[NVIC] Corrupt Chinese FDA Chief Executed

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July 13, 2007

National Vaccine Information Center

A young boy on the beach was throwing the washed-up starfish back into

the ocean. A stranger passing by told him not to bother, because it would

not make any difference, there were thousands of beaches and millions of

starfish, and it would not be possible to save all of them. The boy reached

down, picked up a starfish, threw it back into the ocean and said, smiling

softly, " I made a difference for that one! "

NVIC E-news

" Why are the friends who gave me money all the bosses of pharmaceutical

companies? " he wrote in his [confession] letter, entitled How I Look on My

Mistakes. " Obviously because I was in charge of drug

administration. " ..... " There were so many companies going to him and he

simply couldn't resist the temptation, " said one drug company executive who

befriended Mr. Zheng in the 1980s and did not want to be identified

discussing the delicate issue......Eventually, the court found him guilty

of accepting bribes from eight drug companies, condemned him for

dereliction of duty for failing to police the drug industry or his

subordinates and creating regulatory schemes that allowed dangerous drugs

to come to the market. Industry officials say Mr. Zheng probably accepted

many more bribes, but the government did not need evidence of any more to

ask for the death penalty.....Mr. Zheng's lawyer pleaded for leniency,

saying his client had cooperated with the authorities and, at times at

least, had actually worked to improve the drug industry. But on July 10,

the state- run media issued a terse statement: " Zheng Xiaoyu, former

director of China's State Food and Drug Administration, was executed

Tuesday morning with the approval of the Supreme People's Court. " -

Barboza, New York Times

Barbara Loe Fisher Commentary:

The execution of a former head of the Chinese Food and Drug Administration,

who began his career in government as a consumer advocate determined to

strongly regulate the pharmaceutical industry and ensure the safety of

drugs and vaccines, may seem extraordinarily harsh. However, his choice to

betray the people and take money from an industry he was responsible for

regulating in exchange for allowing dangerous drugs, vaccines and food to

be marketed, caused the deaths and compromised the health of thousands of

innocent people in China and other countries.

What is the appropriate societal sanction for powerful leaders in

government whose irresponsible, immoral actions kill and injure members of

a trusting public? An equally important question: what is the appropriate

societal sanction for wealthy drug company officials, who participate in

corrupting government employees responsible for regulating pharmaceutical

and other consumable products that end up injuring and killing people?

Sanctions for drug company lobbyists, who give financial incentives to

doctors and politicians to push widespread use of pharmaceutical products

that carry serious health risks - or even legally require their use - is

another outstanding issue.

The corruption of a once honest man by corporate executives exploiting

people for profit is a human tragedy. The people doing the corrupting

should not be left off the hook. Equally important is the need for

politicians in every country to refrain from putting too much power to

regulate and recommend pharmaceutical product use in the hands of one

unelected bureaucrat working for a government health agency.

Mechanisms for strong public participation and oversight should be an

integral part of any public health program that involves government or

physician recommended use of pharmaceutical products. Absolute power

corrupts absolutely.

http://www.nytimes.com/2007/07/13/business/worldbusiness/13corrupt.html

A Chinese Food and Drug Official Betrays His Cause, and Pays

The New York Times

July 13, 2007

By DAVID BARBOZA

Click here for the URL: (registration required)

BEIJING, July 12 - Zheng Xiaoyu once ranked as one of the most powerful

regulators in China. He rose from modest beginnings to help create and lead

Beijing's version of the Food and Drug Administration in the United States.

But last March, locked up in the Qincheng Prison here, he wrote a short

confession. " Why are the friends who gave me money all the bosses of

pharmaceutical companies? " he wrote in his letter, entitled How I Look on

My Mistakes. " Obviously because I was in charge of drug administration. "

In his confession, Mr. Zheng acknowledged that during his eight-year

tenure, he had accepted gifts and bribes from eight drug companies that

sought special favors: a car, a villa, furniture, cash. And corporate

stock. All told, he and his family accepted gifts valued at more than

$850,000 - in a country where the average worker earns less than $2,000 a

year.

For his crimes, the 62-year-old was executed on Tuesday, making him one of

the highest-ranking Chinese officials ever to be put to death.

The rise and fall of Mr. Zheng offers a rare glimpse inside China's flawed

regulatory system. He started out as an idealistic reformer. Concerned

about China's unsafe drug supply, he lobbied for the creation of the State

Food and Drug Administration. But in the end, according to friends and

associates, he was corrupted by the very system he sought to change - even

enlisting his wife and son to solicit bribes.

" There were so many companies going to him and he simply couldn't resist

the temptation, " said one drug company executive who befriended Mr. Zheng

in the 1980s and did not want to be identified discussing the delicate issue.

While China's tainted exports have attracted international attention,

China's own citizens suffer most from the shortcomings of its drug

regulators. Tens of thousands of crates of unsafe pharmaceuticals have

reached the local market - from antibiotics to vaccines, from drugs to

treat erectile dysfunction to ones to strengthen the immune system. The

government does not know how many deaths and serious illnesses have

resulted from faulty drugs.

Corruption is not the only problem, say industry insiders. Agencies battled

over who had the authority to fine companies and who was responsible when

things went wrong. The rapid growth of the drug industry has also made it

hard for regulators and their staffs to keep up.

During Mr. Zheng's tenure, for instance, his agency approved over 150,000

applications for new drugs, an approval rate that dwarfs the F.D.A., which

approves only about 140 new drugs each year.

And when regulators do discover counterfeit pharmaceutical operations,

powerful local officials often seek to shield companies in their area from

punishment.

As much as his own greed, all these larger problems stymied the intelligent

but naïve Mr. Zheng. " He was smart in a technical way, " says a drug company

executive who knew him for more than 20 years. " But he didn't have

political skills. He should have never gone into government. "

Zheng Xiaoyu was born in coastal Fujian Province in 1944, when China was

still being torn apart by war. He and several siblings were raised by an

aunt, friends say. Mr. Zheng was bright enough to gain acceptance to the

prestigious Fudan University in Shanghai, where he studied biology and

played the trumpet in the school band.

After graduation, he got a job as a technician at the state-owned No. 1

pharmaceutical factory in nearby Hangzhou, where he eventually rose to

become factory manager.

Colleagues remember him being passionate about his work. " He was innovative

and liked new ideas, " said one retired worker who knew Mr. Zheng well, but

asked not to be identified. " In the 1980s, he even bought computers for the

factory in an attempt to computerize manufacturing and management. "

Later, in the mid-1990s, Mr. Zheng took a job in the country's

pharmaceutical regulatory administration. There he pushed the government to

create a separate body to regulate food and drug safety, one with more

power to protect Chinese consumers.

In 1998, Beijing did. The amiable Mr. Zheng headed the state agency for the

next eight years, pushing a modernization plan that was supposed to help

transform China into one of the world's leading centers for pharmaceutical

production.

To improve industry standards, the agency cracked down on fake drugs and

illegal factories. Mr. Zheng would occasionally show up at the side of

victims to grieve and declare his own fears about product safety.

He talked like a determined enforcer. " The crimes of making and selling

fake drugs haven't been uprooted, " he said in a speech in 2001. " And

criminals and corrupt officials in the system should be severely punished

according to the law. "

One of his boldest reforms was an effort to push new production standards,

giving companies a " good manufacturing practice " seal of approval. Mr.

Zheng promised to use the standards to weed out irresponsible

manufacturers. His agency declared that any pharmaceutical company that did

not get G.M.P. approval by July 2004 would lose its license.

" The intention of the G.M.P. certification was good, " says Yang Yue, a

professor at the Shenyang Pharmaceutical University. " You don't know what

horrible conditions some drug makers had been in. For example, in some

traditional Chinese medicine companies, workers stirred the drugs with

their feet. "

The plan had its intended impact: the industry shrank from 6,700 drug

makers to about 4,000.

But the agency's higher standards coincided with an effort by Beijing to

curb soaring drug prices. Companies were caught between the mandatory

government price cuts and the increased costs to upgrade equipment and

retrain staff members to meet Mr. Zheng's modernization plan.

Companies complained that because of their shrinking profit margins, they

did not have the money to develop new drugs. Some producers switched to

drugs not covered by the government's price caps, or simply changed the

dosage of existing drugs to maintain higher prices, exploiting a loophole

in the pricing regulations. And companies bribed agency officials to get

speedier drug approvals or other special favors.

Those officials included Mr. Zheng, according to court records. His wife,

Naixue, and son, Hairong, eventually formed a consulting company in

Shanghai that helped solicit bribes from companies.

Court records show that when a company named the Double Dove Group sought

to register disposable syringes, it offered shares to Mr. Zheng's wife; his

son received a used Audi, consulting fees and property in Shanghai.

When a Beijing drug maker needed approval to import more Madame Pearl's

Cough Syrup from Hong Kong and to distribute a new intravenous drug, the

company's chairman helped Mr. Zheng's wife pay for a villa and then went

shopping with her for furniture. Decorating fees came to about $30,000.

The court offered detailed accounts of other bribes: secret payoffs at a

Beijing hotel, checks handed to Mr. Zheng in his office; and instructions

for Mr. Zheng's son to fly to Hong Kong, where he got over $120,000 that he

later told prosecutors he put away for his parents' retirement.

At least eight other senior drug agency officials have been accused of

taking bribes, according to court records and the state-controlled media.

Mr. Zheng's top deputy, Hao Heping, the director of the medical devices

division, accepted cash, expensive golf memberships and a Honda Accord.

Cao Wenzhuang, head of the drug registration division, accepted at least

$300,000 in gifts and bribes. Both men also worked with their wives to

solicit the money.

The court that handed down Mr. Zheng's death sentence said at least six

drugs that had been approved by the State Food and Drug Administration

during his tenure were fake. The agency's current leaders say hundreds of

fake drugs are on the market at any given time - some approved, many not.

According to state-run media accounts, prosecutors began hearing from

informants about corruption at the highest levels of the S.F.D.A. beginning

in 2002, when a drug regulator who had worked with Mr. Zheng was sentenced

to death for corruption. (That official received a reprieve and was never

executed.)

Soon, several other agency officials came under scrutiny. One drug industry

insider, who asked not to be named discussing government agency rivalries,

said bureaucratic battles also worsened between Mr. Zheng's drug watchdog

and the Ministry of Health, which had primary oversight over the drug

market before Mr. Zheng's agency was formed. That fight, according to this

official, could have led his rivals to inform on Mr. Zhang.

In June 2005, Zheng Xiaoyu quietly stepped down as director of the State

Food and Drug Administration. Rumors spread that he was under investigation.

But Mr. Zheng's arrest did not come until a year later. In the meantime, he

remained head of the China Pharmaceutical Association, even attending

high-level government meetings, according to China Vitae, a Hong Kong Web

site that tracks government officials.

About the same time, Mr. Zheng's wife and son, sometimes at his direction,

began returning some of the gifts they had received from drug company

executives, including the $30,000 dividend Hairong had been paid for his

stake in the Double Dove property. Naixue returned some of her consulting

fees.

After attending a December 2006 meeting of the Beijing Pharmaceutical

Association, Mr. Zheng was questioned by the government's disciplinary

agency, according to court documents.

Two months later, the State Council, China's highest governing body, held a

special meeting to consider Mr. Zheng's crimes. Prime Minister Wen Jiabao

attended. The council was told that Mr. Zheng had " neglected his duty to

supervise the drug market, abused the administration's drug approval

authority, took bribes and turned a blind eye to bad practices by relatives

and subordinate officials. "

Mr. Zheng was officially arrested in March. Soon after, the entire Zheng

family was undergoing intense interrogation. All three members confessed to

soliciting and accepting bribes.

" Some money wasn't given to me directly, but through Naixue and Hairong, "

Mr. Zheng wrote in his confession. " Naixue was retired and stayed at home.

Hairong was just a student. So their target was still me. Indirect ways

were easier for me to accept. So I agreed, consented. This was bribery. "

Eventually, the court found him guilty of accepting bribes from eight drug

companies, condemned him for dereliction of duty for failing to police the

drug industry or his subordinates and creating regulatory schemes that

allowed dangerous drugs to come to the market.

Industry officials say Mr. Zheng probably accepted many more bribes, but

the government did not need evidence of any more to ask for the death penalty.

Many drug company officials still defend Mr. Zheng, arguing that he was a

good man, undone by temptations that would have corrupted many people. They

say that the industry was plagued by dishonesty that no regulator could

have controlled; and that in a country where counterfeiting is rampant in

all types of industries, where doctors and hospitals regularly accept

kickbacks, that Mr. Zheng was made a scapegoat for national ills.

Mr. Zheng's lawyer pleaded for leniency, saying his client had cooperated

with the authorities and, at times at least, had actually worked to improve

the drug industry.

But on July 10, the state-run media issued a terse statement: " Zheng

Xiaoyu, former director of China's State Food and Drug Administration, was

executed Tuesday morning with the approval of the Supreme People's Court. "

Whether Mr. Zheng's wife and son will be tried is not clear.

The day after his execution, the agency Zheng Xiaoyu had helped found said

it was dismantling his drug approval system and putting in place new

measures to bring transparency to the drug approval system. The agency also

said it would start making unannounced visits to check on drug factory

production.

Industry analysts say Beijing will have to do a great deal more to solve

the country's food and drug safety problems " If the head of the drug agency

is corrupt, " said J. Shen, a longtime industry analyst in Beijing and

the publisher of Pharma China, " you can imagine how corrupt the whole

system is. "

Rujun Shen contributed reporting.

cfda

Zheng Xiaoyu, the former director of China's State Food and Drug

Administration, was executed July 10 for approving untested medicine in

exchange for cash. He became the highest ranking Chinese official ever to

be put to death.

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