RUTHFULLY YOURS

Concern over China’s territorial, military, and economic aggressiveness has been building over the past decade as the country is increasingly perceived as a threat to the United States, U.S. Asian allies, and the West.  In China Rx: Exposing the Risks of America’s Dependence on China for Medicine (Prometheus Books, 2018), authors Rosemary Gibson and Janardan Prasad Singh explore yet another peril: China as the largest global supplier of ingredients for many prescription drugs, over-the-counter products, and vitamins.

In their alarming book, the authors report how China has become the largest supplier of the active ingredient in aspirin and acetaminophen, present in more than 600 over-the-counter and prescription medicines.  China is also the dominant global supplier for the essential ingredients to make penicillin and for vitamin C, used in vitamin supplements, cereals, soda, and hamburger buns.  It is also the largest exporter of medical devices, with close to 20,000 products for sale.

They argue that because of this, China represents a grave threat to the U.S. and its strategic position in the world.  American jobs, businesses, and national security and the general health and welfare of its citizens are compromised as the U.S. increasingly loses control of the supply of critical medicines, drug ingredients, and even medical devices.  The loss of manufacturing capability and U.S. dependence on a single source could result in manipulative shortages as critical drugs are withheld for a political or economic quid pro quo.  American consumers could become the victims of price manipulations and compromises in product efficacy and quality.

Gibson and Singh begin their book explaining that drug manufacturing has changed dramatically in the past two to three decades, with China achieving primary global supplier status.  Part of that rise, according to the authors, occurred after Chinese companies dumped penicillin ingredients on the global market in 2004, forcing Western countries, who couldn’t compete on price, out of business.  Eventually, China instituted a major price increase on these vital ingredients

In 2005, Chinese firms allegedly created an artificial shortage of vitamin C in the U.S. by restricting production and exports.  A class action suit, with overwhelming evidence of collusion presented at trial, resulted in an eight-year battle that found Chinese companies guilty of conspiring to fix prices.  China was ordered to pay $162 million in damages to U.S. firms.  The Chinese government, which has investigated U.S.-based companies for antitrust violations in the sale of drugs in China, appealed the decision under the pretext that the U.S. was interfering with China’s sovereignty and its laws that set minimum export prices and production targets.

The authors also explore the role of U.S. drug companies in China’s pharmaceutical dominance, citing the lack of transparency in drug labeling, which enables drug companies to hide the country of origin of active ingredients.  Typically, a domestic pharmaceutical company will source drug components from other countries and manufacture the finished product in the U.S., thereby earning a “Made in America” label and avoiding full disclosure to patients.

In addition, by manufacturing in China, drug companies avoid FDA regulations and inspections; enjoy low prices; and turn a blind eye to potentially contaminated, low-potency, or counterfeit medicines.  The FDA has failed to require inspections of drug-making plants in China, and pharmaceutical companies utilizing Chinese plants do so at their discretion.  In China, as in many countries outside the U.S., safe drug-production procedures, quality testing, and expiration dating and labeling requirements are ignored.  In this way, counterfeit and unapproved drugs can be sent to legitimate manufacturers and used to produce legitimate drugs.  Chinese companies have provided false documents and refused to submit to audits.  Gibson and Singh decry the unfair advantage that China enjoys in drug manufacturing, with very few of the hundreds Chinese plants inspected annually while U.S. facilities are inspected every two years.  In 2008, to ameliorate the situation, the FDA opened offices in Beijing, Shanghai, and Guangzhou and posted inspectors at U.S. ports of entry to stop banned products from entering the country.

Following a deadly Heparin contamination in 2008, six companies voluntarily agreed to an FDA test of their supply of the drug, while others refused.  Heparin, a blood-thinner used to prevent blood clotting for 12 million seriously ill people annually, was subject to a voluntary recall, as the FDA lacked the authority for a mandate and has limited authority to publicly release information about companies responsible for the contamination.  Many U.S. hospitals, failing to interpret the voluntary recall as urgent, kept the fatal drug on their shelves.

In China Rx, Gibson and Singh discuss China’s long-term strategy to destroy the markets of Western countries in China and take over vital industries.  They cite the expectation of technology transfer held over Western companies who want access to China’s explosive domestic market.  Many Chinese nationals employed by American pharmaceutical firms have stolen trade secrets and provided them to Chinese companies.  Plus, China is heavily involved in cyber-espionage to steal treatment protocols, manufacturing plant specifications, and cost and pricing data to undercut U.S. companies and co-opt government-funded research.

The authors recognize the acute danger of China’s monopoly on the production of key drugs and devices and how the situation is ripe for geopolitical manipulation and the lowering of standards.  Economic warfare, defined by Britannica, is the use of economic means or threats to weaken the economy of another country and reduce its political and military power.  It involves the use of economic force “to compel an adversary to change its policies or behavior or to undermine its ability to conduct normal relations with other countries.”

China is the largest global exporter of the antibiotic ciprofloxacin, the active ingredient needed to manufacture the antidote to anthrax, used in attacks that occurred after 9/11.  It’s not difficult to imagine that biological warfare against the U.S. or a widespread pandemic could create an acute need for a China-produced drug.  That need could result in U.S. political reluctance to respond to provocations in Taiwan and the South China Sea or disregard human rights violations such as the imprisonment and torture of Falun Gong practitioners or the persecution of Tibetans and Uighur Muslims.  If China itself engaged in biological warfare, this could create a desperate need for drugs – antidotes – to which the Chinese hold the key to supplies.

Gibson and Singh support the view that medicines should be viewed as a vital strategic resource for the well-being of the country’s citizens.  They recommend several solutions in China Rx.  First, the U.S. must track and forecast drug demand and supply and provide information on countries and companies that supply medicines and key ingredients.  The government must also perform risk assessments on product reliability and any potential for supply disruptions or shortages.  Additionally, it is critical to prioritize the supply of essential drugs, provide incentives for domestic drug production to level the playing field, ensure that the military is not dependent on China for medicine, and increase FDA testing and oversight of all pharmaceutical products made in China.

China Rx is an important wake-up call for American citizens and government officials about the danger of our dependency on a hostile superpower and the need to safeguard our drug supply, American jobs, and industries and national security.