Safety and efficacy failures in a pharmaceutical supply chain: the heparin tragedy of 2008

The Chinese supply chain value proposition is a familiar one. In order to pare expenses and be more competitive, American and European companies buy ingredients for prescription and over-the-counter drugs from companies in China. These include active pharmaceutical ingredients (APIs), as well as other components and delivery mechanisms that make up a wide array of pharmaceutical therapies. Supply chains are often long, labyrinthine, and lack transparency. It is a major challenge for companies and regulators alike to figure out exactly where everything comes from that winds up in a given drug sold in the West, and whether each component has been manufactured under Good Manufacturing Practices (GMP), the high standard that governs drugs distributed in the United States and Europe even when manufactured elsewhere.

A particularly alarming example of what can go wrong in a pharmaceutical supply chain was the heparin recall of 2008. Just after the New Year, two children undergoing dialysis at St. Louis Children’s Hospital experienced severe allergic reactions. Their eyelids swelled, heartbeats quickened, and blood pressure dropped within two minutes of being hooked up to dialysis machines for their regular treatments. The attending physicians at the hospital had seen similar reactions a few weeks earlier. At the time, the doctors assumed it was a problem with the sterilization of the dialysis equipment. When the second incidents occurred, Dr. Alexis M. Edward realized “we really need to report this” (Rockoff, 2008).

After learning about Dr. Edward’s findings, the US Centers for Disease Control and Prevention (CDC) posted internet notices and advisories about the unusual adverse reactions. Within two days, the CDC received reports of similar reactions among 50 adult dialysis patients in six states. The cause of the allergic reactions turned out to be contamination in the blood thinner heparin which was used in dialysis as well as in treating heart attack victims and in heart surgery. By April 2008 the CDC counted over 700 reports of serious side effects among heparin users and perhaps as many as 62 deaths attributable to contaminated heparin (Gibson & Singh, 2018). The manufacturer, Baxter International, Inc., recalled heparin products in the US as did companies in Canada, Japan, Italy, Denmark, and Germany (Kelly, 2008).

Eventually, the supply chain led back to a contaminated ingredient manufactured in China. Baxter bought the pharmaceutical ingredient from a Milwaukee, Wisconsin-based firm, Scientific Protein Laboratories, then owned by a Bethesda, Maryland-based leveraged buyout firm called American Strategies. Scientific Protein Labs made the contaminated ingredient at a plant it co-owned with a local Chinese company, Changzhou SPL. It turned out that the Changzhou plant manufacturing the contaminated ingredient and exporting it to the United States was not even registered as a drug manufacturer with the Chinese regulatory authorities, and so had never been examined by either US or Chinese authorities. The supply chain for the adulterated product reached even deeper into manufacturing facilities far from either Chinese, European, or US government regulation. Changzhou purchased the adulterated heparin from two wholesalers who in turn gathered the rawmaterials from smaller producers, many of which were family operations.

When the FDA started investigating in February 2008, it found that the active ingredients from Changzhou were contaminated with a cheap, unapproved ingredient—over-sulphated chondroitin sulfate (OSCS)—modified to mimic heparin. OSCS is not ordinarily found in nature. Normally, heparin is made from pig intestines, which were often handled and processed by many smaller operations, who then sold the product to middlemen, who in turn sold it to Chinese companies like Changzhou SPL (Gibson & Singh, 2018, pp. 24-26). OSCS, on the other hand, is created through chemical synthesis of chondroitin sulphate, which is derived from animal cartilage. Scientific Protein claimed that the contaminant was already in the crude heparin by the time it found its w-ay to Changzhou. Because OSCS mimics heparin, it cannot be detected by routine quality control testing. The FDA found that anywhere from 2 to 50 percent of the suspect heparin samples consisted of OSCS. The introduction of a cheap, chemically synthesized contaminant designed to mimic heparin and evade detection suggests the troubling likelihood that the contamination was intentional rather than accidental. Further support for this possibility comes from the fact that pig prices had risen dramatically because of an outbreak of blue-ear disease affecting pigs in China starting in 2006, making the financial incentive to cheat even stronger (Gibson & Singh, 2018, p. 25). Thanks to the vigilance of the doctors at St. Louis Children’s Hospital and the quick response of the CDC and other authorities, the potential harm of the heparin contamination was limited to 62 deaths. However, the heparin incident could have been even more tragic if public health safety alert systems had not caught the problem.

The heparin case exemplifies how things can go very wrong in a supply chain. Effective management of safety and quality in a supply chain requires a more proactive approach which, among other things, identifies potential issues, organizes manufacturing processes and policies to avert defects, and establishes an effective plan of remediation. Drug manufacturing in particular is a highly regulated area. In addition to regulation by Chinese authorities, the US Food and Drug Administration has several field offices in China to help assure that manufacturers follow GMP. The European Medicines Agency has held high-level regulatory harmonization meetings with their Chinese counterparts. These regulatory frameworks are, however, inadequate to oversee the multitude of facilities in drug supply chains originating in China. Despite such imperfect intergovernmental regulatory efforts, ultimately the responsibility to assure the safety and efficacy of the supply chain rests with the company at the top of the supply chain that will distribute the product to doctors and patients. How then can Ethical Agility and an understanding of the concept of face help executives to manage safety and efficacy in their supply chains?