China Drugs: A Cautionary Tale

2008-01-31

China Drugs: A Cautionary Tale

Contamination Case
Underlines Risks
Of Outsourcing

By NICHOLAS ZAMISKA and AVERY JOHNSON
January 31, 2008; Page A11

HONG KONG — A contaminated anticancer drug made by one of China’s largest pharmaceutical companies underscores how quality-control problems continue to plague the Chinese drug industry. There is no sign the tainted leukemia drug was exported. But the case provides a cautionary tale as Western pharmaceutical companies start outsourcing some manufacturing to China.

Last June, Yan Zhenni, a 5-year-old with leukemia from Shanghai, received a shot of the anticancer medication methotrexate. But the drug meant to treat her left her incontinent and unable to walk on her own, her mother says.

• The News: A leukemia medicine made by a unit of one of China’s largest drug companies was found to be contaminated.

• The Big Picture: Although no tainted products were exported, the case highlights quality-control problems in China’s drug industry as Western companies look to produce more medicines there.

Possibly dozens of patients across China who took the drug from the same Chinese factory had similar problems. The drug’s manufacturer initially said the reactions might be a side effect of the medication. Later, government officials investigating reports of problems with the drug discovered the medicine had been contaminated, blamed its maker for a coverup and revoked the factory’s license to make the drug.

“We were so hopeful that she would recover from leukemia eventually. The chances were very good. But now even walking has become a problem,” says 28-year-old Ms. Yan, who took a leave from her job at an auto-parts factory to care for her daughter.

Over the past year, a spate of safety problems involving Chinese-made products has surfaced, mostly involving small-scale factories operating with little scrutiny. But the tainted leukemia drug given to Yan Zhenni was made by a subsidiary of one of China’s largest and more prominent drug companies, Shanghai Pharmaceutical (Group) Co. Other units of the company make medicines in collaboration with a number of multinational drug companies, although there is no sign that the quality-control problems affected other divisions.

[Making Medicine]

Major drug companies are quickly moving to conduct research and some manufacturing in China, as costs in the U.S. rise and they face hurdles in bringing new drugs to market and defending existing blockbusters against generic competition. AstraZeneca PLC, GlaxoSmithKline PLC, Pfizer Inc. and Bristol-Myers Squibb Co. have all recently announced plans to outsource some of their manufacturing capacity.

China is still a relatively small player when it comes to exporting finished pills, a market that India’s generic-drug makers dominate. But China is the world’s largest producer of active pharmaceutical ingredients, the chemicals needed to produce drugs. In 2005, China had $4.4 billion, or 14%, of the world’s $31 billion market for APIs, ahead of Italy and India, the world’s second- and third-largest players respectively, according to a report last year from Credit Suisse.

Shanghai Pharma has teamed up with a number of multinational drug companies over the years and says it exports APIs around the world. The group’s products are sold in countries including the U.S., Canada, Mexico, the U.K., India and Japan, according to Neil Wang, general manager in China for the research and consulting firm Frost & Sullivan.

Roche Holding AG of Basel, Switzerland, set up a joint venture with Shanghai Pharma in 1994 called Shanghai Roche Pharmaceuticals, according to a media officer for Roche, who emphasized that Roche has no connection with the subsidiary that produced the tainted medicine. The factory makes most, if not all, of the drugs Roche sells in China, she says.

Pfizer has signed a deal with Shanghai Pharma in which a unit of the Chinese company would produce a hormonal steroid for Pfizer at one of its factories, the Shanghai Pharmaceutical Group Hualian Pharmaceutical Factory, according to a person in the foreign trade department at Shanghai Pharma. The plant that Pfizer is partnered with isn’t the same as the one that produced the tainted drug.

Pfizer spokesman Chris Loder couldn’t confirm the hormonal steroid agreement with Shanghai Pharma. He did say in a statement: “In 2006, Pfizer entered into an agreement with Shanghai Pharmaceutical Group in China to evaluate SPG’s capabilities as an ingredient supplier. To date, SPG has not met the standards required by Pfizer for suppliers of active pharmaceutical ingredients.” As a result, Mr. Loder said, Pfizer hasn’t sourced any API for human use in the U.S. or elsewhere.

The U.S. Food and Drug Administration says none of the tainted drugs from the Shanghai Pharma unit involved, Shanghai Hualian Pharmaceutical Co., were manufactured for the U.S.

In November 2006, Yan Zhenni was diagnosed with leukemia, a cancer of the cells that make up blood or bone marrow. The following year, on June 2, 2007, she received an injection of methotrexate, a drug commonly used to treat leukemia, at the Children’s Hospital of Fudan University in Shanghai.

Around eight days later, according to her mother, the girl started to show unusual symptoms. “She started to have problems walking, had no strength, and was unable to climb stairs,” recalls Ms. Yan. On June 19, the mother sent her daughter back to the hospital, but doctors weren’t sure what was causing her problems. They said a viral infection might be the culprit. They prescribed antibiotics, but that didn’t help. On June 27, Yan Zhenni left the hospital and returned home.

Just over a week later, however, Ms. Yan received a call from the hospital telling her that the drug her daughter received, which had been made by the Hualian factory, was contaminated. The girl was hospitalized that same day.

Signs of problems with the same drug began cropping up elsewhere in the country. The First Affiliated Hospital of Guangxi Medical University reported problems with patients who took the Hualian drug, a hospital nurse said. In Shanghai, at the Xinhua Hospital, doctors switched to a similar version of the drug made by Pfizer, said Yuan Xiaojun, a doctor at the hospital. Dr. Yuan added that he suspected there might have been impurities in the Hualian medicine, but he wasn’t sure.

The Pfizer drug cost significantly more than the Chinese drug, which was priced at about 50 cents a dose. That cost differential was daunting for one mother, Fang Yangqing, who traveled from her home in Anhui province to the Xinhua Hospital to seek treatment for her 4-year-old daughter, Wang Yujie. “The expenditure is too high. I hope the situation could soon change,” she said in July.

Following reports of adverse affects from the drug, Shanghai Pharma said in July it had stopped selling two batches of methotrexate, a drug commonly used to treat leukemia, and was conducting a “thorough investigation.” But it also suggested side effects might be at fault, noting “all drugs have 30% harm, and it’s even bigger with cancer-fighting medicines.”

Yin Qinxie, Shanghai Pharma’s spokesman, said in an interview at the time that “so far, we don’t think the quality of this drug has any problems,” but that the company had to investigate “in order to be responsible to the drug’s users.”

When reached yesterday, Mr. Yin declined to answer questions, and subsequent efforts to reach him were unsuccessful.

Also around July 2007, Chinese officials were pledging to crack down on safety and corruption in the country’s drug industry. In July, Zheng Xiaoyu, the former head of the State Food and Drug Administration, was executed for taking bribes to speed drug approvals.

By that time, Shanghai drug authorities, as well as others with the State Food and Drug Administration and Ministry of Health in Beijing, were investigating the Hualian unit. In a statement from December, the SFDA accused Hualian of “systematically covering up irregularities in manufacturing.”

For years, Hualian had been recycling leftover materials from methotrexate’s production process to “cut costs,” according to the head of cancer-drug sales for Hualian in Shanghai, although it is unclear if that caused any problems. But last summer, a technician mistakenly added another anticancer compound, vincristine sulfate, to the mix. “It was an accident,” the sales official says, denying there was any coverup.

The technician and a company official in charge of the manufacturing line have both been detained by police, according to the Hualian sales official. Production of the cancer drugs have since ceased, although the company is still making drug ingredients for other products, according to the sales official.

On Sept. 5, the State Food and Drug Administration banned the use of Hualian’s injectable methotrexate, in addition to another drug made by Hualian called cytarabine hydrochloride, across the country.

Hualian has since offered some families compensation, according to Ms. Yan, who turned down an offer for $55,000 from the company. She says she and a group of other families have retained a lawyer in Guangdong province and plan to sue the drug maker.

–Ellen Zhu contributed to this article.

Write to Nicholas Zamiska at nicholas.zamiska@wsj.com and Avery Johnson at avery.johnson@WSJ.com