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December 2008

China's Contaminated Brand

by Henry I. Miller

China’s food adulteration woes continue as testing has revealed that melamine contamination of eggs produced in three provinces has caused kidney stones and renal failure in children. This comes on the heels of widespread milk contamination with melamine that has sickened more than 50,000 and killed at least four.

Chinese officials have attempted to restore consumer confidence. In October, for example, they established limits for allowable trace amounts of melamine in dairy products, and tightened quality-control regulations for the dairy industry. These measures, however, are not likely to reassure foreign consumers and importers of Chinese products. Unfortunatley, the government’s actions are focused only on the most visible tip of a gigantic iceberg, and China’s “brand” is severely compromised.

According to a Nov. 3 news report in The Wall Street Journal, before the current crises “the routine spiking of milk with illicit substances was an open secret in China’s dairy regions” with “protein powder” of uncertain provenance “employed for years as a cheap way to help the milk of undernourished cows fool dairy companies’ quality checks.”

These lethal examples of intentional tampering with food or drug ingredients (to say nothing of lead paint in toys and poisonous toothpaste) intended for export from China seem to be business as usual. Earlier this year, a similar incident in which the blood-thinning drug heparin was contaminated with a chemical called over-sulfated chondroitin sulfate caused hundreds of allergic reactions and 19 deaths in the United States and at least 80 serious adverse events in Germany. Like melamine in milk products, it was added intentionally to give falsely high readings of protein in the finished product. The contaminant was introduced in China, a common source of crude heparin precursors.

 Last year, melamine was deliberately added to an ingredient in pet food that sickened and killed cats and dogs in various parts of the world. Also last year, Chinese-made diethylene glycol, mislabeled as non-toxic glycerin, was mixed into anti-fever medicines for children, killing at least 100 in Panama. Especially in developing countries, these statistics are surely under-estimates.

Moreover, outright fraud in the distribution of pharmaceuticals is a significant and growing problem. Last year, warehoused drugs seized in Dubai were found to be part of a complex supply chain of counterfeits that ran from China through Hong Kong, the United Arab Emirates, Britain and the Bahamas, finally leading to an Internet pharmacy whose American customers believed they were buying medicine from Canada.

China is also involved in a related problem the cause of which is more negligence than fraud: medications that, while not intentionally adulterated, are produced without sufficient quality control of potency and purity to ensure drug safety and efficacy. As the production of many generic drugs has shifted from Europe and the U.S. to Asia, manufacturers in China and India have become frequent offenders,

The U.S. Food and Drug Administration (FDA) has made it clear that they will not tolerate corporate irresponsibility and that they will demand “greater supply-chain accountability.” In remarks delivered at a recent Food and Drug Law Institute conference in Washington, D.C., the head of compliance at the FDA’s Center for Drug Evaluation and Research emphasized that “manufacturers must bear clear responsibility for the integrity, quality, and safety of their products and all ingredients.”

At the end of the conference, a prominent food and drug attorney in private practice concluded: “The presentations made clear the extent to which industry will be asked to bear a greater and greater burden in the effort to ensure safety of the supply chain in all aspects of the life sciences related industry. Companies will be expected to know everything about not only what their suppliers are providing, but also what their suppliers’ suppliers are providing.”

The bottom line is that in order to ensure the safety and efficacy of medicines and confidence in commerce, foreign governments—particularly in China and the other egregious offenders—must make combating drug counterfeiting and food adulteration a high priority. In the meantime, fearing the wrath of regulators, toxic tort lawsuits, and the degradation of their own corporate brands, American and European companies will reject precursors and ingredients from China in favor of those from pricier but more reliable sources.

Dr. Miller, a physician and fellow at the Hoover Institution, was an official at the U.S. Food & Drug Administration from 1979 to 1994. Barron’s selected his most recent book, “The Frankenfood Myth,” as one of the 25 Best Books of 2004.

comments (1)
David Schneider @ 2008-12-19 14:45:53
Scattered Trust of Highly-Motivated Employee by David Schneider david_lawyer@walla.com If you open Moscow Yellow Pages, you would be surprised how many foreign companies have their offices in Moscow. Although the international financial crisis has caused the collapse which has never occurred since the Great Depression, the Russian Federation is still considered as a quiet harbor. Amongst the transcontinental companies there are a considerable number of Japanese corporations such as Toshiba and Mitsubishi. Though the latter are thought to be well-known for their successful in retailing of high-quality products worldwide, there have been cases which must be interesting to investigating institutions. We are going to take Mr. Vadim Danilov’s employee fraud case including asset misappropriation, money laundering, and kickback scheme. The story goes Mr. Vadim Danilov was hired by Mr. Harry Fujimaki to work for Toshiba Corporation (株式会社東芝 Kabushiki-gaisha Tōshiba) as a general logistics manager in Russia. The event occurred in 2004. In the course of two years Mr. Danilov had been “employed” in other areas such as, a certification specialist, customs broker, trader, promoter, etc. Mr. Danilov worked effectively and honestly thinking that he was a team player contributing to Toshiba’s profits. Moreover, Mr. Koichiro Natsume, an executive manager of Toshiba Corporation in the CIS, declared him a Toshiba Official Trader at the Conference at the Imperial Park Hotel, Moscow, 2006. In addition, Mr. Natsume declared that Mr. Vadim Danilov was officially registered by Toshiba Corporation as Toshiba's Official Trader named “the Ninth Wave” in the UK. To conclude the announced procedures, Mr. Natsume issued to Danilov’s Ninth Wave an invoice which was paid to a TCMS official account at Sumitomo Mitsui Banking Corporation, Singapore Branch. Furthermore, there were other financial transactions during 2006-2007-2008 years, executed by Mr. Vadim Danilov between clients and Toshiba Consumer Marketing Singapore, SMBC Singapore branch account. After all the payments were completed, Mr. Natsume vanished somewhere in Japan. Toshiba Corporation managers in Russia, Japan and Singapore refused to explain to Mr. Vadim Danilov how those payments had been used. Toshiba Corporation & TCMS, insist that Mr. Vadim Danilov has no evidences and the corporation declares now that Mr. Vadim Danilov had never had any relations with Toshiba Group Companies. Nowadays, the Toshiba staff has been running away from Mr. Danilov for 33 months. The Metropolitan Police Department of Tokyo also refused to investigate the accident and explained to Mr. Danilov that he had no right to bring in an action against a Japanese citizen. It seems to be a confrontation between David and Goliath but David had had no backup…
 
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