reason is often left out - the role of rich countries, the World Bank, and the IMF. They pushed several African countries to open their economy for free trade in the 1970s-80s in exchange for a loan. Many countries were unable to compete with international competition for finished goods while natural resources were extracted at cheap rates. Since these countries lacked strong institutions, this led to corruption, disruptions, and conflicts in the region.
   
6. People in poor countries are more entrepreneurial than people in rich countries. Due to the lack of opportunities in the formal sector, people in low-income countries are pushed into self-employment. However, there is a hard ceiling on how much they can grow a company. A country needs to provide strong institutions like the financial sector (to provide loans/credits), an educational system to supply engineers, government to invest in R&D, and machinery to add value to their products. For example, a person in a poor country can buy some cows and sell milk to their village but a person in a rich country can work in a company that makes packaged butter and supplies it to the whole country. 
7. **More education in itself is not going to make a country richer. This is perhaps the only chapter that surprised me. In 1960, the Philippines had a 20 percent point higher literacy rate than Taiwan. Yet today, Taiwan has twice the per capita income of the Philippines. As the author states, ‘What matters in the determination of national prosperity is not educational levels of individuals but the national ability to organize individuals into enterprises with high productivity.’ Lant Pritchett, a Harvard economist, in his research paper titled, ‘Where has all the education gone’, compares educational levels across countries from 1960-87. He concludes there is very little evidence that increased education leads to higher economic growth. 
8. Big government makes people more open to change. Big government with a well-designed welfare state (unemployment benefits, medical insurance) like Europe encourages people to take more risks and allows for higher social mobility (poor can become rich) without affecting economic growth. Countries should design welfare programs like bankruptcy code: if a business fails, an entrepreneur is given time to pay off their debt. Similarly, if a person quits/is fired from a job, the government should provide welfare benefits until they find another job. 
9. **Good economic policy doesn’t require good economists. This is my favorite chapter. Although the author is an economist himself, he acknowledges that economists are not a necessary condition to design and implement good economic policies. The East Asian economies of Japan, Taiwan, South Korea, Singapore, China in the 1960s onwards were predominantly led by bureaucrats (lawyers, engineers, scientists, military services) yet achieve high growth rates. Does this mean we should abandon economists? Not necessarily, but take their expertise with a pinch of salt. As the joke goes, ‘An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today.’
   

There are some flaws in the arguments made in the book. First, the author uses confirmation bias in many instances to prove his points. For example, the author provides examples from Europe to defend the big government. However, in many instances, a big government also comes with complex regulations, clunky implementation, and lower efficiency especially in countries like India, Turkey. Second, the book could have delved deeper into each topic. I understand it is aimed at readers who are just getting introduced to economics and capitalism. But it could be unsatisfying for others who prefer to read in-depth. Third, the book could have categorized 23 things into several components like financial markets, trade, governments, etc. Currently, the chapters jump from one topic to a completely different one.

Despite some shortcomings, the book is an engaging read filled with interesting anecdotes. Its brutal yet honest take on the role of high-income countries in pushing for economic policies that they didn’t adopt earlier is eye-opening. These are silently whispered in universities and multi-lateral organizations yet no significant progress has been made. Unfortunately, economic policies are a product of politics. And both don’t go hand-in-hand always.

I would recommend this book to anyone who has recently developed an interest in economics and wants to enhance their knowledge on fault lines in capitalism. It is a rare bedtime book on economics that won’t put you to sleep, at least not immediately.