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China’s Cartels: Those Who Control the Medicines Control the World

The vital drugs and supplies needed to treat coronavirus are in the hands of a government that has already weaponized them.

(Getty Images)

If the coronavirus pandemic has taught us anything, the United States is unprepared for a disease outbreak or biowarfare because we no longer make the medicines necessary for survival. 

Shortages of masks, ventilators, and respirators have made headline news but shortages of critical medicines have remained largely out of public view.

On February 27, 2020, the Food and Drug Administration (FDA) reported the shortage of a drug caused by the coronavirus outbreak in China. The agency didn’t name the drug because it would cause hoarding. Since then, the FDA has gone silent about shortages. Meanwhile, U.S. drug wholesalers are “allocating” critical generic drugs, an industry euphemism for rationing.

How dependent are we on China for medicines to care for people with severe cases of coronavirus? China is the source of 90 percent of the chemical starting materials needed to manufacture common generic drugs that help people recover. They include medicines to increase dangerously low blood pressure such as norepinephrine, the antibiotic azithromycin for bacterial infections, and propofol given when patients are placed on a ventilator to help them breathe.

How Did the U.S. Become Dependent on China?

Generic drugs are 90 percent of the medicines Americans take. Thousands of them are made with chemical starting materials from China.

China’s dominance escalated after the U.S. granted most-favored nation trading status to China. Within three years of the U.S.-China Trade Relations Act in 2000 and China joining the World Trade Organization (WTO), the last aspirin manufacturing plant in the U.S. shut its doors, the last facility making Vitamin C went out of business, and the only remaining penicillin plant announced its closure.  Now, the U.S. has virtually no capacity to manufacture antibiotics.

A common view is that production has shifted to China because of lower labor costs and weaker regulations. There’s more to the story. 

Western companies cannot compete successfully because the free market doesn’t exist in generic drug and chemical ingredient manufacturing. China’s cartels fueled by government subsidies undercut U.S. and other companies, driving them out of business. Western firms aren’t competing against Chinese companies. They are competing against the Chinese government.

U.S. Generic Drug Manufacturing is Collapsing

China is moving up the value chain and makes 10 percent of the generic drugs in the U.S. The first was an HIV/AIDS medicine. Other generics made in China by domestic companies and sold in the United States include: antibiotics, anti-depressants, birth control pills, chemotherapy for cancer treatment for children and adults, medicine for Alzheimer’s, diabetes, Parkinson’s, and epilepsy, to name a few.

As China ramps up production of generic drugs for American hospitals, pharmacies and home medicine cabinets, U.S. and other western manufacturing is collapsing. Mylan, a U.S.-based generic company, announced last year that it was merging with Pfizer. Around the same time, Pfizer announced the opening of its global generic headquarters in China. Sandoz, a European company, and Teva, an Israeli company, announced in early 2019 that they will discontinue production of many medicines.

Long before the coronavirus hit the U.S. homeland in earnest, hundreds of medicines were in short supply or unavailable altogether. At a Senate Small Business Committee hearing chaired by Senator Marco Rubio in March 2020, a Johns Hopkins professor said that its hospital has 200 to 300 drugs in shortage, far more than the 98 officially reported by the FDA.

Now, in the middle of a global pandemic we face a perfect storm. Production in China has been shut down. China has withheld exports of masks and other protective gear, and it is likely that China has been withholding domestically-produced medicines. 

I visited a hospital recently and talked with doctors about the availability of critical drugs. They said they could not obtain a critical antibiotic to treat pneumonia. Many other antibiotics are being rationed. 

More than 100 countries affected by the coronavirus are competing for a limited global supply of critical medicines whose production depends so decidedly on a single country.

Hungary, the UK, India and other countries have sealed their borders to prohibit exports of essential medicines. Although India has a very large generic drug industry, it depends on China for 70 percent of the chemical starting materials to make drugs.

If You Control Medicines You Control the World

China relishes its geopolitical leverage. As the number of coronavirus cases climbed in the U.S. last month, China’s official news outlet issued this threat, “If China announces that its drugs are for domestic use and bans exports, the United States will fall into the hell of a new coronavirus epidemic.”

China’s threats to withhold medicines are not new. More than a decade ago the Chinese government threatened drug shortages if the federal government failed act as it wished. No trade kerfuffle existed at that time.

Make no mistake, China knows precisely where the U.S. is vulnerable. Meanwhile, the FDA and industry are scrambling to pinpoint those medicines where we are solely or mostly dependent on China.    

Rocket Fuel in Generic Drugs

In July 2019, the U.S.-China Economic and Security Review Commission held a hearing on U.S. dependence on China for medicines. During the hearing, a representative from the Department of Defense testified about the risks to the military of medicines made with key ingredients from China.

This testimony triggered a spellbinding account by a commissioner, a retired Army colonel with a distinguished record of military service. He talked about his three different blood pressure medicines whose key ingredients were made in China and contained rocket fuel. If he was getting contaminated drugs, active duty military people were probably getting them too, he opined.

The retired Army colonel was one of millions of Americans whose blood pressure medicines were contaminated with carcinogens. In July 2018, the FDA announced the first of many recalls. While many manufacturers recalled their products, the most troubling was the manufacturer in China whose active ingredient contained more than 200 times the acceptable limit of the rocket fuel carcinogen, per pill. Even worse, the company knew its product did not meet U.S. standards but sold it anyway

Meanwhile, the coronavirus landed on the nuclear-powered aircraft carrier USS Theodore Roosevelt last month as it was patrolling the South China Sea. More than two dozen crew members have been infected. The carrier was forced to make an emergency stop in Guam so all 5,000 people on board could be tested.

Make no mistake, the United States faces an existential threat posed by China’s control over the global supply of the ingredients and chemical materials to manufacture critical drugs. In the hands of an adversary, medicines can be weaponized. They can be made with lethal contaminants or sold without any real medicine in them, rendering them ineffective. 

Same Talking Points: Generic Drug Industry and Premier Xi Jinping

The director of the White House Office of Trade and Manufacturing Policy, Dr. Peter Navarro, drafted an Executive Order with Buy American medicine provisions for the U.S. military, VA, and the strategic national stockpile.

An avalanche of opposition from special interests has erupted. They claim that making medicines in the United States would somehow disrupt the medicine supply chain. As noted, it was already in shambles before coronavirus, plagued with poor quality medicines in persistent shortage.

The generic drug industry circulated a draft letter to the White House on March 24, 2020, which stated that medicines made in America would “destabilize the (medicine) supply chain.” Two days later, Chinese Premier Xi Jinping used a similar talking point during a virtual G20 meeting. He said global supply chains need to “remain stable.”

Premier Xi added that China will increase its supply of active pharmaceutical ingredients to the international market. The generic industry is not opposed to China’s growing nationalism and monopoly position, yet it fiercely opposes the United States salvaging a bare minimum of manufacturing capability for our national security.   

The fate of the Executive Order is uncertain. Washington lobbyists are working overtime to increase our dependence on a country that has threatened to kill us. Let that sink in.

[Editor’s Note: This story is featured in the forthcoming May/June issue of The American Conservative]

Rosemary Gibson is senior advisor at the Hastings Center and author of China Rx: Exposing the Risks of America’s Dependence on China for Medicine. Follow her on Twitter @Rosemary100.

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