Toxic heparin was fraud, not accident

I realize I'm repeating myself, but this really would be a good time to panic.

A major medication, Heparin, was manufactured in very substandard conditions. The final product contained counterfeit chemicals designed to fool quality tests. It was then distributed widely in the US healthcare systems.

Up to 10% of the entire US supply of Heparin may consist of a counterfeit drug:

FDA says recalled heparin contained contaminant - USATODAY.com

In a finding eerily similar to the contamination of pet food last year, the Food and Drug Administration said Wednesday that a counterfeit chemical has been detected in recalled supplies of the blood thinner heparin.

From 5% to 20% of the active pharmaceutical ingredients in some heparin supplied by Chinese companies to Baxter (BAX) Healthcare is a similar, but different, chemical that mimics the blood thinner in commonly used tests.

Nineteen people have died since Jan. 1, 2007, from allergic reactions that appear to be associated with contaminated heparin, says Janet Woodcock, acting director of the FDA's Center for Drug Evaluation and Research. The death toll had been four.

Last year, thousands of pets fell ill after eating food made with adulterated wheat flour from China. The flour contained two industrial chemicals, melamine and cyanuric acid, added to make it appear to be the more expensive wheat gluten.

Baxter, which supplied half of the heparin used in U.S. clinical settings, first recalled some of its heparin products on Jan. 17. The company expanded the recall on Feb. 27 to include all of its multidose, single-dose and Hep-Lock products, used to flush intravenous lines to ensure that they aren't blocked by blood clots.

The USA's main other supplier of heparin, APP Pharmaceuticals, (APPX) has not had any reported allergic reactions associated with its products. It increased production after the Baxter recall.

Heparin is commonly used in many medical and surgical procedures. Initial analyses could find nothing wrong with the recalled product, says Woodcock.

"It reacts like heparin in some of the conventional tests used for heparin, which is why conventional acceptance tests of this ingredient might not detect this contaminant," she said.

But sophisticated tests by Baxter and the FDA, including nuclear magnetic resonance spectroscopy and capillary electrophoresis, showed slight differences. The counterfeit chemical is very like heparin in its molecular makeup and is also from an organic source, says Baxter's Peter Arduini. The raw ingredient in heparin comes from the lining of pig intestines.

Baxter Healthcare is based in Deerfield, Ill. Wisconsin-based Scientific Protein Laboratories (SPL) supplies Baxter's heparin from sources in China.

SPL has been a successful supplier of the active pharmaceutical ingredient in Baxter's heparin for almost 30 years with no problems, says Arduini.

Both the FDA and Baxter said they can't yet confirm that the heparin-like compound was the cause of the allergic reactions, but they are centering their investigation on them. They also don't know if it was introduced intentionally.

The news is good for Baxter as a company, says Aaron Vaughn at investment firm Edward Jones.

"Originally, it was a Baxter story. Now, it's become China supplying the U.S. market with goods that are not up to international standards," he says,

Good for Baxter? Maybe under current law.

We need to change the law.

Let me say that again.

We need to change the law.

Distributors must be held responsible -- only then will they be incented to move their supply chain away from unreliable sources. Congress should be considering vary large tariffs on medications coming from countries with known production and quality issues. The tariffs can help pay for the compensation claims that should be paid to injured persons.

This is why we need trial lawyers like John Edwards. It's also why we need to get the GOP out of the executive office, and resurrect America's regulatory infrastructure.

Update 3/20/2008: Yep, it sure looks like fraud.