Over the last several decades, free market reforms have helped China become a prominent force in the foreign exchange market. Spurred by the abundance of cheap labor, thousands of companies have established large factories for the mass production and exportation of supplies. Unfortunately, the combination of profit-driven motivation and wide-spread competition among these companies has led to some illegal and unregulated activity in the chemical and pharmaceutical industries. Some companies have found loop-holes in Chinese regulations; the serious and most frequent lawbreakers are companies that produce the “intermediate” products—chemical ingredients that are used in a variety of consumer products. Their illicit activity includes the mislabeling and contamination of these chemicals. Recent incidents in which consumers were killed or severely injured have raised serious concern in the United States. Due to insufficient resources, the U.S. Food and Drug Administration (FDA) has not been able control the regulation of imports from China, which has established itself as a major supplier of foreign-made drug products that enter the U.S. As China’s influence on the U.S. market continues to grow, the FDA must enforce stricter and more effective regulation procedures in order to protect the safety of U.S. consumers.
The agency that supervises the regulation of Chinese drug products is China’s State Food and Drug Administration (SFDA). The SFDA claims to “enforce its own strict controls on the chemicals used in pharmaceuticals, safeguarding the legality, quality, and safety of active pharmaceutical ingredients” (Barnes, 2008). The problem with the SFDA enforcement is that it does not have any authority over the companies that produce the intermediate materials. These companies are not registered as pharmaceutical companies, thus their regulation falls under another Chinese authority which is basically non-existent. Although they are not the companies that produce the final products, they do supply the major corporations with the raw material ingredients used to produce them. The freedom of poor regulation has in turn allowed certain companies to create or modify their intermediate products in a way that is beneficial to them yet harmful to the consumer. The U.S. FDA lacks the resources (money, man-power, etc.) to competently play a role in the regulation of Chinese chemical-drug exports. The House Energy and Commerce Committee recently stated that the FDA could not identify the number of firms exporting to the U.S. and that the FDA inspectors did not have the logistic support necessary to perform their job (Bogdanich, 2007). Inadequate regulation by both China’s SFDA and the U.S.’s FDA has allowed Chinese companies to export certain chemical ingredients that have had disastrous effects on consumers.
A little over a decade ago in Haiti, the poisonous chemical diethylene glycol was found in cold medicine for children. The chemical was traced back to a Chinese company that produces intermediate drug ingredients. This company mislabeled the diethylene glycol as glycerin (a safe pharmaceutical ingredient) and exported it out of the country to be put in pharmaceutical products (Bogdanich, 2007). The results were devastating. More than 100 Haitian children were killed, and countless others were injured. The same situation happened again almost exactly a decade later in Panama. According to an article in the New York Times, a Chinese chemical company “masqueraded” diethylene glycol as its more expensive chemical cousin, glycerin, and exported it to a pharmaceutical company to use in its product, and over 100 people were killed by the poisonous medicine (Bogdanich, 2007). Both of these incidents set off an alarm for the U.S. FDA. Because glycerin happens to be a chief ingredient in toothpaste and China is the second largest importer of toothpaste into the U.S., a ban was placed on all Chinese-made toothpaste. While the ban was most definitely necessary, many people believe it was not extensive enough and said that rather than just toothpaste products, all glycerin-containing products from China for humans and animals should have been banned.
A more recent occurrence that has stirred concern about the food, drugs, and other products coming to the U.S. from China occurred earlier this year, and it involved the blood-thinning chemical heparin (Kaufman, 2008). A contaminated batch of heparin was sold by Baxter International. However, the source of contamination did not come from Baxter, but rather from the Chinese intermediate company that supplies Baxter’s raw materials (Hartman, 2008). The disastrous results of the defective heparin can be seen in the U.S., in which nearly 20 people died and nearly 350 people reported harsh allergic reactions. The company found responsible for the contamination was Chagzhou Scientific Protein Laboratories. An investigation found that this company was never checked by Chinese drug regulators and has no certification for the production of the raw materials for heparin (Nordqvist, 2008). This is a perfect example of how certain Chinese companies are able to fly under the radar of regulation.
Another illustration of harmful chemicals finding their way into the U.S. from China has to do with the chemical melamine as an active ingredient in pet food. Once again, the final product came from U.S. suppliers–Tembec and Uniscope–but these companies were unaware that there was Melamine in the food product. Melamine is most often found in fire retardants and plastic products (Reinberg, 2007). An investigation by the FDA found that the melamine chemical was added by a Chinese company that exports raw materials to Tembec and Uniscope. In the investigation the FDA traveled to China and found two possible companies that might be the responsible for adding melamine to the food product, but they currently remain unnamed. Thousands of pet owners in the U.S. have reported that their pets have died from the food products containing melamine. The FDA tested melamine to see the effects on humans, and fortunately there seems to be no serious danger of ingesting poultry or fish that have consumed melamine. Even so, the fact that such a harmful chemical was able to make its way into a U.S. product shows the incapacity of the regulation authority overseeing Chinese exports.
Over the past several months, the FDA has made plans to establish a much greater presence on the ground in China because the Chinese SFDA seems to be inefficient in its own regulation. As of March 2008, the U.S. State Department has granted the approval to establish permanent FDA positions at U.S. diplomatic posts located in China—pending authorization from the Chinese government. This increase in FDA presence is greatly needed in China as evidenced by the fact that over the past 16 years there has been a 400 percent increase in foreign companies related to drug marketing (Barnes, 2008). The proposed plan by the U.S. State Department hopes to improve regulation so as to assure that Chinese products imported into the U.S. meet the necessary standards of U.S. goods. Regrettably, there are many critics of this plan who believe that it falls far short of what is really necessary.
The major concern about this proposed plan involves the resources provided to the FDA, which are inadequate for the proper regulation of overseas goods. For example, there are more than 150 entry ports to the U.S. and FDA inspectors are only able to physically inspect less than one percent of all imports (Barnes 2008). The Government Accountability Office (GAO) has stated that the FDA would need around 70 million dollars a year to adequately inspect the more than three thousand foreign drug companies (over seven hundred being Chinese). Of the necessary 70 million dollars, the government plans to give the FDA only 11 million this year, and approximately 13 million next year (Cohen 2008). This insufficient supply of FDA resources will not help establish a more stringent regulation of Chinese products headed to the U.S.
Due to the ever-increasing number of Chinese companies manufacturing chemicals, China is well on its way to become the world’s premiere supplier of goods, most especially in the pharmaceutical industry. The cause for concern is simple: there is a high demand throughout the world market for Chinese production and with an inefficient regulation of this production, there is a strong likelihood of dangerous, illegal goods finding their way into many countries. The fact that serious infractions by Chinese chemical companies have been made more than once is very disturbing. The ideal plan for improving the regulation of these companies would be to increase funding for agencies such as the FDA so they can better perform their jobs. However, as previously discussed, it looks as though the government is unwilling to provide the necessary resources in order to improve regulation. By not stepping up regulation on these companies, the U.S. is hurting itself because it greatly relies on China for so many supplies. If a change in attitude toward the regulation of Chinese companies producing chemicals is not made, the current situation of unchecked chemical products making their way onto the world market will spiral out of control, and the possibility of a scary future for consumers will become a reality.