Lawyers start to sue Baxter over tainted heparin supplies

Regular readers will be aware of regular posts on the effect of deliberate substitution of oversulfated chondroitin sulfate, or OSCS--that is derived from animal cartilage -- in supplies of heparin -- derived from pig intestines -- in China which first showed up in deaths and illness in users of Baxters heparin in the US during twice weekly kidney dialyisis sessions earlier this year. (see Wednesday, February 13, 2008 Baxter Healthcare Heparin crisis grows - active ingredient traced to Chinese production plant that was not inspected by the FDA )

This week's Time magazine has helpful update detailing some of the personal tragedies this has caused - Heparin's Deadly Side Effects By Bill Powell/Shanghai Thursday, Nov. 13, 2008

The article claims that (as many have suspected) that OSCS's key benfit is -- as a Baxter spokeswoman is quoted by Time, a "virtual mimic of heparin" in most tests and, according to a congressional investigator, costs only $20 per kg, vs. $2,000 for crude heparin. The suppliers, investigators believe, colluded to substitute OSCS in the crude heparin they passed along for the standard price and pocketed the $1,980 difference for each kilogram they sold.

Naturally in the land of the lawyers , plaintiff attorneys have filed 60 suits to date against Baxter and their Chinese based heparin suppliers, Scientific Protein Laboratories LLC (SPL), in federal courts. (Pic of Changzou SPL factory outside Shanghai)

SPL CEO Strunce can claim his company's heparin met Chinese standards, but that's probably a meaningless defense in a U.S. trial. For American drug companies using sources in China, quality control is not just China's problem--it's also their problem.

It is of interest that Waunakee, Wis., based SPL was started in 1976 by Oscar Meyer (now part of Kraft Foods) , top hot dog merchants throughout the USA. SPL have no connection now and are an independent company - " As a truly independent company, SPL is extremely nimble, entrepreneurial and customer-focused .... While we retain the levels of quality and compliance from our “Big-Pharma” roots.." (website)

Time points out that the gruesome connection is that half the world's pigs are to be found in China and Oscar Meyer handles a lot of them and so set up the company to manufacture and trade the many proteins used in the world wide pharmaceutical industry.

Thos interested in the further story of how Baxter's competitors in the USA , APP was taken over by dailysis speciaists Fresenius (FREG_p.DE: Quote) and the fascinating career of their fascinating Chinese born founder Patrick Soon Shong - Wednesday, July 09, 2008 who is till busy counting the US$3 Bn. he collected on selling out. Heparin -another chapter in the tale APP taken over by Fresenius - Patrick Soon Shong trousers US$3 Billion

Heparin -another chapter in the tale APP taken over by Fresenius - Patrick Soon Shong trousers US$3 Billion

German medical group Fresenius (FREG_p.DE: Quote) the biggest worldwide provider of dialysis services have bid a remarkable US$3.7 Bn. for APP Pharmaceuticals (APPX.O: Quote, ) who have, since problems with Chinese supplies of heparin pre cursor, become the dominant US supplier of heparin for dialysis , which hit competitor Baxter International Inc (BAX.N: Quote)

The high price saw Fresenius stock declining as they intend to finance part part of the deal through a capital increase. The deal will not only help Fresenius control costs (heparin from APPX has more than doubled in price) but provide an edge on competitor , dialysis services group DaVita Inc. (DVA.N: Quote, )

Fresenius will pay a 29% premium to the market price on Monday of US$23 per share and a possible US $6 a share in the second quarter of 2011 if APP beats a core profit target. Fresenius will also take on APP's net debt of about $940 million. It expects to close the deal at the end of 2008 or start of 2009 after regulatory approval when AP will become part of the Fresenius ' Kabi unit, its infusion drug therapy and nutrition division.

"With the APP platform, Fresenius Kabi will be able to market its product range in the U.S. Fresenius Kabi's international marketing and sales network will allow us to sell APP's products globally," Fresenius Chief Executive Ulf Schneider said.

Fresenius plans to finance the purchase with a mix of debt and equity aimed at minimizing the impact on Fresenius SE's credit ratings, with the largest portion through debt.

Colourful and controversial Patrick Soon-Shiong, APP founder and holder of over 80% of the APP outstanding stock, had given his written consent and a voting agreement and will pick up US$3 Bn. see Saturday, May 17, 2008 see Heparin - APP doubles prices, triples production - the fascinating life of Dr Soon-Shiong and cures for cancer and diabetes

We said at the time "Keep an eye open for more interesting information about this very interesting man and his very interesting career." .. which probably explains why a lot of interest has been shown in the last 2 days in the above post by folks at JP Morgan and Lehman Bros.... amomgst others.

Well maybe Baxter International just got unlucky with their suppliers of heparin from China enabling APP to snuck in, take over the dialysis market, double prices ... Patrick must have had good contacts in China to ensure supplies were not contaminated.

UPDATE WED 4.45 BST Here is soemthing very interesting about this very intersting company run by the very intersting Dr Patrick Soon Shiong. Footnoted.org notes an 8K SEC filing at around 2-30 on July 2nd ...there was Footnoted noted ..."sudden uptick in the company’s stock on Wednesday afternoon, someone seems to have picked up on the filing, or at least used it as a convenient excuse to buy."

"But it’s not just the stock that bounced. A short time ago, I spoke with Ryan Dietrick, a senior technical strategist at Schaeffer’s Research who said the options activity late last week looked unusual, given that normal open interest for APPX options had been “very light”. But on Thursday, someone made a pretty bold bet and bought 540 August call options @ 17.50 a share, which Dietrick says likely went for $1.30 to $1.40. Right now, those options are going for $6.30 a share, which makes whomever bought those options on Thursday either very smart or unusually lucky."

A Commentator posts ...."Hmmm, looks suspicious. I wonder if someone got the call first…"

European Medicines Agency recalls heparin batches in France, Italy and Denmark

Concern is spreading in Europe about the extent of contamination of injectable heparin which has been sourced in China. To date the FDA have identified 19 deaths in the USA 19 patients who have died after taking heparin, apparently from allergic reactions.

London based European Medicines Agency spokesman Martin Harvey-Allchurch said that France, Italy and Denmark have recalled batches of the blood thinner heparin, although no adverse effects have been reported in any of those countries.

In Italy and Denmark, the raw material for heparin has been pulled from the market, while in Germany and France, it's the finished medicine that was removed, Harvey-Allchurch said. The ingredient has been traced to four Chinese manufacturers.

Germany's Rotexmedica GmbH said it recalled ``several batches'' of the blood thinner earlier this month after patients experienced allergic reactions. Switzerland's regulator asked G. Bichsel AG and B. Braun Medical AG last week to remove two heparin products from the Swiss market. German heparin supplies recalled (March 10th)

The EMEA presumes (but does not yet know definitely) that the contaminant in the three countries is over-sulphated chondroitin sulphate, the same substance found in lots of heparin recalled in the US and a deliberately modified form of the popular diet supplement for joint pains, chondroitin sulphate.

The Wall Street Journal reports that Italian company Opocrin SpA. said it bought some ingredients from Shenzhen Hepalink Pharmaceutical Co., in China that turned out to be contaminated.

APP Pharmaceuticals Inc. -- currently the sole supplier of large-dose heparin for surgery and kidney dialysis in the U.S. have also been supplied by the same company,

However APP spokeswoman Maili Bergman said yesterday that Opacrin heparin was sourced from a different slaughterhouse than the source of APP material. APP heparin has consistently tested contaminant-free in its own and in U.S. Food and Drug Administration testing.

Boston.com
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Previous posts on heparin contamination

Heparin - B Braun issue nationwide product recall after supplier notifies contaminated suuples

B. Braun Medical Inc. (est.1839) began recalling 23 lots of pre- mixed injectable Heparin Sodium in 5% Dextrose and 0.9% Sodium Chloride injection solution on March 21st , 2008 from the US and Canada. This is a precautionary measure as their supplier, Scientific Protein Laboratories (SPL), disclosed that one lot of Heparin Sodium, USP Active Pharmaceutical Ingredient acquired by B. Braun Medical Inc. had a heparin-like contaminant.

To date, B. Braun Medical Inc. has not received any adverse event reports related to this issue. B Braun recall FDA recall notice

Heparin contaminant is a modified cheap diet supplement for joint pain - "it didn't come straight from the pig"

The Food and Drug Administration stated yesterday that a contaminant - over-sulfated chondroitin sulfate, a substance derived from animal cartilage, found in recalled batches of the blood-thinner heparin was deliberately altered in a way that mimicked the real substance.

Janet Woodcock, head of the FDA's drug division, said the substamce was not medically approved ***and was a lower cost product than heparin. Chondroitin sulfate is sold as a cheap and widely used dietary supplement in it's unmodified form to relieve joint pain or osteoarthritis - often with glucosamine.

"It does not appear to be a natural contaminant that got in there. We don't know how it was introduced or why," she said. Woodcock noted that the over-sulfated substance was deliberately processed and chemically modified so it would act like heparin - "It didn't come straight from the pig".

In some samples of Baxter's active ingredient, the contaminant made up between 2% and 50% of the total material, Dr. Woodcock said.It is heparin sold by Baxter that has resulted in the reports of over 700 adverse reactions and 19 deaths.

The FDA could not say whether iot was added by mistake or to lower costs.

Lord Patel's favourite Senator, Iowan Republican Charles Grassley, ever alert to the malign forces at work in commerce , said the investigation has "provided additional evidence of the need for a robust foreign inspection program within the Food and Drug Administration."

In fiscal 2007, there were a total of 714 Chinese facilities making drugs or drug ingredients for the U.S. market.

Charles Hubbard who was head of the FDA intil 2005 is reported in WAPO saying , "I have no doubt that there are other contaminated or counterfeit drugs like heparin coming into the country, because there's really no system in place to stop them,"

This case mirrors the discovery last year that Chinese suppliers had put low cost melamine into gluten used by American pet food manufacturers to make animal food appear more nutritious. Thousands of American pets became sick or died as a result. Which as far as Lord Patel is concerned is good. The only good dog is a dead dog - 4 legged shit machines.

*** Chondritin sulphate is approved for use in Europe as a symptomatic slow-acting drug for ostearthritis (SYSADOA) with evidenced efficacy and safety demonstrated by clinical trials in osteoarthritic patients. This also provides reference for chemical purity.

The bioavailability of chondroitin sulfate ranges from 15% to 24% of the orally administered dose.

The rationale behind the use of chondroitin sulfate is based on the belief that osteoarthritis is associated with a local deficiency in some natural substances, including chondroitin sulfate.

There is no proof that either glucosamine or Chondritin sulphate , taken singly or in combination, will actually slow the degenerative process or restore cartilage in arthritic joints. A recent a recent study by ConsumerLab.com in the US showed that almost half of the glucosamine/ chondroitin supplements tested did not contain the labelled amounts of ingredients.

US Heparin production boosted by APP as Baxter and FDA still need to identify their problem with Chinese sourced drug component

It's an ill wind.

Schaumberg, IIlinois based APP Pharmaceuticals (formerly known as Abraxis Bioscience Inc. ) and Baxter each supplied roughly 50/50 o fthe heparin for the US market which is essential for haemodialysis. Now that Baxter have of heparin , APP have ramped up production to meet demand and have arranged new production lines at its Grand Island, N.Y., plant.

APP source the heparin product from several sources inspected and approved by both the FDA and the Chinese regulatory body SFDA.

APP shares rose 79 cents to $11.30 in trading on the Nasdaq on the news which was also affected by the University of Chicago Medical Center, announcing that it switched last month to APP product. A chain of 1,600 U.S. kidney-dialysis centers run by Fresenius Medical Care North America, a unit of Germany's Fresenius Medical Care AG, already have announced switching to buying exclusively from APP. Fresenius has 120,000 dialysis patients who get esential life saving treatments three times a week.

Shares of APP are still nearly 20 percent off a 52-week high of $15.25 the stock price hit in April of last year.

Baxter note that heparin makes up less than 1% of Baxter's corporate sales and are working with the FDA who are examining the Cherry Hill, N.J., Baxter facility and the Waunakee, Wis., plant of Baxter's supplier, Scientific Protein Laboratories LLC. Scientific Protein's Chinese joint venture, Changzhou SPL in Changzhou, China, is to be examined closely by a team that will include manufacturing experts and a Chinese-speaking chemist.

The FDA is still puzzling over the cause of the heparin reactions potentially tied to Baxter's version of heparin and they are also facing Congessional scrutiny about their failure to examine and approve Changzhou SPL which they claim was due to a mix up over similiar names of companies on their database.

Joseph Famulare, deputy director of the FDA drug center's office of compliance, said the name of the operation "that was sent to the office of compliance for evaluation was not the correct firm. It was another firm with a similar name," which had been inspected and found to be in compliance.

This problem has highlighted concern in the U.S. over the mounting number of foreign-sourced drug ingredients (unkown to many consumers) and the FDA's questionable ability to effectively monitor quality control.

Such Congressional concern might spill over into other practices outsourced to China - testing on animals, humans etc.,