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[News Focus] Valsartan chaos reveals Korean drugmakers’ weakness
  • By So Jae-hyeon
  • Published 2018.08.13 14:21
  • Updated 2018.08.13 14:21
  • comments 0

The pharmaceutical industry is having time for self-reflection, admitting that its excessive pursuit of cost cuts has caused the recent fiasco over carcinogen-containing valsartan drugs.

The Ministry of Food and Drug Safety recently banned the sales of 174 valsartan-based hypertension treatments that contained N-Nitrosodimethylamine (NDMA), a carcinogen.

The prohibited drugs account for 30 percent of the 571 locally approved valsartan products.

Korean drugmakers import cheap Chinese raw materials en masse

Industry watchers blamed local drugmakers’ use of low-priced Chinese raw materials as a major cause of the valsartan fiasco. Korea imports pharmaceutical raw materials from China the most.

According to the Korea Pharmaceutical Traders Association (KPTA), the nation imported $552.2 million worth of pharmaceutical raw materials from China last year, which was the largest among countries that exported drug materials to Korea. The figure took up 25 percent of the total imports of pharmaceutical raw materials.

The reason for the high proportion of Chinese pharmaceutical ingredients in Korean drugs is simple. Korean generics makers aim to make more profits by reducing the manufacturing costs of generics.

According to an executive of a pharmaceutical ingredient maker, a drum of a specific local drug substance costs 400,000 won ($353), while a Chinese alternative is about 160,000-180,000 won. The more Korean drugmakers use Chinese materials, the more they can cut costs and make more profits.

The reason that many small- and medium-sized drugmakers had to face the sales ban of their valsartan medications is that they used cheap ingredients, industry officials said.

“Some established pharmaceutical companies use Chinese ingredients only when there is no alternative ingredient available,” said a researcher at a medium-sized drugmaker. “Smaller drugmakers seem to have used Chinese ingredients because they were cheaper.”

“In contrast, Japan detected few carcinogen-containing valsartan ingredients. This shows that Korean pharmaceutical firms lost the trust of consumers who once believed that Korean drugs were safe.”

Generics consignment system failed to screen out carcinogen-containing drugs

Experts note that the nation’s approval of generic drugs consignment was unable to block the release of poorly made generic medicines.

In the past, one drug consignment company could share data for generic drug approval with two companies at maximum. However, in 2010, the government uncapped the limit.

Pharmaceutical firms could obtain a generic drug license through consignment manufacturing. The mushrooming of generic drugs led to severe competition, which caused some drugmakers to offer illegal rebates to doctors to sell their medicines. A significant number of pharmaceutical products involved in unlawful rebates were found to be generic drugs.

Some critics demand the government limit the number of consignment companies to prevent a reckless market release of generic medicines. However, it is still unclear whether the government would accept the demand.

For the present, the government is encouraging the use of generics to reduce the spending on health insurance.

“If the government restricts the number of consignment companies, most of the drugmakers will oppose the move. Because the government recommends the use of generics, it will feel burdened to revise the system,” a pharmaceutical source said. “To protect quality generic drugs and resolve the issue of illegal rebates, however, the government needs to amend the drug approval system.”

sjh@docdocdoc.co.kr

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