Closure Kasauli Report 2011s

TYPED COPY

Final Report of the Committee

Set up to determine

The reasons for the suspension of the manufacturing licenses of

CRI, Kasauli, PII, Conoor

And

BCGVL, Guindy

And to draw the road-map for the revival of the three Unis

September, 2010

Contents

S.No. Section Page No.
1. Background 4–7
2. Deliberations of the Committee 7 – 10
3. Process Followed in Government in Suspending Licenses 10 – 14
4.1 Committee’s Observations on the Process Followed 14 – 15
4.2 15
4.3 16
4.4.1 Issues Relating to WHO 16 – 20
4.4.2 Span of Indian GMP Norms 20 – 25
4.4.3 Due Diligence in Examination of Issues 25 – 29
4.4.4 Purpose of Notifying GMP standards 29 – 31
4.4.5 Role of DGHS 32 – 33
4.4.6 National Health Security 34 – 35
4.4.7 Evaluation of Public Interest 35 – 37
5. Impact of Closure on the UIP 37 – 39
6. Revocation of Suspension 40
7. Upgradation of Public Sector Vaccine / Sera Units 41 – 42
8. Organizational Restructuring 42 – 43
9. National Vaccine Security Advisory Board 43 – 44
10. Summary 44 – 53
Annexure
Annexure A Summary of the points made by the Former Health Minister 54 - 55

before the Committee
Annexure B Note dt. 13.9.10 submitted to the Committee by Director 56 - 57

General, DGHS
Annexure C Chronological Account of Process of File No. X – 58 - 61

11026/1/2006-D
Annexure D Chronological Account of Process of File No. X – 62

11026/1/2006-D (pt. File)
Annexure E Chronological Account of Process of File No. M – 63

11035/3/06/EPI
Annexure F Note of Dissent by Vineet Chowdhury – Member Secretary – 64

Para 4.4.3.9
Annexure G Supply of Vaccines from Public and Private Sector 65-67

manufacturing Units in the Period 2004-05 to 2009-10
Annexure H Installed Capacity of Primary Vaccine Manufacturing Units in

Public and Private Sectors
Annexure I Universal Immunization Programme – Achievements for the

Period 2008-09
Annexure J Universal Immunization Programme – Achievements for the 70

Period 2009 – 10
Annexure K Plan Allocation and expenditure in PII,Conoor & CRI, 71

Kasauli & BCGVL Guindy Between 1995 – 96 and 2009 – 10
Annexure L Additional points by Dr. VM Katoch (Member Committee) 72 – 73

Final Report of the Committee set up to determine the reasons for the suspension of the

manufacturing licenses of CRI, Kasauli, PII, Conoor and BCGVL, Guindy, and to draw the road-

map for the revival of the three Units.

I. Background

A Committee to enquire into the captioned issue was set up by an order of the Ministry of

Health and Family Welfare dated 25.9.09. The composition of the Committee was as

under:

i. Shri Javid Chowdhury, Former Secretary, Ministry of Health and Family

Welfare Chairman.

ii. Dr. VM Katoch, Secretary, Department of Health Research – Member

iii. Dr. RN Salhan, Former Additional DGHS – Member

iv. Mrs. Shakuntala D. Gamblin, Joint Secretary, Dept. of Health and Family

Welfare – Member Secretary.*

* Since transferred and replaced by Shri Vineet Chaudhury, Joint Secretary,

Dept. of Health and Family Welfare

The terms of Reference of the Committee were as under:

i) To review the reasons for suspension of the manufacturing licenses of the three

institutes, namely, Central Research Institute, Kasauli, Pasteur Institute of India,

Conoor, and BCG Vaccine Laborary, Guindy.. Chennai from the historical,

technological, administrative organizational and other perspectives:

ii) To review the road map for the revival of CRI, Kasauli, PII, Conoor and BCG,

Guindy to make them Good Manufacturing Practices (GMP) complaint.

At an early stage of its deliberations the Committee came to the conclusion that with the

abrupt closure of the public sector manufacturing units. Vaccine Security and

consequently Public Health Security of the country, had been dealt a severe blow. In view

of this, the Committee submitted an Interim Report on 5 th Feb. 2010, with certain

suggestions, which in its opinion required urgent action on the part of the government.

The Committee is very happy to note that the government accepted several of the

recommendations and effected the suggested changes through consequential orders.

The significant recommendations that have been adopted and implemented by

government include:

(i)

(ii) Revocation of the suspension of the manufacturing licenses of the three Units

i.e. restoration of these licenses in response to the appeals filed by the units

under Rule 85(3) of the D&C Rules:

(iii) Release of the finished products that were impounded consequent upon the

suspension of the licenses, for use under the UIP before their date of expiry.

(iv) Authorization of the management of the units to restart the renovation / up-

gradation of the existing production lines, and, the release of adequate funds to

keep these works moving smoothyly.

(v) Grant of formal approval to the units to initiate action to set up new production

lines at the existing sites.

The Interim Report of the Committee noted that it will require more time to study and

arrive at its conclusions on the full span of the terms of reference. Specifically, the

Committee in this Final Report will be looking at the term of reference relating to the

reasons for the suspension of the manufacturing licenses from the historical,

technological, administrative / organizational and other perspectives.

The Interim Report set out the background to the ‘Vaccine Availability’ scenario existing

in the country. This account, inter alia covered: (i) the use of primary and other vaccines

in the health sector; (ii) primary vaccine coverage under the UIP; (iii) the vaccine

manufacturing units in the country, in both public and private sectors; (iv) the installed

capacity for the different vaccines in the three manufacturing units under review of this

Committee; (v) the extant GMP standards for vaccines / sera under Schedule M of the

D&C Act; (vi) the authority of the Central / State Governments to carry out inspections

of licensed drugs and pharmaceuticals manufacturing units under Rule 85 of D&C Rules

for non-compliance with any of the rules or other legal provisions. The Committee does

not consider it necessary to repeat the details of the background information in this Final

Report. Interested readers may refer to paras 1.1 to 1.5 of the Interim Report.

The DCGI, through its authorized inspectors, from time to time, on a rotational basis,

inspects the manufacturing units. The inspection staff available to the DCGI for carrying

out this function is very limited (40 drug inspectors) and consequently the number of

units inspected annually are limited – between the year 2004-05 and 2008-09 the number

has ranged from 775 to 1163 annually. In the year in which the public sector unit licenses

were suspended (year 2007-08), the number of inspections was 889. The three public

sector units were inspected by the NRA in years 2001, 2004 & 2007. In the year 2001 &

2004 the inspection was carried out exclusively by Indian inspectors authorized by the

DCGI. In the year 2001, WHO had asked to be associated with the inspection, but

permission was explicitly denied by the Indian Government. The position then taken by

the Ministry of Health and Family Welfare was that in the course of the inspection, the

NRA is discharging a sovereign function in which an international agency cannot become

a partner. In year 2004 the WHO was not associated with the Inspection. In year 2007 the

WHO again asked to be associated and the Ministry agreed to the request with the

approval of HFM.

In the year 2007-08 a joint inspection of the three public sector units was carried out

under Rule 78(d) of the D&C Rules by Indian inspectors authorized by the DCGI, along

with WHO nominated inspectors on the dates given below:

Table I

Name of Manufacturing Unit Date of Inspection
Central Research Institute, Kasauli 13th – 14th Aug., 2007
Pasteur Institute of India, Conoor 9th – 10th Aug., 2007
BCG Vaccine Lab. Guindy 11th – 12 Aug., 2007

The inspection reports pointed out several shortcomings in the infrastructure and

operational systems of the units. Based on the deficiencies listed in the inspection report,

under the powers invested under Rule 85(I) the DCGI and CLAA under its letter N.X

11026/21/2006 dated 14.12.07 (identical number for all three units), directed the

manufacturing units to show cause within 10 days from the receipt of the notice why the

license granted to them should not be suspended / cancelled.

Consequent to that, the three manufacturing units, on the dates listed below, replied to the

show cause notices on:

Table 2

Name of Manufacturing Unit Date of reply to show cause notice
Central Research Institute, Kasauli 4th Jan., 2008
Pasteur Institute of India, Conoor 4th Jan., 2008*
BCG Vaccine Laboratory, Guindy 27th Dec., 2007

In general, the manufacturing units in their replies furnished information on those items

listed as deficiencies that had been rectified, as also the likely time-line for the ones

requiring rectification over a longer time span. On receipt of these replies, the DCGI

again directed the inspectors to undertake another inspection to verify the reported

compliance by the units. The inspectors carried out the second inspections on the dates

mentioned hereafter:

* It is clarified that there is no error in this date – the fact is that the unit was inspected for the

second time before the representation had been sent by the unit against the show-cause notice.

Table-3

Name of Manufacturing Unit Date of Second Inspection
Central Research Institute, Kasauli 7th – 8th Jan., 2008
Pasteur Institute of India, Conoor 3rd Jan., 2008*
BCG Vaccine Laboratory, Guindy 4th – 5th Jan, 2008

The Reports on the second inspection carried out of the units in early Jan., 2008

confirmed the rectification of some of the earlier listed deficiencies, while listing other

deficiencies that were still to be rectified. However, it needs to be pointed that though the

Reports of the two inspections carried out in Aug., 2007 and Jan., 2008 mentioned

deficiencies, no inspection report recommended the suspension / cancellation of the

licenses.

2. Deliberations of the Committee

2.1.1 The Committee held eight sittings on 25 th Sept. & 15th Oct., 2009 and 5th Jan., 13th May,

16th June, 12th July, 11th Aug., 16th Sept. 2010 – when it has had intensive discussions. At

the meeting held on 15 th Oct., 2009 the Committee had the opportunity to meet Dr.

Surinder Singh, DCGI with whom it discussed the various circumstances and the

documents relating to the issue. Incidentally, it may be mentioned that Dr. Surinder Singh

was not the DCGI at the time of the suspension of the licenses. The Committee as a part

of its deliberations, visited the three manufacturing units to review the circumstances in

which the licenses were suspended, and to assess the possibility and time-line for re-

starting the manufacture in the existing production line, while concurrently upgrading the

manufacturing standards to as rigorous a GMP standard as is possible. During the

meetings, the members asked the Ministry / DGHS / DCGI to provide copies of various

relevant documents. The files that have been furnished are: F.No. X-11026/1/2006 – D: F

No. X – 11-26/1/2006 – D [pt. File] and F. No. M – 11035/3/06/EPI. The DGHS &

DCGI have given in writing that they have no other papers / files on the issue under

review. The Committee’s visit to the manufacturing units was to review the situation at

the site and to discuss the possibilities for future action with the staff of the units (CRI.

Kasauli – 21 – 23, Nov 2009; PII. Conoor & BCGVL, Guindy – 19 – 22 Dec., 2009).

Various items of information were also obtained from the management regarding the

functioning of their units. The Committee submitted an Interim Report on 5 th Feb 2010

making certain recommendation that in its judgment required immediate attention of the

government.

2.1.2 The Committee would like to record that it had decided not to invite, on its own initiative,

any individual involved in the process of decision –making, in the course of its

proceedings. The Committee was of the view that its status was that of a fact-finding

Committee carrying out an administrative inquiry on the basis of the official records.

Inviting witnesses would greatly widen the inquiry, and it would not even be possible to

exactly determine who to invite and who not to, in the limited time available to it.

2.1.3 In the course of the proceedings the Committee had learnt through the Member-

Secretary, that the former HFM/ the former Secy. (HFW) and the DCGI wished to appear

before this Committee – the Member Secretary was in touch with these individuals and

carried messages back and forth. The Committee had an open mind on the request

conveyed by the HFM/Secy. (HFW)/DCGI. However, on reflection, it was realized that if

the Committee on its own invited witnesses, its proceedings would become of the nature

of a Commission of Inquiry. It was assessed that something like twenty five witnesses

from all over the country (all the officials of the Ministry/DGHS/DCGI: the past and

present Directors of the manufacturing units, the heads of the various inspection teams

that carried out inspections of the units from time to time; etc) would have to be called,

which would be impossible in the limited time available to the Committee. After serious

reflection the Committee came to the consensus conclusion that no purpose would be

served by calling witnesses for oral evidence. The fact-finding inquiry being conducted

by the Committee was on an issue that necessarily had to be conducted in the official

documents – the relevant facts are all a part of the official record: no particular value

would be added to the inquiry by calling witnesses. In the circumstances, the Committee

decided not to call any witnesses, but if any individual on his own initiative indicated an

interest in interacting with the Committee, such a request would be considered.

2.1.4 It may be mentioned here that the former – HFM expressed a desire to meet the members

of the Committee. In response to this, the Committee met the former – HFM on 13.5.10,

when he presented his perception of the process adopted by the Ministry in examining the

issues relating to the GMP standards of public sector vaccine manufacturing units. A

summary of the points made by the former HFM in course of the meeting is placed at

Annexure A. The significant points were: no pharmaceutical / vaccine unit that is non-

compliant with the GMP is functioning today – two thousand units were shut down in his

time for non-compliance – exception could not be made in the case of public sector units;

decision was not a sudden one – was discussed over a long period with the officials; our

public sector units are nowhere near the standard of modern units in Europe and USA;

deficiencies had been pointed out in a series of inspections – what action was taken to

rectify them; the integrated vaccine park proposed at Chengallapattu would enable the

production of new vaccines and vaccine – combos; under the law, DCGI can take a

decision independently. The perceptions presented by the Former-HFM have been taken

into account by the Committee in coming to its conclusions in this Final Report.

2.1.5 The former-Secy (HFW) and the DCGI were individually informed of the Committee’s

position on the issue of hearing of individuals. The former-Secretary asked for a copy of

the draft Final Report in order to know the issues on which he should respond. He was

informed that, since he was not being called by the Committee, no issues would be raised

by the Committee on which a response was sought. Since the individual wished to come

on his own initiative, it would be for him to choose the issues to be addressed. Also, since

the proceedings of the Committee were not in the public domain, it would not be possible

to supply him a copy of the draft Final Report; in fact even the Final Report would have

to be submitted directly to the Ministry only. At the end of exchange of some messages,

the former Secretary (HFW) indicated that he will not be seeking a hearing.

2.1.6 A procedure similar to the one adopted for the former Secretary (HFW) was adopted to

ascertain the intention of the DGHS. The DGHS indicated that, instead of asking for a

hearing, he would be giving a written note on the subject. The DGHS has submitted a

note-dated 13.9.10 along with several enclosures, setting out his perception on the

process adopted for coming to a conclusion on the issue of the closure of the units. A

copy of DGHS’ note is placed as Annexure B to this Final Report. The enclosures are the

very same documents that had been submitted by the Ministry/DGHS/DCGI to the

Committee, and form the basis of the analysis contained in this Report. The points raised

in DGHS’ note have also been kept in mind in the course of finalization of this Report.

2.1.7 The Summary of the Committee’s observations as to the status of the existing units is

given location-wise in paras 2.2, 2.3&2.4 of the Interim Report. The current status of the

manufacturing units was the basis of the recommendation in the Interim Report for

revoking the order suspending the manufacturing licenses of the units. This

recommendation has been accepted by the government and the suspension of the

manufacturing licenses has been revoked on 26-2010. In view of this, the Committee

does not consider it necessary to repeat the findings of the inspections of the units in this

Final Report. Those readers interested in the findings of the inspections may kindly refer

to the relevant sections of the interim Report.

2.3. The Committee was of the view that some of the recommendations given in the interim

reports were of far-reaching importance. Considering the gravity of those

recommendations, the analysis relating to them in the Interim Report was rigorous and

the reasoning was given in detail. In respect of those issues the matter has come to a

close. However, in order to make the Final Report an integrated and coherent whole, the

significant sections of the interim report have been reproduced in this Final Report. The

Committee could have refrained from this, and could have merely given a reference to

the text in the Interim Report, as has been done in the case of some of the less significant

aspects. However, the Committee felt that the broad expanse of the terms of reference

entrusted to it covered vital issues relating to public health security, and it would be

desirable that the gamut of these issues be presented as a integrated whole in the Final

Report.

3. Process followed in Government in suspending Licenses

The final decision to suspend the licenses of the three units was taken by the DCGI after

seeking the comments of the Ministry of Health & Family Welfare. The Ministry, in turn,

examined the issue over an extended period of eight months. The Committee has made

strenuous efforts to gain access to all the files on which these issues came to be

discussed. According to the information made available to the Committee, the issues

were discussed in the following three files:

i) File No. X – 11026/1/2006-D: Chronological statement of

events on the file placed at Annexure ‘C’

ii) File No. X – 11026/1/2006-D: Chronological statement of

events on the file placed at Annexure ‘D’

iii) of File No. M – 11035/3/06/EPI: Chronological statement of

events on the file placed at Annexure ‘E’

The Chronological Statement of Events on File No. X – 11026/1/2006-D, placed at

Annexure B, indicates that the examination of the relevant issues began as far back as

April, 2007 and terminated on 14.12.07, when a view was reached to issue show cause

notices to the units for suspension of their licenses. The first note floated on 5.4.07 inter

alia, covered the following points: (i) Raised the question whether WHO should be

permitted to join NRA’s inspection of the public sector units: (ii) pointed out that WHO

expects all public sector units to comply with its GMP standards, and also all other WHO

pre-qualification requirements; (iii) pointed out that if the NRA is de-recognized by

WHO, private sector vendors, who otherwise comply with GMP standards would become

ineligible for empanelment and India’s exports will suffer; (iv) that in year 2002 WHO

was not permitted by government to join the NRA inspection as that would tantamount to

WHO exercising regulatory control over the NRA; and (v) to meet WHO’s requirements,

government will have to shut-down public sector manufacturing facilities, impact on

availability of vaccine on public health programmes would have to be assessed.

DGHS, to whom the file was marked, made no substantive comment before passing it on

to the line-up in the Ministry.

Secy, (HFW)* took a meeting on 3.5.07 where a tentative decision was taken to allow

WHO to join the NRA inspection. Consequent to that DCGI through his note dated

3.5.07 submitted the proposal for allowing WHO to join the NRA inspection for approval

of HFM. The Committee notes that the DCGI’s proposal did not give any reasoning for

departing from the earlier decision taken by government in year 2002 to not permit

WHO to join the NRA inspection. Also, DCGI’s note dated 3.5.07 did not raise the other

issues highlighted in his earlier note dated 5.4.07. HFM’s final order dated 10.5.07,

permitting WHO to join the NRA inspection was limited to that point only.

It appears from the subsequent record that Secy. (HFW) took a meeting on 11.9.07 to

discuss the connected issues. The Minutes of the meeting listed the following decisions:

(i) Public Sector units should wind-down operations by stopping procurement of raw

materials and production; (ii) the units urgently prepare a plan for setting up new

manufacturing facilities and (iii) efforts be made by the UIP Div. to build up buffer

stocks to meet possible shortages.

DCGI’s note also recorded the following decisions taken at a subsequent meeting chaired

HFM (i) Ministry should take up with WHO Hqs the need for a longer period for up-

gradation of the manufacturing facilities; a team of senior officers be sent to Geneva for

holding discussions with WHO officials; (ii) immediate steps to be taken to improve the

manufacturing facilities by renovation/setting up new facilities to comply with the

deficiencies pointed out by WHO; and (iii) the plan to set up an integrated Vaccine Park

at Chengallapattu be immediately drawn up.

This note of the DCGI was seen by DGHS on 25.10.07 no substantive comments were

offered by DGHS – the file was marked to the administrative division (JS [DP]) in the

Ministry.

From the administrative division, on 31.10.07 JS (DP) put up a note suggesting that

WHO be approached for grant of more time for the public sector units to rectify the

observed deficiencies in the GMP standards of the unit. The note also suggested that the

units be asked to expedite their action plans. In other words, JS (DP)’s note supported the

earlier note of DCGI.

At this stage, the action seems to have been shifted to F. No. X – 11026/1/2006 – D – (pt.

File) the chronological statement of events of which is given in Annexure D. It appears

that since no orders had been received on the main file, DCGI sent a fresh note dated

27.11.07 giving the background of the build up of the issues that now required urgent

attention.

* Whenever the expression HFM or Secy. (HFW) or DCGI is used in this report it means

the then HFM, the then Secy. (HFW) and the then – DCGI.

This note of the DCGI was see by DGHS on 25.10.07; no substantive comments were

offered by DGHS – the file was marked to the administrative division (JS [DP]) in the

Ministry.

The note of DCGI dated 27.11.07 mentions an earlier note put up on 20.10.07 giving the

principal findings of the draft / final report of the joint NRA-WHO inspection of the

manufacturing units. It appears from contextual references that some of the earlier notes

mentioned by DCGI are not available now. Every effort has been made to obtain

whatever is available in the Ministry/DGHS/DCGI offices. The Report of the Committee

is necessarily based on the documents made available by the Ministry/DGHS/DCGI. It

appears to the Committee that this confusion in the records is the result of chaotic

secretariat practices, there is no reason to believe that any relevant papers/files have been

intentionally withheld from the Committee. It is clear that the style of secretariat

functioning in the Ministry/DGHS/DCGI offices at that point of time was unsystematic.

The only explanation for the confusion in the notes is that several notes were floated from

the DCGIs office from time to time with the same file number, without mentioning that

these were part files. At some subsequent date these were merged together without

ensuring continuity of proceedings. As a result, there are anomalies in the sequence of

recorded proceedings as is evident from Annexure C.

DCGI’s note of 27.11.07 also contained a draft interim reply proposed to be sent to the

WHO, indicating that many of the deficiencies noted in their report had been rectified

and stating that the reply on the action proposed for the public sector manufacturing units

would follow. There is nothing on record to show that any letter was issued.

In Annexure C there is a mention of notes submitted on 3.12.07 and 6.12.07 reminding

the senior officers that an earlier file that had been submitted for orders, has not been

returned; and that a reply has to be sent to WHO before 5.12.07. The chronological list of

events in Annexure D shows that on 28.11.07, AS (DG) inquired about the plan of action

of the units for rectifying the short-comings and suggested that a letter be sent to DG,

WHO explaining the government’s point of view. In response to this, JS (BKP) put up a

note on 1.12.07 spelling the highlights of WHO’s inspection report and mentioning the

meeting taken by HFM on 11.9.07. He also asked for directions for adoption of one of the

two opinions (i) negotiate with WHO for more time for compliance (ii) move towards

gradual shut down of the units and make alternative arrangements for the UIP.

In response to this, As (DG) in turn, in his note dated 1.12.07 suggested the following

line of action : (i) that the units move towards gradual shut down; (ii) the Ministry move

towards setting up a new integrated vaccine unit; (iii) the Ministry take up the issue with

the DG, WHO during his ensuing visiting to Delhi.

Secy. (HFW) supported the proposed action of AS (DG) while at the same time making

some observations on the need to alter the organizational structure of the existing units.

Further on in this file on 13.12.07 the HFM recorded that he had discussed the matter

with Secy (HFW) and directed action be taken in terms of the discussion. From the

context of note, and the content of subsequent notes, it is beyond doubt that the HFM

approved the proposed line of action.

From Annexure C it appears that a meeting was taken by HFM on 13.12.07 to take a final

view on the question of issue of show-cause notices to the units for suspension of their

licenses. DCGI recorded a note on 14.12.07 listing the following views reached in the

abovementioned meeting taken by HFM (i) recommending the issue of show cause

notices to the units for suspension of the licenses for non-compliance with GMP

standards (ii) asking the units to draw up a time frame for rectification of the deficiencies

pointed in the WHO inspection (iii) making a presentation to the expert body of WHO

regarding India’s response to WHO’s report. This note was seen and signed by the Secy.

(HFW) on 14.12.07. Consequent to the view conveyed by the Ministry, DCGI issued

show case notices of No. X – 11026/1/2026 – D dated 14.12.07 for suspension of the

licenses till such time as the deficiencies were rectified.

As mentioned in para 1.8 the DCGI directed that inspections be carried out of the

rectifications mentioned in the representations of the manufacturing units. The Reports on

the second inspection of the units in early Jan 2008 confirmed the rectification of some of

the earlier listed deficiencies, while listing other that were still to be rectified. However, it

needs to be pointed out that, though the Reports of the two inspections carried out in Aug

2007 and Jan 2008 mentioned deficiencies, no inspection report recommended the

suspension / cancellation of the licenses. Subsequent to the receipt of the representations,

the DCGI suspended the licenses of the units under his order No. X-11206/1/2006-D

dated 15.1.08 for violations of the following two provisions:

(i) the untis were not maintaining adequate standard of premises, plant and staff as

required under Rule 78(a)(I) of the D&C Rules.

(ii) the GMP standards for manufacture of drugs as set out in Part I and Part I A

Schedule M of the D&C are not being followed as required under Rule 78(p).

When reviewing the recent history of the three public sector vaccine manufacturing units

one aspect kept that these units have received an exceptional degree of attention from the

regulatory authorities. Over the years, the units have been inspected by the state and

central drug control authorities time and again (BCG, Guindy (5/2001 to 2/2008) – 10

inspections: PII Conoor (10/99 to 3/2008) – 9 inspections and CRI. Kasauli (9/2002 to

1/2008) – 5 inspections). The NRA has itself inspected the units in 2001, 2004 and 2007.

While diligence in the regulatory duties is something which should be commended, it

must not take the shape where it is perceived that these units are particularly targeted.

There are over 10,000 drugs and vaccine/sera units in the country, out of which all at but

350 are in the small scale sector. DCGI has 40 drug inspectors under him who carry out

statutory inspections on his behalf. The number of inspections carried out by the central

drug inspectors in different years is as under:

Inspections carried out by Central Drug Inspectors

Year Number of Inspections
2004-05 1163
2005-06 847
2006-07 775
2007-08 889
2008-09 764

Under the law, the DCGI (CLAA) has jurisdiction over all drugs and pharmaceutical

manufacturing units in the country, including those categories for which the registration

powers are with the state governments. However, the DCGI has informed the Committee

that the central inspectors are carrying out inspections of only certain categories of items

– vaccines & sera. Large volume parenterals, notified medical devices, blood banks and

units applying for certificate of pharmaceutical products under WHO GMP Certification

Scheme. The Committee is surprised to note the role allotted to itself by the DCGI.

Though it has a supervisory responsibility over the entire range of drug manufacturing

units, it has withdrawn itself from the inspection of the drug units, except on request.

Considering that it has jurisdiction over 10,000 manufacturing units, the above table

reveals that a paltry number of manufacturing units were inspected. Given that in year

2007-08, the year in which the licenses of the public vaccine units were suspended, the

central inspectors only carried out 889 inspections, it is remarkable that the regulatory

authority found it possible to spare so much attention for the three public sector vaccine

manufacturing units.

4. Committee’s Observations on the Process Followed

4.1. As has been mentioned in passing in an earlier part of the Report, the process followed in

the Ministry in the course of decision-making on this issue, can only be called

unsystematic. In a public administration system, the fundamental principles of good

governance require that the record keeping of the decision-making process be clear. Only

then is transparency ensured in the process of governance, and only then is minimal

accountability achieved, as is required in governance.From the discussion of the process

adopted in this matter as analysed in the previous section of the Report, minimum

standards in this regard have not been maintained in the Ministry. If that had been

ensured, a plain reading of the file would have enabled one to understand the reasoning,

and ascertain the responsibility for the decision taken. The Committee observes that in

the matter under review here, it became necessary for it to carry out a mini-archival

research in order to determine even the sequence of events, not to talk of the rationale or

analysis of the issue involved. In this backdrop, the Committee is constrained to observe

that the Ministry of Health and Family Welfare had not maintained minimal secretariat

standards in the process of decision-making on the issue under review.

4.2. The relevant points that need to be analyzed before taking a decision on the closure of the

units, have not been explicitly stated anywhere in the Ministry’s notes. Looking at the

issues ab initio, the Committee is of the considered view that the following aspects

should have been considered in the course of taking a decision in the matter.

(i) Issues Relating to WHO

What is WHO’s role vis-à-vis that of the NRA in the matter of regulation of the

GMP standards for drugs and pharmaceutical units? Does WHO have a

supervisory jurisdiction over the Indian NRA to derecognize the NRA? Has the

WHO spelt out its position explicitly at any stage in regard to the GMP

compliance of Indian manufacturing units? Whey did the Ministry not take up

the issue with the DG, WHO, even though at several points in the notes, this line

of action was suggested?

(ii) Scope of Indian GMP Norms

Are Indian vaccine/sera manufacturing units required to conform to Schedule M

of the D&C Rules, or to the GMP norms of WHO? Does Schedule M of the

D&C Rules mandatorily require that the vaccine units ensure that the production

is strictly in uniflo and with a logical sequence of operations?

(iii) Exercise of Due Diligence by the Officials dealing with the Issue

Whether the dealing officials attempt to examine the various relevant aspects to

enable them to arrive at a decision in public interest? Whether the final decision

was on the basis of a reasoned analysis?

(iv) Purpose of notifying GMP standards

What is the fundamental purpose of statutorily notifying GMP standards for

drugs and vaccine/sera? Does a more stringent GMP standard necessarily ensure

a better product quality for the user? Has the Indian user of vaccines under the

UIP suffered in any way, whether in the long term or short term, by using

vaccines produced in public sector units that conformed to Indian GMP

standards rather than WHO GMP standards?

(v) Role of DGHS has the technical wing of the Ministry of Health and Family

Welfare the Directorate General of Health Services – adequately discharged its

role in advising the Ministry on this sensitive public health issue? Did the

Ministry involve the DGHS adequately?

(vi) National Health Security: Impact of the sudden closure of the units on the

Health Security of the country.

(vii) Evaluation of Public Interest: Was a comparison of the pros and cons of the

issue from the viewpoint of broad public interest carried out with due diligence?

4.3. A scrutiny of the records of the Ministry reveals that there was no systematic

identification of the issues and subsequent logical analysis of each of these aspects. Much

of the discussion on the files is extremely confused. There is some passing mention of

certain aspects, but these relate to the consequences if WHO de-recognizes the NRA.

Repeatedly, emphasis has been focused on the line that, if the NRA is derecognized, the

private manufacturers will be treated as ineligible for WHO pre-qualification as vendors.

The risk or damage to public interest resulting from closure of the public sector units has

never been considered; though, on a few occasions mention has been made that steps will

have to be taken to secure alternate sources of supplies for vaccines. In sum, it is the view

of the Committee that the Ministry (including the DGHS and the DCGI) did not carry out

a appropriately structured analysis of the sensitive issue under review. The discharge of

the responsibility of due diligence by the Ministry required that the various facets of the

issue be discussed in a simple structured manner so that the pros and cons were

transparent. The Committee is of the considered view that had this been done, the

Ministry would not have come to a decision to close the units in an abrupt manner.

4.4. The Committee will now record its perceptions, ad seriatim, on the various facts of the

issue of closure that have been listed in para 4.2 above.

4.4.1 Issues Relating to WHO

4.4.1.1 WHO is a highly regarded international organization in the Global Health Sector, India’s
association with it goes back to the time of independence. In the early years after our

independence, India was critically short of both financial resources and technical

expertise in the health sector. In those day, WHO’s assistance – both financial and

technical – went a long way in meeting the minimal requirement of health services in the

country. Over the years, both the financial resources available to the national health

sector and the local skilled human resources, have grown manifold. Though it is clear that

we are still a resource-deficit, developing country, the domestic resources are much more

now than what WHO can possibly provide by way of assistance. WHO has over the years

been hard-pressed for budgetary resources. Most of its budget is used for paying its

technical man-power. The annual allocation for the various field programmes funded by

WHO in India, would only be of the order of about Rs. 50 crores. As against this the

central government budget is itself of the order of Rs. 25,000 crores, while the state

budgets aggregate about Rs. 60,000 crores a year. Looking to these numbers, it is clear

that WHO’s contribution to service delivery in the health sector of India is miniscule.

However, there is still much that India can gain through an active association with the

initiatives undertaken by WHO. WHO is very influential in crafting the major policy

trends in the global health sector. Indeed, it is one of the few international organizations

that are not totally dominated by the developed countries of the first world. In the recent

past, WHO played a significant role in the Doha round of the IPR negotiations conducted

under the auspices of WTO. All of us in the developing world owe it a debt of gratitude

for influencing the trend of those negotiations, so as to provide comfort-space to

struggling countries to gain relief from some of the rigid IPR provisions, in the

eventuality of a national health emergency. All in all, it is the view of the Committee that

if it is very much in the interest of India to maintain a close working relationship with the

WHO to strengthen the voice of the developing countries in the global health sector. The

particular areas where the influence of this international organization could be of use to a

country like India are: setting normative commercial terms for pharma research:

prioritization of pharma research in neglected tropical diseases, sponsoring of pharma

research in the public domain to avoid patent restrictions advice in adoption of best

practices in health service delivery in different settings; etc. Given this backdrop, the

Committee is well aware of the valuable services provided by WHO, and has kept this in

mind while discussing in the next para the appropriate bi-lateral relationship between the

national government and the international agency.

4.4.1.2 As has been mentioned in the previous paragraph, the advice/information offered by

WHO-about improvement in product standards and technical processes, advancement in

treatment regimens and new diagnostics – is of immense value. However, in order to

maintain a harmonious working relationship, it is important to accurately demarcate the

boundary between the reach of WHO’s advocacy and the irreducible extent of exercise of

sovereign authority by the Indian government. It is known that the WHO has been

offering technical advice to the Ministry of Health and Family Welfare on GMP related

issues. However, no matter how useful WHO’s advice may be, the NRA’s sovereign

function under statute, of inspecting the manufacturing standards of drugs and

pharmaceutical units, cannot be discharged in partnership with international organization.

Under the D&C Act and Rules, the DCGI is the apex point of the Indian regulatory

system. This was the position taken by the government in year 2002 when it denied WHO

the permission to conduct inspections jointly with the NRA. The Committee recognizes

that it is within the competence of the Ministry to review a policy decision at a

subsequent point of time. Changing circumstances and national and international

developments, may necessitate that in the country’s interest. But the Committee is of the

view that any change in position of the government on a sensitive matter should be

agreed out in the notes in any analytical manner. It is seen that the decision taken by

HFM on 10.5.07, to permit WHO inspectors to be associated with the NRA inspection, is

on an opaque note stating that Secy. (HFW) has opined that we should not object to the

participation of WHO representatives in the NRA inspection. The note does mention that

in the past the Ministry has not agreed to this request from WHO. However, there is just

no analytical discussion as to why we should reverse the earlier position of the

government. This being a sensitive issue, the reasoning for the decision should have been

recorded explicitly. Once WHO came to be associated with the NRA inspection, their

view on the GMP standards became the dominant one. In this background, the committee

is of the view that the decision to permit WHO to join the NRA inspection was not taken

with the necessary degree of application of mind and accountability.

4.4.1.3 The Committee is aware that the WHO renders certain consultancy services by way of

procurement of drugs and pharmaceuticals for use in international programmes funded by

other multilateral agencies (UNICEF, WB, UNHCR). In the discharge of this function,

WHO can prescribe any norm considered appropriate in its judgment for pre-qualification

of vendors for supply of drugs and pharmaceuticals for the international programmes, so

long as its norms are not arbitrary. The functioning of the NRA has no nexus with any

inspection WHO may carry out on behalf of the international drugs/vaccine purchasers.

Independent inspection of the quality of manufacturing facilities is a common feature in

international trade a large number of countries proposing to import drugs and vaccines

from India routinely conduct independent inspection of the facilities of the vendors.

DCGI has also informed the Committee that WHO is periodically and independently

inspecting the private units in the country that are on WHO’s pre-qualified list of

vendors. However, the assertion which seems to have been made by WHO – that if WHO

was not permitted to inspect public sector manufacturing units (even if these had no

intention of applying for WHO’s pre-qualified vendor’s list), this would result in the de-

recognition of the Indian NRA, and would consequently render the private vaccine units

ineligible for listing on WHO’s pre-qualified vendor list – seems to be an arbitrary

conclusion. On the basis of what has been mentioned earlier, it is apparent to the

Committee that WHO does not exercise any supervisory authority over the Indian NRA.

Hence the question of de-recognition of the Indian NRA cannot arise. WHO would

naturally be entitled to make an independent assessment of the level of cGMP

compliance of those manufacturing units that apply for pre-qualified vendor listing with

WHO. Needless to say, the NRA in India can take a differing view on the status of

compliance for the very same units for its own purposes. However, it is the considered

view of the Committee that the eligibility of individual applicants should in no

circumstances be contingent upon whether public sector manufacturing units have been

inspected by WHO, or whether these public sector manufacturing units in the assessment

of WHO, meet its cGMP standards. Treating the eligibility of individual applicants as

contingent upon public sector units meeting eligibility standards, would clearly be

arbitrary.

Incidentally, it may be motioned that, after the view expressed in the above paragraph

had been incorporated in the interim Report, the issue of de-recognition of the NRA by

WHO seems to have been dropped and the Indian suppliers of vaccines to international

agencies have suffered no disadvantage.

4.4.1.4 The Committee is of the view that there is considerable confusion in the dialogue
between the Ministry of Health and Family Welfare and the WHO on the issue relating to

the GMP standards required to be achieved by public sector vaccine units. The WHO has

to bring out is position explicitly in writing at any time. The only mention of their

position is in passing notes of different Indian officials. These notes mention that WHO

has been insisting that, if India does not permit the inspection of public sector

manufacturing units, WHO will de-recognize the Indian NRA. Also, that if the Indian

NRA is de-recognized, no unit, including private units that otherwise are compliant with

the WHO GMP norms, will be eligible for listing as WHO’s pre-qualified vendors. The

only communication on record on this subject is a letter dated 17.5.06 addressed to the

HFM from the Additional Director General, WHO. This letter does not state that WHO

will de-recognize the Indian NRA if it is not allowed to inspect the public sector

manufacturing units, or if in their assessment the public sector manufacturing units are

seen to be non-compliant with WHO GMP norms. Clearly, the context of this letter only

relates to the requirements of eligibility for pre-qualified listing as vendors for purchase

relating to international programmes. The letter, however, does assert the view of WHO,

that India has followed dual GMP standards for vaccines with comparatively weak

enforcement of GMP for public sector units. By way of a caution, the letter does say that

there may be a major negative impact should the NRA assessment fail to meet the critical

indicators required for the WHO pre-qualification scheme. The Committee is of the view

that as a matter of administrative practice, in the normal course, the Ministry should have

obtained the position of WHO on this sensitive issue in explicit terms in writing. It is

considered to be imprudent for the Ministry to arrive at a decision on this important issue

merely on the basis of impressions and conjecture of some officials in the Indian

administration.

4.4.1.5 The Committee observes that in several notes on file, officials have suggested that the

issues be taken up at the level of DG, WHO so that the position of the Indian government

can be effectively put across. The specific suggestions for taking up the issue with DG,

WHO were made in the following listed notes; (i) JS (DP)’s note dated 31.10.07 in

Annexure C; (ii) AS (DG)’s note dated 28.11.07 in Annexure E; (iii) JS (BKP)’s note

dated 1.12.07 in Annexure D; (iv) AS (DG)’s note dated 1.12.07 in Annexure D. and (v)

HFM’s meeting on 13.12.07 recorded in DCGI’s note dated 14.12.07 in Annexure C.

While no one disagreed with this line of action, the suggestion was never perused. This

Committee had also recommended in its Interim Report that the Ministry may consider

taking up the issue with the DG, WHO, as the differences appeared to be on account of a

misunderstanding between the Ministry of Health and Family Welfare and the WHO.

While four of the Committee’s recommendations made in the Interim Report have been

accepted by the government and implemented, this particular recommendation does not

seem to have caught the attention of the Ministry. Even at the cost of repetition, the

Committee would again suggest that the Ministry may consider entering into a candid

dialogue with the DG of WHO so that the country’s position is clearly understood by the

WHO, and no unnecessary misunderstanding persists between the two.

4.4.1.6 For the reasons given in the earlier paragraphs, the so called de-recognition of the Indian

NRA by WHO, should not affect the eligibility of private manufacturers who otherwise

meet the norms for enlistment on WHO’s pre-qualified list of vendors. The Committee is

of the considered view that any decision by the WHO to de-recognize the Indian NRA,

for reasons that have been discussed, would be an extraordinary action on the part of the

organization. Such a move on the part of WHO would have far reaching implications on

the integrity of statutory institutions in sovereign nations. The Committee feels that any

move to consider private vaccine manufacturers (who are otherwise complaint with

WHO GMP norms) as ineligible because the WHO finds certain public sector units non-

compliant, would be illogical, arbitrary and discriminatory, as this has no nexus with the

objective of purchasing high quality drugs/vaccines produced under the best possible

GMP standards.

4.4.1.7 Despite having arrived at the above position on the question of de-recognition, the

Committee considers it necessary to address the worst-case scenario, one in which, at

some distant date, when even those Indian manufacturers that are compliant with WHO-

level GMP norms, are not included in the pre-qualified list of vendors. India has been a

growing exporter of drugs/vaccines under internationally funded relief programmes.

Exports of drugs and vaccines from the country under such programmes are of a value of

about Rs. 500 crores annually i.e. US$ 0.1 billion. Even if we hypothetically assume that

these exports run the risk of being discontinued, the impact will be nominal, as the value

of these exports is miniscule compared to the aggregate national export earnings of about

US 180 billion annually. In the perception of the Committee, the export earnings

foregone, if such an eventuality arises, would be insignificant compared to the gain

through enhanced vaccine security for the country over the long run.

4.4.2. Span of Indian GMP Norms

4.4.2.1 The Indian GMP norms of drugs and pharmaceutical are notified under the D&C Act and

D&C Rules. Over the last decade or so, WHO has been advising and encouraging

countries to align their GMP standards with their model GMP norms. After detailed

consideration over several years, on 11.12.01, the new GMP standards for vaccines / sera

was notified for India through an entirely new Schedule ‘M’ under the D&C Rules,

which were substantially congruent with WHO’s recommended norms. The new

standards came into force with immediate effect for new units; however, the notification

provided for a grace period for the existing units to upgrade their facilities and eventually

came to effect from 1.7.05.

4.4.2.2 The extant national GMP standards for drug /vaccine manufacture are largely identical to

the cGMP standards recommended by the WHO. The standards, inter alia, applicable to

vaccine/sera manufacturing units are set out in Part I and Part 1 A of Schedule M of the

D&C Rules. A perusal of this Schedule Reveals that it covers a vast array of

specifications that collectively impact on the quality of the manufacturing process. By

their number, nature and span of application, all these standards cannot be met to the

fullest extent by every manufacturing facility. Many of the standards are spelt out in

descriptive language, and an assessment of compliance would depend on the subjective

perspective of the individual making the evaluation. Also, legal compliance does not

require that each of the norms be individually met to the fullest extent, but rather than, the

overall compliance of the various norms should be adequate. A shortcoming in some of

the non essential / minor areas – need for re-configuration of production line; need for

smooth surfaces and dust-free junctions, corners and door-frames; defects in the animal

house; need for amendment of SOPs and new documentation; calibration of equipment –

does not automatically call for the suspension / cancellation of the license. To legally

carry out operations in India, the drugs and pharmaceutical units are required to

substantially comply with the standards set out under Schedule M of the D&C Rules,

subject to the monitoring /assessment of the NRA/DCGI.

4.4.2.3 To appreciate the approach required to be adopted in the enforcement of the GMP

standards given in Schedule M, it would be necessary to review, in brief, the historical

backdrop in which the drug industry has operated in the country. As a developing

country, India can be considered reasonably strong in the drugs and vaccine/sera sectors.

In the sub sector of generic drugs, we have a global reputation for production of high

quality and inexpensive generics. The vaccine / sera manufacturing facilities heirlooms

that have come our way. Two of our public sector vaccine manufacturing units are over a

century old, while the third one is over sixty years old. All three units have, what can be

called, an unmatched corpus of experience in the area of manufacture of vaccine/sera.

Here it may be mentioned that manufacture of vaccine/sera is not only an application of

technology/science, but it is also a quasi-art. The technical manpower in these units over

time has acquired, what can be called, a unique experience in this line of activity. The

private sector manufacturers of vaccines/sera in the country are relatively recent entrants

and the experience they draw upon is largely through the technical staff of public sector

units who are either retirees, or have been poached from public sector units. The vaccine /

sera supplied by the public sector manufacturers rigorously meet product standards

notified under the D&C Act and Rules – these units have had an unblemished production

record.

4.4.2.4 The key provision under Schedule M setting out the GMP standards in the production

area is: ‘The production area shall be designed to allow the production preferably in uni-

flow and with logical sequence of operations. ‘This is an over arching provision that sets

the backdrop for the other more specific norms. The language of this provision puts it

beyond doubt that production in uni-flow and with logical sequence of operations’ is a

desirable goal, but not a rigid mandatory requirement.

4.4.2.5 The notification of the rigorous GMP standards does not imply that all manufacturing

facilities that do not meet the standards to the fullest extent would in one stroke have to

be shut down. However, throughout the process of consideration of the issue on the

records of the Ministry, and the Inspection Reports, the underlying assumption has been

that the attainment of ‘uni-flo- of the operations in an irreducible, mandatory requirement

of the GMP standards. This approach is misconceived. These GMP standards are the

ultimate standards towards which we aspire, and these would have to be achieved through

progressive stages. It is not the intention of the law-makers to abruptly enforce these

standards on all manufacturing units with immediate effect, regardless of other

circumstances. It needs to be recognized the sudden-death approach to the

implementation of the GMP standards (which may be newly notified and subjectively

assessed) would serve no public purpose, it would only bring about a crisis, as the

operations of a larger portion of the domestic drug sector would come to a halt. About

95% of the domestic drug production units are in the small-scale sector. It would take a

decade or more for the units in this sector to become GMP-compliant to the fullest extent.

Through a package of progressive incentives and administrative hand-holding, these drug

units would have to be induced to improve manufacturing conditions. Looking to the

magnitude of the task involved, it would be a considerable time before the manufacturing

conditions in drug units would be anywhere close to the notified GMP standards as

interpreted to the ultimate extent. The Regulatory Authority, in exercising its judgment in

allowing units with various levels of compliance to GMP standards, subject to a minimal

level of compliance, should take a variety of factors into account. These factors would

include: the present manufacturing conditions, a realistic time-line for upgradation of

manufacturing conditions; harm to public interest resulting from a sudden drop in drug /

vaccine / sera availability; capacity of the manufacturing units to rigorously maintain

statutory product standards with their current manufacturing practices; irreducible needs

of national health security, etc.

4.4.2.6 At this stage the Committee would like to react to the issue raised in the letter dated

17.5.06 addressed to the HFM by the Additional Director General of WHO. This letter,

inter alia, makes the assertion that India is adopting dual vaccine standards in the matter

of vaccine supply with inferior quality products from the public sector units being used

under the UIP. The Committee has examined this issue very carefully and has come to

the conclusion that this perception is misconceived as it is not based on any acceptable

evidence. Different manufacturing units may have varying standards of GMP within a

range and yet all may meet the minimum compliance level of Schedule M acceptable to

the NRA. Vaccine/Sera manufactured in Indian public sector units are compliant with the

Indian GMP standard, and are also compliant with the notified product standard. Former

HFM, when he met the Committee on 13.5.10, also made a point in passing that supply of

vaccines from public sector units under UIP, would imply the use of inferior vaccines.

For the reasons spelt out in this para, in view of the Committee, such an apprehension is

unfounded.

4.4.2.7 A perusal of the three files relating to the issue of suspension of the licenses of the public

sector manufacturing units reveals that the examination has been carried out under an

impression that WHO exercises some type of supervisory jurisdiction over the Indian

NRA. Consequently, the entire examination process has borne the burden of the belief

that the conclusions of the inspection have to be agreed joint conclusions of WHO and

the NRA. As has been shown in the previous section of the report, the WHO inspection,

whenever it is carried out, would be only for the purpose of listing manufacturing units as

pre-qualified vendors, and the independent inspection of the NRA, under the authority of

the D&C Rules, would be to determine compliance with Indian GMP standards.

4.4.2.8 In the three files where the issue of suspension of the license was considered, great
emphasis has been given to the fact that the arrangement of the production line does not

conform to the principle of ‘uniflo’ and with logical sequence of operations… The

impression given on file is that non-compliance with complete ‘uniflo’ would constitute a

fatal deficiency in the observance of GMP standards in the production unit. To arrive at a

finding on the reasonableness of the above issue, the Committee considers it necessary to

discuss in some detail the significant provisions of Schedule M that are applicable to

vaccine/sera manufacturing units in the country.

4.4.2.9 The GMP standards are laid out in an elaborate document, a part of which is descriptive

in nature. The key overarching provision of Schedule M is: The production area shall be

designed to allow the production preferably in uniflo and with logical sequence of

operations.’ The manufacturing standards in the drugs and pharmaceutical industries of

the country are far-removed from the best in the world. However, the Committee must

quickly qualify this by saying that, this is not to imply that they are an unacceptable

standard that place at risk the health of the citizenry. The optimal flow of operations can

be ensured by strict application of appropriate SOPs without any major redesign of the

lay-out of the production line / buildings. It is the view of the Committee that, broadly

speaking, they maintained the minimum required technical standard, and in tandem with

rigorous enforcement of product quality standards, they have been able to provide quality

preventive / curative care to the citizenry.

4.4.2.10 The Committee visited the three manufacturing units before the finalization of the Interim

Report. The status of the manufacturing facilities at each of the three locations at the time

of the Committee’s visit has been given in paras 2.2, 2.3 &2.4 of the Interim Report. A

summary of the overview of the status of the three units is recapitulated hereafter. It is

noted that several inspection reports have been submitted pursuant to various inspections.

Many of the observations overlap. The last detailed inspection report was submitted in

early January 2008, after the receipt of the reply from the units to the show cause notice,

and immediately prior to the suspension of the manufacturing licenses. These are perhaps

the most detailed reports pointing out the deficiencies. The deficiencies listed in these

reports of January 2008, will be used as the reference list for the discussion in this

section. Out of the total of 140 deficiencies mentioned in the reports, some 71

observations are of a minor nature, not significantly affecting the manufacturing

standards. Some 69 others require significant improvement / upgradation – walls not

having a smooth surface, junctions, corners, window/door frames not being smooth and

dust free, animal house requiring minor improvement, SOPs requiring revision, need for

introduction of new documentation, need for calibration of different equipment,

separation of different work areas, etc. About 60% of this second category of work had

already been completed at the time of the site visit. It was the assessment of the

Committee that the remaining work in this category could comfortably be completed

within three months. On the basis of the observations during its site visit, the Committee

was of the view that many of the deficiencies pointed out are minor in nature, and even

the key requirement – ‘production in uni-flow and logical sequence of operations’ – is

substantially achieved in the existing production lines.

4.4.2.11 At this stage, the Committee would like to set out its understating of the key phrase of the

GMP, which constitutes the overarching objective, to design the work area ‘to allow the

production preferably in uni-flo and with logical sequence of operations.’ In the view of

the Committee, the key word in the provision is ‘preferably’. Quite obviously this word

was used to imply that the principle of logical sequence of operations would be enforced

to the extent it is possible to optimize the working, in the circumstances in which the

manufacturing units operate. It would be inherent in the situation that the rigour of the

application of the GMP standards would be greater for new units than for existing units.

The rate of progressive tightening of the compliance to the GMP norms would be judged

by the NRA in the totality of the circumstances. The facilities existing at the time of

suspension of operations were designed in an age when the idea encapsulated in the

phrase quoted at the start of the paragraph, was non-existent. However, the given

space/plot constraints at the three locations. It was noted by the Committee that much has

been achieved by way of rationalization of the flow of men and material in the

manufacturing process. In fact, in all the units, within each section of the manufacturing

process (receipt of raw material and glassware from outside suppliers, sterilization of the

items; culturing of bacteria, preparation of media; filling of vials; capping and labeling of

vials, packaging of the product) the layout and the manufacturing sequence has been

optimized. It can safely be claimed that within each section of the manufacturing line,

production ‘in uni-flo and with logical sequence of operations’ has been achieved.

Efficient flow of operations can be ensured by strictly following the SOPs, without major

changes in the building design. However, this had not been possible across all the

interfaces of the different sections in the sequence of production. The connect between

different sections of the production process in some instances is established through the

use of aseptic pass-boxes. To achieve the ultimate optimization through the entire process

line, a new production line will have to be established by incorporating the essential

technical features in the original design. It is learnt that the Ministry has approved the

schemes for establishment of new manufacturing lines. Taking into account the

reasonable estimates of time for administrative processing of the scheme and construction

of the new facilities, the Committee felt that a total implementation period of three years

would be required.

4.4.2.12 The manufacturing units at CRI, Kasauli and BCGVL, Guindy had considerably

quantities of finished products with them from the time of the closure. The Committee in

its Interim Report recommended that these should not be wasted and should be used to

bridge the supply gap at least in year 2010-11. In this backdrop, the Committee

recommended that the manufacturing units be advised that, after confirming the quality

of the products, these products be supplied under the UIP before their expiry dates. This

recommendation has been accepted and implemented by the government.

4.4.3. Due Diligence in Examination of Issues

4.4.3.1 A fundamental principle of Governance is that in the process of decision-making, the

examination of the relevant issues be carried out with due diligence, with due regard to

accountability and the need for safe-guarding public interest. Annexure C, D & E chart

out the route taken in the processing of the issue on the relevant files. The Committee

observes that not even one official has identified the different aspect of the issue and

analyzed it in any systematic manner. In fairness, it must be recorded that in his first note

dated 5.4.07. DCGI did, in a passing manner; spell out the likely impact of closure of the

public sector units on availability of vaccines for the UIP. However, this cannot be

treated as an adequate analysis of the various relevant aspects of the files the suggestions

were side-tracked and lost amongst other views. The overall impression that the

Committee gets is that the process of examination of the issue had spun out of control,

and no one at the senior administrative level made any attempt to bring it back on track.

The flawed decision was the result of multiple human errors. The constructive

responsibility for this would rest on the apex functionaries of the political and

bureaucratic executive i.e. HFM and Secy. (HFW).

4.4.3.2 Early during the process of examination of the issue, at the meeting taken by Secy.

(HFW) on 1.9.07, he had suggested that the units be advised to wind-down operations.

HFM, in a subsequent meeting had taken a milder view and instead suggested that the

units be asked to rectify the deficiencies pointed out and also that WHO Hqs be

approached for more time to carry out the upgradation. However, the Ministry’s final

views on the question of issue of a show cause notice dated 14.12.07 to the units was

approved by HFM. From this recapitulation of the process, it will be seen that the crunch-

decision taken by the DCGI, was accepted at the highest levels in both the political and

bureaucratic executive line-up of the Ministry. Responsibility for the flawed advice given

to the DCGI would substantially rest at those two levels – HFM and Secy (HFW).

4.4.3.3 From a study of the files it is seen that the representation made by the manufacturing

units against the notice of suspension / cancellation of the licenses and the reports of the

second round of inspection carried out under the orders of the DCGI, were never

examined on DCGI’s file: also at this stage, no reference was to the Ministry. The

Committee only finds a short note dated 16.1.08 (Annexure C), stating that the DCGI had

suspended the licenses on 15.1.08. This note was seen by DGHS (17.1.08) and Secy.

(HFW) (26.1.08).

4.4.3.4 The Committee is surprised to note the procedure adopted by the DCGI after the receipt

of the representations in response to the show cause notices. The action of the DCGI in

ordering the suspension of the licenses without even going through a ritual of considering

the representation, and the subsequent inspection report, is plainly illegal. Since the

DCGI was exercising quasi-judicial powers, an analysis of the representations and the

reasons for arriving at a decision, needed to be recorded as speaking orders. Since the

particular DCGI who was involved in the administrative process then, is no more with us

in the world, the Committee finds it appropriate to refrain from more critical comments

on this matter.

Before passing on to another section, the Committee would like to clarify one other

aspect. Despite the fact that the DCGI independently took the final decision to suspend

the licenses, without any consultation with the Ministry, there is ample collateral

evidence that the Ministry, including the apex levels of the political and bureaucratic

executives, were fully in the loop. In this background, the only conclusion we can arrive

at is that the Ministry was associated with the final decision for the closure of the units.

4.4.3.5 At this stage of the Final Report, the Committee would like to record the general

impression it has gained after studying the Ministry’s records relating to the

administrative processing of the issue. It is observed that the officials involved in the

process showed a marked reluctance to come to grips with the problem being examined.

The files floated around in a directionless manner. Most notes were perfunctory and

repetitive. The various elements constituting the issue have not been identified and there

is little rigorous analysis of the issues. A strong impression is gained that everyone was

handling the files with kid gloves. It would not be an exaggeration to say that the process

adopted in the Ministry – for evaluation of the issue relating to the closure of the units –

was virtually on auto-pilot. Quite apparently, the issue involved was a critical one and its

examination should have been carried out in all its multiple aspects. If, for any reasons,

the junior officers felt diffident, it fell upon the apex level officials of the political and

bureaucratic executive, to discharge this leadership role. There was nothing worn with

the ‘system’ in the Ministry / DGHS / DCGI, it was only that the ‘system was not

operated responsibly’ With disappointment, the Committee is constrained to note that at

no level was the duty – of ensuring a rigorous and objective analysis – discharged with

the necessary diligence. In fact, evidence on record indicates that, in the midst of the

administrative process, the decision was being treated as pre-judged.

4.4.3.6 The Former HFM in his meeting with the Committee on 13.5.10 made the point that the

consideration of this important issue was carried out for long, much of which went

unrecorded in the files. He implied that the question of adequacy of scrutiny in the

Ministry should not be based only on the recorded notes. The principle of accountability

on public administration requires that the process be fully recorded in the official

documents. It is not possible to entertain post-factor claims on the basis of unrecorded

discussions. Former HFM also contended that the Indian public sector units were in no

way comparable to the modern units Europe and USA. While this is true, as discussed in

another part of the report, this in no way contradicts a conclusion that the public sector

units broadly conform to the Indian GMP standards. In defending the closure of the

manufacturing units, the HFM had mentioned that during his period a large number of

units had been closed down in the country for non-compliance with the GMP standards.

For verifying this, the DCGI’s office was asked to provide information on the number of

units whose license was suspended / cancelled in the last five years for non-compliance

with the GMP standards. Despite several reminders, and despite the caution that failure to

furnish the information would only be construed as deliberate to avoid embarrassing

facts, these figures have not been furnished to the Committee. The general impression of

the knowledgeable officials in the Ministry is that this number would be very small, if not

nil. Thus, the former HFM’s impression about large-scale cancellation of licenses during

his period in office is mistaken. The Former HFM also has no comments as to why

WHOs views on the GMP standards should be binding in the Indian NRA. In totality,

during his meeting with the Committee, the former HFM did not mention a single point

of significance that could have improved the Ministry’s case in defending the handling of

this issue.

4.4.3.7 The note submitted by the DGHS does not raise any significant point. It generally says

that all matters were processed in DGHS/DCGI with all diligence and responsibility. The

only eye-catching opinion mentioned is that some issues listed in the note were purely

policy issues and DGHS had nothing to do with them. It comes as a surprise to us to hear

that the Director General does not consider it to be his role to advice the Ministry in

policy formulation. If this is really true, DGHS would be left with practically no

responsibility – it is well known that DGHS does not itself execute any field programme,

or deliver any health services. Policy issues in the Ministry of Health have a predominant

technical aspect, and one would expect it to be the principal responsibility of the DGHS

to provide the Ministry the requisite technical inputs. In fact, in the view of the

Committee, the issues being considered relating to implementation of GMP standards

were ones where the DGHS’ inputs would have been decisive in arriving at a policy

view-point. Without exaggeration, it can be said that the examination policy issue became

a mess, principally because there were no technical inputs to guide the analysis. In this

back-drop, the Committee is of the view that it would not be correct for the Director

General to assert that DGHS has no role in policy formulation.

The disagreement elements that should have been examined in the consideration of the

issue, have been discussed in para 4.2 of this Final Report. A perusal of the subsequent

paras would indicate that no rational analysis of these issues would lead one to the

conclusion that the vaccine units needed to be closed in public interest.

4.4.3.8 The Committee notes that another important point mentioned in DCGI’s note dated
16.1.08 relates to a meeting held on 17-18 th Dec, 2007 between Secy. (HFW) and the

DCGI on the side of the Ministry and Additional Director General and his team from the

side of WHO. [In the Interim Report, the Ministry’s representatives had inadvertently

been mentioned as Secy. (HFW) and DGHS. DCGI has recorded that in this meeting

relating to the GMP standards of public sector units, the Ministry had agreed to suspend /

cancel the licenses of the public sector units by 15.1.08. Strangely, this note is nearly a

month after the event and also after the licenses had been suspended. There are no

minutes of that meeting on record to ascertain the circumstances in which that assurance

was given; it appears that no minutes were prepared and issued. This note of DCGI

records a startling development. There is nothing on record to show that the issue had

earlier been discussed at any level in the Ministry. Also, there is nothing to show that the

issue had earlier was given with the approval of HFM, or even that HFM came to know

of it post-facto. It may be mentioned that DGGI’s note dated 16.1.08 was not marked up

to HFM by Secy. (HFW).

4.4.3.9 The record does not explain under what circumstances and with whose authority, this
assurance was given. The show cause notice for suspension / cancellation of the license

was issued on 14.12.07. It seems that almost immediately after that Secy. (HFW) went to

Geneva, where he attended the meeting on 17-18 th Dec 2007. Looking to these facts,

there is no gain saying that, even before the notice period was over and without taking the

unit’s representation into account, the assurance gave an unmistakable indication that the

outcome was pre-decided. A pre-judged outcome vitiates a quasi – judicial proceeding ab

initio. Noting the tenor of the notes, the route the files had taken and the issues which

were pointedly ignored, the Committee cannot avoid the perception that the conclusion

was pre-decided. The Committee considers it a matter of great regret that in examining

such a sensitive issues of public health security, the Ministry pre-judged the issue. In

view of this finding, regardless of all other considerations, DCGI’s order of suspension

dated 15.1.08 would have to be treated as null and void. Responsibility for the unilateral

assurance assuring closure of the units before 15.1.08, would rest on the apex functionary

of the bureaucratic executive i.e. Secy. (HFW)

4.4.3.10 Under the Rule 85(I) of the D&C Rules, the powers for suspension / cancellation of

licenses lie with the DCGI. The DCGI has the authority to exercise these powers

independently. However, there is no bar in law to the DCGI seeking advice / guidance

from anyone, including the Ministry of Health and Family Welfare. The issue regarding

the closure of the public sector vaccine units being such a sensitive one, it is not

surprising that the DCGI chose to seek the guidance of the Ministry of Health and Family

Welfare. Needless to say under the law the DCGI was in no way bound to accept the

advice of the Ministry. In the final sense, it was the DCGI who took the call on the issue

of the closure of the units. This issue has been raised in a separate note recorded by the

Member Secretary attached to the Interim Report. In this separate note, the Member

Secretary of the Committee has expressed the view that the DCGI is not required to

exercise his statutory powers for suspension / cancellation of licenses under instructions

of the Ministry. The Member Secretary had, therefore expressed the view that it would be

inappropriate to expect the Ministry of Health and Family Welfare to overtly interfere in

DCGI’s statutory powers. Thereby, the Member Secretary implied that the officials of the

Ministry of Health and Family Welfare cannot be said to be associated and would not be

responsible for the decisions taken by the DCGI. The other three Members of the

Committee consider it necessary to give their comments in this Final Report on the view

expressed by the Member Secretary.

4.4.3.11 It is the view of the other three Members of the Committee that, as mentioned earlier, it is

open to the DCGI to seek advice from anyone, including the Ministry before taking an

independent statutory decision. On receiving such a request, it was for the Ministry to

agree to give advice, or to instruct the DCGI to exercise his powers on his own. It is quite

clear from the record that the Ministry chose to evaluate the issue and finally offer its

observations to the DCGI. In fact, the Ministry processed this issue on its files from early

April 2007 to mid December 2007, a period of over eight months. In the background of

this history, and particularly after the decision of closure has generated considerable

public controversy, it would not be open to the Ministry officials to say that they are not

required to take a decision under the law and therefore they should not be held

responsible for the observations they offered to the DCGI. In the perception of the other

three Members of this Committee this would not be a bona fide position to take. In fact,

in our discussions in the Ministry, no official has taken such a position. In this backdrop,

the other three Members of the Committee would beg to disagree with the observations

made by the Member Secretary in his separate note attached to the Interim Report.

4.4.4. Purpose of Notifying GMP Standards

4.4.4.1 Any drug or vaccine/sera ultimately has to be judged by the product quality. All the

rigorous monitoring of GMP standards is to eventually secure product quality. The Indian

product standards are of a rigorous level, largely congruent with those recommended by

WHO. The products from the public sector vaccine / sera manufacturing units have not

come to adverse notice on ground of sub-standard quality. This record itself shows that,

despite not maintaining manufacturing standards that meet the ultimate level of

compliance of the GMP standards, the thoroughness of its procedures have ensured the

highest product quality.

4.4.4.2 The purpose of notifying GMP standards is to reduce, to an infinitesimal level,

the risk of any contamination / infection at any stage of the manufacturing process. It needs

to be recognized that conceptually, the risk of product quality failure can never be reduced

to zero; it can only be minimized to a low level. With the manufacturing processes in use in

the public sector units, and with diligence and thoroughness, they have ensured that the

product quality fully meets the notified standard. As has been mentioned in an earlier part

of the Report, the public sector units have already made considerable improvements/ are in

the process of making improvements in the manufacturing arrangements in order to rectify

the deficiencies that have been highlighted by the inspectors in their reports. To reach an

even higher level of sophistication in the standard of the manufacturing process, a new

production line will have to be established at each location, incorporating in the basic

design the fullest GMP requirements. However, till the new facilities are commissioned,

there does not seem to be any reason to discontinue producing the vaccines / sera in the

facilities available in their existing production line, which in some cases have been

significantly upgraded, and in others, are undergoing upgradation. While operating the

existing production line, the management will have to ensure that their product conforms to

the product standards prescribed in the D&C Rules in every respect. The Committee is of

the considered view that at the time of issue of the suspension orders, the public sector units

were substantially complying with the letter and substance of the GMP standards set under

Schedule M of the D&C Rules. The contrary assessment in the course of the inspections in

the latter half of 2007 was largely on account of a mis-interpretation of the statutory

requirements of the GMP standards, as discussed in an earlier section of the Report. In the

period after the closure, many of the deficiencies listed in the inspection reports have been

rectified, and action is underway to rectify the remaining deficiencies. Therefore, on

restarting after upgradation, the compliance level of the units would be superior to that

existing prior to closure.

4.4.4.3 With reference to the above paragraph, the Member Secretary of the Committee, at

the stage of finalization of this Final Report, has brought to our notice a Note of the

Standing Finance Committee circulated by the Ministry of Health and Family Welfare in

July, 1999 relating to the expenditure sanction for certain works of upgradation proposed in

the manufacturing facilities of CRI, Kasuali. The Member Secretary has pointed out that the

said Note admits that the manufacturing conditions in that unit are not cGMP compliant and

that the upgradation is required to make the unit compliant with Schedule ‘M’ under the

D&C Rules. From this, the Member – Secretary has drawn the conclusion that it cannot be

said as has been stated in the previous para, that at the time of suspension of the licenses of

the unit in January 2008, the unit was substantially in compliance with the extant GMP

standards. The substance of his point is placed in Annexure F to this Final Report as a Note

of Dissent. As suggested in that note, the Committee once again asked DGHS/DCGI to re-

check and forward any other files relating to the issue under examination that had escaped

their notice earlier on. No other documents have been located and forwarded by the

DGHS/DCGI. The other Members of the Committee have studied the available documents

and the surrounding circumstances referred to by the Member-Secretary, in great detail. The

observations of the other Members of the Committee are as under:-

(i) GMP norms were first introduced under the D&C Rules in 1988 and have been

changed from time to time. The GMP norms in force in December, 2007 when the

licenses of the manufacturing units was suspended, were first made effective from

1.7.05. The GMP norms in force when the SFC Note was circulated in July, 1999

were clearly not the norms under which the licenses of the manufacturing units were

suspended in January, 2008. Thus the statement in the SFC Note relates to another

norm at another time, and would have no bearing, legal or otherwise, on the status of

GMP compliance of the unit in January 2008.

(ii) Quite apart from the issue as to which norm was in operation when the SFC Note

was circulated, a long span of over eight years separated the circulation of the SFC

Note and the suspension of the license of the unit. Any regulatory action under the

D&C Act or Rules has to be based on proximate events. The observations on the

manufacturing conditions in year 1999 would have no rational nexus with the

manufacturing condition in early 2008. In the subsequent para 7 of this Report some

details have been given of the steps taken over the years to upgrade the quality of the

facilities in the manufacturing units. Annexure K to this Report sets out the annual

plan allocation over the last fifteen years for CRI, Kasauli. It will be observed there

from that between 1999-2000 (when the SFC Note was circulated) and 2007-08

(when the manufacturing license was suspended), the Plan Expenditure incurred at

CRI, Kasauli for various upgradation works was of the order of Rs. 43 crores. Given

these facts, it is clear that the condition of the manufacturing facility in year 2007-08

would be vastly different from that in year 1999-2000.

For the reasons given above, it is considered view of the other three members of the

Committee that a remark in a document of year 1999 – that CRI, Kasauli is not GMP

compliant – would have no logical bearing on the GMP status of the unit in the year

2007-08.

4.4.4.4 The impression given in some of the documents of WHO officials and also in the

media, is that, by not meeting WHO GMP standards, the users of these drugs / sera under

the UIP are being delivered sub-standard medical services. Such a perception is

misconceived. All the sera/vaccines produced in the country are produced from units

meeting Indian GMP standards. Also, all the products being introduced in the domestic

market are conforming to the notified Indian product standards, which in most cases are

congruent to the WHO recommended product standards. Conceptually, GMP standards can

be of an ever-increasing sophistication. The GMP standards maintained by some European

manufacturers are even superior to the WHO GMP standards. This in no way implies that

products from a unit complying with WHO recommended standards is inferior to that from

European from manufacturing units maintaining even more sophisticated standards.

Likewise, the products from units conforming to Indian GMP standards are in no way

inferior to the products from units conforming to WHO recommended standards. All

products released into the domestic market are rigorously checked for product quality

against the notified product standards, regardless of the GMP standards of the originating

manufacturing units. It is, of course, true that for manufacturing units having higher GMP

standards, the possibility of turning out batches of sub-standard products reduces. In any

case, all batches of bulk finished product and all lots of packaged drugs/vaccine/sera are

rigorously checked for product quality prior to release into the market. Looking at if from a

commonsensical point of view, no manufacturing unit that was noncompliant with the GMP

standards could possibly produce vaccines with the correct product standards on a

consistent basis over an extended period of time. Thus, the impression given in certain

circles that the products from unit conforming to Indian GMP standards are inferior to the

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