Johnson and Johnson Settles Suit Alleging Management Incompetence and Deception, Managers Continue to Prosper

Very quietly, pharmaceutical/ biotechnology/ medical device corporate giant Johnson & Johnson just settled another lawsuit. The most pithy version is <a href="http://www.pharmalive.com/jj-pays-23m-to-settle-class-action-suit-over-otc-troubles">by Ed Silverman on Pharmalot</a>, although <a href="http://www.reuters.com/article/2013/07/18/us-johnson-recall-settlement-idUSBRE96H01S20130718">Reuters</a> and <a href="http://www.bloomberg.com/news/2013-07-17/j-j-agrees-to-pay-22-9-million-to-settle-case-over-drug-recalls.html">Bloomberg</a> published short accounts.<br /><br /><b>The New Settlement </b><br /><br />Per Mr Silverman, the gist is:<br /><br /><blockquote class="tr_bq">The health care giant agreed to resolve the dispute brought over <i>allegations that J&J management shirked their responsibilities </i>and allowed a chain of events that resulted in congressional probes; lost market share, consumer confidence and revenue, and a consent decree with the FDA. In the lawsuit, a shareholder charged that <i>J&J bungled</i> the integration of the Pfizer consumer health acquisition, <i>placed inexperienced execs in charges</i> of its OTC unit and <i>cut costs so drastically that quality control suffered.</i><br /><br />The lawsuit, which was brought by Ronald Monk, alleged that the health care giant <i>made misleading statements about its products</i> before disclosing problems with the Fort Washington plant and another in Puerto Rico. He also maintained that J&J <i>withheld material information</i> before its decision three years ago to shut down the Fort Washington plant, where contamination led to the unpublicized recall of defective Motrin tablets in 2009.<br /><br />In agreeing to the settlement, J&J refused to admit any wrongdoing</blockquote><br />So let me review. The allegations in this case were all about problems with the management of Johnson and Johnson.  They included allegations that management was incompetent and deceptive.  The incompetence was in handling the core functions of the company, assuring that its drug products were pure and unadulterated.  The deception was of patients, the public, and the nominal owners of the company to whom management is supposed to report, and allegedly included an attempt to cover up concerns about the purity of its drug products.<br /><br />The proposed settlement follows the current practice of allowing the defendant not to admit the allegations, leaving their truth unproven.  However, one wonders, given that the allegations are about the core responsibilities of management and were leveled by the company owners, why the management would not defend their honor more forthrightly.<br /><br /><b>The Company's Sorry Legal Record </b><br /><br />Furthermore, this settlement also follows the current practice of being made without reference to any other seemingly relevant legal proceedings.  In fact, it is just the latest of a long string of settlements and other resolutions of legal actions, including guilty pleas, by Johnson and Johnson management.  As we summarized most recently <a href="http://hcrenewal.blogspot.com/2012/09/how-many-legal-settlements-does-it-take.html">here</a>, these included:<br /><br />- Convictions in two different states in 2010 for misleading marketing of Risperdal<br />- A guilty plea for misbranding Topamax in 2010<br />- Guilty pleas to bribery in Europe in 2011 by Johnson and Johnson's DePuy subsidiary<br />- A guilty plea for marketing Risperdal for unapproved uses in 2011 (see <a href="http://hcrenewal.blogspot.com/2011/08/why-cultivate-weldons-confidence-ceo.html">this link</a> for all of the above)<br /><br />- A guilty plea to misbranding Natrecor by J+J subsidiary Scios (see post <a href="http://hcrenewal.blogspot.com/2011/09/johnson-and-johnson-pleads-guilty.html">here</a>)<br />- In 2012, testimony in a trial of allegations of unethical marketing of the drug Risperdal (risperidone) by the Janssen subsidiary revealed a systemic, deceptive stealth marketing campaign that fostered suppression of research whose results were unfavorable to the company, ghostwriting, the use of key opinion leaders as marketers in the guise of academics and professionals, and intimidation of whistleblowers. After these revelations, the company abruptly settled the case (see post <a href="http://hcrenewal.blogspot.com/2012/02/texas-tmap-trials-as-illustration-of.html">here</a>).<br />-  Also in 2012,  Johnson & Johnson was fined $1.1 billion by a judge in Arkansas for deceiving patients and physicians again about Risperdal (look <a href="http://hcrenewal.blogspot.com/2012/04/once-more-with-feeling-johnson-and.html">here</a>).<br />-  Also in 2012, Johnson & Johnson announced it would pay $181 million to resolve claims of deceptive advertising again about Risperdal (see this <a href="http://hcrenewal.blogspot.com/2012/09/how-many-legal-settlements-does-it-take.html">post</a>). <br /><br />Even though the record includes a number of settlement in which management did not have to admit guilt, the company has made a surprising number of guilty pleas in just the last few years.  Despite all this evidence of poor, that is incompetent or unethical management, Johnson and Johnson managers have been getting very rich.<br /><br />As we mentioned <a href="http://hcrenewal.blogspot.com/2012/03/despite-recalls-legal-settlements-and.html">here</a>, Mr William Weldon, the outgoing CEO on whose watch most of the misbehavior resulting in the legal actions above occurred, retired with a huge retirement package, after receiving extremely generous compensation prior to that.  The new CEO as of April, 2012,  Mr  Alex Gorsky, per<a href="http://www.investor.jnj.com/common/download/download.cfm?companyid=JNJ&fileid=644762&filekey=44D6D309-4972-4DAE-97C5-60157E6C6CD1&filename=JNJ_2013_Proxy_Statement.PDF"> the company's 2013 proxy statement</a>, already owns more than 190,000 Johnson and Johnson shares,  and received $10,977,109  total compensation in 2012.  Mr Weldon received over $29 million in total compensation just for 2012, the year in which he retired.  Other top executives received from over $3.5 million to over $8 million.  <br /><br /><b>Summary</b><br /><br />So why do the stockholders, the owners of Johnson and Johnson continue to pay so much to an executive team on whose watch so many bad things have happened?  Why did law enforcement authorities allow the company to continue to plead guilty or settle cases without imposing any negative consequences on these executives?  Maybe only <a href="http://en.wikipedia.org/wiki/The_Shadow">the Shadow</a> knows. Of course, the <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">lack of any discussion </a>beyond that on <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a>, that puts each new settlement or guilty plea in the context of the ones before, and juxtaposes them to the rewards of given to management, may not help.  <br /><br />As we <a href="http://hcrenewal.blogspot.com/2012/09/how-many-legal-settlements-does-it-take.html">said the last time</a> we addressed the contrast between Johnson and Johnson's sorry legal record and its voluminous payments to executives, we have <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">noted again and again and again</a> that many of largest and once proud health care organizations now have recent records of repeated, egregious ethical lapses. Not only have their leaders have nearly all avoided penalties, but they have become extremely rich while their companies have so misbehaved. <br /><br />These leaders seem to have become like nobility, able to extract money from lesser folk, while remaining entirely unaccountable for bad results of their reigns. We can see from this case that health care organizations' leadership's nobility overlaps with the supposed "royalty" of the leaders of big financial firms, none of whom have gone to jail after the global financial collapse, great recession, and ongoing international financial disaster (look <a href="http://hcrenewal.blogspot.com/2012/08/duchess-of-wellpoint-abdicates-likely.html">here</a>). The current fashion of punishing behavior within health care organization with fines and agreements to behave better in the future appears to be more law enforcement theatre than serious deterrent.  As Massachusetts Governor Deval Patrick exhorted his fellow Democrats, I exhort state, federal (and international, for that  matter) law enforcement to "<a href="http://www.washingtonpost.com/blogs/election-2012/wp/2012/09/04/patrick-it-is-time-for-democrats-to-grow-a-backbone/">grow a backbone</a>" and go after the people who were responsible for and most profited from the ongoing ethical debacle in health care.<br /><br />As we have said before, true health care reform would make leaders of health care organization accountable for their organizations' bad behavior.

Johnson and Johnson Settles Suit Alleging Management Incompetence and Deception, Managers Continue to Prosper

Very quietly, pharmaceutical/ biotechnology/ medical device corporate giant Johnson & Johnson just settled another lawsuit. The most pithy version is by Ed Silverman on Pharmalot, although Reuters an…

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Six Years Later, Ranbaxy - Oops, Daiichi Sankyo - Pleads Guilty to Adulteration, Pays $500 Million

It only took until 2013, but the US Food and Drug Administration finally secured guilty pleas and fines.  The basics are in an Associated Press story (<a href="http://www.washingtonpost.com/business/subsidiary-of-indian-drug-maker-agrees-to-pay-record-500-million-us-penalty-for-impure-drugs/2013/05/13/2d586104-bc33-11e2-b537-ab47f0325f7c_story.html">via the Washington Post</a>):<br /><br /><blockquote class="tr_bq"> A subsidiary of India’s largest pharmaceutical company has <i>agreed to pay a record $500 million in fines and penalties for selling adulterated drugs and lying to federal regulators</i> in a case that is part of an ongoing crackdown on the quality of generic drugs flowing into the U.S.<br /><br />Federal prosecutors say the guilty plea by Ranbaxy USA Inc. represents the <i>largest financial penalty against a generic drug company for violations of the Federal Food, Drug and Cosmetic Act, which prohibits the sale of impure drugs.</i></blockquote><br />Note that the company pleaded guilty to criminal charges. <br /><br /><blockquote class="tr_bq"> The subsidiary of Ranbaxy Laboratories Limited <i>pleaded guilty to federal criminal charges </i>and the company separately agreed to resolve civil claims with all 50 states and the District of Columbia. The company had earlier set aside $500 million to cover potential criminal and civil liability stemming from the Justice Department investigation.<br /><br />It admitted as part of the deal that it sold adulterated batches of drugs — including an antibiotic and generic versions of medications used to treat severe acne, epilepsy and nerve pain — that were developed at two manufacturing sites in India. </blockquote><br /><b>Ironies</b><br /><br />Note that this resolution has certain ironies.<br /><br /><u>Lateness</u><br /><br />There is a saying that justice delayed is justice denied.  Note that it took six years to obtain the guilty pleas.  As noted by the AP,<br /><br /><blockquote class="tr_bq"> The problems were largely<i> revealed by a whistleblower in a federal lawsuit filed in Maryland in 2007.</i> </blockquote><br /><u>Ambiguities about Responsibility</u><br /><br />First, note that while all the headlines are about Ranbaxy, Ranbaxy is not really an independent company.  As<a href="http://www.reuters.com/article/2013/05/13/us-ranbaxy-settlement-idUSBRE94C0PT20130513"> reported</a> by Reuters (and only by Reuters so far as I can tell at this time),<br /><br /><blockquote class="tr_bq"><i>Ranbaxy ... [is] majority-owned by Japan's Daiichi Sankyo.</i></blockquote><br />Second, as per the AP, see the comment made by the Ranbaxy CEO,<br /><br /><blockquote class="tr_bq">'While <i>we are disappointed by the conduct of the past </i>that led to this investigation, we strongly believe that settling this matter now is in the best interest of all of Ranbaxy’s stakeholders; the conclusion of the DOJ investigation does not materially impact our current financial situation or performance,' Ranbaxy CEO and managing director Arun Sawhney said in a statement.</blockquote><br />Maybe there was something lost in translation, but the CEO certainly spoke as if someone else was responsible for the "conduct of the past."  Incidentally, it does not appear that so far any journalist has even sought comment from the people really in charge, at Daiichi Sankyo.<br /><br />Third, just like many other cases we have reported before, no individual, especially anyone who authorized, directed, or implemented the bad behavior, was held legally responsible.  The cost of the fines will no doubt be spread among the corporate structures involved.  Since a company pleaded guilty, no individual pays a fine, much less goes to jail. <br /><br />It does appear that when the settlement was first announced in 2011, a cut in compensation for top executives of Daiichi Sankyo was announced, but the cuts were temporary, and apparently in response to the immediate financial consequences of the settlement, not any larger implications.  See Bloomberg's <a href="http://www.bloomberg.com/news/2011-12-21/daiichi-sankyo-lowers-executive-pay-after-500-million-ranbaxy-settlement.html">report</a>:<br /><br /><blockquote class="tr_bq"> Chief Executive Officer Joji Nakayama and board members will receive <i>5 percent to 30 percent less compensation for six months</i> in response to the cut in the earnings forecast, Daiichi Sankyo said today. The company has lost about half its market value since agreeing to buy a majority stake in Ranbaxy, India's largest drugmaker, in June 2008. </blockquote><br /> <u>The Contrast with the Case of the Adulterated Heparin</u><br /><br />Note that in this case, there have been no allegations that patients were harmed by the admitted adulteration,  Per the AP:<br /><br /><blockquote class="tr_bq"> It’s not known whether the problems with the drugs led to any health issues.... The government’s allegations against the company make no claims that the drugs, whose strength, purity or quality differed from the specifications, harmed anyone.</blockquote><br /><br />In 2008, we <a href="http://hcrenewal.blogspot.com/2008/02/heparin-made-out-of-pigs-from-elsewhere.html">began </a>blogging about how  US patients started to get sick and die after being infused with heparin, the common anti-coagulant drug. As we have discussed repeatedly  (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. <br /><br />The AP article stated,<br /><br /><blockquote class="tr_bq"> The case comes as federal regulators and prosecutors focus attention on the quality of ingredients of generics and other drugs manufactured overseas, said Allan Coukell, an expert on drug safety at The Pew Charitable Trusts. He said the <i>2008 deaths linked to tainted batches of the blood-thinner heparin that were imported from China </i>served as a 'wake up call' about just how much of the nation’s drug supply comes from overseas.</blockquote><br />So perhaps this wake up call helped propel the current case against Ranbaxy, that is, Daiichi Sankyo.  However, since 2008, if there has been a criminal investigation of the tainted heparin, which appears to have been much more consequential, sometimes fatally so, to patients, the results have not been made public.  A cynic might note that the contaminated heparin was sold by a US based manufacturer of branded pharmaceuticals, not a foreign based manufacturer of generic drugs. <br /><br /><b>Summary </b><br /><br />The most fundamental obligation of a drug company is to produce pure, unadulterated drugs.  The first attempts to regulate the drug industry in the US were meant to ensure that these companies fulfilled this obligation.  Yet now there is increasing evidence that the contemporary pharmaceutical industry has trouble with this most basic responsibility. <br /><br />As we discussed <a href="http://hcrenewal.blogspot.com/2012/09/who-really-makes-brand-name.html">here</a>, the managers of pharmaceutical companies have been swept up in a dominant business management fad, <a href="http://hcrenewal.blogspot.com/search/label/outsourcing">outsourcing</a>, as a means to cut costs to the bone.  (It seems that most health care managers are also caught up in the larger rage for <a href="http://hcrenewal.blogspot.com/search/label/financialization">financialization</a>, to emphasize short term revenue over all other concerns, including patients' and the public's health.)  As the New York Times <a href="http://www.nytimes.com/2013/05/14/business/global/ranbaxy-in-500-million-settlement-of-generic-drug-case.html">reported  </a>re the Ranbaxy case,<br /><br /><br /><blockquote class="tr_bq"><div itemprop="articleBody">Others say the company’s problems highlight how <i>little oversight federal drug safety officials have of overseas plants.</i> Studies that have shown the F.D.A. inspects foreign generic manufacturing plants about <a href="http://www.fda.gov/RegulatoryInformation/Legislation/FederalFoodDrugandCosmeticActFDCAct/SignificantAmendmentstotheFDCAct/FDASIA/ucm310992.htm" title="The F.D.A.’s statement on the issue.">once every seven to 13 years</a>, compared with once every two years for domestic manufacturers. A law passed last year will eventually require the F.D.A. to apply the same standards when inspecting all manufacturing plants, regardless of location. But some worry that <a class="meta-classifier" href="http://topics.nytimes.com/top/reference/timestopics/subjects/f/federal_budget_us/index.html?inline=nyt-classifier" title="Recent and archival news about the federal budget.">federal budget</a> cuts are <i>slowing the adoption of that law. </i></div><div itemprop="articleBody"><br /></div><div itemprop="articleBody">'They just happened to stumble across the Ranbaxy problem at those two plants in India,' said Joe Graedon, a pharmacologist who runs a consumer Web site, <a href="http://www.peoplespharmacy.com/" title="The Web site.">the People’s Pharmacy</a>, which has raised questions about the safety of generic drugs. 'Ranbaxy was the biggest and one of the best in India. What about all the smaller ones? What does that say about them?' </div></blockquote><br /><a href="http://hcrenewal.blogspot.com/2012/09/who-really-makes-brand-name.html">Again,</a> all pharmaceutical companies, not just generic drug manufacturers, have seen fit to outsource much, if not most of their production.<br /><br />In our rush to market fundamentalism, we seem to have deregulated, at least de facto, most aspects of health care.  We now cannot trust the drugs we take to have been made by the companies whose labels they bear, or to be pure.  We now cannot trust that regulators will find that out, or having found that out, will do anything about it in a timely manner.  <br /><br />To repeatedly reiterate, 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.<br /> <br />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).<br /><br />- Roy M. Poses MD for Health Care Renewal  <br /><br /><br /><span style="color: blue; font-size: xx-small;">Appendix - Heparin Case Summary</span><br /><br /><span style="color: blue; font-size: xx-small;">- We have posted several times, recently <a href="http://hcrenewal.blogspot.com/2011/06/first-contaminated-heparin-case-verdict.html">here</a></span><span style="color: blue; font-size: xx-small;"> 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.</span><br /><br /><span style="color: blue; font-size: xx-small;">- 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>.)</span><br /><br /><span style="color: blue; font-size: xx-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2008/03/fake-heparin-then-sick-and-dead.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.) 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 </span><a href="http://hcrenewal.blogspot.com/2008/03/who-was-responsible-for-purity-of.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.) 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.</span><br /><br /><span style="color: blue; font-size: xx-small;">- 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."</span><br /><span style="font-size: xx-small;"><br /><span style="color: blue;"></span></span> <span style="color: blue; font-size: xx-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2008/05/blaming-some-dude-for-contaminated.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.)  Note that SPL was recently bought out and taken private, making its current leadership even less transparent (see post </span><a href="http://hcrenewal.blogspot.com/2010/10/more-contaminated-heparin-but-who-leads.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">).  A 2010 inspection of an SPL facility by the FDA revealed ongoing manufacturing problems (see post </span><a href="http://hcrenewal.blogspot.com/2011/02/fda-to-scientific-protein-laboratories.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">).</span><br /><br /><span style="color: blue; font-size: xx-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2009/08/who-investigated-case-of-deadly.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.)</span><br /><br /><span style="color: blue; font-size: xx-small;">- Hundreds of lawsuits against Baxter have now been filed, so far without resolution. (See post </span><a href="http://hcrenewal.blogspot.com/2010/01/blog-post.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.)  Efforts to make documents to be used in these cases public so far have not succeeded (see post </span><a href="http://hcrenewal.blogspot.com/2010/08/proprietary-information-confidentiality.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">).</span><br /><br /><span style="color: blue; font-size: xx-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2010/04/another-echo-of-case-of-deadly-heparin.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.)</span><br /><br /><span style="color: blue; font-size: xx-small;">-  Despite requests from the US, the Chinese government did not investigate the production of the heparin that lead to the deaths (see post </span><a href="http://hcrenewal.blogspot.com/2010/07/more-about-what-we-dont-know-about.html"><span style="color: blue; font-size: xx-small;">here</span></a><span style="color: blue; font-size: xx-small;">.)</span><br /><br /><span style="color: blue; font-size: xx-small;">-  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>.)</span><br /><br /><span style="color: blue; font-size: xx-small;">-  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>).</span><br /><br /><span style="color: blue; font-size: xx-small;">-  If there was a criminal investigation of the case, its results have not yet appeared.  </span>

Six Years Later, Ranbaxy - Oops, Daiichi Sankyo - Pleads Guilty to Adulteration, Pays $500 Million

It only took until 2013, but the US Food and Drug Administration finally secured guilty pleas and fines.  The basics are in an Associated Press story (via the Washington Post): A subsidiary of India’s…

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Who Really Makes Brand-Name Pharmaceuticals?

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.  <br /><br /><b>Background: The Contaminated Heparin from China</b><br /><br />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.<br /><br /><b>Continued Outsourcing to Questionable Drug Manufacturers</b><br /><br />Reuters reported on a new investigation of outsourcing of drug manufacturing to China.  The main point was:<br /><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 <i>unregulated Chinese chemical companies making active pharmaceutical ingredients (API) are still selling their products on the open market with few or no checks.</i><br /><br />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.<br /><br /><i>'There is falsification of APIs going on, we know it,'</i> said Lembit Rago, coordinator for Quality Assurance and Safety in Medicines with the World Health Organisation (WHO).</blockquote><br />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:<br /><blockquote><i>'Illegal ingredients in bulk are a big problem, but nobody talks about it,'</i> said Guy Villax, chief executive of Hovione, an API supplier based in Portugal with factories there and in China, the United States and Ireland.<br /><br /><i>About <b>70 to 80 percent of all active drug ingredients</b> - the biologically active component in medicines - originate in China and India</i>, 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.<br /><br />'If China for some reason decided to stop exporting APIs, within three months all our pharmacies would be empty,' said Villax.</blockquote><b>How Dodgy Manufacturers Continue to Operate</b><br /><br />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,<br /><blockquote>A key regulatory weakness in China is<i> 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</i>, exploiting a loophole by describing the products as chemicals, which they are, rather than the more specific designation of APIs.</blockquote><br />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,<br /><blockquote>[A]company, <i>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,...</i></blockquote><br />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. <br /><br /><b>The Use of Brokers</b><br /><br />More questions were raised by the pharmaceutical company's apparently common practice of buying drugs through brokers,<br /><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.<br /><br />The pervasive presence of brokers in the supply line is another risk. <i>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.</i></blockquote><br />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,<br /><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,<br /><blockquote><i>As long as there are customers for substandard APIs they will be produced and sold</i>.</blockquote><br />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.<br /><blockquote><i>'Any number of foreign pharmaceutical companies go no further than looking for API suppliers at CPhI (an international pharmaceutical fair) based only on price</i>,' [manaing director of Samsara Biopharma Consulting Robert] Walsh said.<br /><br />Reuters spoke to brokers who said <i>an API made by an unregulated chemical company would cost less than one from a company that had a GMP certificate</i>.<br /><br />'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.<br /><br />In China <i>there are few legal repercussions for broker firms who relabel or misrepresent products, and tracing counterfeit and substandard APIs is extremely difficult.</i><br /><br /><i>'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,'</i> said the WHO's quality assurance expert Rago.<br /><br />Andre, the Belgian drug detective, estimates he has uncovered <i>fraud or misrepresentations in as many as 25 percent of cases where he has been hired to audit factories all over China</i>. '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><b>Use of Substandard Raw Materials</b><br /><br />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,<br /><blockquote>A subsidiary of the Joincare Pharmaceutical Group reportedly <i>used reprocessed cooking oil – otherwise known as ‘gutter’ oil – to make a widely used antibiotic in China</i>. 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.<br /><br />Why might gutter oil be purchased to produce antibiotics? <i>The oil is cheaper than the more expensive soybean oil used to make 7-aminocephalosporinic acid, or 7-ACA, a chemical for produce cephalosporins.</i> 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.<br /><br />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><br /><b>Summary</b><br /><br />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>.<br /><br />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.<br /><br />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).<br /><br />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.  <br /><br /><br /><span style="color: blue; font-size: x-small;">Appendix - Heparin Case Summary</span><br /><br /><span style="color: blue; font-size: x-small;">- We have posted several times, recently <a href="http://hcrenewal.blogspot.com/2011/06/first-contaminated-heparin-case-verdict.html">here</a></span><span style="color: blue; font-size: x-small;"> 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.</span><br /><br /><span style="color: blue; font-size: x-small;">- 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>.)</span><br /><br /><span style="color: blue; font-size: x-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2008/03/fake-heparin-then-sick-and-dead.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.) 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 </span><a href="http://hcrenewal.blogspot.com/2008/03/who-was-responsible-for-purity-of.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.) 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.</span><br /><br /><span style="color: blue; font-size: x-small;">- 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."</span><br /><span style="font-size: x-small;"><br /><span style="color: blue;"></span></span> <span style="color: blue; font-size: x-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2008/05/blaming-some-dude-for-contaminated.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)  Note that SPL was recently bought out and taken private, making its current leadership even less transparent (see post </span><a href="http://hcrenewal.blogspot.com/2010/10/more-contaminated-heparin-but-who-leads.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">).  A 2010 inspection of an SPL facility by the FDA revealed ongoing manufacturing problems (see post </span><a href="http://hcrenewal.blogspot.com/2011/02/fda-to-scientific-protein-laboratories.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">).</span><br /><br /><span style="color: blue; font-size: x-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2009/08/who-investigated-case-of-deadly.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)</span><br /><br /><span style="color: blue; font-size: x-small;">- Hundreds of lawsuits against Baxter have now been filed, so far without resolution. (See post </span><a href="http://hcrenewal.blogspot.com/2010/01/blog-post.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)  Efforts to make documents to be used in these cases public so far have not succeeded (see post </span><a href="http://hcrenewal.blogspot.com/2010/08/proprietary-information-confidentiality.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">).</span><br /><br /><span style="color: blue; font-size: x-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2010/04/another-echo-of-case-of-deadly-heparin.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)</span><br /><br /><span style="color: blue; font-size: x-small;">-  Despite requests from the US, the Chinese government did not investigate the production of the heparin that lead to the deaths (see post </span><a href="http://hcrenewal.blogspot.com/2010/07/more-about-what-we-dont-know-about.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)</span><br /><br /><span style="color: blue; font-size: x-small;">-  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>.)</span><br /><br /><span style="color: blue; font-size: x-small;">-  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>).</span>

Who Really Makes Brand-Name Pharmaceuticals?

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 appeared in R…

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JAMA Article Begs Key Questions About Case of Contaminated Heparin

There was a recent reminder of the case of the tainted heparin, which begged more questions than it answered.  (A case summary is appended to the end of this post, and nearly all our posts are <a href="http://hcrenewal.blogspot.com/search/label/heparin">here</a>.)  The case is of fundamental importance because it involves the failure of pharmaceutical companies to fulfill their core mission, to supply pure, unadulterated drugs.   Three years later, how the heparin was adulterated, and who was responsible are still unknown. <br />JAMA just published a major news article (Kuehn BM. As production goes global, drug supply faces greater risks to safety, quality.  JAMA 2011; 306: 811-813.  Link <a href="http://jama.ama-assn.org/content/306/8/811.full">here</a>.) This, in turn, was based on a five page case study of the heparin incident in a report by the Pew Health Group entitled "After Heparin: Protecting Consumers from the Risk of Substandard and Counterfeit Drugs" (link <a href="http://www.prescriptionproject.org/assets/pdfs/Pew_Heparin_Round4b_SinglePgs_b.pdf">here</a>).  Reading between the lines, the Kuehn article raised several questions which it did not seek to answer, but which we have raised previously.<br /><br /><strong>Why Didn't Baxter Look the Gift Horse in the Mouth?</strong><br /><br />The JAMA article noted that in general, "pharmaceutical companies are shifting the production of drugs and drug ingredients to emerging economies - primarily India and China - <em>to save money</em>."  [italics added for emphasis]  Also, "Many emerging economies <em>do not have robust regulatory systems</em>, and regulators from the United States or other countries may face hurdles in trying to oversee production in these nations."<br /><br />Why were Baxter International executives not concerned about the quality of a drug offered cheaply from firms in countries with little regulatory oversight?  <br /><br />Note that we have been asking versions of this question since 2008, e.g., "How hard did Baxter scrutinize the production of the drug? How hard did SPL scrutinize its production? Did Baxter, SPL and/or the FDA realize the drug was being produced in an unlicensed Chinese chemical factory which had never been inspected by the Chinese or US government? If they did, why did they accept its product? If they didn't, why didn't they know?" - from <a href="http://hcrenewal.blogspot.com/2008/02/in-middle-of-all-those-pigs-in-china.html">this post</a> on February, 16, 2008.<br /><br /><strong>Who Is Responsible for the Complexity and Opacity of the Out-Sourced Supply Chain?</strong><br /><br />The article stated, "In addition to becoming more global, the drug supply chain has also become more complex, .... Drug ingredients are now imported from 150 countries, and multiple suppliers, producers, and distributors may be involved in the production and import of a single drug." <br /><br />In particular, the article noted that "Baxter relied on the assessment of another company when it began receiving heparin from the plant through which the adulterated drug came."  (The nameless other company was Scientific Protein Laboratories.)  Also, it noted that the supply chain began at "the primitive workshops that extract heparin crude by cooking and drying pig intestines" and proceeded to "the companies that consolidate materials from many such workshops and sell them to the factories that produce heparin."  The article did not discuss how this particular supply chain came into existence.<br /><br />Did not drug companies in developed countries, like Baxter International in this case, create these convoluted supply chains (mainly to save money, as noted above)?  If not, did they not at least enable the creation and operation of these chains by purchasing their products without asking too may questions?  In any case, the supply chain's complexity and opacity arose out of individual humans' decisions, not an act by a deity. <br /><br /><strong>Why Have no Individuals Been Held Accountable? </strong><br /><br />The article noted that the Pew report suggested, "increasing the financial penalties and allowable prison terms for individuals and companies who violate the rules from their current maximums of $10 000 or 3 years in prison." The implication was that these penalties have proven insufficient.  However, the article failed to note that so far in the case of the tainted heparin, no such penalties have even been sought.  To my knowledge, neither Baxter International, Scientific Protein Laboratories, nor any individual who worked for them has ever been charged with any violation of "the rules" that could result in any penalty as much as "$10 000 or 3 years in prison."    I have asked repeatedly why so far there has been no obvious effort to hold any individual accountable for the contaminated heparin?  (see <a href="http://hcrenewal.blogspot.com/2010/07/prosecuting-doctors-for-importing-iuds.html">this post</a> from July 19, 2010, in which I noted legal actions against doctors who implanted IUDs imported from and approved in Canada and asked, "why are we so vigorously pursuing individual doctors for an apparently technical violation of laws that did patients no apparent harm, when we are not pursuing health care corporate executives for selling adulterated drugs that likely killed patients? <br /><br /><strong>Why Are the Key Issues In This Case Still So Anechoic?</strong><br /><br />Neither the JAMA article nor the heparin case study in the underlying Pew report directly addressed these questions.  The JAMA article also omitted such details as the name of the company from which Baxter directly purchased the heparin (Scientific Protein Laboratories) and the total number of deaths that may have been related to the heparin.  (It only mentioned 3 deaths related to heparin, while the Pew Report noted the FDA got reports of 68, six more of which it allowed were "possibly caused by the adulterant, 24 were unlikely, and 35 were unassessable.")  As mentioned above, the JAMA article seemed to imply that criminal penalties have been applied to corporate executives whose companies may have profited from cheap but defective out-sourced drugs (but none have been applied in the heparin case).   Ironically, while the JAMA article identified the "culprit" for the adverse events in the heparin case, it used the word to refer to the compound that adulterated the heparin, not those who added it, or who enabled its addition. <br /><br /><strong>Summary</strong><br /><br />Thus, the public discussion in the main-stream medical media of the case of the adulterated heparin is still remarkably squeamish even three plus years after it first became public.  While the heparin case has made it into major medical journals, it still simply is <em>not done</em> to even publicly discuss whether the leaders of health care organizations who become rich partly as a result of decisions such as the unsupervised, uninspected, apparently barely considered out-sourcing of heparin to be accountable when these decisions turn out to have adverse effects on patients.<br /><br />If we cannot even discuss the accountability of leaders of health care organizations, how can we hope to actually hold them accountable?  <br /><br />To repeatedly reiterate, 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.<br /><br /><br />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).<br /><br /><span style="color: blue; font-size: x-small;">Case Summary</span><br /><br /><span style="color: blue; font-size: x-small;">- We have posted several times, recently <a href="http://hcrenewal.blogspot.com/2011/06/first-contaminated-heparin-case-verdict.html">here</a></span><span style="color: blue; font-size: x-small;"> 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.</span><br /><span style="color: blue; font-size: x-small;"></span><br /><br /><span style="color: blue; font-size: x-small;">- 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>.)</span><br /><br /><span style="color: blue; font-size: x-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2008/03/fake-heparin-then-sick-and-dead.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.) 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 </span><a href="http://hcrenewal.blogspot.com/2008/03/who-was-responsible-for-purity-of.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.) 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.</span><br /><br /><span style="color: blue; font-size: x-small;">- 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."</span><br /><span style="font-size: x-small;"><br /><span style="color: blue;"></span></span><br /><span style="color: blue; font-size: x-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2008/05/blaming-some-dude-for-contaminated.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)  Note that SPL was recently bought out and taken private, making its current leadership even less transparent (see post </span><a href="http://hcrenewal.blogspot.com/2010/10/more-contaminated-heparin-but-who-leads.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">).  A 2010 inspection of an SPL facility by the FDA revealed ongoing manufacturing problems (see post </span><a href="http://hcrenewal.blogspot.com/2011/02/fda-to-scientific-protein-laboratories.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">).</span><br /><br /><span style="color: blue; font-size: x-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2009/08/who-investigated-case-of-deadly.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)</span><br /><br /><span style="color: blue; font-size: x-small;">- Hundreds of lawsuits against Baxter have now been filed, so far without resolution. (See post </span><a href="http://hcrenewal.blogspot.com/2010/01/blog-post.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)  Efforts to make documents to be used in these cases public so far have not succeeded (see post </span><a href="http://hcrenewal.blogspot.com/2010/08/proprietary-information-confidentiality.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">).</span><br /><br /><span style="color: blue; font-size: x-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2010/04/another-echo-of-case-of-deadly-heparin.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)</span><br /><br /><span style="color: blue; font-size: x-small;">-  Despite requests from the US, the Chinese government did not investigate the production of the heparin that lead to the deaths (see post </span><a href="http://hcrenewal.blogspot.com/2010/07/more-about-what-we-dont-know-about.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)</span><br /><br /><span style="color: blue; font-size: x-small;">-  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>.)</span><br /><br /><span style="color: blue; font-size: x-small;">-  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>).</span>

JAMA Article Begs Key Questions About Case of Contaminated Heparin

There was a recent reminder of the case of the tainted heparin, which begged more questions than it answered.  (A case summary is appended to the end of this post, and nearly all our posts are here.) …

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Guest Blog: Health Care in Dangerous Times

<span style="background-color: white; color: blue; font-size: xx-small;"><em>Health Care Renewal presents another guest blog by Steve Lucas, a retired businessman who formerly worked in real estate and construction who has a long standing interest in business ethics, and has long observed the health care scene.</em></span><br /><br /><a href="http://hcrenewal.blogspot.com/">Health Care Renewal </a>has often covered the disconnect between the stated goals of companies and the realities of their day to day operations. This raised the following question: Has medicine moved from being dysfunctional to being dangerous?<br /><br />There is certainly no lack of material to support this question as in the last two weeks we can find examples of pharma/biotech/device companies all engaged in questionable behavior. <br /><br /><strong>Medtronic and Manipulation of Study Data</strong><br /><br />In the print media, The Wall Street Journal, a pro-business newspaper regularly highlights stories questioning the actions of companies.<br /><br />In the June 29 <a href="http://online.wsj.com/article/SB10001424052702303627104576413663395567784.html">story</a> titled "Medtronic Surgeons Held Back, Study Says" by John Carreyrou and Tom McGinty we find doctors being paid by Medtronic held back information regarding negative out comes of a bone growth product. <br /><blockquote>'Medtronic paid millions to doctors and those same doctors, oddly enough, published the 'science' Medtronic needed to sell a product,' says Paul Thacker, a former aide to Sen. Charles Grassely…'</blockquote><br /><strong>Chantix's Cardiac Adverse Effects</strong><br /><br />In the July 5 <a href="http://online.wsj.com/article/SB10001424052702304803104576425634260856212.html">story</a>, "Pfizer Drug Tied To Heart Risk" by Thomas M. Burton covers the increased cardiovascular problems with Chantix that only now seemingly have become evident. <br /><br /><blockquote>However, J. Taylor Hays, a Mayo Clinic doctor who has received funding from Pfizer for research on Chantix, responded in a commentary, 'The risk for serious cardiovascular events is low and is greatly outweighed by the benefits of diminishing the truly 'heartbreaking' of smoking.'</blockquote>The article then continues:<br /><blockquote>'Some people have had changes in behavior, hostility, agitation, depressing mood, suicidal thoughts or actions while using Chantix to help them quit smoking,' Pfizer says in safety information.</blockquote><br /><strong>Overuse of Cardiac Stents</strong><br /><br />In the July 6 <a href="http://online.wsj.com/article/SB1000142405270230476060457642832.html">article</a>, "Heart Treatment Overused" by Ron Winslow and John Carreyrou we find the over use of stents and the profit potential for doctors and hospitals. <br /><br /><blockquote>Outside of heart attacks, doctors are often quick to use a common $20,000 procedure to treat patients suffering from coronary artery disease, a new study suggest.</blockquote><br /><strong>Untested Imported Drug Ingredients</strong><br /><br />In the July 6 <a href="http://online.wsj.com/article/SB10001424052702303339904576406163574698.html">Op-ed</a>, "Beware the Risk of Generic Drugs" by Roger Bate reinforces a point made often on Health Care Renewal when he covers the importation of untested or tainted product used in our pharmaceuticals. <br /><blockquote>China is now the largest supplier of pharmaceutical chemicals – hundreds of tons annually – to the world. And pharmaceutical companies that buy these chemicals do not test them.</blockquote><br />Moving on to widely read blogs,<br /><br /><strong>Ghost Writing and Risperdal</strong><br /><br />1BoringOldMan in his <a href="http://1boringoldman.com/index.php/2011/07/03/bipolar-kids-postscript-detestable/">post</a> on bipolar kids and the doctors involved in the Harvard debacle discussed an article favorable to the drug ostensibly written by Harvard Professor Josephy Biederman:<br /><br /><blockquote>This covers the reworking of a previously done study to promote the use of drugs in children with this printed at the bottom of the first page:<br /><br />“"Printed in the USA. Reproduction in whole or part is not permitted. Copyright © 2006 Excerpta Medica, Inc."</blockquote><br />1BoringOldMan continues with this <a href="http://1boringoldman.com/index.php/2011/07/06/in-tears-and-despair">post</a> that since we have identified children as bipolar we are free to ignore other factors and simply medicate them to death.<br /><br /><blockquote>As reported by '60 Minutes' in September of last year, Rebecca Riley died on December 13, 2006, at her home in Hull, Massachusetts, due to an overdose of psychiatric drugs. The drugs — Depakote (divalproex; Abbott), Seroquel (quetiapine; AstraZeneca), and clonazepam — were prescribed by Tufts psychiatrist Kayoko Kifuji for the child’s bipolar disorder, which was diagnosed at the age of 2 years.</blockquote>This covers the death of a child, a child, using the above ghost written drug information.<br /><br /><strong>Bayer's Use of Social Media to Market Drugs</strong><br /><br />Pharma does adjust to the times and market, if it is not explicitly forbidden then it is fair game.<br /><br />Per a <a href="http://www.pharmalot.com/2011/07/bayer-is-scolded-for-tweeting-new-medicines/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Pharmalot+%28Pharmalot%29">post</a> in Pharmalot entitled, "To Tweet or not to Tweet"<br /><br /><blockquote>'To Tweet or not to Tweet?' That is a question that Bayer Healthcare will be pondering for some time. The drugmaker was upbraided by the UK’s Prescription Medicines Code of Practice Authority for recently Tweeting about two medicines, which was deemed to be a cause for concern since the information went directly to the public.</blockquote><br />Much like shooting a gun into a crowd and then claiming they had no way of knowing they would injure someone, a tweet is sent with the full knowledge the first thing everybody will do is hit the forward to all button.<br /><br /><strong>Pharma's Public Relations People Infiltrate Patient Support Groups</strong><br /><br />Per a <a href="http://www.healthnewsreview.org/blog/2011/07/creepy-invasion-of-pharma-into-patient-targeted-social-media-space.html">post</a> on the HealthReviewNews Blog we have one of the most frightening posts possible since it shows pharma following individuals and a willingness to intrude into their personal lives.<br /><br />Marilyn Mann is approached on her Facebook page set up to support parents of children with lipid disorders by a drug PR person to promote a drug.<br /><br /><blockquote>Hi Marilyn, <br /><br />A few months ago, I had emailed you about some research I was doing about a new treatment for FH. I am now working with a pharmaceutical company, and the company currently has a drug in development to help treat people with severe FH that may not be responding to current therapies.</blockquote><br />In the comment section we find this:<br /><br /><blockquote>I'm a communications consultant to many big pharma firms and I'm not sure the PR person in this case did anything wrong. She was upfront and polite about her role, and asked if any patients would do what many have done, and be interviewed to raise the profile of FH.<br />The owner of the group politely declined as was her right.<br />It would have been a different case if there had been any subterfuge involved, but there wasn't.<br />I think on this occasion you have aimed at the wrong target.<br />Good luck with future postings.</blockquote><br />What do all of these references have in common? Senior executives, and health care academics, removed from the day to day work of helping people being able to claim they are not responsible while making ever larger incomes.<br /><br /><strong>Natrecor Shown Not to Work</strong><br /><br />The corporate culture of medicine has become so perverse that even selling a drug that has no benefit becomes acceptable. <br /><br />Per this <a href="http://www.everydayhealth.com/heart-health/0707/study-finds-heart-failure-drug-ineffective.aspx?xid=aol_eh-cardio_24-_20110704&aolcat=ESR&icid=main%7Chtmlws-main-n%7Cdl6%7Csec3_lnk3%7C218187">item</a> in the Heart Health Center Health Day News:<br /><br /><blockquote>Study Finds Heart Failure Drug Ineffective<br /><br />Billions wasted on Natrecor in decade it took to find out it doesn't work, expert says.<br /><br />By Steven Reinberg, HealthDay News<br /><br />WEDNESDAY, July 6 (HealthDay News) — The heart failure drug Natrecor (nesiritide) is ineffective and linked to increased rates of potentially dangerous low blood pressure, a new study finds.</blockquote><br /><strong>Summary: The Most Dangerous Game </strong><br /><br />So, back to my original question: Has medicine become dysfunctional or dangerous? I would contend dangerous. There is nothing magical about the above listed articles or posts. I am not a professional medical person, nor an academic, only someone concerned by the continued decline of medicine and medical care due to a corporate culture that promotes profit above all else. <br /><br />When I meet doctors socially they all speak of being small businessmen. Time and time again we see hospital administrators of all types speaking about being the CEO’s of multi-billion dollar organizations.<br /><br />Drug companies speak of blockbuster drugs as being those with sales of over one billion dollars and fines become the cost of doing business.<br /><br />Today we have a small, but vocal group of people who feel all drugs should be offered to the public and it is up to them to decide if they are appropriate. They also want the government and insurance companies to pay for this return to the pre-FDA days.<br /><br />How will the FDA itself withstand the onslaught of new technologies given out current Federal budget concerns? Tweets and Facebook represent only the beginning of a whole new wave of ways to communicate.<br /><br />My personal opinion is this is a very dangerous time for doctors and patients. Doctors are being pushed into corporate practices where financial gain is the main driver, not health care. Information given to doctors can be so tainted by commercial interest as to be of no value.<br /><br />Patients have no way of knowing where the doctor’s loyalty lies, with them or the practice? DTC ads are full of half truths and fear mongering. Patients need to bring even more information and skepticism to the doctor/patient relationship.<br /><br />I fear we do live in dangerous times. The word “good” has left much of medicine.<br /><br />Steven Lucas MBA

Guest Blog: Health Care in Dangerous Times

Health Care Renewal presents another guest blog by Steve Lucas, a retired businessman who formerly worked in real estate and construction who has a long standing interest in business ethics, and has l…

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The First Contaminated Heparin Case Verdict: Making Money by Giving Patients "the Cheap Stuff"

In February, 2008, we first <a href="http://hcrenewal.blogspot.com/2008/02/in-middle-of-all-those-pigs-in-china.html">posted</a> about the case of the deadly adulterated heparin.  (A case summary is appended to the end of this post, and nearly all our posts are <a href="http://hcrenewal.blogspot.com/search/label/heparin">here</a>.)  The case is of fundamental importance because it involves the failure of pharmaceutical companies to fulfill their core mission, to supply pure, unadulterated drugs.  It is also of fundamental importance because it may be about how this failure to fulfill core mission was not due to accident, or even simple incompetence, but due to putting financial goals ahead of patient safety.  <br /><br />The latest event in the very slowly unfolding aftermath of this case was the first verdict against the sellers of the heparin in a civil trial in a US court room.  As <a href="http://www.chicagotribune.com/business/breaking/chi-baxter-loses-first-heparin-case-20110609,0,1020947.story">reported</a> by the Chicago Tribune,<br /><blockquote>A Cook County Circuit Court jury Thursday awarded $625,000 to the estate of a man who his attorneys say was given a dosage of a blood thinner made by Baxter International Inc. that contained a contaminated ingredient found in the company's supply chain in China.<br /><br />The verdict is the <em>first from a case against Baxter and its supplier, Wisconsin-based Scientific Protein Laboratories, from hundreds of lawsuits</em> filed against the Deerfield-based medical product giant. A mountain of litigation has been leveled against the companies after U.S. regulators determined in 2008 that Baxter's heparin was contaminated, from fake ingredients sourced in China.</blockquote><br />A statement by the (winning) plaintiff's attorneys underscored that this case may have been about cutting costs winning out over patient safety:<br /><blockquote>'The active pharmaceutical ingredient in the contaminated heparin received by Mr. Johansen and other Americans was obtained from Baxter (and its supplier Scientific Protein Laboratories') Changzhou SPL,' Johansen estate attorneys Don Nolan of Chicago and David Zoll of Toledo, Ohio said in a statement this afternoon. <em>'This crude heparin was referred to in the companies' own internal records as <strong>'the cheap stuff.'</strong></em> The contaminant was determined to be a man-made 'fake heparin' called over-sulfated chondroitin sulfate, causing among other effects, potentially fatal allergic-like reactions.'</blockquote><br />As explained in <a href="http://postscript.communitycatalyst.org/?p=2770">this post</a> in the Postscript blog:<br /><blockquote>Baxter and its ingredient supplier, Scientific Protein Laboratories (SPL), announced in 2008 that<em> the OSCS contaminant was introduced intentionally by their suppliers in China. Financial motives are presumed, because Heparin costs 100 times more to make than OSCS.</em> In addition, Heparin which is harvested and purified from the intestines of pigs, was even harder to obtain in 2007-08 because a global pig disease epidemic had created an unexpected shortage in China and elsewhere.<br /><br />The timing was right, and seems the chemistry was, too. The OSCS contaminant was not initially discovered because it mimics some chemical properties of Heparin, <em>suggesting that it was introduced by suppliers in China who possessed the biochemical savvy to fool the standard chemical purity tests then in use by Baxter and the FDA. </em>(The assay test has since been improved by the US Pharmacopeia.)</blockquote>So it appeared in their haste to cut costs, Baxter International, and its US based supplier, Scientific Protein Laboratories, failed to consider that heparin chosen because it was "the cheap stuff" might not turn out to be safe. In particular, they seemed to be wilfully blind to the prospect that pushing for the cheapest price without inquiring too deeply into the details of the supply chain might tempt those down the chain to cheat, and in doing so, to disregard the safety of those patients (in another country) who would be infused with the resulting adulterated product.  This thus appears to be a vivid, and fatal case of mission-hostile management.<br /><br />Meanwhile, we still await the result of the investigation that was supposed to have started in February, 2011 (see <a href="http://hcrenewal.blogspot.com/2011/02/three-years-later-congressional.html">this post</a>.) <br /><br />To reiterate, 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.<br /><br />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).<br /><br /><span style="color: blue; font-size: x-small;">Case Summary</span><br /><br /><span style="color: blue; font-size: x-small;">- We have posted several times, recently </span><a href="http://hcrenewal.blogspot.com/2011/02/fda-to-scientific-protein-laboratories.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">, 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 last year, hundreds of such reactions, and now 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.</span><br /><span style="color: blue; font-size: x-small;"></span><br /><br /><span style="color: blue; font-size: x-small;">- 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.</span><br /><br /><span style="color: blue; font-size: x-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2008/03/fake-heparin-then-sick-and-dead.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.) 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 </span><a href="http://hcrenewal.blogspot.com/2008/03/who-was-responsible-for-purity-of.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.) 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.</span><br /><br /><span style="color: blue; font-size: x-small;">- 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."</span><br /><span style="font-size: x-small;"><br /><span style="color: blue;"></span></span><br /><span style="color: blue; font-size: x-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2008/05/blaming-some-dude-for-contaminated.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)  Note that SPL was recently bought out and taken private, making its current leadership even less transparent (see post </span><a href="http://hcrenewal.blogspot.com/2010/10/more-contaminated-heparin-but-who-leads.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">).  A 2010 inspection of an SPL facility by the FDA revealed ongoing manufacturing problems (see post </span><a href="http://hcrenewal.blogspot.com/2011/02/fda-to-scientific-protein-laboratories.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">).</span><br /><br /><span style="color: blue; font-size: x-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2009/08/who-investigated-case-of-deadly.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)</span><br /><br /><span style="color: blue; font-size: x-small;">- Hundreds of lawsuits against Baxter have now been filed, so far without resolution. (See post </span><a href="http://hcrenewal.blogspot.com/2010/01/blog-post.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)  Efforts to make documents to be used in these cases public so far have not succeeded (see post </span><a href="http://hcrenewal.blogspot.com/2010/08/proprietary-information-confidentiality.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">).</span><br /><br /><span style="color: blue; font-size: x-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2010/04/another-echo-of-case-of-deadly-heparin.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)</span><br /><br /><span style="color: blue; font-size: x-small;">-  Despite requests from the US, the Chinese government did not investigate the production of the heparin that lead to the deaths (see post </span><a href="http://hcrenewal.blogspot.com/2010/07/more-about-what-we-dont-know-about.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)</span><br /><br /><span style="color: blue; font-size: x-small;">-  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>.)</span>

The First Contaminated Heparin Case Verdict: Making Money by Giving Patients "the Cheap Stuff"

In February, 2008, we first posted about the case of the deadly adulterated heparin.  (A case summary is appended to the end of this post, and nearly all our posts are here.)  The case is of fundament…

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Three Years Later, A Congressional Investigation of the Deadly Adulterated Heparin

Slightly more than three years ago, we first <a href="http://hcrenewal.blogspot.com/2008/02/in-middle-of-all-those-pigs-in-china.html">posted</a> about the case of the deadly adulterated heparin.  (A case summary is appended to the end of this post, and nearly all our posts are <a href="http://hcrenewal.blogspot.com/search/label/heparin">here</a>.)  The case is of fundamental importance because it involves the failure of pharmaceutical companies to fulfill their core mission, to supply pure, unadulterated drugs.   Three years later, how the heparin was adulterated, and who was responsible are still unknown. <br /><br />So now, it seems, there will actually be an official investigation.  As<a href="http://online.wsj.com/article/SB10001424052748703775704576162450111643240.html"> reported</a> by Alicia Mundy in the Wall Street Journal,<br /><blockquote>The House Energy and Commerce Committee<em> is conducting a formal investigation into the contaminated-heparin crisis of 2008,</em> saying it wants regulators to figure out who was responsible for adulteration linked to 81 U.S. deaths.<br /><br />The panel's chairman, Rep. Fred Upton (R., Mich.), and two colleagues sent a letter Wednesday to the Food and Drug Administration asking for documents on whether the agency pursued possible culprits in China and pushed the Chinese government for more information.<br /><br />'The committee is investigating the <em>unsolved case of who contaminated the U.S. supply of heparin,</em>' a blood thinner used by about 12 million Americans annually, said Mr. Upton, joined by Reps. Clifford Stearns (R., Fla.) and Michael Burgess (R., Texas).</blockquote><br />Better late than never, I suppose. <a href="http://hcrenewal.blogspot.com/2008/03/contaminated-heparin-where-is-outrage.html">In March, 2008</a>, I called the case "outrageous," and called for an investigation. You really did hear it here first on Health Care Renewal. So three years later, an investigation has actually begun. <br /><br />The latest WSJ article noted:<br /><blockquote><em>'There is substantial public interest in solving this case' because more than 80% of the standard heparin supply in the U.S. today comes from China</em>, the lawmakers wrote. About 16% of all pharmaceutical ingredients in the country are imported from China, they wrote.</blockquote><br />Also,<br /><blockquote>'There is reason to believe all or some of the individuals responsible for the adulteration are <em>still actively engaged in the Chinese pharmaceutical supply chain, and pose a <strong>continuing threat</strong> to pharmaceutical products imported to the U.S</em>.,' the lawmakers wrote.</blockquote><br />However, why this "substantial public interest" and the existence of "a continuing threat" did not lead to an investigation earlier is still completely obscure. <br /><br />The article hinted at some partisan discord in the committee that will do the investigation:<br /><blockquote>Over the last two years, Mr. Burgess and the Energy and Commerce Committee's then-top Republican, Rep. Joe Barton of Texas, <em>pressed the FDA for information on the agency's inspections of Chinese heparin facilities and on the extent of cooperation from national and local Chinese authorities. </em><br /><br />At the time, Republicans were in the minority. Their inquiries didn't constitute a committee investigation, and they couldn't demand nonpublic information from the FDA or call hearings. They now are in the majority and have those powers. </blockquote><br />The implication is that the Democrats on the committee blocked the investigation. Why they would have blocked an investigation when the executive branch was in Republican hands, and why the matter could not have been investigated in another congressional committee, or by some other organization, is unknown.<br /><br />So, again, better late than never. An investigation could at least be the beginnings of accountability for the very well paid pharmaceutical company leaders who up to now have denied all responsibility for failing their most important responsibility, to provide pure, unadulterated drugs. <br /><br />As we have said again and again, 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.<br /><br />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). <br /><br /><span style="color: blue; font-size: x-small;">Case Summary</span><br /><br /><span style="color: blue; font-size: x-small;">- We have posted several times, recently </span><a href="http://hcrenewal.blogspot.com/2011/02/fda-to-scientific-protein-laboratories.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">, 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 last year, hundreds of such reactions, and now 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.</span><br /><span style="color: blue; font-size: x-small;"></span><br /><br /><span style="color: blue; font-size: x-small;">- 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.</span><br /><br /><span style="color: blue; font-size: x-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2008/03/fake-heparin-then-sick-and-dead.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.) 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 </span><a href="http://hcrenewal.blogspot.com/2008/03/who-was-responsible-for-purity-of.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.) 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.</span><br /><br /><span style="color: blue; font-size: x-small;">- 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."</span><br /><span style="font-size: x-small;"><br /><span style="color: blue;"></span></span><br /><span style="color: blue; font-size: x-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2008/05/blaming-some-dude-for-contaminated.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)  Note that SPL was recently bought out and taken private, making its current leadership even less transparent (see post </span><a href="http://hcrenewal.blogspot.com/2010/10/more-contaminated-heparin-but-who-leads.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">).  A 2010 inspection of an SPL facility by the FDA revealed ongoing manufacturing problems (see post </span><a href="http://hcrenewal.blogspot.com/2011/02/fda-to-scientific-protein-laboratories.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">).</span><br /><br /><span style="color: blue; font-size: x-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2009/08/who-investigated-case-of-deadly.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)</span><br /><br /><span style="color: blue; font-size: x-small;">- Hundreds of lawsuits against Baxter have now been filed, so far without resolution. (See post </span><a href="http://hcrenewal.blogspot.com/2010/01/blog-post.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)  Efforts to make documents to be used in these cases public so far have not succeeded (see post </span><a href="http://hcrenewal.blogspot.com/2010/08/proprietary-information-confidentiality.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">).</span><br /><br /><span style="color: blue; font-size: x-small;">- 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 </span><a href="http://hcrenewal.blogspot.com/2010/04/another-echo-of-case-of-deadly-heparin.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)</span><br /><br /><span style="color: blue; font-size: x-small;">-  Despite requests from the US, the Chinese government did not investigate the production of the heparin that lead to the deaths (see post </span><a href="http://hcrenewal.blogspot.com/2010/07/more-about-what-we-dont-know-about.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)</span><br /><br /><span style="color: black;">Hat tip to the </span><a href="http://postscript.communitycatalyst.org/?p=2234"><span style="color: black;">Postscript blog</span></a><span style="color: black;">.</span>

Three Years Later, A Congressional Investigation of the Deadly Adulterated Heparin

Slightly more than three years ago, we first posted about the case of the deadly adulterated heparin.  (A case summary is appended to the end of this post, and nearly all our posts are here.)  The cas…

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FDA to Scientific Protein Laboratories Managerement: "We Are Concerned About Your Fundamental Understanding"

Per Ed Silverman <a href="http://www.pharmalot.com/2011/02/heparin-supplier-is-warned-again-by-the-fda/">on the Pharmalot blog</a>, we hear of new concerns about a company in the supply chain that ended up with adulterated heparin and dead patients.  Before summarizing what the blog reported, let me summarize the case again.<br /><br /><strong>Case Summary</strong><br /><br /><span style="color: blue; font-size: x-small;">- We have posted several times, recently </span><a href="http://hcrenewal.blogspot.com/2010/12/unreasonably-dangerous-heparin.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">, 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 in 2008, hundreds of such reactions, and now over 80 deaths were reported in the US after intravenous heparin infusions.All the heparin related to these events in the US was sold by Baxter International.</span><br /><span style="color: blue; font-size: x-small;">- 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.</span><br /><span style="color: blue; font-size: x-small;">- 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.  (For a more detailed summary of the case, look </span><a href="http://hcrenewal.blogspot.com/2010/05/more-questions-no-answers-about-case-of.html"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">, and for all our posts on this topic, look </span><a href="http://hcrenewal.blogspot.com/search/label/heparin"><span style="color: blue; font-size: x-small;">here</span></a><span style="color: blue; font-size: x-small;">.)</span><br /><br /><strong>The FDA Letter</strong><br /><br />Pharmalot reported that the US Food and Drug Administration (FDA) sent a warning letter dated January 20, 2011, to Scientific Protein Laboratories LLC, and provided <a href="http://freepdfhosting.com/e89847cc8b.pdf">a link</a> to the letter.  <br /><br />The letter identified continuing serious problems with Scientific Protein Laboratories' operations:<br /><blockquote>During our July 28, 2010 - September 3, 2010, inspection of your active pharmaceutical ingredient (API) manufacturing facility, Scientific Protein Laboratories LLC, located at 700 E. Main Street, Waunakee, WI, investigators from the Food and Drug Administration (FDA) identified <em>significant deviations from Current Good Manufacturing Practice (CGMP) for the manufacture of drugs.</em> These deviations <em>cause your drugs to be adulterated</em> within the meaning of section 501(a)(2)(B) of the Federal Food, Drug, and Cosmetic Act (the Act) [21 U.S.C. § 351(a)(2)(B)] in that <em>the methods used in, or the facilities or controls used for, their manufacture, processing, packing, or holding do not conform to, or are not operated or administered in conformity with CGMP</em>.</blockquote><br />The firm failed to adequately respond to complaints about its products, including heparin:<br /><blockquote>Failure to investigate all quality related complaints whether received orally or in writing according to a written procedure.<br /><br />For example, your firm <em>failed to conduct a formal investigation concerning a complaint identifying potential contamination with Oversulfated Chondroitin Sulfate (OSCS)</em> in a lot of Heparin Sodium USP (lot 1035-0778) on October 9, 2008. Your firm <em>did not initiate a formal investigation until September 9, 2009.</em> In addition, at that time, your firm <em>failed to extend your investigations to other lots of Heparin Sodium USP manufactured using the same crude lot identified with OSCS contamination.</em> Your investigation <em>did not consider the other lot of Heparin Sodium USP that was associated with the same contaminated crude lot until May 26, 2010, eight months after initiating a formal investigation </em>(i.e., lot 1035-0780, which tested negative for OSCS in June 2010). We acknowledge that you initiated a voluntary recall of Heparin Sodium USP that included lots 1035-0778 and 1035-0780 on October 13, 2010.<br /><br />In your response, your firm notes that you have revised your procedure to state, “Any SPL employee will inform QA of a customer complaint.” However, this response does not address the fundamental issues that allowed the delays in communications and investigation to occur. <em>Your handling of the heparin contamination complaint suggests the need to evaluate training across all departments about the types of information requiring prompt reporting to the quality unit</em>. Further, your response <em>does not address how you will ensure that complaint investigations are handled in a timely manner.</em></blockquote><br />Also, the firm still had problems overseeing the work of companies that supplied it:<br /><blockquote>Your firm <em>failed to properly evaluate a contract laboratory to ensure GMP compliance of operations occurring at the contract site</em></blockquote><br />Furthermore, it did not use the proper equipment:<br /><blockquote><em>Failure to have equipment for the manufacture of APIs of appropriate design for its intended use.</em></blockquote><br />The FDA seemed concerned that company management did not understand its responsibilities:<br /><blockquote>The manner in which you addressed this problem [the contamination of the heparin] is <em>very worrisome with respect to the timeliness of the investigation, the identification of all potentially affected drugs, and implementing appropriate actions to resolve these issues. <strong>Be advised that your firm has the responsibility to ensure the quality, safety, and integrity of its drugs</strong>.</em> FDA expects that your corporate management will immediately undertake a comprehensive evaluation of your quality system to ensure comprehensive compliance with CGMP.</blockquote><br />In addition,<br /><blockquote>However, we are <em><strong>concerned about your firm’s fundamental understanding</strong> of what is required by your Quality Unit and the regulatory expectations for a firm that enters into agreements with contract testing laboratories</em>. Although you have agreements with other firms that may delineate specific responsibilities to each party, <em>you are ultimately responsible for the quality of your products and the reliability of test results. Regardless of who tests your products or the agreements in place, you are required to manufacture these products in accordance with section 501(a)(2)(B) of the Act to assure their identity, strength, quality, purity, and safety.</em></blockquote><strong>Summary</strong><br /><br />In previous discussions of the case of the adulterated heparin I speculated about reasons that the current leaders of health care corporations may have abandoned their most fundamental responsibilities, <a href="http://hcrenewal.blogspot.com/2010/12/unreasonably-dangerous-heparin.html">for example</a>:<br /><blockquote>I submit that corporate cultures increasingly influenced by the arrogant, greedy, amoral leadership of the financial services industry that lead us to the brink of another depression are also leading us to the brink of a poisonous era in health care. Corporate leaders intent on cutting costs, and paying themselves as much of the resulting proceeds as possible, may see quality and safety as just another cost cutting target. Corporate leaders brought up in the culture of finance, but untrained and inexperienced in engineering, science, and medicine find it all too easy to ignore quality and safety and focus on the bottom line. </blockquote><br />The FDA letter to Scientific Protein Laboratories seems to confirm my fear that leaders of health care corporations no longer seem to understand their most elementary responsibilities for providing safe products, in this case, pure, unadulterated drugs. It did not speak to why that may be the case, but certainly does not contradict my theory above. <br /><br />The letter provides some reassurance that the FDA, at least, has not forgotten the case of the adulterated heparin. However, despite the number of deaths involved, this case has been relatively <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic</a>, and never fully investigated.<br /><br />So here I go again: 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.<br /><br /><br />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).

FDA to Scientific Protein Laboratories Managerement: "We Are Concerned About Your Fundamental Understanding"

Per Ed Silverman on the Pharmalot blog, we hear of new concerns about a company in the supply chain that ended up with adulterated heparin and dead patients.  Before summarizing what the blog reported…

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