Business
Nature 446, 598-599 (5 April 2007) | doi:10.1038/446598a; Published online 4 April 2007

China's deadly drug problem

Abstract

The head of China's drug-safety agency is under investigation for alleged corruption. David Cyranoski looks at how the inquiry might affect the country's fast-growing pharmaceutical industry.

A corruption scandal at China's top drug-regulatory agency has led to the arrest of its former head and an investigation of unprecedented scale into drugs approved during his tenure. Some are calling the crackdown a step towards a modernized drug industry that encourages innovation. But others wonder whether anything will really change. "The government is cleaning up, but many hope it will be changed once and for all," says Wang Ming Wei, director of the National Center for Drug Screening in Shanghai. "You can't just do cosmetic surgery."

The scandal centres around Zheng Xiaoyu, who was the head of the State Food and Drug Administration (SFDA) from 1998 until June 2005. Last summer, concerns mounted about the agency after poor-quality drugs resulted in some highly publicized deaths. More than ten people died across the country after being injected with the antibiotic clindamycin, which had not been sterilized properly. And 11 people in southern China died from kidney failure after receiving the drug armillarisni A, which had been manufactured with a toxic substance.

A high-level probe of the SFDA culminated in Zheng being detained in December 2006. In late January, the Chinese premier Wen Jiabao ordered an investigation into reports that Zheng had accepted bribes, and Zheng was subsequently thrown out of the Communist Party. Two of Zheng's former secretaries have also been detained. Hao Heping, who headed the department that bestowed licences to manufacture medical equipment, was sentenced to 15 years in prison for accepting money to smooth drug approvals. Cao Wenzhuang, former head of the drug-registry division, has also been detained.

Zheng's wife and son were also arrested, according to Chinese news reports. A senior executive of a foreign pharmaceutical company who did not want to be named says that they ran consulting firms whose work would help ensure a drug's approval.

China's US$13-billion pharmaceutical industry has struggled to overcome deeply rooted problems. Many drug companies in China make money not through innovation but by making different formulations of products. Statistics provided by Wang show that about half of the 'new' drugs are varieties of previously approved products. Yet large numbers of applications flood the SFDA; in 2004, for instance, China fielded some 17,000 applications for new drug approvals, compared with 167 for the US Food and Drug Administration.

At first, Zheng seemed like a reformer who was trying to modernize the country's regulatory oversight. A veteran of the drug industry, he led a merger of the state food administration and the state drug administration — which he had headed — into the SFDA in 1998. He introduced a Chinese version of Good Manufacturing Practice guidelines, which ensure that production is up to standard and that a mechanism is in place to deal with drug problems. All Chinese drug companies had to comply with the requirement by July 2004; more than a quarter closed their doors. Zheng also established new requirements that traditional Chinese medicines had to fall in line with national, rather than previously established regional, standards.

Under the new pressures, observers say, drug companies became desperate to get their products approved by SFDA officials, who were able to use their positions to push drugs through the system. "There was too much power invested in a few individuals," says Wang. Government officials seem to agree. In February, Wu Yi, one of China's vice-premiers, reportedly told members of the SFDA: "We urgently need to reform the system to remove loopholes in food and drug administration and set up an effective mechanism for clean governance." She suggested several measures that could be implemented, such as requiring that the acceptance, appraisal and approval of new drug applications are each handled by different people.

Stifling standards
But as the SFDA tries to raise standards for its drug-approval processes, some are worried that smaller companies will not be able to survive. According to one Shanghai-based researcher involved in drug development, some clinical trials now require thousands of patients rather than the hundreds needed previously. The source blames "arbitrarily high" standards that came as a reaction from "demoralized" SFDA staff. "Because of the overreaction, people without deep pockets will suffer," he says.

David Liu, vice-president of Beijing Pharmaceutical, a wholesaler for drugs and medical devices, agrees that the system is geared towards taking smaller manufacturers out of the market. But it is a good thing, he says, because most of those companies do not innovate. "It is not like the United States, where you have small companies with an entrepreneurial spirit. In China, a small company means quick in, quick out," he says.

Multinational pharmaceutical companies that work in China could benefit. "A cleaned-up process will be good for foreign companies," says Liu. "They usually pay more attention to ethics in the first place." Several major drug companies, including Roche of Switzerland, AstraZeneca of the United Kingdom, and Eli Lilly of the United States, recently opened research and development facilities in China. And Novartis of Switzerland announced last November that it would invest US$100 million in a 400-researcher facility in Shanghai.

Private preferences
Senior executives from several multinational drug companies told Nature privately that they would be happy to see reforms in China's drug-regulatory system. "The cleaner, the better for us," said one. But when asked whether they had been encouraged to pay bribes or 'consulting fees' when applying to register drugs, or whether the SFDA scandal might affect their willingness to invest in the country, most shied away from official answers.

Within China, the fallout continues. The bribery scandal has pushed the agency to review the applications for some 170,000 drugs, focusing on those approved between 1999 and 2002. Sources in the pharmaceutical industry there say that SFDA officials and pharmaceutical companies are being given a grace period during which they can come clean and face a lesser penalty. The agency is also stepping up its investigation of companies and pharmacies thought to be involved in the scandal; 160 of these lost their licence to make or sell drugs in 2006.

There remains some scepticism as to whether the reforms will have a lasting effect. The inability for people — including most of the sources for this article — to voice their concerns suggests that the government might not have the input it needs. Some have even suggested that the reforms have been a political move and that things might return to their past state once officials under Zheng are removed. "You need another body to watch the SFDA," says Liu. Still, he, like most, is upbeat about the government's desire to reform. "The government knows it has a problem. Now it is going to fix it."