Despite Tainted Heparin, US Drug and Medical Device Companies Still Like ChinaMar 14, 2008 | Parker Waichman LLP
Pharmaceutical companies and medical device makers are in no mood to break their China habit, as several life sciences companies are planning on expanding manufacturing operations in that country. That, despite 21 deaths and a staggering number—over 700—of reported adverse reactions linked to contaminated Baxter Heparin, the main ingredient of which was imported from China. And the Baxter Heparin debacle hasn't even been the worst scandal resulting from Chinese drug manufacturing. Last year, in Panama, dozens of deaths were traced to Chinese-made medicine tainted with an ingredient found in antifreeze. In China itself, hundreds of people were reportedly injured by a contaminated leukemia drug.
Chinese drug imports have more than quadrupled in the US in the past five years to $401 million in 2007, according to the International Trade Administration, part of the US Department of Commerce. Approximately 3,000 Chinese companies are registered with the Food & Drug Administration (FDA) to market medical devices in the US. But even the FDA says many of those Chinese manufacturers are not up-to-snuff. "While some Chinese [drug] companies are state-of-the art in technology and manufacturing expertise, many are at the opposite end of the spectrum," FDA deputy commissioner Murray Lumpkin told Congress last year.
Meanwhile, the life sciences industry here continues to create close business ties in China, despite countless reports of tainted medicines, foods, and consumer goods sickening and killing US consumers. Massachusetts Governor Deval Patrick led a trade mission there last year that included a stop at Shanghai drug manufacturer WuXi PharmaTech Co., which reports 20 US customers, including Vertex Pharmaceuticals of Cambridge. Vertex is developing a hepatitis C treatment and has hired WuXi to manufacture chemicals. WuXi, which said it works with many of the world's biggest drug companies, reported that Vertex is one of its largest customers and is quadrupling its Shanghai plant to meet Vertex's need.
Other US companies maintain Chinese plants, including Covidien Ltd. of Mansfield and Inverness Medical Innovations Inc. of Waltham, which are both expanding Chinese production. Gensyme Corporation—a Cambridge biotech organization—is considering building a Beijing plant. Last month, Waltham's Inverness, which makes pregnancy tests and diagnostic products, said it plans to close its Bedford, England plant and transfer the majority of work to low-cost Chinese facilities; it already has plants in Hangzhou and Shanghai. Covidien, which makes surgical instruments and respiratory equipment in Shanghai, said it will triple its workforce there.
Operating in China is tempting with its lower costs and the benefit of creating a presence in the booming Asian market; however, risks are real and costly. Take the Baxter Heparin tragedy, which remains ongoing with the number of dead and sick rising daily. "Reasonable people understand that there is some level of concern about Chinese manufacturing," said one lawyer handling Heparin suits, adding that jurors will likely conclude companies that make products in China cut costs at the expense of safety.
Dr. Sidney Wolfe, director of Public Citizen's Health Research Group, predicted there will be more injuries from Chinese medical imports because the FDA rarely inspects Chinese plants. Over 700 Chinese drug makers are registered with the FDA, but the agency only conducted 14 inspections in China last fiscal year and visits are generally planned since the Chinese government warns companies in advance. Worse, Chinese regulators do not inspect plants exporting to the US and other countries. "It's inevitable that we will keep seeing more problems until this is taken care of," Wolfe said.