How Good Are Your Drugs? (Part 4) - Page 3

It appears that oversight is even more of a problem overseas. According to a recent Washington Post article, pharmaceuticals and pharmaceutical components manufactured in China, India, Japan and Europe are not inspected as often by the FDA. In 2006, according to FDA records, 32 inspections were conducted in India and 15 in China. Some of these inspections were done as part of the approval process and not for quality control oversight, although the FDA would not comment on the nature of these 47 inspections.

This is in contrast with the 1,222 quality control inspections conducted in the United States in 2006. It is estimated that 20% of finished pharmaceutical products and 40% of active ingredients come from China and India.

It is predicted that within 15 years, 80% of the components of pharmaceuticals will come from these two countries

Setting the Standard
With the revelations that there are glaring irregularities in the manufacture of pharmaceuticals and the oversight by US federal and state regulatory agencies, you would think that Congress would move to strengthen the rules governing all of these industries. Instead, Congress is seeking to relax the rules, ostensibly to lower cost to the consumer to justify the increased lack of oversight.

In 1984, Congress passed the Hatch-Waxman bill, expanding the distribution of generics to reduce cost to the patient. The strength of this bill was FDA enforcement. Today, with the proliferation of adulterated and fraudulent pharmaceuticals through the Internet, the FDA has proven that it can’t or worse, won’t keep up.

Powerful forces are now lobbying Congress to provide an FDA framework for the production of biogeneric drugs - generics in the area of biologics. Biotech or biologics are not chemically manufactured but produced from live cells, and are used to treat a variety of chronic and terminal patient populations, including AIDS, diabetes and cancer.

American biotech companies are increasingly outsourcing drug research and purchasing outsourced raw ingredients, creating a framework that allows for the approval and production of Indian and Croatian biogeneric drugs. This may serve as a catalyst for American biotech companies to hasten the outsourcing of biologic production, and along with it, high paying biotech jobs.

It has been evidenced that in the past, the pharmaceutical, distribution, dispense and insurance industries all appear to have allowed for the introduction of adulterated compounds into the mainstream manufacturing, distribution and dispense systems in violation of standards. The sale of adulterated pharmaceuticals to unwitting patients can be debilitating.

Biologics involves increased scrutiny. Since these are live cultures, they are often infused so they have a direct route to vital organs and the central nervous system. Given the compromised condition of the patient population, any change or alteration of the manufacturing process can render the drug toxic, and the negative effects are immediate, and in many case life-threatening or even fatal. Biologics are much more sensitive to process changes than chemically manufactured drugs, although both scenarios can be dangerous. Most also have short shelf-life and require highly specialized (and expensive) handling in order to maintain product integrity and FDA approval. Lengthening the amount of time that biologics drugs spend in Indian or Croatian distribution and shipping channels doesn’t intuitively make a whole lot of sense.

Continued on the next page Page 1Page 2 — Page 3 — Page 4

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Article Author: Rick Vassar

Rick Vassar CPCU, ARM, AIS, ARM-P is a career commercial risk manager and the author of Hide! Here Comes the Insurance Guy, where he uses humor to explain insurance strategies in language everyone can understand.

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  • 1 - bliffle

    Jun 26, 2007 at 12:30 pm

    As it happens I spent the weekend with a number of doctors and the efficacy of drugs came up. Apparently, few drugs show any statistical effect on longevity. Lipitor, for example. If that is so, then why take a chance on the safety of drugs, especially since the FDA has abandoned it's watchdog job? Are we, the patients and taxpayers, merely payers of fees to enrich the pharmas and their cohorts in the insurance 'industry'? And if we balk at paying ourselves, our taxes, to the tune of $500billion, used to subsidize them?

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