One important aspect to our blog which provides commentary on global supply chain management is to keep an eagle eye on developments both before, during, and sometimes considerably after a significant supply chain related event.  Our focus is to share learning or takeaways from these various incidents.

When we launched Supply Chain Matters back in 2008, one of our first series of commentaries concerned supply chain risk management, specifically the issue of the tainted pharmaceutical drug heparin that originated from Chinese based suppliers.  Readers may recall that tainted batches of the prime API compound that produces heparin, a key life-saving drug utilized as a blood thinner, were found to later contain oversulfated chondroitin, an altered version of the required chondroitin sulfate.  Instead of sourcing this active API from designated pig intestines, the tainted API apparently came from shark cartilage.  This specific incident attributed to death of 80 persons and many others became very ill.

Our 2008 commentary, Will FDA Inspectors in China Solve Product Safety Issues?, questioned whether regulatory agencies were ill equipped to keep up with the pace of global outsourcing of pharmaceutical compounds and specifically getting a handle on the increasing occurrence of counterfeit or non-conforming products. At the time, the FDA had just announced the deployment of 15 inspectors to monitor hundreds of Chinese food and drug related suppliers that were supplying U.S. destination supply chains.

It was thus with keen interest that we came upon a recent Wall Street Journal published news story titled Suppliers Linked to Impure Heparin. (paid subscription or free metered view).  The article notes that 14 Chinese suppliers are suspected of supplying contaminated raw material to make heparin, but an FDA spokesperson stresses that the agency does not have any hard evidence that these same companies are currently supplying tainted material. The 14 companies have reportedly been placed on an import alert list, with 8 other suppliers that allows FDA and other governmental inspectors to stop shipments from any of these suppliers at the U.S. border.

In our view, the takeaway is that four years after the original incidents, our 2008 commentary still resonates, namely, can the FDA or other regulatory agencies police supply chains for the existence of non-conforming or unsafe products, or is this a prime responsibility of the industry itself.  Since 2008, the FDA has managed to specify a test that can reportedly detect the existence of any heparin contaminate and is now reminding heparin manufacturers to police their supply chains.

The WSJ article quotes the same FDA spokesperson as indicating the following: “The heparin supply is safe.  It’s one of the most protected drugs out there.” Perhaps this statement is predicated on an assumption that the industry will invest in the proper processes and tools to be able to detect unsafe or non-conforming materials, and that the FDA can somehow accelerate its monitoring of foreign-based suppliers.

The final takeaway question is this: Is it really possible for regulated industries such as drugs and medicines to continue their current pace of global-based outsourcing without significant investments in counterfeit and non-conforming materials protection?

Supply Chain Matters is of the point of view that evidence of the current pace of mitigation efforts related to detecting counterfeit materials seems inadequate.  Four years is a very long time to wait for concerted action plans. Investments in global based product pedigree, track and traceability and centralized supplier intelligence could have long been implemented with an investment cost far below the current costs of liability and damaged brand identities.

Perhaps other industry participants, regulators  or service providers can share some perspectives on what exactly is the problem here?

Bob Ferrari

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