Politics & Policy

The High Cost of Cheaper Drugs

The heparin scare is a monitory lesson on drug importation.

Tainted heparin in 11 countries has caused the deaths of 81 patients, highlighting the potential danger of cheaply produced — sometimes counterfeit — imported medicines. Congress is holding multiple hearings on the tragedy, but it’s unlikely that they’ll draw the appropriate conclusion. All three presidential candidates support making drug importation easier to combat the “high cost of health care.” But they seldom acknowledge the inherent risk — and associated external costs — in such importation.

According to the FDA, over half of the drugs Americans buy over the Internet don’t work — and at least one North American death has been officially linked to drugs purchased this way. Even in the legitimate supply chain, where businesses have generally done a good job at quality control, risk remains — especially when products are imported from countries with far less stringent manufacturing standards.

Importing finished medicines and the active pharmaceutical ingredients (API) used to make them certainly reduces price. China and India have some of the cheapest drug production around. U.S. companies already import 40 percent of API from India and China, a number that is expected to double within a decade. While a few companies in both countries have the technical capacity to make good products, regulatory structures are weak there, and their markets are plagued by counterfeit and substandard medicines which annually kill tens of thousands — maybe hundreds of thousands — of their citizens.

In the U.S. heparin case, FDA scientists determined that suspicious lots of API used to make the drug were imported from China and appeared to contain 5 to 20 percent of a heparin-like compound which mimicked heparin activity so closely that it was not recognized during routine testing. The FDA was careful to avoid using the word “counterfeit” when discussing the incident – but when pressed by reporters, Center for Drug Evaluation and Research director  Dr. Janet Woodcock, admitted that the agency was “99 percent sure [the contaminant] is not a natural component that got in there as part of the purification process.”

Heparin is a blood thinner, often used on patients undergoing cardiac surgery or kidney dialysis. Raw heparin is normally sourced from the intestines of pigs or the lungs of cows, while the contaminant — oversulfated chondroitin sulfate — comes from animal cartilage. It is more abundant (and so cheaper) than raw heparin, and not registered for medical use because it causes severe allergic reactions.

FDA inspections of the Changzou, China facility of Scientific Protein Labora tories (SPL), the company responsible for producing the suspect API, revealed insufficient standard-setting and poor record keeping. On Monday, the Chinese government suggested that the problem may have been at the U.S. end, and the FDA quickly responded issuing a warning to SPL (and Beijing) citing “significant deviations” from good manufacturing processes and recommending disapproval of future applications to manufacture APIs.

The FDA and the affected companies appear to have managed the incident well, minimizing American exposure to suspect heparin. Baxter International voluntarily recalled nine lots of its multi-dose vials of the drug in January, and the next month expanded the recall. The FDA investigated SPL facilities in China and Wisconsin – as well as a plant in New Jersey, determining whether the heparin could have been contaminated by its packaging.

The diligence appears to have paid off: no new deaths associated with the suspicious allergic reaction have been reported since February.

But the incident exposes the ugly little secret about drug importation as a means to lower the cost of medicine. Substandard and counterfeit drugs proliferate in many countries in Africa, Asia, and elsewhere — even in Finland, as much as 8 percent of pharmaceutical products may be counterfeit. Outside the U.S., businesses not as vigilant as Baxter, Covidien, and B. Braun — all three of whom issued precautionary recalls once the heparin scare began — and regulatory agencies are not as adept as the FDA.

High regulatory standards in the U.S. have limited drug counterfeiting — but have also fostered a complacency over drug safety. The regnant political opinion today is to allow more intermediaries to import more drugs from overseas. While regulators can oversee the output from large manufacturers, widespread importation will put myriad actors into the importation business, some of them criminal operators.

Pharmaceutical companies are better positioned to source and import drugs than patients are: they have experience, expertise, and reputations to maintain. American consumers benefit when U.S. companies import API from Asia (assuming they pass cost savings on to consumers), and they should continue to do so. Interpol and the World Customs Organization should continue to encourage vigilance in exporting countries, and the FDA should send more inspectors to overseas production facilities in China and India.

But the risk remains. An unchecked drive for the cheapest drugs will increase the risk of another heparin-type incident. And there’s nothing cost-effective about such folly.

Roger Bate is a resident fellow at the American Enterprise Institute. His book Making a Killing: the Deadly Implications of the Counterfeit Drug Trade will be published in May.


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