healthy4u: China

A striking illustration of the hazards to patients' and the public's health from health care organizational leaders using fashionable management techniques to maximize short-term revenue <a href="http://www.reuters.com/article/2012/08/28/us-china-pharmaceuticals-idUSBRE87R0OD20120828">appeared</a> in Reuters.  Background: The Contaminated Heparin from China The particular issue got public notice after US patients started to get sick and die after being infused with heparin, the common anti-coagulant drug. As we have discussed repeatedly starting in 2008 (look <a href="http://hcrenewal.blogspot.com/search/label/heparin">here</a>, and see the summary at the end of the post), Baxter International was selling contaminated heparin under its label which was made in unregulated workshops in China, and then transmitted through a complex chain of Chinese and US companies.  What helped to further obscure the problem was what Baxter was buying was called the active pharmaceutical ingredient (API), which actualy means it was buying the active drug from poorly documented foreign sources.  In other words, it had entirely outsourced the manufacturing of a drug it sold as if it had been made by Baxter in the US. Continued Outsourcing to Questionable Drug Manufacturers Reuters reported on a new investigation of outsourcing of drug manufacturing to China.  The main point was: <blockquote>Four years ago, Beijing promised to clean up its act following the deaths of at least 149 Americans who received contaminated Chinese supplies of the blood-thinner heparin. But an examination by Reuters has found that unregulated Chinese chemical companies making active pharmaceutical ingredients (API) are still selling their products on the open market with few or no checks. Interviews with more than a dozen API producers and brokers indicate drug ingredients are entering the global supply chain after being made with no oversight from China's State Food and Drug Administration (SFDA), and with no Good Manufacturing Practice (GMP) certification, an internationally recognized standard of quality assurance. 'There is falsification of APIs going on, we know it,' said Lembit Rago, coordinator for Quality Assurance and Safety in Medicines with the World Health Organisation (WHO).</blockquote> In fact, the article made the point that the majority of drugs sold worldwide are the product of outsourced, often unregulated, and potentially contaminated and adulterated manufacturing: <blockquote>'Illegal ingredients in bulk are a big problem, but nobody talks about it,' said Guy Villax, chief executive of Hovione, an API supplier based in Portugal with factories there and in China, the United States and Ireland. About 70 to 80 percent of all active drug ingredients - the biologically active component in medicines - originate in China and India, estimate industry experts, with China accounting for the lion's share. Its export market in these products is worth $22 billion in annual sales, according to the China Chamber of Commerce for Import and Export of Medicines and Health Products. 'If China for some reason decided to stop exporting APIs, within three months all our pharmacies would be empty,' said Villax.</blockquote>How Dodgy Manufacturers Continue to Operate Apparently, a particular problem in China is that APIs, that is, the particular drugs in question, can be made by chemical as opposed to officially designated "pharmaceutical" companies, and these chemical companies are not regulated, <blockquote>A key regulatory weakness in China is the distinction between pharmaceutical and chemical companies. While the former are regulated by the SFDA, the latter, making everything from sweeteners to solvents, are not. Yet many chemical companies also churn out drug ingredients, exploiting a loophole by describing the products as chemicals, which they are, rather than the more specific designation of APIs.</blockquote> For example, the article recounted how an unregulated chemical company was apparently a source for a well-known branded pharmaceutical sold by two big pharmaceutical companies headquartered in developed countries, <blockquote>[A]company, Jinan Hongfangde Pharmatech (JHP), of Jinan city in Shandong province, had a product list showing at least five patented products for sale. They included tiotropium bromide, a blockbuster lung drug co-promoted by Boehringer-Ingelheim and Pfizer Inc and sold under the name Spiriva,...</blockquote> Both Boehringer-Ingelheim and Pfizer spokespeople claimed that they only bought drugs from known sources, but then it would be pointless for Jinan Hongfangde Pharmatech to manufacture tiotropium bromide. The Use of Brokers More questions were raised by the pharmaceutical company's apparently common practice of buying drugs through brokers, <blockquote>The rise of the Internet has facilitated exports of drug ingredients. An online search brings up websites offering hundreds of Chinese API sellers. Those not GMP-certified or SFDA-registered are not necessarily substandard, but buyers lack independent quality assurance. The pervasive presence of brokers in the supply line is another risk. Pharmaceutical companies looking to source APIs in China typically hire middlemen to help them navigate the language, red tape and protocol. That system helps Chinese companies making substandard APIs avoid detection.</blockquote> The reason corporate executives choose to buy drugs in China rather than having their companies manufacture them themselves seems to be to reduce costs. A <a href="http://www.in-pharmatechnologist.com/Ingredients/Substandard-APIs-will-be-made-as-long-as-Pharmas-keep-buying-them-says-WHO">post</a> on the In-Pharma blog quoted Lembit Rago, the same WHO official quoted by Reuters, thus, <blockquote>There are Chinese manufacturers supplying APIs of high quality to multinational companies, but there are also companies producing APIs of poor or not defined quality.</blockquote>So, <blockquote>As long as there are customers for substandard APIs they will be produced and sold.</blockquote> The cheapest Chinese drugs, of course, come from the most questionable manufacturers, and that may not be apparent to companies who use brokers to facilitate purchases. <blockquote>'Any number of foreign pharmaceutical companies go no further than looking for API suppliers at CPhI (an international pharmaceutical fair) based only on price,' [manaing director of Samsara Biopharma Consulting Robert] Walsh said. Reuters spoke to brokers who said an API made by an unregulated chemical company would cost less than one from a company that had a GMP certificate. 'Different (API) grades have different prices. Sometimes we accept an order sheet and we happen to find a factory that can do it cheaper than our factory, we will outsource to them and make a bigger margin,' said one broker based in China who sources for a South African outsourcing firm. In China there are few legal repercussions for broker firms who relabel or misrepresent products, and tracing counterfeit and substandard APIs is extremely difficult. 'There are a lot of brokers who are relabeling (APIs) which means you can't trace where the API comes from and that adds to the risk,' said the WHO's quality assurance expert Rago. Andre, the Belgian drug detective, estimates he has uncovered fraud or misrepresentations in as many as 25 percent of cases where he has been hired to audit factories all over China. 'If you can substitute an API that is expensive to make and manufactured at a high level with something that costs much less, then that can happen,' Andre said. 'It's impossible to give an exact number, but it's not rare. It's a minority, but not tiny minority.'</blockquote>Use of Substandard Raw Materials Meanwhile, a <a href="http://www.pharmalot.com/2012/09/using-cooking-oil-to-make-antibiotics-in-china/">post</a> on PharmaLot suggested that the supposedly regulated Chinese "pharmaceutical" companies may implement questionable manufacturing practices, <blockquote>A subsidiary of the Joincare Pharmaceutical Group reportedly used reprocessed cooking oil – otherwise known as ‘gutter’ oil – to make a widely used antibiotic in China. If the term gutter oil is unfamiliar, this refers to reprocessed oil made from kitchen waste dredged from gutters behind restaurants. The State Food and Drug Administration is now investigating the charge after media reports over the past several days, China Daily reports. Why might gutter oil be purchased to produce antibiotics? The oil is cheaper than the more expensive soybean oil used to make 7-aminocephalosporinic acid, or 7-ACA, a chemical for produce cephalosporins. Joincare produces 25 percent of the total amount of the chemical, although up to a dozen other drugmakers may have purchased gutter oil from various suppliers, according to various Chinese media reports. For its part, Joincare reportedly denied using gutter oil. The companies reportedly bought the recycled cooking oil from a company called Huikang Grease Co., which is facing prosecution over its alleged processing and selling of thousands of tons of gutter oil in 2010 and 2011. The Shanghai Daily reported that Huikang received around $22.5 million for roughly 14,700 tons of gutter oil sold to Jiaozuo Joincare Biological Product, a unit of Joincare.</blockquote> Summary There is increasing evidence that a substantial proportion, probably the majority of drugs sold by big pharmaceutical companies based in developed countries were actually made by often poorly regulated firms based elsewhere, often China or India. To put it more directly, most so called pharmaceutical companies in the US and other developed countries have outsourced the actual manufacturing of drugs. Thus, most companies that appear to be pharmaceutical manufacturing companies are really just pharmaceutical marketing and development companies. (And not so much the latter, look here:  Light DW, Lexchin JR. Pharmaceutical R&D; what do we get for all that money? Brit Med J 2012; 345: 22-25.  Link <a href="http://www.bmj.com/content/345/bmj.e4348">here</a>.) Pharmaceutical companies appear to be abandoning their core essence, but are content to market drugs  under their logos without telling the patients who take them the real source of these products.  This would appear to be a big scandal, but one that stays curiously <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic</a>. I have yet to see any discussion with pharmaceutical executives about why their companies hardly make drugs anymore. In the absence of such discussion, I can only speculate that most likely, this is first a product of <a href="http://hcrenewal.blogspot.com/search/label/financialization">financialization</a>. Drug company executives, like most organizational leaders, have fallen under the spell that says their only goal should be to increase short-term revenues. It may be cheaper to buy drugs from perhaps dodgy outsourced suppliers rather than manufacturing them them themselves. Continuing stories like those above, and that of the contaminated Chinese heparin suggest that these outsourced drugs are cheap for a reason. It appears that to save money short-term, pharmaceutical executives may be abandoning their most central mission, to provide pure, unadulterated drugs. The continuing story of outsourced pharmaceutical manufacturing provides yet more evidence that current management dogma may be literally toxic. Once again, I suggest that true health care reform requires leadership of health care organization who put patients' and the public's health ahead of short-term revenue (and the personal enrichment that may result). It is likely that a number of policy changes will be needed to reduce the threats posed by contaminated or adulterated outsourced pharmaceuticals.  There is one simple step that ought to be taken quickly to at least make the problem more transparent.  In the US, most manufactured products have a label disclosing the country of origin.  In parallel with that, all pharmaceutical containers, and all pharmaceutical labels and marketing materials ought to disclose the country in which the active pharmaceutical ingredient was manufactured, and the name and location of the company responsible for that manufacture.  Appendix - Heparin Case Summary - We have posted several times, recently <a href="http://hcrenewal.blogspot.com/2011/06/first-contaminated-heparin-case-verdict.html">here</a> about the tragic case of suddenly allergenic heparin. Although heparin, an intravenous biologic anti-coagulant, has been in use for over 70 years, serious allergic reactions to it had heretofore been rare. Starting late in 2007, hundreds of such reactions, and 21 deaths were reported in the US after intravenous heparin infusions.All the heparin related to these events in the US was made by Baxter International. - We then learned that although the heparin carried the Baxter label, it was not really made by Baxter. The company had outsourced production of the active ingredient to a long, and ultimately mysterious supply chain. Baxter got the active ingredient from a US company, Scientific Protein Laboratories LLC, which in turn obtained it from a factory in China operated by Changzhou SPL, which in turn was owned by Scientific Protein Laboratories and by Changzhou Techpool Pharmaceutical Co. Changzhou SPL, in turn, got it from several consolidators or wholesalers, who in turn got it from numerous small, unidentified "workshops," which seemed to produce the product in often primitive and unsanitary conditions. None of the stops in the Chinese supply chain had apparently been inspected by the US Food and Drug Administration nor its Chinese counterpart. (See posts <a href="http://hcrenewal.blogspot.com/2008/02/in-middle-of-all-those-pigs-in-china.html">here</a> and <a href="http://hcrenewal.blogspot.com/2008/03/heparin-in-era-of-hogwash.html">here</a>.) - We found out that the Baxter International labelled heparin was contaminated with over-sulfated chondroitin sulfate, a substance not found in nature, but which mimics heparin according to the simple laboratory tests used in the Chinese facilities to check incoming heparin. (See post <a href="http://hcrenewal.blogspot.com/2008/03/fake-heparin-then-sick-and-dead.html">here</a>.) Further testing revealed that the contamination seemed to have taken place in China prior to the provision of the heparin to Changzhou SPL. (See post <a href="http://hcrenewal.blogspot.com/2008/03/who-was-responsible-for-purity-of.html">here</a>.) It is not clear whether Baxter International or Scientific Protein Laboratories had inspected most of the steps in the supply chain, or even knew what went on there. - The Baxter and Scientific Protein Laboratories CEOs did not seem aware of where they got the heparin on which the Baxter International label was eventually affixed. But one report in the New York Times alleged that Scientific Protein Laboratories would not pay enough for heparin to satisfy any sources other than the small "workshops." - Leaders of all organizations involved, Baxter International, Scientific Protein Laboratories, Changzhou SPL, the Chinese government, and the US Food and Drug Administration, and the US Congress assigned blame to each other, but none took individual or organizational responsibility. (See post <a href="http://hcrenewal.blogspot.com/2008/05/blaming-some-dude-for-contaminated.html">here</a>.)  Note that SPL was recently bought out and taken private, making its current leadership even less transparent (see post <a href="http://hcrenewal.blogspot.com/2010/10/more-contaminated-heparin-but-who-leads.html">here</a>).  A 2010 inspection of an SPL facility by the FDA revealed ongoing manufacturing problems (see post <a href="http://hcrenewal.blogspot.com/2011/02/fda-to-scientific-protein-laboratories.html">here</a>). - Researchers (who turned out to have financial ties to a company which is developing an anti-coagulant drug that could compete with the heparin made by Baxter International) investigated the biological mechanisms by which the contamination of the heparin lead to adverse effects, but no one investigated further how the contamination occurred, or who was responsible. (See post <a href="http://hcrenewal.blogspot.com/2009/08/who-investigated-case-of-deadly.html">here</a>.) - Hundreds of lawsuits against Baxter have now been filed, so far without resolution. (See post <a href="http://hcrenewal.blogspot.com/2010/01/blog-post.html">here</a>.)  Efforts to make documents to be used in these cases public so far have not succeeded (see post <a href="http://hcrenewal.blogspot.com/2010/08/proprietary-information-confidentiality.html">here</a>). - A government report which attracted little attention warned of the dangers of pharmaceutical ingredients made in China and subject to virtually no oversight. (See post <a href="http://hcrenewal.blogspot.com/2010/04/another-echo-of-case-of-deadly-heparin.html">here</a>.) -  Despite requests from the US, the Chinese government did not investigate the production of the heparin that lead to the deaths (see post <a href="http://hcrenewal.blogspot.com/2010/07/more-about-what-we-dont-know-about.html">here</a>.) -  In February, 2011, a congressional investigation of the case was announced, but results are so far unavailable (see post <a href="http://hcrenewal.blogspot.com/2011/02/three-years-later-congressional.html">here</a>.) -  In June, 2011, a jury returned the first verdict in a civil case about the contaminated heparin, awarding money from Baxter International and Scientific Protein Laboratories to the estate of a man who apparently died due to tainted heparin (see post <a href="http://hcrenewal.blogspot.com/2011/06/first-contaminated-heparin-case-verdict.html">here</a>).

Who Really Makes Brand-Name Pharmaceuticals?

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We last blogged about the case of Baxter International's adulterated heparin <a href="http://hcrenewal.blogspot.com/2010/07/prosecuting-doctors-for-importing-iuds.html">here</a>.  (For a more detailed summary of the case, look <a href="http://hcrenewal.blogspot.com/2010/05/more-questions-no-answers-about-case-of.html">here</a>.) In summary, Baxter International imported the "active pharmaceutical ingredient" (API) of heparin, that is, in plainer language, the drug itself, from China. That API was then sold, with some minor processing, as a Baxter International product with a Baxter International label. The drug came from a sketchy supply chain that Baxter did not directly supervise, apparently originating in small "workshops" operating under primitive and unsanitary conditions without any meaningful inspection or supervision by the company, the Chinese government, or the FDA. The heparin proved to have been adulterated with over-sulfated chondroitin sulfate (OSCS), and many patients who received got seriously ill or died. While there have been investigations of how the adulteration adversely affected patients, to date, there have been no publicly reported investigations of how the OSCS got into the heparin, and who should have been responsible for overseeing the purity and safety of the product. Despite the facts that clearly patients died from receiving this adulterated drug, no individual has yet suffered any negative consequence for what amounted to poisoning of patients with a brand-name but adulterated pharmaceutical product. Now, <a href="http://online.wsj.com/article/SB10001424052748703954804575381540372921432.html">an article</a> in the Wall Street Journal by Alicia Mundy tells us more about what we don't know, <blockquote>The Chinese government didn't pursue an investigation into contaminated heparin sent to the U.S. in 2007 and 2008, despite repeated requests from the U.S. for help, according to a congressional probe. Two House Republicans said Food and Drug Administration officials recently told them that the agency has been "severely hampered" by the lack of cooperation from China in finding those responsible.</blockquote> Furthermore, <blockquote>'It is shocking to find out two years after Chinese-made heparin was killing Americans, the Chinese government still has done no investigating to find out why,' said Mr. Barton, the top Republican on the House Energy and Commerce Committee. He called on ... [FDA Commissioner Margaret] Hamburg to air the issue with Chinese officials.</blockquote> Chinese officials denied there is a problem, <blockquote>Yan Jiangying, spokeswoman for China's State Food and Drug Administration, said the congressmen's accusations are 'not true.' Ms. Yan said her agency 'did a very thorough investigation, including very detailed inspection and testing, and surveys of enterprises as well. We signed an agreement with the FDA on drug safety in the end of 2007, and strengthened the monitoring of heparin.' </blockquote> Note that their investigation, such as it was, did not appear to identify any misconduct or wrong-doing by anyone. So now we know more about what we do not know about the deadly adulterated heparin from China. But remember this is a case about heparin sold in the USA by Baxter International, an American company as an American product, resulting in the death of Americans.  Also, remember that the American company obtained the heparin from another American company, Scientific Protein Laboratories LLC, which in turn obtained it from a factory in China operated by Changzhou SPL, which in turn was owned by Scientific Protein Laboratories and by Changzhou Techpool Pharmaceutical Co.  Since Baxter International sold the heparin under its own label, should not its leaders be responsible for the safety and purity of the product?  Since Scientific Protein Laboratories LLC furnished the active pharmaceutical agreement to Baxter, and obtained it from a factory it partially owned in China, should not its leaders also be responsible for the safety and purity of the product? It would be important to find out ultimately where in China the adulterated heparin entered the supply chain, but the current uncertainty about the initial origin of the contamination does not absolve those in the US who sold the active pharmaceutical ingredient, and then sold that ingredient in bottles with a US company label of responsibility for the safety and purity of the drug. Why have we heard nothing more from Baxter International's and Scientific Protein Laboratories' leaders about the deadly heparin which they had sold?  Why have we heard nothing more about any investigation of these US based participants in this case?  Both US companies doubtless saved money by buying the heparin from the cheapest Chinese sources they could find, by not directly inspecting and supervising its production, and by at best ignoring the lack of regulation of producers of active pharmaceutical ingredients in China.  They and their leaders benefited from this out-sourced, off-shore production.  (Note that Baxter CEO Robert L Parkinson Jr received total compensation of $14,361,305 according to the company's <a href="http://www.baxter.com/downloads/investors/reports_and_financials/2010_baxter_proxy.pdf">proxy statement</a>, and six named officers all received more than $2,200,000.) Why aren't they being held accountable for its bad results? As we have said until being blue in the face, as long as the leaders of health care organizations are not held accountable for the results of their decisions on health care quality, cost, and access (even in such extreme quality violations as those resulting in multiple patient deaths), we can expect continuing decisions that sacrifice quality, increase costs, and worsen access, but that are in the self-interest of the people making them. To really reform health care, we must hold health care organizations and their leaders accountable (and not blame all the problems on doctors, other health care professionals, patients, and society at large). Hat tip to Ed Silverman <a href="http://www.pharmalot.com/2010/07/china-stymies-fda-probe-into-contaminated-heparin/">on the PharmaLot blog</a>.

More About What We Don't Know About the Contaminated Heparin from China

We last blogged about the case of Baxter International's adulterated heparin here. (For a more detailed summary of the case, look here.)In summary, Baxter International imported the "active pharmaceu…

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