A costly oversight: the ongoing impact of the valsartan recall

So vehement is the lack of affection Chinese pharmaceutical manufacturers have for the US Food and Drug Administration (FDA) that they are reported to have reserved the epithet of “the killer” for Peter Baker, the director of the regulator’s Beijing office.

The FDA is believed to have issued 11 letters of caution to Chinese companies over the course of 2018 in connection to poor manufacturing practices – hence the nickname. And given the events of the second half of 2018, in particular, one suspects further unfavourable sobriquets have followed. 

At the heart of the discontent has been the mass recall of blood pressure drug valsartan from the US market, after traces of a probable carcinogen (N-Nitrosodimethylamine) were found in the medication supplied by Chinese group Zhejiang Huahai. In July, the FDA, along with the European Medicines Agency (EMA), issued alerts over the active pharmaceutical ingredient (API), which serves as generic version of Novartis’ Diovan.

The subsequent fall-out from the recall has seen sartan prices skyrocket. As of October, a 160mg valsartan tablet was fetching around $0.31– up $0.17 from the previous month. Similarly, the price for 80mg was reported to be hovering around $0.20 – over double its cost recorded in September.

We perhaps shouldn’t be too surprised by these repercussions. After all, such is China’s monopoly of API production that it is responsible for over 40% of the global supply of ingredients. API exports in 2017 are believed to have been in the region of $29bn, driven by a local marketplace comprised of thousands of producers. 

The episode raises important questions around the safety of sartans and the power wielded by the FDA in China. Despite Chinese producers’ clear chagrin over being targeted by the FDA, how clear an oversight does the regulator have of day-to-day production practices on the factory floor?

Not as much as it should, claims Raps, a healthcare industry body focused on regulation. According to a 2016 report conducted by the body, the FDA only had 17 employees on hand to monitor the 700 facilities that supply APIs to the US. Furthermore, impending FDA inspections in China are made known to Chinese companies in advance, while US manufacturers are subject to unannounced visits.

One might infer that Chinese sartan producers have been able to go about their business without adequate scrutiny from overseas regulators, such as the FDA and EMA. Yet, according to Rosemary Gibson, senior advisor to US thinktank the Hastings Center – an author of China Rx: Exposing the Risks of America's Dependence on China for Medicine – blame for the valsartan episode can’t be placed entirely at the feet of regulators. 

Instead, recent events are more indicative of widespread cultural impropriety, by which the drug industry has sought to cut corners around costs without due consideration of the consequences. 

“I think the key safety concern is what the FDA found when it inspected the plant in China whose products were subsequently put on import alert,” she says. “The company [Zhejiang Huahai] noticed out-of-specification impurities, and instead of finding the root cause and how they got there, it simply reprocessed the batch. It didn’t go back and investigate how they got there in the first place and fix the problem at the source.

“We can’t inspect our way to quality. The FDA isn’t in manufacturing plants every day. There has to be a culture of safety in manufacturing plants and it starts from the top. When there’s a race to the bottom on price, this is a result.”

The recall of valsartan is not a stand-alone incident, believes Eric Pachman, the co-founder of healthcare data company 46brooklyn Research, who calls to mind a similar price spike for malaria drug hydroxychloroquine in 2014 after Indian producer Ranbaxy Laboratories was forced to recall its supply due to risks of hypoglycaemia.

In that instance, costs for the medication peaked at $2.62 per pill, having fetched around $0.10 a year earlier. “There are concerns that there is potential for valsartan to become a hydroxychloroquine-like situation,” he confirms. 

Using the Centers for Medicare and Medicaid Services national average drug acquisition cost (NADAC) – a nationwide monthly survey of invoice costs of drugs purchased by independent US pharmacies –  as a price benchmark – Pachman says the latest price for a 160mg valsartan tablet stands at $0.37, up from $0.09 per unit back in late August. “So, it’s up quite a bit”.

It will be interesting to see what happens next in the saga of the demand and supply of sartans. The FDA has gone on record in saying it has no concerns about drug shortages as a result of the import ban slapped on Huahai. This suggests prices could settle at some point in the near future.

And while the Chinese manufacturer looks into how impurities found their way into its drugs and improves its quality control systems – as demanded by the FDA – there will be no shortage of drug manufacturers looking to capitalise on plugging the supply gap. As reported in November in the Business Standard, an Indian financial broadsheet, a number of firms on the subcontinent have already started selling valsartan to the US market in the hope of a fast buck. 

In recent years, high blood pressure, or hypertension, has gained the moniker of “the silent killer”, being the root cause of up to 60,000 deaths per year in the US alone. Patients will therefore be hoping the latest valsartan recall episode proves to be the exception rather than the rule. They can’t afford for any such further bottlenecks in the supply of their medication.