Column: Where do prescription drugs come from? Good luck answering that question
Westwood resident Steve Simich was taking a generic anti-cholesterol pill. One day he got curious about where it came from. It didn’t say on the label.
Simich, 57, asked the pharmacist at his local Rite-Aid. She looked it up and said the country of origin was India.
“That made me angry and a little disgusted,” Simich told me. “They should disclose that. I asked the pharmacist to switch me to a name-brand version made in the United States.”
Now he takes Crestor, sold by the pharmaceutical giant AstraZeneca.
What Simich may not realize, though, is that while AstraZeneca has offices and facilities here in the U.S., the active ingredient for Crestor, rosuvastatin calcium, comes from abroad.
A company spokeswoman said AstraZeneca obtains the ingredient from suppliers in Britain, Belgium and Switzerland. Most makers of generic alternatives to Crestor, meanwhile, get their rosuvastatin calcium from India and China.
Simich’s experience speaks not just to the fact that prescription drugs, and their ingredients, come from all over the world, but also to the huge challenge consumers face in making informed decisions about the meds they take.
And that’s apparently deliberate.
“The pharmaceutical industry does not want you to know where its drugs are from,” said Rohit Deshpande, a marketing professor at Harvard Business School who has studied country-of-origin branding.
“The moment people find out that these products largely come from China and India, they want to know why they’re not cheaper,” he told me. “The industry’s motivation in hiding this is to maintain very high prices.”
On Friday, President Trump outlined steps he said would result in lower drug prices. “Under this administration,” Trump declared, “we are putting American patients first.”
In fact, the measures he presented were so half-hearted that the stocks of major drug companies immediately went higher.
Peter Magnusson, an associate professor of international business at the University of Alabama, said research clearly shows that consumers are influenced by labels that disclose a product’s origins.
If presented with an American-made and a Chinese-made version of the same drug, he said, most U.S. consumers wouldn’t hesitate to select the American pill. Rightly or wrongly, Magnusson said, “consumers trust rich-country stuff more than they trust developing-country stuff.”
I wrote on Friday about a highly deceptive campaign from the Partnership for Safe Medicines, a U.S. drug-industry-backed group that seeks to prevent Americans from importing cheaper meds from abroad.
The organization has come out with ads that misleadingly claim Canada is an untrustworthy source of drugs, with some meds containing “antifreeze, drywall, even road paint.”
This got me thinking about pharmaceutical countries of origin. My subsequent chat with Simich only increased my curiosity.
Why is it so hard to find out where drugs come from, especially when nearly all other consumer products, from clothing to cars, have their country of origin prominently disclosed?
One reason is because the supply chain for drugs is very complex. Active and inactive ingredients might come from dozens of suppliers in multiple countries, and each of those suppliers in turn might have facilities around the world.
That’s why the Food and Drug Administration generally defines a drug’s country of origin as the final stop in the manufacturing process — where the ingredients were combined or the final touches put in place.
Under FDA rules, drug companies are required to disclose only the name and business address of the manufacturer. A U.S.-based pharmaceutical plant, therefore, would not have to reveal that its active ingredients come from China.
The U.S. Customs Service, on the other hand, considers a drug’s country of origin to be the last place that resulted in a “substantial transformation.” Typically, that means the source of the drug’s main active ingredient.
Even so, it’s often impossible to get a fix on any aspect of the supply chain or manufacturing process. Take a look in your own medicine cabinet. More than likely, not one prescription drug has a country of origin on the label.
The Tariff Act of 1930 requires that every foreign good be labeled “in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article.” But there are several key exceptions to this law.
No such labels are required for “articles that are incapable of being marked,” “articles which are crude substances” and “articles to be processed in the United States by the importer.”
Michael Chattalas, a professor of marketing and international business at Monmouth University in New Jersey, said drug companies interpret these exceptions as applying to the myriad components of prescription meds — and no one in Washington is saying otherwise.
It could be argued that it makes no difference if a drug’s country of origin is disclosed.
Frances Richmond, chairwoman of the Department of Regulatory and Quality Sciences at USC’s School of Pharmacy, told me that because all facets of the supply chain must meet strict FDA safety standards, it shouldn’t matter to consumers where drugs or their ingredients originate.
But she acknowledged that some drug companies probably don’t want people knowing that 80% of active ingredients — yes, 80% — come from China and India.
“There’s an effort to contain the cost of drugs, and that’s why these things are outsourced to other manufacturers,” Richmond said. “It’s the way of the world.”
Perhaps, but that doesn’t mean obfuscation should be the norm. Apple is based in California, but its iPhones are made in China — and are clearly labeled as such.
“When you pick up a package of cereal, you can see the major ingredients and where it was made,” said Harvard’s Deshpande. This isn’t the case with prescription drugs, he said, because “the industry’s lobbyists are too powerful.”
The drug industry has spent nearly $4 billion on lobbying over the last 20 years, according to the Center for Responsive Politics. No other U.S. industry comes close.
As a reasonable person, I understand that Richmond is correct when she observes that “our drug supply is amazingly safe.”
But I also agree with Simich. As a consumer, I feel I have a right to know where the things I buy come from, without a lot of trickery. This seems particularly pertinent in the case of prescription drugs, which can play a life-or-death role for millions of people.
If you go to AstraZeneca’s Crestor website, you’ll find safety information about the drug but you won’t learn where it was made, or where its active ingredient comes from.
I think Deshpande is right when he says that if Americans knew where their pills, or much of what’s in them, come from, they’d be shocked by the absurdly high prices being charged.
That’s why the pharmaceutical industry is keeping such information to itself.
That’s why, if Trump was serious about tackling runaway drug prices, he’d make companies clearly disclose countries of origin.
The perfect conversation starter, you could say.