India, EU scramble to resolve drug ban so trade talks don't go down the drain

Print 19 August 2015
Eric Palmer / FeircePharma

When EU regulators banned about 700 products from India over concerns that clinical trials by an Indian CRO were flawed, it put an estimated $1 billion worth of Indian exports at risk. But Europe says it is sure the problems can be worked out after Indian Prime Minister Narendra Modi started playing tough by cancelling discussions over restarting trade negotiations.

India struck from its calendar a meeting this month to talk about resuming the long-stalled talks between the trading partners after India's complaint over the drug bans went unanswered, Reuters reports. EU trade officials insist they never got the letter but say they think the matter can be resolved. In fact, they have said drugmakers simply need to submit new data showing their drugs are safe and effective.

Daniel Rosario, a spokesman with the European Commission told the news service that Europe wants to forge a trade deal with India. "The Commission hopes that a solution will be found to the current deferral," Rosario said.

And behind the scenes, an Indian official conceded that India also wants to get back to the trade table given that the 28-country European Commission is India's largest trading partner and exports of goods actually slid 4% in the last fiscal year to $98 billion.

The continent-wide ban is supposed to kick in yet this week. The issues that led to it track back nearly a year when the European Medicines Agency (EMA) said investigators uncovered irregularities at the Hyderabad lab of CRO GVK Biosciences that left them with doubts on bioequivalence data used to support the approval of hundreds of drugs. While many of the products were made by Indian drugmakers, some are produced by U.S. companies like Mylan ($MYL) and Abbott ($ABT). GVK has insisted its testing was solid and some drugmakers have appealed but the EMA last month reaffirmed its position and set Aug. 21 for the ban to take effect.

Initially, EU trade officials brushed aside the matters, saying the ban was a technical matter unrelated to trade, Reuters reports. But India took the position that the ban was a move by the EU to protect its own drugmakers from competition. While Modi has gotten applause in his own country for hanging tough, some trade experts said there is risk in this kind of brinksmanship. After all, India currently accounts for only 2% of Europe's export sales, and the EU has other, more valuable trade talks brewing, such as the Transatlantic Trade and Investment Partnership (TTIP).

Indian trade expert Shyam Saran, who has previously served as the country's top trade diplomat, told Reuters that India would be best served if it worked a trade deal with Europe ahead of the trans-pacific deal being struck. "The European Union is very important. It is our largest trade partner," Saran said. "Given that negotiations are going on with TTIP, it is better to have a FTA (free trade agreement) deal before that."

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