Tianjin protest.

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China Should Fix Its Drug Problem (Here's How)

Adam Minter is a Bloomberg View columnist. He is the author of “Junkyard Planet: Travels in the Billion-Dollar Trash Trade.”
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Just before Christmas, the U.S. Food and Drug Administration alerted U.S. pharmaceutical manufacturers to keep a sharp eye on ingredients imported from Tianjin, China. The problem, it seemed, is that these could be contaminated with cyanide that escaped after an explosion in August of a hazardous material warehouse. Already, the FDA reported, it had detected the deadly chemical in two shipments from the city.

The FDA deserves credit for shutting down a poison pipeline aimed at America’s medicine cabinets. But there are considerable doubts about whether it can consistently repeat that success.

The problem is numbers. China and India manufacture more than 80 percent of the main ingredients of the world’s medicines. But the FDA has only two inspectors in China to scrutinize around 700 factories involved in manufacturing drugs for export to the United States, according to Bloomberg News. Concerns are running so high that just days before the FDA’s cyanide letter, two members of Congress requested a GAO investigation into the FDA’s ability to supervise foreign drug manufacturers.

Based on the FDA’s publicly available reports from 2015, there’s reason for concern. Beyond safety violations, there are also cover-ups. During an April inspection of one Chinese-owned manufacturer of pharmaceutical ingredients, inspectors found evidence that staffers deleted unfavorable reports from computers and kept a paper shredder near machines that recorded quality data. The situation wasn’t much better at a new Pfizer facility where, according to Bloomberg News, “employees hid quality failures, used expired manufacturing materials or ones that hadn’t been recently checked, and retested failing products until they passed.”

It’s natural to think that additional FDA inspectors could make these problems go away. Certainly, they would increase the odds that a rogue factory could be identified. But even if the FDA were capable of regular inspections of all those 700 manufacturers, neither it nor the Chinese authorities have the resources to make regular inspections of the additional suppliers who deliver ingredients to those 700 export facilities.

Identifying the scofflaws is made more difficult by a lack of clear regulatory authority in China. Within the China Food and Drug Administration, for example, are 10 agencies with responsibility for medical products. Chinese law grants considerable regulatory authority to individual provinces, many of which have their own bureaucracies. Sculpting national and local institutional rivalries into a competent, national regulatory apparatus might be more difficult than cleaning up China’s drug manufacturers.

Nonetheless, it’s very much in China’s interest to do so. Among Chinese consumers, fake and adulterated drugs are an everyday concern that call into question the ruling regime’s competence and interest in their safety. And if the Chinese government and pharmaceutical industry want to make good on their ambition to become a global leader in pharmaceutical innovation, it’s going to need to clean up an industry that’s second only to India in the number of facilities banned by the FDA, currently 38.

Allowing additional FDA inspectors into China without additional red tape would be an excellent place to start. Long-term, China needs to re-think its product liability laws so that consumers have access to courts and cash settlements that will spur companies to clean up their supply chains voluntarily.

Above all, China needs to demonstrate that it meets international pharmaceutical manufacturing and safety standards, from the factory floor to the top regulatory offices. To do this, it should begin the process of joining the Pharmaceutical Inspection Co-Operation Scheme, a 46-member association of top-level pharmaceutical inspection authorities (like the FDA) that have harmonized their manufacturing standards and recognized each other’s factory inspection reports.

It’s not easy to join. The U.S. FDA, which only became a member in 2011, needed five years to meet the organization’s strict standards. China, with it’s chaotic regulatory regime, will face an even bigger challenge. But the country really has no choice if it hopes to be recognized as a safe and responsible supplier of drugs to its own people, and those abroad.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Adam Minter at aminter@bloomberg.net

To contact the editor responsible for this story:
Jonathan Landman at jlandman4@bloomberg.net