Oxytocin is a critical part of the birthing process and is recommended as a first line drug to prevent and treat excess bleeding immediately after childbirth. With stakes this high, it’s little surprise that the oxytocin injection figures in the World Health Organisation’s Model List of Essential Medicines as well as India’s National List of Essential Medicines.
But despite this, both manufacture and distribution of the drug have been severely restricted since July 2018, when the Indian government banned private companies from manufacturing oxytocin. Instead, the health ministry decreed that a public sector unit (PSU)—Karnataka Antibiotics & Pharmaceuticals Limited (KAPL)—located in Bengaluru would now single-handedly shoulder the burden of fulfilling India’s oxytocin needs.
Here’s the kicker though, KAPL’s expertise in oxytocin is limited. It only began producing oxytocin in 2018, when it was finally licensed to manufacture it. But now, its factory in Peenya, an industrial area on the outskirts of Bengaluru, is expected to produce at least 160,000 ampoules per day for 71,232 births (two ampoules per woman)—the national daily requirement of oxytocin, according to the country’s birth rate. An ampoule is a small single dosage vial with a sealed neck.
The government’s logic for this was that private players were illegally diverting the drug for other uses, such as injecting cows with it to increase milk production. However, in the months following the government’s directive, one patient activist group and three pharmaceutical companies challenged the ban in the Delhi High Court. In December 2018, they won. The court overruled the government order as it wasn’t supported by sufficient data to prove the assertion that there was “rampant abuse” of the drug. The court also saw the dangers of concentrating production for the entire country in one place.
So, the government took its fight to the Supreme Court.
There are questions aplenty about KAPL’s capability to manage this incredibly important duty. Doubts about its distribution channel, which, public health activists and gynaecologists allege, is insufficient. They argue that not all the distributors that KAPL ties up with will have the cold chain capacity that oxytocin requires. Oxytocin must be stored at temperatures between 2-8 degrees Celsius for it to be effective. KAPL, however, is confident in its abilities. It says it has the numbers—at least one distributor for every district in India. All told, it claims 896 distributors for India’s 719 districts.
But it isn’t just about KAPL’s distribution. Patient activist groups have also expressed concerns over the quality of drugs that KAPL produces. With good reason. KAPL has a chequered history in this domain. The 35-year-old company, which produces pharma, veterinary and agri products, was pulled up by the state drug controller in October last year for a substandard batch of oxytocin. KAPL, for its part, says this is a non-issue, claiming this is “common” in the pharma industry.
And going by how it has fought to establish KAPL’s monopoly over oxytocin in the Indian market, the central government seems to share the pharma company’s confidence. Despite this, though, there are murmurs that it wants to divest its shares in the company. It currently holds a 59.17% stake in KAPL, the rest is owned by the Karnataka government.
Today we’ll know how the KAPL-oxytocin saga ends. If the Delhi High Court order is upheld, private companies will go back to manufacturing oxytocin alongside KAPL. If the court overturns the HC judgement, KAPL will be the sole producer, and it remains to be seen if the company’s management will go into private hands.
This is a high stakes case which Women and Child Development Minister Maneka Gandhi is close to. As an animal rights activist, she has advocated for the regulation of oxytocin for two decades now. She has attended every hearing even though she’s not party to the case, claim the petitioners in the Delhi High Court case. The Solicitor General, India’s second-most senior law officer, was even brought in to plead the Centre’s case. What gives?
Of birth, death, and cows
Dr Hema Divakar makes no bones about it—oxytocin, she says matter-of-factly, is “life-saving”. Dr Divakar is the ambassador of the Federation of Obstetric and Gynaecological Societies of India (FOGSI), which counts 33,000 Indian gynaecologists and obstetricians as members. She also represents FOGSI at the International Federation of Gynecology and Obstetrics (FIGO).
“26 million women deliver in India every year. It is recommended that after each delivery, irrespective of the mode of delivery and the number of delivery, [the patient] is given 10 units of oxytocin within one minute after delivery to prevent excessive bleeding after birth,” says Dr Divakar. Postpartum haemorrhage (PPH)—the excessive post-childbirth bleeding that Divakar is referring to—affects eight million of the 136 million women worldwide who give birth each year. Of the total 279,000 maternal deaths worldwide each year, 69,000 deaths are due to PPH.
Apart from this, oxytocin is also used to induce labour.
And then, of course, there’s the reason the government set these events in motion in the first place. The alleged illicit use of oxytocin in cattle, which is meant to facilitate easier lactation. It was also claimed that oxytocin could induce artificial ripening in fruits and vegetables. The government’s failure to check and curb this alleged misuse is what finally resulted in the “no private players” notification.
The notification came on the heels of a March 2016 ruling of the Himachal Pradesh High Court. It directed the state and central government to coordinate better to regulate the manufacture, distribution and import of drugs like oxytocin. The court recognised that the misuse was not because it was being manufactured in India but because it was being illegally diverted, smuggled, imported or sold and that there was not enough that the state and central machinery was doing to prevent it. But while the court wanted better, more effective regulation and oversight, the government opted to clamp down on oxytocin production altogether.
Delivering the goods
Considering the importance of the drug, KAPL has been producing oxytocin on a war-footing ever since it was made the sole manufacturer of the drug last year. At that time, there were 133 licensed manufacturers of the drug, though only 80 were actively involved in production.
Currently, KAPL has a single production line for oxytocin ampoules. A second production line will be completed by the end of April. This, claims KAPL, will take its total oxytocin production capacity from 170,000 ampoules per day to 320,000 ampoules per day. Double the national requirement. But KAPL’s claims don’t quite add up.
“We produce 1 ml ampoules for human use and 10 ml ampoules for veterinary use,” says Nirja Saraf, Managing Director of KAPL. The vast majority of this—95%—she says, is for human use. KAPL began production and distribution of oxytocin in July 2018. However, to date, claims Saraf, the company has distributed 21 million ampoules worth Rs 28 crore ($4.06 million). Another 1.65 million ampoules, she says, are currently under testing. One batch takes 15-16 days to test. However, back of the envelope calculations show that, across its eight months of oxytocin production, KAPL has dispatched far fewer ampoules than the country requires. Requests for clarification on this only elicited vague responses. “There are many factors because of which there’s a disparity between production and dispatch,” Saraf said. However, she refused to name any of these factors.
But even if we are to take KAPL’s numbers at face value, Malini Aisola, convener of the All India Drug Action Network (AIDAN), raises another problem. KAPL has no backup. “It is not just about capacity, they are confining production to one city. What happens if they are not able to sustain production in case of a breakdown?” she questions. AIDAN, a patient activist group, is one of the petitioners in the Delhi High Court case. Dr Divakar concurs. She raises a pertinent concern: what happens to distribution if there is a strike—a common occurrence in India—which brings transport to a standstill?
KAPL, to its credit, is working towards possible solutions for both Aisola and Divakar’s concerns. It is currently awaiting clearance from the Ministry of Health and Family Welfare to set up a separate oxytocin production facility in Dharwad, Karnataka. Once cleared, this will take anywhere from a year and a half to two years to set up and is expected to have a daily capacity of 320,000 ampoules.
A “loan licensed facility” is another option KAPL is deliberating. “We are in the process of identifying one [loan licensed facility] outside Karnataka. For example, suppose there is an earthquake in Karnataka, it may affect the whole state. A loan licensed facility is one where we take the facility on loan and take licence in the name of KAPL and manufacture there,” Saraf says.
KAPL has 896 distributors, stockists and agents all over India’s 719 districts. “In each district, there is a distributor. I don’t think there will be a shortage,” Saraf says in response to questions about KAPL’s pan-India reach. Aisola, though, remains sceptical about the capabilities of these distributors. Oxytocin needs to be stored at temperatures of 2-8 degrees Celsius, failing which the drug becomes ineffective. “This [cold chain for oxytocin] requires a different kind of infrastructure to maintain this kind of refrigeration. It is certainly not there with these distributors,” Aisola alleges. But her issues with KAPL go beyond distribution and into the quality of KAPL’s oxytocin itself.
Not of standard quality?
“We have questions about quality. KAPL has been producing substandard drugs for many years. It has a poor track record in quality,” Aisola alleges.
On 10 October 2018, the head of Karnataka’s Drugs Control Department, Amaresh Tumbagi, found one batch of Oxytocin to be not of standard quality (NSQ). “In our routine inspection, we found one batch to be substandard. But when we flag NSQ drugs, the drug maker is allowed to appeal, and KAPL did. On subsequent tests, it was found to meet required standards,” says Tumbagi. Tumbagi is also one of the directors on KAPL’s board.
KAPL’s Saraf also refutes the claims of substandard drugs. The batch was retested by the Central Drugs Laboratory, Kolkata, and was declared as being of standard quality, she says. “So we can say that there has been no NSQ in oxytocin so far,” she concludes. And she’s correct. About oxytocin, at least.
But it isn’t just oxytocin. There are other quality tests that KAPL has reportedly failed in the past for other drugs. Between 2014 and 2018, 24 batches of KAPL drugs were found to be NSQ. The Centre even barred KAPL from supplying its 500mg paracetamol tablets to various state and central government institutions. Saraf, however, is resolute. She says that the tests were either challenged and the retest results are being awaited or that the batch was recalled from the market.
“In the pharma industry, it is a common feature, and when any such incident happens, we immediately recall the batches from the market and replace them,” she says. Most of the problems, she adds, were defects in packing, foil, printing, and the like. Not the quality or safety of the drugs. The Ken could not independently verify this.
But even as it scrambles to prove its doubters wrong, KAPL is in a state of churn behind the scenes. For the year ending March 2019, KAPL expects revenues of Rs 380-390 crore ($55.13 million-$56.58 million), according to Saraf. This represents a jump of 8% to 10% from the Rs 357 crore ($51.79 million) it earned in the year ending March 2018, according to figures sourced from company research platform Tofler. That year, however, was a disappointing one for KAPL—revenue had declined year-on-year, as had profit. In fact, its profit had dropped by more than half. From Rs 30.33 crore ($4.4 million) the year prior to just Rs 14.55 crore ($2.1 million). With this being the case, the central government isn’t sure it wants to hold onto its stake in the PSU.
Saraf says that the Cabinet Committee on Economic Affairs took the decision to disinvest in KAPL on 1 November 2018. “This is being dealt with by the ministry [of chemicals and fertilisers], we are not much aware of the developments. This will not affect much as around 41% is being held by the state government even if the central government totally divests its shares. We are not aware of the percentage it will divest or the model it is adopting,” she says.
The Karnataka government through Karnataka State Industrial and Infrastructure Development Corporation Limited owns 40.83% of KAPL shares. It is unclear as of yet whether the state government will want to increase its stake in KAPL. And while a positive verdict for KAPL today will undoubtedly add some sheen to the PSU, any divestment by the Centre is unlikely to hamper KAPL’s oxytocin production.
Jitendra Trivedi, a board member of KAPL, said that disinvestment and oxytocin production could go on simultaneously and one has no bearing on another. Trivedi is also a director in the Department of Pharmaceuticals in New Delhi. Jai Priye Prakash, the secretary of the pharmaceuticals department, meanwhile, washed his hands of the matter. He said that it is the prerogative of another government department—the Department of Investment and Public Asset Management (DIPAM)—and not his.
The Ken reached out to DIPAM for further clarity on KAPL’s future and was told that divestment is definitely on the cards. “The disinvestment plan is very much on. Normally, during elections (the 2019 Indian general elections take place in April-May), strategic investments are held back. We’d like to complete the March-ending accounts and then put out information for the common public,” said DIPAM secretary Atanu Chakraborty.
But if the Centre is selling, who’s buying? On condition of anonymity, one of KAPL’s directors indicated that the Karnataka government is in pole position. “The Karnataka government has the first right of refusal as it has a 40% stake. If the Government of India divests, the state will weigh its options and look into it,” the director said.
The ball is in the apex court
All parties involved want to portray the government’s decision to divest its KAPL stake as business as usual. However, this move could impact the government’s case for banning private players from oxytocin production in the first place. “The two issues are not connected as such,” says Prashant Reddy, a Senior Fellow at Vidhi Centre for Legal Policy. The Government of India, as the majority shareholder, he argues, is well within its rights to sell its stake. However, he points out, the logic for the restriction on private sector companies will no longer make sense. “If KAPL is no longer a public company, the same issue—of alleged misuse of oxytocin by private players—will crop up,” he concludes.
But that’s not the only issue. The ban on private manufacturers was enacted under Section 26A of the Drugs and Cosmetics Act, 1940. This empowers the Centre to prohibit manufacturing of drugs in public interest. “Under 26A, the government generally bans dangerous drugs and fixed-dose combination drugs. This is an awkward case because the government is trying to regulate the manufacturing of a drug that is safe,” explains Reddy.
The petitioners in the Delhi High Court were also helped by the sheer lack of evidence supporting the government’s directive. “Generally, ban orders under 26A leave very little room for the judiciary. But here, the Delhi High Court interfered because there was not enough material or convincing statistics. This case will set a precedent as to what extent the judiciary can interfere in powers exercised by the central government. It’s a first of its kind. The case can easily go the other way,” he adds.
The government, though, reacted to the Delhi High Court’s criticism with uncharacteristic vigour. Shortly after the Delhi High Court criticised the lack of supporting evidence in September 2018, India’s apex drug regulator, the Central Drugs Standard Control Organisation (CDSCO), raided the factories of three private oxytocin manufacturers—Ciron Drugs and Pharmaceuticals, Sovereign Pharma, and Neon Laboratories. All three companies were petitioners in the Delhi High Court case. The CDSCO collected the companies’ purchase data, production data, and dispatch data of oxytocin for the past three financial years. Purchase data of raw materials required to manufacture oxytocin were also taken.
This action, though, shouldn’t come as too much of a surprise, say the various groups fighting the government order. “This [ban on private manufacturing of oxytocin] is more of a political victory than the actual issue of alleged misuse of oxytocin,” says Aisola. And she might have a point. Patient activist groups say that Gandhi, the minister for women and child development, has been a strong advocate for the regulation of oxytocin production for the past two decades. She has written letters to the health ministry asking it to stop the “misuse” of oxytocin and has even sought a ban on the sale of the drug, calling it “the single main disease-giving drug in India.”
With that level of opposition, it is little surprise that the government has flexed its muscles to ensure it gets its way. Apart from the Solicitor General—who was pressed into action first in the Delhi High Court and then in the Supreme Court—even the Joint Secretary of Health and the Drug Controller General of India attend hearings, claims Aisola. “Even Maneka Gandhi is present, giving instructions directly, visibly and openly to lawyers,” Aisola alleges.
So is it a matter of public safety or is it just a political power play? The Ken contacted Eswara Reddy, the Drug Controller General of India, and asked if the apex drug controller’s job would be easier with a single manufacturer. “Whatever the court decides will be easier for us,” he quipped.
Clarification: A previous version of this article carried an outdated designation for Prashant Reddy. This has been updated. We regret the error.
*Lead image by Mohican, CC BY-SA 3.0