China Drugmakers Face U.S. Scrutiny on Investigator Bump

China Drugmakers Face U.S. Scrutiny on Investigator Bump

U.S. regulators are more than tripling to 27 the number of workers they’ll have in China to inspect pharmaceutical plants and products, a move that may spur a wave of enforcement similar to what’s happening in India. An increased number of Food and Drug Administration investigators in India this year led to import bans against some generic drugs from Ranbaxy Laboratories Ltd. (RBXY) and Wockhardt Ltd. (WPL) for failure to meet U.S. standards. The China expansion is the culmination of almost two years of negotiations with government officials, Christopher Hickey, director of the FDA’s China office, said in a telephone interview from Beijing.China, like India, has become a significant supplier around the world of the active ingredients found in prescription drugs, Hickey said. U.S. Vice President Joe Biden visited the capital, Beijing, last week and was able to secure a final commitment from the government to allow more inspectors into China to routinely review drug manufacturing practices and conditions.

“It’s always difficult to say with precision what will happen with warning letters or inspections,” Hickey said. “One thing we have seen with our inspections overseas in India, and here in China, is that over time, inspectors are better able to identify specific problems in the firms.”

Among the 19 new employees stationed in China, 10 will be pharmaceutical inspectors, Hickey said. The number of food inspectors will increase to eight over the next year, allowing the FDA to complete about 160 inspections a year, compared with 20 to 25 now, he said. Drugmakers will see a similar increase.

“Clearly that’s a possibility that we could see more enforcement letters,” said Linda Bentley, chairman of the legal practice group dealing with FDA matters at the law firm Mintz Levin in Boston, said in a telephone interview.

Heparin Scare

China became a particular point of focus after contaminated doses of Baxter International Inc.’s blood thinner heparin was linked to 246 death reports from Jan. 1, 2007, to May 31, 2008. The active pharmaceutical ingredient was made in China. Around that same time, tainted jerky treats imported from China began to be linked to thousands of dog illnesses in the U.S.

The FDA opened its China office in November 2008 with posts in Beijing, Shanghai and Guangzhou, according to the agency’s website.

“The FDA has had a very limited presence in China, which has not increased on a permanent basis, while at the same time the amount of outsourcing done to China has increased primarily because of cost issues,” Bentley said.

Sales Growth

China has been a growing player in the health-care industry, with sales there for eight foreign drugmakers, including GlaxoSmithKline Plc (GSK), Pfizer Inc. (PFE) and Merck & Co. (MRK), climbing 40 percent in 2011. Growth has slowed to 20 percent this year, data compiled by Bloomberg show, mainly because of more modest expansion of the Chinese economy.

Glaxo, based in London, also faces a corruption probe in China for allegedly bribing hospitals and doctors that may further shrink growth.

As part of the agreement secured by Biden, the Chinese government also will take steps to register bulk chemical manufacturers that make active ingredients. The industry is currently unregulated in China and more oversight could help combat counterfeit medicines worldwide, the White House said.

The FDA first started discussions with Chinese officials after U.S. President Barack Obama’s fiscal 2013 budget request included funds for additional inspectors. The State Department became concerned in October 2012 that an FDA hire hadn’t gotten a visa applied for in August, Hickey said.

Blocked Visas

Hickey made four more hires whose visas were blocked, of which two have moved on to other jobs in the FDA rather than wait, he said. The agency froze hiring subsequently while the visa situation was resolved.

Hickey said he doesn’t think the U.S. will know the full story of why China opposed the visas for additional inspectors.

“It’s a big request for any government, to allow an increase in foreign inspectors in your country,” Hickey said.

The FDA can still send its U.S.-based workers to China to conduct case-by-case inspections. Last year, only about a third of food inspections and 15 percent to 20 percent of drug inspections were done by staff stationed in China, Hickey said.

The FDA expects to be fully staffed in China in about a year, Hickey said.

“It’s a process, and to be very honest, these delays have cost us,” he said. “We lost a couple staff members, we had to stop the hiring process.”

To contact the reporters on this story: Anna Edney in Washington at aedney@bloomberg.net; Drew Armstrong in New York at darmstrong17@bloomberg.net