Book Review: Bottle of Lies: The Inside Story of the Generic Drug Boom

Book: Bottle of Lies: The inside story of the Generic Drug Boom 

Author: Katherine Eban

Page Length: 410

Date Read: June 24th

Rating: 5/5

Review:

I recently read Bottle of Lies as part of a book club I joined with some of my future business school classmates. I’ve been trying to learn more about the healthcare sector over the past few months so this exposé of  the darker side of the generic drug industry definitely piqued my curiosity. Having  finished the book, I’ve learned so much about a space I knew next to nothing about just two weeks ago. This book is not all sunshine and rainbows. I’d advise you to buckle up before reading because Catherine Eban took me on a journey that seemed too insane to be true and too important to have not known before now. But it is true, and it’s backed up by thousands of FDA documents, internal corporate records, and first hand interviews with over 240 individuals, including regulators, corporate executives, lawyers, drug experts, whistleblowers, and members of congress.

Over 90% of our pharmaceutical market is comprised of generic drugs, most of which are manufactured overseas. In the pages of this book, Eban exposes the generic drug industry as one that is teaming with fraud and deceit and led by executives who put profit over the safety of consumers, easily trick FDA inspectors, stifle whistleblowers with harassment and threats of violence, and bring drugs to market that are neither as safe nor as effective as we believe them to be. Some may say ignorance is bliss, but I tend to disagree, especially when it could have direct implications for my health and the health of others. Having read this book, I’ll pay a serious premium to avoid purchasing generic drugs made overseas. Of course, I’m lucky to be very healthy and in a financial position that I can do this. Many others are not and that’s a problem. It’s a problem that gets to the crux of the generic drug dilemma: looking through the lens of health equity, how do we balance the benefits of having access to more affordable drugs with the dangers that those drugs may pose to us if they may not be what we think they are? Below, I’ve provided an admittedly lengthy summary of some of the key findings of the book, so if you want to read Bottle of Lies free of spoilers I’d suggest you stop reading now. If you want to get my perspective on the takeaways, read on.

Generic drugs have been heralded as one of the greatest public health innovations of our time, dramatically reducing the cost of medications and expanding healthcare access to many who wouldn’t otherwise be able to afford needed and often life-saving drugs. Why are generic drugs so much cheaper than their brand name equivalents? As Eban explains, the answer extends beyond the fact that brand names can charge a premium because you’ve heard of Lipitor but haven’t heard of the generic alternative, Atorvastatin. It also extends beyond the fact that generic drugs are often manufactured overseas where labor and material costs are lower. Eban argues that the generic drug industry was fundamentally changed and in some ways born out of the 1984 Hatch-Waxman act, which effectively did two things. First, it decreased the amount of testing generic drug companies needed to complete prior to getting FDA approval. Previously, generic drug companies had to complete massive and expensive human trials. After the Hatch-Waxman act they needed only to prove that the drug they’d manufactured was biologically equivalent to the brand name alternative. This significantly reduced the cost barriers to entering the industry. Second, the act provided a “first-to-file” incentive, which offered a six month sales exclusivity rite to the the first generic drug company that could prove to the FDA that they had produced a biologically equivalent alternative to the brand name drug they were seeking to replicate. This was huge, at times representing a $1 billion plus opportunity. The combination of this incentive and the lower cost barriers was a major policy innovation that opened up the doors for many new entrants to bring cheaper drugs to market. One such Indian company, Cipla, manufactured an AIDS drug that cost patients $350 per year, a much more feasible alternative than the $10,000 to $15,000 per year being charged by Pharma companies in the United States for a similar product. This generic drug and its price relative to the brand name alternative is but one example of how generic drugs have literally saved lives that would not have otherwise been saved given the price delta between brand name and generics.  However, as Eban explains throughout her book, not all generic drugs are created equal. Some are neither as safe nor as effective as they claim to be.

Chronicling the rise and fall of an India based Pharmaceutical company, Ranbaxy, Eban highlights the rampant fraud and deceit within the industry. As an example, executives within Ranbaxy were known to travel to the United States, buy up bottles of the brand name drugs they were seeking to replicate, stuff these bottles in their carry-on suitcases, fly the drugs back to India, and then perform tests on the brand name drug to provide to the FDA as proof that their generic alternative performed the same as the brand name. Ranbaxy also regularly manipulated testing data, destroying files that didn’t pass the testing guidelines and manipulating the testing equipment until it yielded passing data, all of which break FDA rules. One individual within the firm, Dinesh Thakur, was tasked with retroactively reviewing the supporting test results for the company’s entire portfolio of drugs to understand the firm’s level of confidence in the information provided to various regulators over the past twenty years. The results he found were astounding. Ranbaxy had faked 50 to 60 percent of its data for drugs manufactured for the US and European markets and nearly 100 percent of its data for drugs manufactured in India and other developed markets. “In entire markets,” Eban writes, “including Brazil, Kenya, Ethiopia, Uganda, Egypt, Myanmar, Thailand, Vietnam, Peru, and the Dominican Republic—the company had simply invented all the data.” After producing a document for Ranbaxy’s executive team outlining the extent of the firm’s fraud, Thakur was asked to destroy the document. Given the liability he posed to the company, Thakur was shortly thereafter accused of browsing porn sites from his office computer. He was able to prove that his computer had been tampered with and the porn websites had been planted under his IP address by the company, but the head of HR did not seem to care, so Thakur resigned. He eventually became a key whistleblower for the FDA and US government investigations into Ranbaxy, which resulted in a $500 million settlement but no criminal charges against any of the firms’ executives.

Beyond Ranbaxy, Eban exposes the flaws within the FDA that allow companies like Ranbaxy to push dangerous drugs through the FDA approval process for sale in the United States. When the FDA conducts investigations of drug manufacturing plants in the United States, they give no advanced warning. Investigators just show up, provide their FDA badge, and are granted access to any part of the plant they want to see right then and there. Overseas, the story is different. Given visa restrictions and concerns around foreign diplomacy, FDA investigators provide multiple weeks of advanced notice to the plants they are going to investigate. The result? The executives at the plants have time to clean up their act, destroy records, and prepare a curated tour of their facilities—one that effectively masks all problems. However, even when problems are found, the pressure put on the FDA from insurance companies and the government to approve and get cheap drugs to market has led the FDA to give plants a passing grade when findings from inspections suggest they have clearly flunked. In the case of Ranbaxy’s application to bring a generic version of Lipitor to market, an FDA inspector found that one of their manufacturing plants had failed inspection, which should have resulted in the drug application being disqualified under the premise that a manufacturing plant that cannot function safely cannot produce safe drugs. Facing the pressure to bring a cheap alternative for Lipitor to market quickly, the agency decided to change the inspector’s findings from fail to pass and greenlight Ranbaxy’s application. It’s important to understand that this was not a one-off practice. Eban writes, “From 2012 to 2018, the agency downgraded 112 inspections in India to make the final classifications less severe. For company after company—Mylan, Cipla, Aurobindo, Dr. Reddy’s, Sun Pharma, Glenmark—Findings of Official Action Indicated (OAI) became Voluntary Action Indicated (VAI) (407). In other words 112 failing grades that should have resulted in each company’s drugs being taken off the shelves of pharmacies effectively turned into 112  notes in red handwriting at the end of an essay that said, “here are my suggestions for improvement, take them or leave them.” 

The irony in this situation is that generic drugs, which have been praised as such game changers for health equity, breed health inequity in ways we may not have previously realized. Eban explains that “dual-track” or “multi-tier” production is common practice in the generic drug industry. She writes, “Companies routinely adjust their manufacturing quality depending on the country buying their drugs. They send their highest-quality drugs to markets with the most vigilant regulators and their worst drugs to countries with the weakest review” (340). Racism has undoubtedly played some role in this. When commenting on a poor-quality AIDS drug it had developed for Africa, a medical director at Ranbaxy said, “Who Cares, It’s just blacks dying.” However, Eban writes that it is not overt racism, but a profit at all costs mentality and a cold calculation about the risk of getting caught that drives the disparate quality of drugs. When Eban discusses quality and dual-track manufacturing, it’s important to note that poor quality doesn’t just mean a drug that may have more side effects or a greater likelihood of having a “bad apple in the bunch”. It is all of that, but it’s also deliberately putting less active ingredient within a drug than what shows up on the product label. Eban interviewed a psychiatrist in Ghana who routinely prescribes three times the recommended dose of the generic version of Haldol, a drug used to treat Psychosis, because he knows that the suggested dose, “won’t do anything.” He explains that it’s just common knowledge that you have to increase doses to get an effect because the active ingredient in the drug is a significantly lower dose than advertised.

This phenomena could help explain the greater prevalence of antibiotic resistance within many developing countries. Every time I’ve been put on antibiotics, the doctor and/or pharmacist has stressed how important it is that I finish the course of drugs in its entirety or else the drug may not kill off all the microbes in my body. Those microbes could then go on to reproduce and create new pathogens capable of resisting future medications. If generic antibiotics in developing countries have less active ingredient than they should, anyone who takes them is effectively ending their antibiotic course early. As  Covid-19 has shown, viruses can be transmitted to the rich and poor alike, as can bacterias. Since the moral imperative sadly fails all too often, I’m hopeful that a selfish imperative may be used as a case to stop the practice of dual-track manufacturing: You can buy your high quality brand drugs all you want, but if they become drug resistant because of the existence of low quality generics, then even the high quality drugs can’t help you. 

In some ways this book left me with more questions than answers. Mainly, how do we fix this problem?  Personally, I’d encourage you to be more careful about which generic drugs you take by reading where they were manufactured and looking up any documented quality issues with the companies who manufactured them. However, absent completely blacklisting overseas drugs, it may be hard to know with confidence that the drugs you are consuming are of the same quality as the brand name. Further, that doesn’t stop the problem. It only somewhat protects you from it and still leaves other individuals exposed. From a macro perspective, I am hopeful that the trend of increased shareholder activism and interest in ESG (Environmental, Social, Governance) factors within the investment process may push pharmaceutical companies in a more ethical direction—one that places greater value on the safety and health of consumers. But, even if every investor in the world were to make ethics a top priority, I don’t see how generic drug companies would be motivated to change too much if the FDA process doesn’t improve in some way. If companies aren’t getting caught, how are investors to think of them as anything but ethical producers of safe, high quality product? On that note, I believe the FDA compensation system is flawed. Eban notes that the FDA is compensated based on the number of applications it approves each year which can perversely incent them to overlook flaws in drug applications and negative inspection findings. They are also understaffed and under-resourced, inspecting plants on average once every 11 years, according to Eban. Changing this compensation schema and providing the FDA with more resources would likely have a positive impact. Further, while the Hatch-Waxman act’s requirement that generic companies need only prove bioequivalence with the brand name alternative to gain FDA approval has created significantly more competition within the industry and driven down drug prices, the data that generic drug companies must provide to the FDA does not take into account the drugs’ time to release within the body. It probably should. To use Eban’s analogy, it’s not rocket science to understand that five shots of alcohol in one hour is going to impact an individual very differently that five shots over five hours. Further, even if we improve the FDA process, the FDA’s scope doesn’t extend to drugs sold in other countries, so while we may solve the problem in the United States by fixing the FDA, there’s still a big global problem without a clear solution.