First, the Wall Street Journal reported how heparin is made in China.
In a small, damp factory here [in Yuanlou, China], blood-smeared men wring pulp from pig intestines, then heat it in concrete vats.
The activity at Yuan Intestine & Casing Factory is the first step in the poorly regulated process of making raw heparin, the main ingredient in a type of blood-thinning medicine that in recent days has come under suspicion in the deaths of four Americans.
More than half the world's heparin comes from China. The chemical is often extracted from pig entrails in small factories -- many as rudimentary as this one, which also manufactures sausage casings from intestines.
Heparin goes through extensive processing in its journey from abattoir to IV bag. Nevertheless, because some of it originates in tiny Chinese factories like these, if there's a problem with the final medication, it can be nearly impossible to trace the raw heparin back to the source, the pigs whose tissue was used to make it.
Heparin makers in China readily acknowledge the lack of oversight. Yuan Changkun, the owner of the small factory here, says health regulators don't visit his plant. Mr. Yuan doesn't keep records of where he acquires the intestines he uses. Nor is he sure who the end customers are.
The raw heparin made by China's myriad small producers ends up in the hands of about 50 export companies, which sell to customers overseas. In the first half of last year, more than 85% of these heparin exports went to the U.S., Austria, France, Italy and Germany, according to an industry trade group.
In fact, although Scientific Protein Laboratory did not get the heparin it sold to Baxter International from Yuan Changkun, it appears that the management of SPL did not know much about the heparin it supplied.
David Strunce, the president of Scientific Protein Laboratories, Baxter's main supplier of heparin, says that the Yuan Intestine & Casing Factory isn't in his company's supply chain. He says Scientific Protein can't trace its supplies in China in as much detail as it can in the U.S. 'We're all dealing with the China collection system,' Mr. Strunce says.
In fact, Changzhou SPL actually was not the source of the heparin that eventually got the Baxter International label. Changzhou SPL, in turn, got the heparin from a number of wholesalers who in turn, got it from a number of smaller, unnamed factories.
Scientific Protein's Mr. Strunce says his company's China venture, Changzhou SPL, gets raw heparin from two wholesalers who gather it from 'six to 12' workshops. 'You can have better, or less good, workshops, Mr. Strunce says.
So to recap so far, Baxter International got the heparin that it sold under its label from SPL, which got the heparin from Changzhou SPL in China, which got the heparin from several wholesalers, which got the heparin from numerous, unnamed small factories. Apparently at none of the steps along the way in China was the heparin subject to any inspection or regulation by the US FDA or its Chinese counterpart.
Then, the Chicago Tribune reported,
Baxter International Inc. does not monitor its supply chain to the extent that it would know that a supplier in China was never inspected before it began shipment of the blood-thinning drug heparin, which is linked to more than 300 illnesses in the U.S., the company's chief executive said Wednesday.
Baxter contracted with a Wisconsin supplier, Scientific Protein Laboratories, and not with that company's Chinese affiliate, Baxter CEO Robert Parkinson said Wednesday in his first interview since the heparin problems surfaced.
"It's not unusual for us not to know that the FDA hasn't inspected a supplier to a supplier," Parkinson said.
Parkinson noted that Baxter's auditors had inspected the facility in the last six months, but he declined to speculate on whether they may have missed something.
'It is both premature and inappropriate to go down that path,' he said.
So, to summarize, a commonly used drug which carried the label of a formerly respected US pharmaceutical company actually came down a torturous supply chain that began in several small factories in China. The factories, and the entirety of the supply chain was never subject to FDA inspection. The respected US company and its CEO did not seem aware of who was actually making the drug it sold under its name, and under what circumstances it was made. The US company that was the proximate source of the active drug to the pharmaceutical company, and its CEO did not seem aware of who was actually making the drug it supplied, and under what circumstances it was made.
Most US corporate CEOs receive extremely generous compensation. For example, Robert L Parkinson, the CEO of Baxter International, was recently reported as getting $3.16 million a year in total compensation. One common explanation for such compensation that to some borders on the outrageous is that the CEOs have to make the tough decisions and take ultimate responsibility for what their companies do. Yet Mr Parker did not seem aware of company practices critical to the health and safety of the patients who were using Baxter International products.
More importantly, patients and physicians used to have some reason to trust the quality of drugs made by US pharmaceutical companies. But now, big US pharmaceutical companies seem willing to outsource the drugs that doctors and patients thought the companies themselves made. Big US pharmaceutical companies do not always seem to know where and how these drugs are made.
In addition, patients and physicians used to have some reason to trust that the FDA was assuring the quality and purity of drugs. My dim recollection of the history is that the FDA was founded to assure the purity and quality of US pharmaceuticals. But now, the FDA no longer seems to be keeping track of an increasing proportion of drugs marketed by US companies, but actually made somewhere else.
So tell me again why US patients and physicians should trust these companies to provide them with pure drugs which are as safe as their labels purport them to be, and why they should accept the high prices these companies charge for their heavily marketed products.
Reckless outsourcing of drug production, failure of US pharmaceutical companies to control and be responsible for how and where the drugs they market were made, and the FDA's failure to monitor drugs sold with US company labels but made somewhere else threaten a crisis of confidence that could have dire consequences for US health care.
ADDENDUM (22 February, 2008) - Also see comments on Effect Measure blog.