DRUG - IS IT A FOOD OR A CHEMICAL?

take the example of heparin. It's a pharmaceutical product. You expect that the supply chain that gets it to the hospital, probably squeaky clean. The problem is that the active ingredient in there -- as I mentioned earlier -- comes from pigs. The main American manufacturer of that active ingredient decided a few years ago to relocate to China because it's the world's biggest supplier of pigs. And their factory in China -- which probably is pretty clean -- is getting all of the ingredients from backyard abattoirs, where families slaughter pigs and extract the ingredient. So a couple of years ago, we had a scandal which killed about 80 people around the world, because of contaminants that crept into the heparin supply chain. Worse, some of the suppliers realized that they could substitute a product which mimicked heparin in tests. This substitute cost nine dollars a pound, whereas real heparin, the real ingredient, cost 900 dollars a pound. A no-brainer. The problem was that it killed more people.

And so you're asking yourself, "How come the U.S. Food and Drug Administration allowed this to happen? How did the Chinese State Agency for Food and Drugs allow this to happen?" And the answer is quite simple: the Chinese define these facilities as chemical facilities, not pharmaceutical facilities, so they don't audit them. And the USFDA has a jurisdictional problem. This is offshore. They actually do conduct a few investigations overseas -- about a dozen a year -- maybe 20 in a good year. There are 500 of these facilities producing active ingredients in China alone. In fact, about 80 percent of the active ingredients in medicines now come from offshore, particularly China and India, and we don't have a governance system. We don't have a regulatory system able to ensure that that production is safe. We don't have a system to ensure that human rights, basic dignity, are ensured.