By Kevin E. Noonan —
In the face of increases in the numbers of medications available to treat ailments from the life-threatening to the annoying (or, in the case of Viagra®, embarrassing), the numbers of prescriptions taken per person, particularly the elderly, and the costs of these drugs, there is a concomitantly increased pressure to reduce the cost of prescription drugs. These efforts can be seen on the local (e.g., Canadian drug importation laws in Maine and Illinois), federal (e.g., the pending biogenerics proposals in Congress), and international levels (e.g., Brasil’s compulsory licensing of anti-AIDS drugs; see "Not Getting It about Patented Drug Prices at The Wall Street Journal"). By the same logic that compels citizens (and their governments) to want increased services without increased taxes, the public clamors for low-cost, typically generic drugs, and politicians, non-governmental organizations (NGOs), and consumers blame the innovator drug companies for increased drug costs. The solution, for many, is to be found in cheap generic drugs from any number of manufacturers, which companies have one thing increasingly in common: the source of their drugs, whether the active pharmaceutical ingredient or the finished drug itself, comes from a foreign company, where its manufacturing plants are far from the watchful eye of the Food and Drug Administration (FDA). Despite this, those same politicians, NGOs, and consumers take it on faith that they can rely on the FDA to oversee the safety and efficacy of generic drugs from these sources. But they may be very wrong.
The alarming lack of FDA oversight regarding foreign-produced drugs was the subject of a Washington Post story this Sunday by reporter Marc Kaufman. The statistics in Mr. Kaufman’s story are chilling: the FDA conducted a total of 200 plant inspections in Indian and Chinese drug companies selling or supplying drugs to the U.S. market over the past seven years. In contrast, the agency conducted 1,222 quality-assurance inspections in U.S. drug manufacturing plants in the past year alone. Moreover, even the agency admits that the kind of inspections conducted abroad are rarely as rigorous as those U.S. firms routinely undergo, and are always arranged in advance (unlike the "surprise" visits American drug companies are subject to).
This is significant, because the confluence of greater political pressure from Western governments, medical insurance coverage providers and drugstores, and the explosive growth of native pharmaceutical industries in India and China since the development of the World Trade Organization regime, has greatly increased the number and types of drugs imported from abroad. These include antidepressants, antibiotics, and heart medications, and they are arriving at unprecedented numbers: almost 350 varieties of such drugs from India alone, and $675 million in finished drugs and active pharmaceutical ingredients (API) from China in the past year. Up to 20% of finished generic drugs and over-the-counter medications, and 40% of the active drug ingredients used to make them, come from India and China according to the FDA. These percentages may reach as high as 80% within 15 years, according to these officials.
Thus, the situation is that foreign drug manufacturers, and their U.S. and Western partners, are introducing drugs into the American medical system with significantly less government quality control oversight than most Americans appreciate. After all, the mantra at almost all chain and local pharmacies is that a generic is "just as good" as the branded variety, and at a significant cost savings. Indeed, for some medicines there is no available non-generic form, since the innovator drug company has licensed the sale of "branded generics" to the generic manufacturer. As a consequence, more than 60% of the prescriptions filled in the U.S. use generic rather than branded versions of the drugs. These pressures will only increase if the trend started by WalMart to make available generic drugs for a set price (recently, $4) takes hold in the industry.
These developments come at a time when the nation’s household pet owners have seen firsthand how lack of quality control can cause real damage. The contamination of several popular brands of dog and cat food with melamine monomer resulted in pet deaths all other the country and a massive pet food recall. The reason for the contamination was purely economic: because total protein content is estimated by determination of the amount of nitrogen in a foodstuff, mixing nitrogen-containing melamine monomer as a contaminant raised the apparent protein content at a fraction of the cost of including actual protein.
For pharmaceuticals, nothing so nefarious is needed to have an even more harmful effect. Simply supplying drugs that have a shorter shelf-life, less active ingredient, or are otherwise contaminated could have Americans taking ineffective drugs that may not be identified even if the FDA were to test the drugs as they enter the country. The nature of pharmaceutical agents is such that only by monitoring production facilities to ensure that the methods tested and approved by the FDA are being followed can the agency have a chance at keeping these "bad" drugs out of pharmacies and medicine cabinets in this country.
The FDA is constrained by a limited budget that cannot accommodate a world-wide quality assurance regime funded by Washington. For now, the FDA is relying on the pharmaceutical companies that partner with Indian and Chinese drug suppliers, and such companies actually do some quality assurance testing on the drugs they import. However, this testing may not be effective, for the reasons mentioned above among others. More importantly, such reliance is based on a hope that the Western drug company will undertake the burden of testing to avoid product liability lawsuits. This reliance is misplaced for a number of reasons. First, there are other avenues for such companies to take, such as bankruptcy, and as the pressures to produce lower-cost drugs increase, more and more companies may be willing to take the risk rather than incur the effect on their earnings, profitability, and attractiveness to Wall Street investors. Second, it neglects to consider the effects of contrary government efforts to shield these same companies from liability, such as the Bush Administration’s attempts to provide exclusion of liability for drug-related injuries incurred by taking an FDA-approved drug, or the phantom provisions of a Senate appropriations bill that would have shielded pharmaceutical companies from liability for thimerosal-related autism (should such a link ever be established). Finally, it places the burden for pharmaceutical quality control on the public, making them in effect guinea pigs or coal-mine canaries for detecting adulterated drugs, and leaving any recovery for what could be serious, debilitating injury to the vagaries of the products liability system (which is under its own kind of assault from the "tort reform" crowd).
There are many reasons for the costs of branded drugs, including development costs, regulatory costs, production costs, and costs incurred along the chain of commerce between the innovator drug company and the pharmacy that dispenses the drugs. It is in the public’s best interests to be sure that these costs are based in a reality affected by the rest of the economy as a whole; the time is long past for the pharmaceutical equivalent of a robber baron (or an oil company). However, these costs are real, and the generics’ capacity to undersell innovator companies is based, in part, on avoiding the development costs and regulatory costs borne by the innovator (and usually recompensed with market exclusivity due to patent protection for the drug). However, although it can be expected that production costs will also be lower for generic drugs produced abroad, it must also be recognized that without strong FDA scrutiny the opportunity to "cut corners" is both real and financially attractive. It is unlikely that anyone will get caught: indeed, doctors cited in Mr. Kaufman’s article admitted that it was only after testing by German researchers revealed a "wide range in quality and effectiveness" in gentamicin, an antibiotic supplied by a Chinese company, that deaths in the 1990’s in patients treated with the drug were recognized as being "related to faulty manufacture" of the drug. In the face of these kinds of pressures, and the unlikelihood that anyone responsible will ever need to take responsibility, it is irresponsible for the FDA, and the American government, to assume drugs provided from overseas generic companies are safe. The next time we are confronted with the "branded or generic" choice at our pharmacy or doctor’s office, we are well advised to remember that when it comes to these generic drugs, Americans are more vulnerable today than any time since Upton Sinclair wrote "The Jungle."
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