The Peter Attia Drive - #71 - Katherine Eban: Widespread fraud in the generic drug industry

Episode Date: September 16, 2019

In this episode, Katherine Eban, investigative journalist and author of Bottle of Lies, illuminates the prevalence of fraud in generic drug manufacturing which brings into question the idea that generics are identical to brand-name drug as we are lead to believe. Katherine walks us through how this widespread corruption came to be, including the shocking story of one particularly egregious (and unfortunately not uncommon) example of an Indian drug company, Ranbaxy, whose business model was completely dependent on falsifying data in their drug applications to the FDA. We then discuss the subsequent investigation into Indian and Chinese drug manufacturing plants which revealed that nearly 80% of them are tainted with fraud. We conclude this discussion on a positive note with i) how individuals can investigate their own drugs to protect themselves ii) an innovative pharmacy attempting to disrupt the market and iii) some ideas on how to reform to the regulations around generic drugs, the FDA, and more.   We discuss: How Peter found Katherine’s book, and what convinced her to investigate the generic drug industry [5:45]; Branded vs. generic drugs: Why they aren’t the same thing [11:15]; The Food and Drug Administration: Why it was originally created and what it does today [20:45]; How the generic drug industry really got its start in the U.S., and the flaw of the Hatch-Waxman Act [28:20]; PEPFAR: How a well-intentioned plan to help Africa with the AIDS epidemic laid the groundwork for corruption [36:30]; The story of Ranbaxy: An Indian drug company whose business model was fraud and deceit [40:45]; How the FDA approves drugs, the impact of “first to file”, and Peter’s tangent on moral corruption [47:30]; A booming generic drug market and the FDA struggling to keep up [57:15]; Dinesh’s internal investigation finds widespread fraud and falsified data inside Ranbaxy [1:00:15]; Presenting the famous SAR document to Ranbaxy’s board of directors which spells out the company-wide fraud [1:09:15]; Dinesh blows the whistle on Ranbaxy which leads to a raid on their US plant [1:19:45]; Formal investigation of Ranbaxy is launched, but the FDA keeps approving Ranbaxy drug applications [1:33:30]; What role does the culture in India play in the high prevalence of fraud in the drug industry? [1:41:00]; The extreme prevalence of data fraud/manipulation in foreign generic drug factories [1:52:30]; Concluding the Ranbaxy story [2:06:15]; How concerned should you be when buying a generic drug from your local pharmacy? [2:11:15]; How to investigate your own drugs for quality to ensure you are getting what you need [2:18:30]; An innovative pharmacy that tests all its drugs for quality [2:24:45]; Reforming the FDA and generic drug industry: Why we need reform and ideas on how to do it [2:27:45]; The importance of taking individual ownership and not waiting for Congress to bail us out [2:34:00]; Closing thoughts from Katherine [2:36:50]; and More. Learn more: https://peterattiamd.com/ Show notes page for this episode: https://peterattiamd.com/katherineeban/ Subscribe to receive exclusive subscriber-only content: https://peterattiamd.com/subscribe/ Sign up to receive Peter's email newsletter: https://peterattiamd.com/newsletter/ Connect with Peter on Facebook | Twitter | Instagram.

Hey everyone, welcome to the Peter Atia Drive. I'm your host, Peter Atia. The drive is a result of my hunger for optimizing performance, health, longevity, critical thinking, along with a few other obsessions along the way. I've spent the last several years working with some of the most successful top performing individuals in the world, and this podcast is my attempt to synthesize what I've learned along the way to help you live a higher quality, more fulfilling life.

If you enjoy this podcast, you can find more information on today's episode and other topics at peteratia-md.com. [♪ OUTRO MUSIC PLAYING [♪ Hey everybody, welcome to this week's episode of The Drive. I'd like to take a couple of minutes to talk about why we don't run ads on this podcast and why instead we've chosen to rely entirely on listener support. If you're listening to this, you probably already know, but the two things I care most about, professionally, are how to live longer and how to live better.

I have a complete fascination and obsession with this topic. I practice it professionally and I've seen firsthand how access to information is basically all people need to make better decisions and improve the quality of their lives. Curating and sharing this knowledge is not easy and even before starting the podcast that became clear to me. The sheer volume of material published in this space is overwhelming. I'm fortunate to have a great team that helps me continue learning and sharing this space is overwhelming. I'm fortunate to have a great team that helps me continue learning and sharing this information with you. To take one example,

our show notes are in a league of their own. In fact, we now have a full-time person that is dedicated to producing those, and the feedback has mirrored this. So all of this raises a natural question. How will we continue to fund the work necessary to support this? As you probably know, the tried and true way to do this is to sell ads, but after a lot of contemplation, that model just doesn't feel right to me for a few reasons. Now, the first and most important of these is trust. I'm not sure how you could trust me if I'm telling you about something when you know I'm being paid by the company that makes it, to tell you about it.

Another reason selling ads doesn't feel right to me is because I just know myself. I have a really hard time advocating for something that I'm not absolutely nuts for. So if I don't feel that way about something, I don't know how I can talk about it enthusiastically. So instead of selling ads, I've chosen to do what a handful of others have proved can work over time. And that is to create a subscriber support model for my audience. This keeps my relationship with you, both simple and honest. If you value what I'm doing, you can become a member and support us at whatever level

works for you. In exchange, you'll get the benefits above and beyond what's available for free. It's that simple. It's my goal to ensure that no matter what level you choose to support us at, you will get back more than you give. So for example, members will receive full access to the exclusive show notes, including other things that we plan to build upon, such as the downloadable transcripts for each episode. These are useful beyond just the podcast, especially given the technical nature of many

of our shows. Members also get exclusive access to listen to and participate in the regular Ask Me Anything episodes. That means asking questions directly into the AMA portal and also getting to hear these podcasts when they come out. Lastly, and this is something I'm really excited about, I want my supporters to get the best deals possible on the products that I love.

And as I said, we're not taking ad dollars from anyone, but instead what I'd like to do is work with companies who make the products that I already love and would already talk about for free and have them pass savings on to you. Again the podcast will remain free to all, but my hope is that many of you will find enough value in one, the podcast itself, and two, the additional content exclusive for members to support us at a level that makes sense for you.

I want to thank you for taking a moment to listen to this. If you learn from and find value in the content I produce, please consider supporting us directly by signing up for a monthly subscription. My guess this week is Catherine Eban. Catherine is an investigative journalist, a fortune magazine contributor, and an Andrew Carnegie Fellow. She has written quite a lot about pharmaceutical, counter-fitting, gun trafficking, coercive interrogations by the CIA, et cetera. But what we focus on today, very specifically, is her most recent book called Bottle of

Lies. This book is a really interesting and truthfully at times, infuriating look at the culture of incredible deceit and fraudulence that exists in the generic drug manufacturing industry. I think Catherine does a great job in the book, and I think we do so in the podcast as well, walking you through basically how the stage is set. In other words, what are the regulatory, environmental, cultural factors that allowed this type of practice to flourish? And then we dive really deep into one specific and infuriating example.

I think I'll leave it at that. I'm have tempted to say more, but I realize everything that we have to say on this topic is covered nicely. This is not a technical podcast, meaning you will, you don't have to know anything about how drugs work and I think you'll get through this pretty clear. And the only thing I'll say before closing is if you find yourself throughout this podcast, getting sort of frustrated, don't worry. At the end, we offer some semblance of things that you can do to at least protect yourself. It's not a magic bullet, but it's better than flying completely blind. So without further delay, please enjoy my discussion with Katherine Eban. Well Katherine, thank you so much for coming up here today. It's great to be here.

For the listener within about 30 seconds of meeting, I was already peddling Topo Chico to you. When you let it be known that you love bubbly water, I couldn't resist. It's good stuff, I like it. That's great feedback with a listener because I'm sort of an unabashed enthusiast and totally not sponsored by them, have no financial affiliation,

but I never waste an opportunity to talk about it. So feel free to say you don't like it because I want people to know this is a legitimate Topo experience. I'm a bubbly water junkie, I'm adding it to my list. Awesome. Well, Catherine, I don't even know if I mentioned this in the initial communication we had over email.

If I did, it also would be helpful for the listener for context. A couple of months ago, I was talking with a friend of mine named Sam Harris. Do you know Sam? Yeah. Yeah, yeah. And we were talking, talking about something,

and the discussion shifted to something had really upset me the day before and I had just gotten super pissed off about something. And in some ways Sam is kind of like my spiritual guidance leader guy. He's the one I turned to when I need sort of help. And I said Sam, do you even know what it's like to get pissed off anymore? I mean, are you so far past this? Is your practice of mindfulness so evolved that you are able to constantly distance yourself from your thoughts and not find yourself in a state of outrage, even if it's not prolonged, but just momentarily. And he said, no, not at all,

like I still get really upset. And he goes, in fact, I just read this book yesterday and I can't tell you how angry I am. And I was like, well, say more. And he said, it's this book about generic drugs and the total chicaneery that goes on along with it. And then he said, you know, in fact, you really need to interview the author of this book. She is the perfect person for your audience. And I think you could have the right discussion with her, a very detailed nuanced discussion.

And so, I mean, I was literally sitting here in my office, and I looked it up, and I did a quick read, and I was like, I wonder how this has sort of escaped my radar. And I think just on that moment's notice, I must have just sent you a direct message on Twitter, and it all went from there. So, in advance, I'll thank Sam for putting this on my radar. I'm sure it would have got there eventually,

but he put it there in a moment and I guess for the listener who doesn't know Sam, that something could make Sam that upset, probably speaks to what you are in store for in the next, I don't know how long. I wanna start with the story, but I'd love a little bit of the motivation. You've written about healthcare before.

How did you dip your toe into this very muddy, disgusting, cesspool? So before I started with this project, I thought about generics the way I think most people do, which is we need them. They're affordable, nobody can afford their brand name drugs. And they're sort of an engine that makes government health

programs run. I mean, how would we prescribe to the VA, Medicare, Affordable Care Act without these affordable life-saving drugs? So that was, you know, they're a public good. But in 2008, I got a phone call from a radio show host named Joe Graden who runs an NPR program called the People's Pharmacy. And he said, I'm delusional with these phone calls and emails from listeners who are complaining about side effects from their generic drugs.

They were stabilized, then they were switched to a drug. It doesn't work. The complaints are similar in nature. And so he took these complaints to the FDA. And FDA senior officials, their reaction was basically, well, it's psychosomatic because if they patients get switched, the pills look different. It's different color, but the drugs are fine.

So Joe Grayden really didn't believe that. And he said to me, we need somebody with investigative firepower to look into this. He knew of my work. I'd been on his program before and that's really where it started. I mean it was an unusual phone call and I just started digging. Now you must have had a pretty high quotient of belief for Joe because I'm sure someone like you would be brought ideas like this pretty often for you to say, I'm going to stop what I'm doing and do some digging. I mean, by definition, you can't really do a little surface scratching. Digging is digging. Was it just Joe's

reputation or was there something that also personally resonated where you thought, but this is more than just plausible? I've been an investigative journalist now for about 20 years and you really begin to get a sense. Something sort of tingles inside you. I get tips all the time. I get tips from whistleblowers, all kinds of people. But when there's somebody with a certain amount of credibility, he's very legitimate, he was asking a big question, it was intriguing to me. I mean, what were all the complaints about? Why were

these patients having problems? It just seemed to me that it was something where there was some depth there. I just felt that it was going to be a pretty deep well to go down. I just had that sense. And so I began. Well, I'm going to resist every sort of temptation in my body right now, which is to let you naturally go into the story, which you've so eloquently written about. But I think, given the format we have have and assuming that the listeners don't necessarily have some of the background, let's take a step back and put a few things in place. So you've already

alluded to this idea of generics versus branded. Can you say a little bit more about what that distinction means? Yeah. So generics, a lot of people will, you go to the supermarket and you can buy a A lot of people will, you go to the supermarket and you can buy a Costco brand cling wrap, which is a version of saran wrap. Or Kleenex versus tissue paper. Right. And the idea that most people have about generics and they have it because the FDA has told them this is that they are identical to the brand name, but just at a lower price point. So a great bargain. If everything is working well, the truth is a little different. So a generic is a version of a brand name drug

that is made either after a brand name drug has gone off patent. It's no longer legally protected, or if the generic company has successfully challenged the brand patent in court, and then the FDA gives them permission to make a generic. So, the FDA recognizes just to take a step back, if you make two batches of drugs in the same manufacturing plant using the same ingredients, those two batches will be in the same manufacturing plant using the same ingredients. Those two batches will be a little bit different. There will be a little variation.

So now if you take a generic where a company has reverse engineered the brand, sort of broken it down in a lab, tried to figure out how to put it together, maybe with a different set of manufacturing steps, but then concocted it, maybe they've used different acceptance, which is additional ingredients, but you have the sort of central molecule, which has already been tested for safety and efficacy, then they have to present data to the FDA.

The FDA recognizes there's going to be differences, so they've provided a range, which is a range of the absorption of the drug into the blood. And basically, the generic has to present data to the FDA showing through their testing that they've hit within that range and that the drug is essentially clinically equivalent in the body, which is called bio-equivalent. Now, I think for some people, it might come as a surprise that the company that makes the branded version of the drug would be anything but cooperative with the generic, because the only thing that patent really discloses is the actual molecular composition. And the little bit that I know about pharmacology, which is to say truly just a little bit,

is that the methods by which one creates the compound are often where some of the secret sauce lies. In other words, there's lots of value within the manufacturing process that is usually deliberately not put into the patent application. Is that generally correct or do the methods typically try to capture that? I mean, I guess maybe I'll explain for the listener what we're talking about here. When you want a patent on something, you have to fully disclose it.

So in exchange for fully disclosing something, you have protection. The downside is when that patent is expired, you no longer have any protection. So for example, Coca-Cola chooses to not patent its formula. Instead, it is a trade secret because they never want to have the expiration. So technically, if you could wave a magic wand and figure out how to make Coca-Cola,

you could do so legally. You would not be infringing on their patent. But of course, the to make Coca-Cola, you could do so legally. You would not be infringing on their patent. But of course, the people at Coca-Cola would, that secret is guarded apparently very heavily. And so my understanding is that in pharma, yes, they'll disclose the molecule because they sort of have to, to get that protection. But a lot of the know-how is in how you went about making it. So when the generic manufacturer comes along and says, well, this drug is now off patent, we're going to go ahead and make it. Just because we know what it looks like in its final, final state, we might not realize the 47 steps required to make it. And

that's sort of this reverse engineering you're talking about, right? So a generic reaches the market through a process of really warfare, which is that the brand name company surrounds its drugs with patents. All different aspects of the drug are patented, so the time release formula might have a different patent, and the process of manufacturing, each manufacturing step may be under a patent. So they surround the drug with these protections. And then what a generic company does is get to sample of the drug. They try to break it down in the laboratory. And figure out reversing the steps, how do you get to formulate this drug?

One way to get around a patent is instead of A, B, C, D, E, manufacturing steps, it's AEDCB. You reverse the steps, which is, by the way, legal to do in India, which is where, I know we'll get there in this interview, but that's where some of the best reverse engineers in the world come from in India. But then they have to figure out, well, how do they make the time release formula? And what sort of acceptance or additional ingredients do they add? And how do they get the drug to dissolve properly? And is it stable under various temperature conditions? And those are all kinds of manufacturing secrets, which the brand name companies put in something that's called a drug master file. And that's like their cookbook. And that is proprietary. That is not disclosed.

So any generic company that wants to propose to make a drug, they're sort of going their own way in the laboratory. Yeah, they're using the same molecule. They have to prove that it absorbs similarly in the body. It has to be same route of administration. So is it a pill? Is it a drug? Yeah, they're using the same molecule. They have to prove that it absorbs similarly in the body. It has to be same route of administration. So is it a pill?

Is it an injection? But otherwise, it can vary in significant ways. So when I make my favorite sort of lamb shank, which is of 12-hour cooking process with seven steps and call it 13 ingredients. The analogy here would be, once my lamb goes off patent, anybody can taste the final product, do anything they want with it, stick it into an analyzer, look at every element of that final lamb shank, but shy of knowing I started with a lamb somewhere back there. They don't necessarily know the other ingredients. That's right.

They don't know the temperature of the oven. They don't know what else I added, how I changed the temperature, because of course in my cool lamb recipe, it's actually multi-temperature that I use. So it's very complicated. They don't know any of that stuff. And they're expected to produce something that is plus or minus a little bit almost identical

to the finished product in flavor, firmness, texture, everything without knowing how I actually made it. Yes, and I'll add one more thing to your analogy, which is they have to follow a set of rules that are imposed to use your analogy in every kitchen. So this is the same set of rules. We'll call these good cooking procedures for this, do you listen to it? You'll get the reference there. Right. Exactly.

So it's in theory the same very stringent set of rules, the same central, active ingredient, and the same route of administration within a range. Yeah, now another kind of topic a little off-the-beaten path but just to set the stage for people. Anybody knows that they can go in and buy drugs off the shelf that are not prescription-based such as Tylenol, aspirin, advill that also come in generics. So you can also buy a C acetaminophen. So every drug store has their own branded acetaminophen, but there's only one Tylenol. Everyone has their own ibuprofen, but there's only one advill. Only Bayer makes true aspirin, but you can buy generic anywhere.

These compounds, these drugs are in a different regulatory schema because they do not require a prescription. But is everything else that we're going to talk about today and that you've talked about already, still applicable to the difference between a generic acetaminophen and the Tylenol acetaminophen? Well, I'd even say, I mean, over-the-counter drugs are less regulated.

But some of the issues we're gonna talk about today really do apply to this drug store brands that you're talking about, the drug store generic brands. Got it. So, if you're listening to this and you buy anything that is a drug, that is over-the-counter or with a prescription, what you're about to talk about probably applies on some

level. And one of the things I've been trying to understand going through your book is the average magnitude of the problem. As we'll talk about today, you make a case for what the extreme examples of this look like. I still don't. And hopefully by through our discussion today, we'll be able to sort of tease out some of these things. But with that said, I think that's a pretty good background for most people to now understand what we're about to talk about. So let's go back and talk about the FDA.

So you've already made reference to this organization a number of times. Where did they come from? How were they created and why were they created? So, the FDA really has its origin in a series of public health disasters that have taken place over the years. It was first formed in the 1930s, and this was after numerous children died from taking cough syrup that had been tainted with, I think it was arsenic, but all of this had galvanized public sentiment around the need for food and drug safety.

And so the FDA was born in 1930 out of history of tragedies around this. But the sort of modern day FDA, as we know it, really has stemmed from a crucial moment in U.S. history. There was a reviewer at the fledgling FDA who refused to approve a drug called Thalidomide. So this is now 30 years after, yeah, this is early 60s. Yeah. Which was being widely dispensed in Europe to help pregnant women who were having trouble sleeping. Morning sickness.

Morning sickness. And she basically held firm basically saying that she didn't have enough information on the drug. And of course it turned out she was correct. America dodged a bullet because that drug was associated with children who were born with flipper-like arms, so it was associated with horrible birth defects. And it was really sort of on the basis of that and other- You remember her name, by the way, I don't remember her name.

Yeah. But I love the story. Yeah. Francis Kelsey. Francis Kelsey, who really became a hero. She's sort of the one that, as you said, took the FDA from being sort of, I guess, FDR had sort of, it was created under FDR, but kind of limped along until the hero moment, which was the Thalidomide story, right?

Right. Well, it's interesting as to that in the beginning of the FDA, there was not this idea to focus on the manufacturing process. The idea was, well, you can't market something with absolutely no basis in fact. But then the question is, well, how are investigators empowered to figure out what is true and what is not. And really, the evolution of the FDA was around a focus on the process of manufacturing. Because the idea was it's impossible to test every single pill in every batch.

But what became sort of vital and sort of underpins the modern FDA is this idea that the process is the product. That was right, the key change in how public health enforcement evolved, that basically you have to be able to document and prove that your process is under control, that there's a control in there in the process. And that sort of, I mean, again, I don't know,

it's not even like I'm hungry by the way, but I'm just keep coming up with these dumb food analogies. But McDonald's can't test every big Mac or French fry, but it's much easier at the centralized level to create procedures and then decentralized locally to be able to enforce the procedures around where we buy our feedstock, how we manufacture in the store, what the temperature is of the oven,

how long a piece of food can sit here, et cetera. And if you put all those things in place, you have much greater faith that every French fry, every big Mac is gonna meet the safety requirement. Right, so one of my sources early on gave me this analogy and we were sitting at a lunch table at a restaurant. He said, a good FDA investigator is not just going to come in here and say, is there a

glass on the table? Is there a fork? Is there a knife? That's a kind of checklist inspection. But a good FDA investigator is going to say, what is the temperature of the dishwasher? And what is the procedure in the kitchen for bringing out these dishes? It's a very different sort of a mode of inspection than most people think of.

Now using your analogy, which seems to largely stop at the border of the restaurant, inclusive of the kitchen, right? So what's the temperature of the dishwasher? What are the temperature of the heaters on the food behind the thing? In that analogy, does the inspector also have the liberty to say where is the meat coming from? How far to the potatoes travel and how were they planted? Absolutely. So anything anything that enters that restaurant is under the purview of the FDA. That's correct. And so for people like me, most of the time, and I suspect this is probably, I don't know,

we'll see, maybe this is not what everybody thinks about it. When I think about the FDA, I normally think about it through the lens of approving new drugs. So going from this standpoint of what's called an investigational new drug and IND application through to a phase one, phase two, and a phase three approval, and embedded within those processes are two things that are absolutely necessary. You can't approve a drug unless you can confirm that it is safe, and that's done primarily in phase one, but the safety monitoring continues into phase two and phase three, and even beyond into post-marketing. And then the second thing that becomes more important by phase two, and then again in phase three, is efficacy.

Does it work? And it's those two things that go hand in hand, and the FDA seems to have a very heavy role in saying, does this thing do what it's supposed to do and does it not hurt people? Were those mandates equally important at the time? I mean, clearly the Thalidomide case brings the safety piece to light. Was efficacy also front and center on their radar throughout this evolution? Well, no, actually, it wasn't always. In fact, proving the efficacy of a drug was a somewhat new idea. I mean, I think that that was one of the things that Francis Kelsey was asking of these thalidomide manufacturers is, what are the studies around the efficacy of this drug? Now, I mean, it's interesting fast forward when Trump was elected president and there

were sort of names being floated. Well, who would his FDA commissioner be? And some of the names that were floated as possible commissioners were people who had made crazy public statements basically saying, well, manufacturers shouldn't have to prove that their drugs are effective in order to market them and let the market take care of and sift out all those questions, which basically was impossible for the industry to even comprehend, because our whole system is based on the idea that the drugs that you're taking have been proven to work.

Right? How would an insurance company even decide what to cover you for if we're all potentially taking drugs that are not effective. So effectiveness is like key to the modern concept of drug approvals. Yeah, and luckily Scott Gottlub became the commissioner, although he is at the time of this recording no longer the commissioner. Right. Which I didn't know Scott, I don't know Scott, but I know many people who do and fortunately

everything I've ever heard about him is that he was the right person for the job. So it's in the 60s, the FDA kind of gets a second wind on the basis of this, as you put it eloquently, they dodge a bullet. I mean, the United States, I can remember if this was in Canada as well, if Canada dodged the Thalidomide bullet, but certainly in the United States, the bullet was dodged.

So you've already alluded to this idea of there being branded drugs. So pharmaceutical companies are pretty smart when they create a drug. The branded name is really easy to remember. The generic name is really hard to remember. That's a design choice. I remember learning this in medical school class in pharmacology, which was you show up and you only learn the generic names.

That's the way you're taught every drug. And I remember thinking, God, these are so complicated names. Like, just come up with something normal in the professor. Sort of said, look, idiot. They don't want the public to know these names. They want you to think lipitor, not a torvastatin. They want you to think Viagra, not Sildena Phil, right? These are very deliberate choices. So up until about the early to mid 80s, you could make the case it was almost impossible for a generic company to compete with a branded pharma company based on the regulatory environment. Is that a safe statement? Well, that is because basically anybody applying to market a drug had to prove safety and efficacy.

So the branded companies were required to do these huge clinical trials, create these enormous new drug applications. And so really, what was the point of a generic, which was supposed to be a lower cost version, doing all these studies all over again? Yeah, the only advantage they have going for them is the risk of failure goes down. So I don't know what the numbers would have been in the mid 80s, and truth, I don't know what the numbers are today, but about a decade ago, when I was paying more attention to this particular issue,

it was about $1 billion to do what you described, to go from an IND to a phase 3 approval cost a billion dollars. And so there aren't that many companies that have deep enough pockets to spend roughly a decade navigating that to then have about a decade to sell their drug without competition. So if you want to open up your own generic drug company and you know that Viagra is about to come off patent, what advantage do you have that Pfizer didn't, that's a bad example because of how Viagra was discovered, but drug X, whatever. You at least know it should work. You know you're not in store for a phase one, phase two or phase three disaster, all things equal,

but there's no denying the cost of doing all of that. And to your point, how can you do it? So of course, this brings us into the question of how the generic industry really got its start in the United States. And so, wasn't Ornhatch half of this law, or am I making mistaken that with another one?

No, no, no. So what happened was actually the generic industry owes a lot to a crusading investigative journalist named William Hadad and he did an investigative series on sort of cartel like pricing practices in the antibiotic market of branded companies. And sort of in the wake of that, he became very interested in generic drugs and also interested in the fact that there was no good pathway for generic drug makers to market their drugs. So to be clear up until this point, generic's existed. They were created and largely consumed outside of the US though.

Right. And they existed within the US, but sort of they were few and far between. There were many, many drugs that had come off patent years earlier, and there was no generic substitute for them. So he ended up walking the halls of Congress with a couple of like-minded colleagues, and his efforts led to what was called the Hatch-Waxman Act of 1984, which Reagan signed into law. And basically what that said is it created a pathway at the FDA for generic drug makers to apply for approval. And said the safety and efficacy of these molecules has already been established, so you don't have

to re-prove that. You don't have to do clinical trials on thousands of people. What you do need to do is prove that your drug is bio-equivalent to the branded product. So you have to submit data from your tests, which shows that your drug falls into that range, we talked about, of absorption into the blood and that it remains stable at certain temperatures, that it dissolves properly in the body, and then

we're going to review your data and see if we're going to give you approval. But the generic drug makers still face a significant risk, which is they would almost certainly have to litigate against the brand name companies, and they might not end up getting approved by the FDA. So there was a really crucial little deal sweetener in Hatch Waxman. What it said was, if you are first to file your application and you get approved, you will get six months of exclusivity on the market without any generic competitors. And what that meant for generic makers is they could price their drug at about 80% of the

brand name drug price. So they would get this six-month window where they could make big money. And that was a big incentive. At the time, was there an understanding of what the price would collapse to after six months with multiple entrants? Was the idea that the steady state ultimate price is going to be? Was there an expectation, at least baked into a hatch-waxman that said, look, by the time it's in all hands-on deck, open field running generic market for drug X with 10 generics out

there, they're making 30 cents on the dollar. open field running generic market for drug X with 10 generics out there. They're making 30 cents on the dollar or I just wonder how the six months came about as the period of time because truthfully that doesn't strike me as very long when you consider how much protected time the branded person got for the risk they took. Six months seems a little short. It shouldn't have been 20 years, but it struck me as that was always a bit short. That created a bit of a perverse incentive in my mind. I mean, as we saw, it created a perverse incentive.

Yeah. I mean, there's no question about that, but it actually, I mean, it really was the difference between, as I have said, making a fortune and making a living. I mean, you look at generic lipitor, the first generic lipitor that came on the market, six months was worth about $600 million. Yeah, which is staggering when you realize how much is saved in not having to run a billion dollars worth of clinical trials.

Right, right. Wasn't it our friend that actually came up with the first generic? Wasn't a torvus, that and... It was rambaxi. There you go. Well, we're going to hear a lot more about these boso's. That's charitable. When you're not on NPR, you can just come out and say, boso's.

So I want to plant a question with you now that I'm going to ask you at the very end, but it's a question that I've been mulling over for a long time without a great answer. And therefore, I don't think it's fair to ask you in a moment. And the question is this, knowing what you know now, everything that happened, the best of intentions, the best laid plans falling. If you could go back in time to Hatchwaxman, how would you rewrite that reg? Because truthfully, I think at least one aspect of Hatchwaxman made sense. I think it was reasonable to get rid of the efficacy, safety, huge clinical trial. I think that was fair. I think everything

that came after it in the reg fell short. But I haven't got a great answer for what I would do different. I have a whole bunch of little answers. And so I want to plant that seed with you, because not that there's huge value in looking through the retrospectoscope, but it is an interesting philosophical question if nothing else, and it might actually offer an insight into part of the way out of this problem going forward. So we'll come back to that in a little while. So I guess there are a couple of other interesting historical things. I guess the last piece I wanna bring into it before we jump into this story is this use of taxpayer dollars.

And the internal culture, meaning internal to this country, the internal culture toward generics took another big shift during the presidency of George W. Bush based on the program in Africa, Petfar, correct? Petfar, yeah. So talk a little bit about that program, which I think does factor into this story in the broad arc.

So Petfar was really born of the best of intentions and was sort of maybe one of the most sort of brilliant, innovative globalization ideas, which is that the developed nations of the world, and us, the US, could use taxpayer dollars to buy low-cost generics from India and send it to Africa to address the AIDS crisis. So in that sense, it was really remarkably innovative. So George W. Bush announced the intention of PEPFAR during 0203 and this creates a little bit

of attention within the administration, right? Because how are you going to fund, well, the question isn't how you're going to fund it, it's what are are you going to buy? Right. So, it was the low cost of Indian generics that made PEPFAR possible. It was based on that concept that the price of the AIDS drugs had fallen down to about a dollar a day, which allowed a taxpayer-funded program to send these AIDS drugs to Africa, which was reeling from the AIDS crisis. You had basically an entire continent under a death sentence. But then the question inside the administration was, how do you guarantee the quality? And Scott Gottlieb at that point was in the Bush White House.

The great line in your book about how he referred to generics. He refused to call them generics. He referred to them as counterfits. Right. And there were people on the other side of the aisle who were saying the World Health Organization, they can come in and inspect these plants and certify them.

And those are going to be fine. And the view of God-leab and other people was what's who going to do. That's just like some guy in a back room in Yugoslavia with a couple of people helping him who are gonna go into these plants and verify the quality. So the idea was created that the FDA would do expedited review of these drugs and approve these companies and then they'd be cleared to sell drugs under the PEPFAR program.

But with the FDA suddenly in the business of approving these Indian companies, it created this idea. Well, if these Indian drugs are good enough for our regulators to approve, shouldn't Americans be taking them too? And this, of course, is in the backdrop of, even though at the time, I think the thing that was on most people's mind was foreign affairs. The Iraq war had reached sort of its peak,

or I shouldn't say it reached its peak, but probably reached its peak attention, maybe. But clearly in the backdrop was the rising cost of healthcare. And a big component of healthcare is drug cost. So this became, well, if PEPFAR is making a very strong compelling case that we can be using Indian manufactured drugs to pay for a program in Africa, shouldn't we be looking at the same drugs here in the United States? Absolutely. And you had Indian companies who had long been regarded as just

fakers and counterfeiters who were suddenly cleared by the US FDA, which was a huge point of pride for those companies. So they wanted to get into our market because if you make drugs, where the market you want to sell to, were the biggest most profitable market. So it was really a convergence of these two things. And so everything that I think we've just talked about sort of sets the stage for the listener to now really understand the story about one company that you use as, I don't think anybody would believe that they're the only company that's out there at the depths. They just happen to be the one for which a set of circumstances which you'll explain allowed

us to be able to do the post-mortem at the level that it's been done. So tell us about this company. So Rembaxi was India's largest drug company. And in India, that meant it was a generic drug company. I mean, India, by and large, was not innovating, creating molecules. What they were doing is they had become master reverse engineers.

And Rambaxi was one of the sort of handful of companies that was a true multinational. It was out there in world markets, and it was one of the first companies, Indian drug companies, to get approved under the PEPFAR program. So Rimbaxi was closing in on a billion dollars in global sales and had its eye on becoming one of the world's top drug companies in short order. It was very ambitious. It had a lot of what are called the first files. So it had been approved by the FDA to be first to launch various high-profile drugs in this market, including generic lipitor.

And in 2003, the company ended up recruiting a young engineer named Dinesh Taker. He had been working in Bristol Myers-Squib, which was a highly regimented corporate culture. He moves his whole family to Gurgau and in India, which is outside of New Delhi. Was he working at BMS in Europe or? No, in New Jersey. Okay. So he was working at BMS in New Jersey. And the environment, just so your listeners understand,

the environment of a Western drug company, which is so heavily regulated, it's hard to move an inch without a stack of paperwork. Everything is documented, the controls are really rigorous. That said, obviously, we know there are scandals all the time, but the atmosphere is one of real control. So let's use the food analogy, right? You're walking into the cleanest, most pristine kitchen that looks like you could eat off the floor if one crumb is left on the counter It is swept up three times. It is cleaned. It is disinfected on any given day the kitchen looks as it looked Any day before and will look any day in the future

You picture it being white, you picture it, having sort of a stainless steel sort of clean conveyor atmosphere. And let's contrast that with where Dinesh went. Yeah, I mean, and just to say Dinesh, it was a senior Indian colleague of his at Bristol Meyers Squibb who was leaving for Rimbaxi and made a job offer

to him. They were walking around the lake on the Bristol Myers campus in New Jersey. So, I went to that campus so I could recreate it in the book because it's in the opening chapter. I mean, that campus, there's not a blade of grass out of place. There's safety poles, emergency phones, every hundred feet. even the turtles in the pond have a special crossing lane that they're supposed to use. I don't know how they know. You know, and every blade of grass is just perfect. It's an environment of total control without variation. And that is like the goal for any drug company.

So, Denesh moves his family to Gurgauin. And Dinesh grew up in India? He grew up in India. And at this point in time, do you get the sense? I know it's, the story will get so much more complicated that the answer might change, but do you think he thinks of himself here as more American or more Indian, as he's about to leave New Jersey for a return to India. Well, that's an interesting question because so many of the Indians who work in the US, who I interviewed for this book, you know, a number of whom went to go back to India, they really saw it as such an important homecoming. I mean, it's a moment in time where India is emerging onto the world stage.

And they saw it as such a sort of patriotic act to help bring their... It's a reverse brain-grain. Yeah, yeah. So the return to India, there was a lot of pride for them in it. They imagined themselves as creating a kind of Pfizer of the 21st century for India. So I think that was really significant for them. Anyway, so he gets to India and he finds complete chaos at this company. I mean, there is just active ingredients that are in the employee refrigerator next to the half and half. There's fist fights in the board room. There's orders to just delete documents that are required for regulation.

They don't even have the same sort of format or font for any of these presentations. I mean, one of the first, so his job was to help standardize and track all the information in this company. I mean, his job was to sort of collate information about the global pipeline in this company. I mean, his job was to sort of co-late information about the global pipeline of this company. I mean, they didn't even have any standardized financial reporting in their presentations and in their bookkeeping. Are they keeping track in rupees or in dollars?

Nothing was standardized. So he senses from the chaos that he is needed and he's built a team to sort of be information architects to keep track of the company's records. Is he hiring people under him from India or is he inheriting people? He hired his team. So he hires some people from India, he hires some people from Bristol-Mirror's Squb, who had the same vision of the job as he did to help bring this company into the 21st century. And remind me what year this is. So this was in 2003, he ends up going over there. Wow. So, true, true and unrelated, but remarkable timing with the PEPFAR discussion that we had,

in terms of being there right at the genu of this thing about to explode. Absolutely. He and his colleagues were basically saying everything is becoming generic. That's where all the growth is. That's where all the energy is. Foreign manufacturers are flooding into our market. By 2005, the FDA has more companies to inspect overseas, more plants to inspect overseas than

it does within US borders. And I know we'll talk about that a little bit later. Well, I was actually just about to go there for a second, but we'll come back to it. Give us a sense of how the FDA could exercise its authority. Again, thinking about this through the sort of Clujee analogy of a chain restaurant or something or something. Basically, they reason I use that example because it's making your commodity product. Like a big Mac is a big Mac is a big Mac.

Do they just get to show up at McDonald's and inspect the McDonald's in India? I mean, how do they have to give advanced warning or notice before they come? Is it done remotely? Is it done in person? How does this process work? So the FDA basically has two sets of tools to figure out whether a generic drug should be on the market. One is the review of all this data,

which the company submit in what's called an ANDA, an abbreviated new drug application. The other thing they do is a pre-approval inspection. So you submit your application to market a generic drug, and wherever it is, whether it's in Mumbai or in Memphis, the FDA wants to come in and inspect your plan to make sure you're not going to be manufacturing these drugs in your garage or in an outhouse. And at a minimum, to be clear, this happens at least once, because after I submit all of the data that back up my claims that I basically have a bio-identical drug. So it has the same chemical composition, it has the same distribution.

Within the body it reaches the same concentrations in the same periods of time, et cetera, et cetera, et cetera. Assuming those data are righteous in your mind, you still have to at least once come and lay eyes on my facility. Right. And ideally, you come to do a pre-approval inspection. Can you make the drug in question? And then under regulation, the FDA would come back in two years. And how is it going in that plan? Are you still making decent drugs? Or are you just running a pharmaceutical slaughterhouse and following no rules? So they will come back and check that. But some of their techniques changed because of a massive scandal that hit the generic drug industry in the late 1980s. So once Hatch Waxman passed and then you had this first file incentive and every generic drug company wanted to be first.

You write something very funny in the book about how when that first mover advantage clause was still in existence, you literally had generic companies camping out in parking lots, waiting to petition the FDA on the nanosecond the patent expired. Right. Which is what led to these street fights. Like it was true mayhem. It was true mayhem. So it wasn't just about who was first on what day it was what second. So you would have generic companies sending in representatives in stretch limos into the FDA parking lot, sleeping in the back of the limos, queuing online. I mean, I even describe one company executive pushing another one out of the way just before the doors of the FDA opened so they can be first.

So there were actually fist fights in the parking lot. And so the FDA ended up changing that requirement a little. But suffice it to say that first defile was like rocket fuel for the generic drug industry. And what you saw very quickly was a massive scandal. It started with a company called Myland, which was a West Virginia generic company. And they noticed that they were not getting drug approvals anymore. And that there were other companies that didn't seem to really merit it, but they were getting approved before they were. And they hired some private detectives who started going through the trash of FDA reviewers

and found that they were being bribed by these companies to get online first. And that led to a huge scandal, congressional hearings, and the result of that was more stringent inspections by the FDA. That was where the pre-approval inspection came in, and that was also where something called an application integrity policy came in. It was a new tool for the FDA to say, you know what, if you're faking your data in applications which some of these companies were, we have the right to basically remove your applications from the queue to shut down your pipeline

to not review your applications because we don't trust you any. Was that a durable response or was that for just that compound? In other words, if a company was caught falsifying data, was that just disqualifying them from that drug or were they then disqualified as a producer of generics in general? They could be disqualified as a producer of generics generally. And did the FDA exercise that much muscle on any company? Very infrequently, it became a very, very rare enforcement tool. And what was the sort of net effect of the bribery within the FDA, were those individuals

prosecuted to the fullest extent of the law? There were huge prosecutions. I mean, there were details like literally company executives who were roaming the halls of FDA and dropping envelopes of cash on people's desks. So in the congressional hearings that followed, the question was, who's clean? How do we trust any of these companies? And so these enforcement mechanisms were added to the FDA's arsenal. So supposedly everything was fine after that.

I mean, the whole thing just, you got to, like, I'm only laughing because the alternative is just to scream, and sometimes laughing just feels better than screaming and raging, but it really speaks to on some level the worst of human nature, which if you're a cynic, is like, look, in the end, entropy always wins, gravity always wins, chicaneery always wins. Create a rule, the scum of the earth will always, even if they start out with well intentions, the scummiest of the scum will always figure out a way

to cheat the system. And if you haven't read it, I can't resist. I cannot resist a chance to always plug her amazing work. Mistakes were made, but not by me. By Carol Tavras. Have you read this book? I haven't. So it's a must read. And in fact, I've already interviewed Carol on the podcast, along

with Averym Bluming, who's a partner of hers on a totally different topic, which is around hormone replacement therapy. I will be interviewing Carol subsequently on this book, which she has written so many years ago and told me she will never again do a podcast on because she's so sick of talking about it, but as a favorite to me, she is going to do a podcast and we'll talk about it. But it talks about this sort of very slippery moral slope. And I realize that's not really front and center to what we're talking about. But we do have the luxury of time and we can pause for a moment because it is a question that

comes up a lot when a person would read a book like yours, right? Which is, how can there be so much moral corruption? And we, myself included and perhaps myself first and foremost, were so quick to put ourselves on the pedestal, the moral high ground. You know, I could never have been that FDA officer that would have been corrupted by the bribe. I could never have been that executive that would have pushed the other guy out of the way to get in line or that would have dropped the cash in the situation or blah, blah, blah, blah. But the way Carol writes about this, you realize that the first infractions are never these big ones.

They're very minor infractions and they often come with a reasonable rationalization. She uses a great example among many, which is the cop who plants evidence on the suspect. In the end, you see what it looks like when it's Mark Ferman, and everybody knows how that story ends. But was that the first time he would have done that? No, the first time he did it is probably more like this. There's a suspect who is absolutely the drug dealer of the town. You barricade the house just as you break in, he manages to lock himself in the bathroom, and is flushing down barrels of cocaine and heroin, and as you break in, he manages to lock himself in the bathroom and is flushing down barrels of cocaine and heroin. And as you finally break the door open, you see the last of the cocaine and heroin go down the toilet. And in theory, he walks away free.

But you're not going to have it, not this day, not on your watch. You're going to take a little bit of cocaine, you're going to throw it down. You've planted it. You arrest him. And you can live with that because, in fact, you actually saw it with your own eyes. You knew he flushed it down the toilet. And this is simply justice. But now you're on the wrong side of morality for a moment. I'll be it very briefly. And now you have a choice, which is you continue to rationalize your behavior or you walk back from it. And most of us can't. And now you have a choice, which is you continue to rationalize your behavior, or you walk back from it, and most of us can't. And we take one step further and further and further. And so I couldn't help but wonder, as I read your book, what were those first

infractions like for all of these actors that you've talked about and will continue to talk about? Because you're showing us the most extreme state of these behaviors, which at the individual level, I think, probably follow an arc like that described by Carol, and I think, frankly, at the population level, just follow the laws of nature, which is, you create a weakness, it will be exploited. I think we'll get into this a little more, but what's interesting is you take that example that you gave of the cop and the suspect, but now put 7,000 miles between them. So there is this whole question about integrity in a globalized world and different actors

in different cultures who are supposed to be following one set of rules. And it becomes like way more complicated. Yeah, I want to come back to this point about the cultural differences between them. I've already sort of derailed you enough. Let's go back to the point of, basically there's a congressional hearing in the late 80s, early 90s, that finds out the FDA is not entirely clean, right? So you've got a bunch of bad actors. Right.

The belief is the bad actors are now out. And how does that change the FDA going forward? And what are the implications for these inspections? So the FDA is this agency that never has enough funding, never has enough resources, and never has enough funding, never has enough resources, and never has enough authority. There's not a cabinet member from the FDA who sits at the table with the president. So the FDA ultimately reports up to HHS? HHS.

HHS, yeah. Right. So it's sort of a stepchild as an agency. It's a kind of under-resourced agency which is in charge of safeguarding like a quarter of our economy. I mean, anybody who has had a meal they haven't died from or taken a pill that hasn't killed them, we're all relying on the FDA to save us. So it's an incredibly important agency. It's been lacking in authority.

So there's always a question of whether it has been an effective policeman. But in theory, after the big generic drug scandal of the late 80s, we were off to the races. The generic drug industry recovered from the scandal. It became, as we've talked about, a crucial player in PEPFAR, a sort of life-saving player, as brand-name drug prices, rose and rose, generic drug industry was ever more important until it came to be 90% of our drug supply.

And you also write that we're kind of at the mercy of non-US suppliers for the feedstock for branded drugs as well. I think is it 40 percent? So 80 percent. So basically what happened was starting in around 2005, as generic drugs are growing in our market, the FDA is hit by this wave of globalization.

Suddenly, it's got way more plants to inspect overseas than it does within the U.S. We've got many more applications for drugs coming in from overseas than in from the U.S. So the FDA is tasked, suddenly, with becoming a global agency almost overnight. And then fast forward to where we are now, which is 80% of the active ingredients in all our drugs, brand or generic, are coming from overseas. 90% of our drug supply is generic, and the majority of those drugs are being made overseas. 40% of our generics alone are coming from India.

We make almost none of our own antibiotics anymore, which means if you go to a pharmacy and fill an antibiotic prescription for your kid, it's coming from India or China. So suddenly, we're in this whole new world where the FDA, which has in the past struggled to inspect plants that are like driving distance from their headquarters, is now having descended specters 7,000 miles away. Which brings us back to Dinesh. When does Dinesh start to figure out that, okay, I acknowledge I've gone from the pristine

campus of Bristol-Mirror's Squib to rural India. It's going to be different, but when does he realize it's different in an unethical way or in a way that isn't what he signed up for? The mentor from Bristol Myers quib who recruited him to come to Rambexie, Rashmi Barbaya. Well, this is not Kumar. Kumar was his boss there, but... Well, to start with Rashmi Barbaya. Barbaya says to him, I'm leaving, and he's disgusted with the company and he won't really

say why. So, Dinesh is upset. He moved his whole family over there, but now his boss is leaving. But he gets a new boss. Raj Kumar, he's a kind of blue chip professional who came from GlaxoSmithCline in London, and he comes in as the head of research and development.

And he's been on the job about six weeks where he summons Dinesh to his office early in the morning. And he says to him, we have a big problem. It turned out that the World Health Organization, when it inspected this contract research organization that was doing some testing for reimbaxi, and it turned out that the tests were fake, like the patients that they were testing the drugs on. Wait, I'm sorry.

So the CRO was themselves fraudulent? The CRO was fraudulent. Okay. And the quote unquote patients that they were testing the drug on didn't really exist. And they were just sort of Xeroxing blood test results. But Raj Kumar, his new boss, had learned that that might not be the only problem that Rambhaksi has. He's beginning to get suspicious and he's very ethical. So he gives

to Nash and assignment. He says, I want you to take your team and I want you to research all of the global drug filings of Rambhi. So all the applications that the company is submitted to regulators around the world. I want you to research them, figure out, is the data real, is the data fake, where does the company's liabilities lie? And so that's what Dinesh begins to do. It's hard to sort of understand what you just said. I mean, I understand the words you said, and because I know the story, this isn't the first time I'm hearing said words. It's quite another thing to try to actually put yourselves in the shoes of, for example, Kumar and the

people who are there seeing this for the first time, because your thinking is, wait a second, this isn't a mistake. A mistake is the wrong batch of the drug got shipped to this study and the patients are receiving something incorrect. Or there was a contaminant in this batch, we didn't know about it. In fact, even if you go into next level mistakes, like there's a contaminant that's there,

we saw the data, now we are trying to cover it up and pretend it didn't happen while we repeat the experiment. Like you can come up with lots of shades of dark gray. This is as black as it gets. I mean, this is sort of make believe. Let me put it this way. If you're going to the level where you are fabricating data to this extent, at best you're shipping

a placebo pill. That would be the best scenario. At worst, you're not even taking the time to ensure you're shipping a placebo. So at that point, Raj Kumar, Dr. Raj Kumar did not know what he was looking at. He'd heard murmurings about some falsification. He'd gotten this letter from the World Health Organization saying that the CRO was submitting fake data. Was the CRO an Indian company or a non-Indian company? It was an Indian company. So at that point Kumar is coming to Rambhaksi with a mindset from his time at Blackso Smith Klein where

anybody who signs off on a regulatory filing is Certifying that it's all legit. Yeah, so this is a failure of imagination at this point He can't even imagine what's going on. Right. He's not sure what's going on But he's saying to Tucker I want you to take your team and tell me what's going on because I don't know now I have questions about the legitimacy of some of these filings. Okay, does Dinesh have to go back and talk to his original boss?

And find out, because if six weeks or eight weeks on the job, your new boss drops this bomb shell on you, do you go back and think, wait a minute, does this have anything to do with why my old boss left? Who's the guy who recruited me here in the first place? Well, you know, at this point, Tucker is wondering that. His boss left with a great deal of bitterness. There were some murmurings about some huge settlement he got. He had said cryptic things to him like, I was trying to change the tires on a car that was going 80 miles an hour.

But he never said what he knew. He just left. So, Tucker begins this crazy research project, which is to do research on every single global filing that the company has made going back 20 years. So, the questions were, what was the data that was filed with different countries? What was the raw data connected to that data? Did the raw data exist? How were the studies done? Where were the studies done?

I had what manufacturing plan? What were the processes and procedures that led to the creation of that data? This is the vast undertaking that T that Tucker's team began on. And you know, because of just a word about Dinesh Tucker, I mean, he was this kind of single-minded, very ethical, and somewhat sort of blinker individual who was like given a task. And he was going to do that that task and he didn't step back and say, well, wait a minute here folks, I'm investigating my own company. So what are the possible ramifications of that? I mean, he didn't really stop and think about that. He was just intent on getting the right answers.

So of the filings that he investigated going back to the early 80s, what did he find? So his team begins to uncover Renbacc's secret, which is that they have basically fabricated data for more than 200 drug products in 40 countries. Some of the data they just completely made up, some of it they manipulated or altered. In some cases they were using brand name drugs which they would just crush up and test

in order to generate data that of course made the drugs look bio equivalent because they were testing the brand name drugs and representing them as their own. And then presumably when approved they would then ship what? I mean if you're going to go through the trouble of Testing on a brand you're not going to ship a brand that would be too expensive. So what were they actually selling? So they were making Generic drugs in their laboratory, but in many cases these generic drugs were either totally untested or did not meet Specifications. I mean for example, you're supposed to do stability testing on drugs, which

means you put them in these special chambers that replicate conditions of heat and cold. And you're supposed to test three months, six months, nine months, 18 months. These are various stability stations that you test to see, does the drug remain stable? So if you're selling a drug into Mozambique where it's very hot, you have to be able to reflect that those drugs will remain stable at very hot temperatures. You know, he discovered they were testing all of these different periods of stability. They would test them all on the same day. And they would alter the data and then make it appear as though it was three months.

And what's the denominator on this? You said 200 drugs falsified across 40 countries. Is this 200 out of 200,000? I'm being facetious. 200 drug products. So that would be like much of their inventory. In other words, had he found any evidence they did anything correctly? No. In other words, that 200 is the denominator and the numerator. I am not certain, but it looked like it that basically... It's unlikely that they did five of them right and then they be asked their way through 200 of them.

Right, so that basically this was how... This was their business model. The business model was fraud. Right. Their business model was fraud and everyone in the company was in on it. In that, people were given orders to swap out ingredients, to replace higher quality ingredients with lower quality, to do all the stability testing on the same day, to use the brand-name drugs, and that was just how the whole company rolled.

So, little PowerPoint presentation gets whipped together. I tell you something. Do you have a copy of that PowerPoint presentation? I do, and a lot of people want it, and I haven't posted it. I've posted one slide of it online in a Twitter thread. But, yeah. Are you permitted to, is there a legal reason,

or is there a reason you haven't been able to post the whole PowerPoint presentation? Maybe because I don't want to crash the internet. I was once approached by the Atlantic magazine as they went to a group of investigative journalists. What is the biggest fraud? What is the most remarkable fraud in the history of the world? And I've given them an example. This was before I did this book, but I will say that it is hard to imagine a more incriminating document than this PowerPoint, which basically says we have falsified data in every market where we sell drugs. In every product that we sell, we have done it simply for the purpose of facilitating our business needs. We have put all our partners at risk.

And there is only one solution, which is to notify every regulator in every country where we sell our drugs, pull all our drugs off the market and fly right. So basically two guys put this PowerPoint presentation together. That's right. Dinesh and his boss. Dinesh and Kumar. And it's hard for me when reading this to put myself in their shoes,

because truthfully a part of me thought, are you guys idiots? I mean, I totally get the naivete at the outset with, hey, this CRO, this contract research organization seems a little shady. Let's go do a little digging. I don't know where my analogies are coming from today. That's like me coming over to your house, Catherine. You invite me over for dinner. And you give me a little something to eat. Catherine, you invite me over for dinner and you give me a little something to eat. You bring me a nice bowl of soup and I'm eating it and I find a tip of a thumb in it and

I think I look at your hand and you have perfectly tipped fingers and thumbs and I think that's really odd. I wonder if there are more bodies in here and I send my kid, I say, hey, I'm going to sit here and keep eating dinner. You go look throughout our house and see what you find. And 30 minutes later while you and I are still eating dinner, he comes back and says daddy there's 200 bodies stashed in the house. And my first reaction is I'm gonna put a PowerPoint presentation together and say Catherine. I found 200. In fact, there's not a room in your house that doesn't contain 10 dead bodies that have been

mutilated. I think we should do something about it. It wouldn't dawn on me that you are the killer of all of these people taking this PowerPoint presentation, which became known as the SAR document. What does that stand for again? The Self assessment report. Self assessment report, I love it. Taking the SAR document into the board room,

I mean, I guess if you could argue, maybe they somehow thought that the CEO was the only one in on this on the board and the non-executive directors had no clue. I mean, I guess in their defense, that's possible, but it seems improbable. And I guess it actually in their defense speaks to the lack of a regulatory environment that they could go to.

In other words, if this were in the US, that SAR doesn't go to the board of Pfizer, that SAR goes directly to the FDA and the New York Times. You know what? That's probably what it speaks to. I think that is a really good point, but also I will say, Farage Kumar coming from Black so Smith clients with this heavily regulated environment, and he's like, oh my God, every single drug product is tainted with fraud.

But he tells Dinesh Tucker, I'm a little bit hopeful that I'm going to present this to a subcommittee, the board of the directors, and they're going to let me fix it. And again, I just have to, because you're going to tell us what happened, which is certainly among top 10 most ridiculous moments in the history of corporate board governance. But do you think on some level, do you think he kissed his wife and kids a little harder that day when he left for the office? Was there some part of him that thought he wasn't ever coming home again? Because in the movies, he'd have been killed.

He wouldn't have left the boardroom. I mean, and if it were funny movie, if it were like Austin Powers, it would have been like one of those little, you probably even seen Austin Powers in a while. Of course, I still know every scene off by heart, but there's the funny version where the chair like catches on fire or a little trap door opens and you drop or it ejects you into a shark tank. And the not as funny version of this and the godfather, good fellow's version of this, on the way out to the car, you get sort of clubbed bag over the head you're never seen again.

How did he not think that that was a strong possibility? I'm not exactly sure what was going through his mind at that moment. But one interesting anecdote that we didn't mention is as Dinesh Taker was putting together his findings. He comes home and he has his three-year-old son there and he realizes, wait a second, I gave him a reimbaxi drug because he had an ear infection and he did not get better. And the doctor then switched him to actually

to a glaxosmith client antibiotic and the boy got better right away. So he is, as he's doing this research, he's putting the pieces together and he's like, okay, I'm not going to give my family a rambaxi drug until I know the truth. So Raj Kumar is now in the boardroom and he's handing out his document. How many pages are in the self-assessment review document? The essay are, I love that just the name is so nondescript. Yeah. 24 slides. Just 24 slides. 24 slides with smoke coming out and fire coming out of every single one.

I'm just picturing him at the office printer. Just rattling these things off. You know, if he's anything like me thinking about, do I staple vertically or horizontally? Do I go with the diagonal staple on this one? Or do I just put the little mini clip on it? So many options. Color, black and white. Do I want to be showy or not showy? Okay. How does the board receive this? So he presents this to a silent board room, like you could hear a pin drop. And just to give a context. I mean, sitting in that boardroom, it was a subcommittee, it was the scientific subcommittee of the board of directors.

So you've got a guy like to Hender Kanna, who is the lieutenant governor of Delhi. You've got super high profile surgeon in India. I mean, you've got real power players in that room. The room is silent. Then, one of the board members asks, well, can we not bury the data? Which also is a funny question to me, because Kumar has clearly gone to great lengths to uncover this, synthesize it, and now present it.

My general take on this is a culture of incompetent incompetence. You see, if you want to be a true fraud, shouldn't you be watching more gangster movies? Shouldn't the board's response have been, Raj, this is exactly the kind of stuff we are looking for our lieutenants in the field to bring us. Thank you. We will take action immediately.

By the way, can we borrow your laptop? We wanna make sure we have more copies of this. And then they let him leave and then they destroy the laptop and then they unsurprisingly, like, yeah, not to give the criminals too many pointers here, but was anybody competent in this arena? Like these guys don't even know how to get out of a bad situation. Because now you've just told the guy who's telling you, I think this is the biggest scam

in the world. Yes, it is. And we want to continue hiding it. It's important to know the mentality comes in part from being in a culture of impunity. I mean, they're not afraid of their own regulators. They can buy off their own regulators. Well clearly, right because they have the lieutenant governor of one of the largest cities is on their board. Right.

They're not worried about regulators storming their offices. In their mindset, they think this can be covered up. And I guess it speaks to not having a, I mean, even though India is a democracy in the sense, their press presumably doesn't have the chops that a press would have in Western Europe or North America. I think that that is true. So Brian Tempest, who was the president, he was sort of an acting president for a year. He says he tells Raj Kumar to leave behind his laptop,

which then gets broken down piece by piece. I'm picturing like office space with the bait. Like, by the way, that photocopier hasn't been working either. So that photocopier plus Raj's laptop, get him in the parking lot. Right. And throw it all into the Ganges. Right. And they had sent the secretary out of the room. So there were no minutes of the meeting. And basically to Raj Kumar, he got his answer right there. So what does Raj do at that point? What does he tell Dinesh? He tells him what happened, and two days later he submits his resignation.

With or without a hush package. It's a question I don't know the answer to. Because his predecessor probably went through something similar and it sounds like there was a settlement. There was, I think, a very large settlement. I mean, his sources had told me he got a million dollars upon leaving. So I don't know what kind of settlement a Raj Kumar may have had, but all of these very dramatic events left Dinesh Takaar, the sort of architect and author of all of this information, alone without protection in the company.

At this point does Dinesh realize he's in trouble? I don't think he fully understood how much trouble he was in. So what happens next? So then the auditors of Ram Baxi come into his department to say they're going to do a review. It seemed clear at that point that they were looking for some sort of dirt on him. And what happens next is that they plant dirt on him and they put his IP address on some porn searches and he is accused of looking at porn on his work computer. Which by the way, still that also made me laugh out loud because we're in a culture where

apparently if you look at porn in your work computer, it's a terminable offense. Go to jail, do not pass go, do not collect $200. Lie, falsify data, jeopardize the lives of millions of people, that's standard operating procedure. We'll promote you for that. But don't you ever look at porn around here? I never quite thought of it that way, but you may have a point in an attorney for a taxi who left the company and spoke to me later said, you know, in retrospect,

I don't think he was doing porn in the office. I mean, again, I'm laughing only because I need another response beyond rage. I just, I have to make fun of a lot of this, even though there's nothing funny about this. Dinesh, remind me how many kids he has. Does he just have the three-year-old? So, at that point, he has a toddler, basically at home and his wife, and he's moved his young family over to Gurgau and from New Jersey. And is his wife also from India originally? She is.

And is she a brass of what's going on? No. And that was another very interesting thing in both reporting this and writing it and thinking about it. They had an arranged marriage. They had seemingly a good working relationship, but really never communicated about any of this. She didn't know why he was down in his basement office working until midnight collating these streams of data. He was actually looking at porn on the company computer. She obviously missed that detail. He never told her she never asked.

So he's kind of going through this alone. He's lost his mentor who brought him. He's now lost his boss. All jokes aside, this is an incredibly frightening isolating experience for him. And so he submits his resignation letter. What year are we up to O5 now? Or where?

In 2005. Okay. He comes back to the US at this point if I remember. No, so there he is in India and he's trying to get on with his life. He's doing some consulting, but of course, he had no plan to leave. It's not like he had a job lined up. So, he's worried about money and he's trying to figure out what to do next. So what comes to him? So it's monsoon season. He's lying there at night and all he can think about is all this data that he prepared on all of these world markets. And the thing that he really focuses on, which is interesting, is he knows that

the AIDS drugs that the company is sending to Africa are terrible. He knows that they're not going to cure people. He knows that they are going to degrade in the heat and what are called zone four conditions and he can't get over what he's uncovered. He just can't get over it. Do we know looking back now, what percentage of PEPFAR's incoming drugs were coming directly from that company? They were certainly a very substantial player in PEPFAR.

I mean, they were definitely supplying a lot of drugs to that program. I don't know what percentage. And it's interesting, again, bringing it back to, on the one hand, PEPFAR changed the culture of generic acceptance. Did PEPFAR include anything in it that said, oh, and by the way, whatever generic drug maker that's going to sell a product directly into this program will have an even higher level of scrutiny

than the FDA current authority is, given that we're going to spend, I mean, billions of tax-dare dollars on this, you'd think that that would give the FDA, which is basically like, here's a private purchase agreement. Now, I really have the authority to put my foot in your ass. FDA approval was viewed as the gold standard. It almost sends a negative message,

which is if we need a higher level of standard, it undermines our basic approval. Really, worldwide, I have to say this, the view is there is no higher standard than the FDA's approval. It is the gold standard. Many regulatory agencies, they will just look to the FDA for guidance, oh, they approve this company, will approve this company. That's it. And regulators around the world sort of hang on the FDA's decisions. So Dinesh is unemployed, but realizing that there's a tsunami coming metaphorically as well as potentially literally through the monsoon, which is we're about to unleash a torrent of at best placebo at

worse something harmful to an entire continent. Well, it wasn't even about to, it was happening. I mean, those drugs were going regularly to Africa. I mean, millions of patients around the world were getting all those drugs as he lay there and he couldn't sleep. So what did he do? So he did something very interesting.

He set up an email account and he gave himself a pseudonym. And the pseudonym he gave himself is Melvinder Singh, who was then the CEO of the company. So Melvinder Singh was this sort of sion of the Rembaixie family. It was his grandfather who had started the company, his father who was revered, who took it multinational, and Melvinder Singh quickly ascended to the role of CEO after Brian Tempest left. But Melvinder Singh, I mean, that was like a name familiar to every Indian household. He was a famous...

Yeah, it would be like Bill Gates, your Jeff Bezos, the United States. So he creates this Yahoo email account where he's Melvin just sing. And he starts writing to regulators around the world. And he's a very educated fellow, but he writes and broken English. And he pretends to be a bench scientist at the company.

And he basically writes and says, I am being forced to falsify data against my will, very dangerous, etc. So to the FDA's credit, almost every regulator around the world blows them off. Thank you for your interesting email and we'll be back to you in due course. Keeps writing to the FDA and keeps writing. He doesn't get a response. And finally, any attachments to these emails, is he actually showing any of the data in the store? Not yet. He keeps writing. And then finally out of just pure frustration, he writes to the

FDA commissioner who at the time was lester Crawford. And he writes to him. And he says, he puts aside the broken English, puts aside being a bench scientist, and he says, I am pleading with you to put a stop to this crime. And several days later, he gets an email back and it is from a deputy at the FDA saying, we're in receipt of your emails from this state, this state, this state, this state. We'd like to talk to you. So he comes to the US or they come out to India?

This is interesting. So Denesh had thought, all I need to do is tell them there's a fraud. Right, and then I'm done with this. I'm done. They'll show up and they'll do what they've done. That's right. They'll come racing across the world. They'll descend on the company and my job has been done.

And what he did not realize is that he was barely even at the beginning. So when they say we would like to talk to you, he's surprised. Talk about what? I told you. I just told you. Oh boy. So what begins is this kind of weird game of chicken with the FDA where they're asking for more information, more documents, they don't know who he is. They just call him M. He's using the same name as the CEO. They haven't figured out that that's a pseudonym.

Oh, well, they know he's not the CEO of the company. Yeah, yeah, yeah, yeah. But they haven't asked him his real name. Like they know that obviously that's not his real name because it wouldn't be by coincidence. Right, right. Okay. So he's presumably at this point dripping out pieces of the S.A.R. and the supporting documents that led to it. No, he hasn't yet said anything about the S.A.R. Okay. And he keeps sending them emails. Is he talking about the specific company or is he

talking more junk? No, he's talking about the specific company and he's sending snippets of emails that basically implicate officials at the company in fraud. But meanwhile, while this is going on, what is the FDA doing? It's approving one drug after another made by Ram Baxi, including a torfist atten. They did. They didn't do it yet because that was later in the story. That was 07, if I remember. It was actually 2011.

Oh, jeez. So they had been investigating the company for almost six years, and they knew it was saturated with fraud at the point that they approve a torvastatin. Because we're coming up to the Valentine's Day Massacre. All right, let's go there. Right. Because we're coming up to the Valentine's Day Massacre. All right, let's go there.

But finally, these FDA officials, I mean, they're doing some investigations around what he's telling them. And they finally say, we understand that you have a document that basically delves into this, and we would like to see it. And at that point, he says, well, do I need a lawyer? I mean, good question. They provide him with reassurances. He gives them the document.

And as you said, so that leads to a raid on the company on February 14th of 2007. And I mean, I guess it's wise that the FDA of course chose to raid the US plant the headquarters the corporate headquarters I didn't realize the corporate headquarters was in the United States So you're just saying the US headquarters the US headquarters. What is their authority there versus their authority in India presumably They have a fraction of the authority on Indian soil correct. Can they raid Indian plant? No, they have no authority in India. I see, so that's why they do these kluji sort of, hey, we're gonna come do a surprise inspection in two weeks.

I mean, let's take a step back and think about this. So we are completely dependent on countries, manufacturing, life-saving drugs. We have no authority, no real legal authority on the ground. We have no US attorneys in India. I mean, we can't serve a search warrant. But I got a second. This seems kind of crazy to me, given that,

let's use the TSA as an example. Okay, so we have complete authority on US soil who gets on and off a plane. Don't we have some authority who gets on and off a plane that's coming into the United States, even if it leaves unforeseen soil? Well, that's interesting you should bring that up because aviation is governed by an international treaty. And all these countries are signatories to a treaty. We have no treaty on drugs, even though it's completely globalized.

We have a few formalized agreements, but they don't give us any legal authority. So that's, we need the equivalent of airline security in the drug world. We need some ability to police. The United States doesn't seem to care if someone flies between Nigeria and Bangladesh to the same extent that they would care if you were flying from one of those two places into the US. Right. But what the aviation treaty says is, you all in your own countries have to police your airlines and set up your airports in the following manner. And you're all agreeing to do that.

And if you don't do that, you can't enter our airspace is what it says. Yeah. And so that's obviously missing here. And so to your point, the FDA had no choice other than to raid the US headquarters. That was the most they could do. Right. But I mean, on the other hand, it does make sense that they go and raid those headquarters because that is where they are sort of launching all their drug applications into the FDA market. So what did they find during that raid? Oh, man.

So they find, for example, we should talk a little bit about so-tret. So so-tret is the generic version of acutane, which is a drug that targets adolescent acne largely. But it is such a dangerous drug leads to miscarriages, suicidal ideation, that the FDA gives it a black box warning. Ram Baxi was the first to launch generic acutane in the US market, but they knew that the drug was completely defective.

It didn't dissolve properly, the dissolution was messed up. They had an internal document that basically says, we know this drug is failing, we're marketing it anyway. And the cover page on this document said, in big letters, do not share with FDA. Wasn't that the actual name of the document as well? Like, that was the file name or something. Like, so FDA agents, okay, so just go into the search engine

and just search for keywords do not share FDA. Just see what comes up. So, I mean, they get that document, they get the SAR. The amount of documents they get is so huge and so incriminating. And it's on the basis of that that the investigation is fully launched. But again, this is 2007. Right.

Okay. As you alluded to it, we'll be many years before this story comes to its natural, ugly, deadly, whatever ending. What is actually happening from 2007 to 2013, or whenever this thing finally resolves? Like, what does an FDA investigation mean when you have that much evidence? Like, this isn't the way we invest crimes. Like, this guy got a house full of dead bodies.

Well, I mean, okay, understanding the neighbors think it smells a little bit funky, like this guy got a house full of dead bodies. Well, I mean, okay, I understand the neighbors think it smells a little bit funky and every time someone comes over for dinner, nobody ever leaves, blah, blah, blah, blah. But now you went over to the house and you found the bodies, right? So what are the next steps when you have this much proof?

And I'm sorry, does this involve the Department of Justice at this point? Yeah, so the FDA, they can't subpoena anybody. They have no subpoena authority. They have no subpoena authority. So for any case they want to make, they need a US attorney. So they involve the US attorney's office in Maryland. And basically, the whole case just grinds down into slow motion.

They're trying to interview witnesses where Rambaxie moves people to India, so they're sort of out of it. So they're subpoena free. Right, so they're subpoena free. They're battling the FDA investigators are battling US attorneys about who to interview. What documents to pursue? They're fighting with Rambaxie's lawyers, they are trying to sort of track the frauds. And what they're trying to figure out, what are we going to charge this company with? What do the frauds mean for the quality of the drugs? I mean, have you spoken to anybody, the FDA, who could speak to what the internal view was circa 2007?

Because with the revisionist history, you could sort of say, look, if you really want to put the boots to these guys, you say, hey, guys, either you cooperate immediately and fully with the investigation or we are suspending all of your sales in the United States pending resolution of this. That's a huge hammer to drop on somebody and you can't drop that every time because if you're ever wrong, there's no telling what the magnitude of that lawsuit would be in reverse. But one, it seems like in this situation, you had enough evidence that you at least could have ethically made that

threat. Clearly, they didn't have the legal chops to make that threat or did they? If they're the FDA, don't they have the singular authority to suspend a drug by a company? They didn't need the Department of Justice or Congress to say, yep, you guys are cool telling these guys no more drugs sold in the United States or by the way through PEPFAR while we're at it using taxpayer dollars until you fully comply with this and our investigation is complete. I'm still struggling to understand the heel dragging. Are they back in 2003, India, where the naivete is, this can't be nearly as bad

as it looks? Well, so first of all, in terms of what was going on inside the FDA, FDA investigators were trying to figure out sort of each permutation of the fraud. So wow, they're doing all of their stability testing for six, nine, 18 months all on the same day. So, that's one revelation. Wow, everybody in the company appears to be in on this. That's another revelation. But as this is unfolding, the other side of the FDA, which is the sort of regulatory approval side of the FDA, keeps on approving the company's drugs. I see. So good point you're making here, which is structurally the FDA has enough silo in it

that the people that are dealing with this company from a drug approval standpoint are not the same people that are investigating them, but there's presumably not a Chinese wall between them. Well, right. And you know, by the end of this, there's like a Rambaxi enforcement team that's 30 people large. And then people start saying to each other, why are we working so hard to keep this company in business? Why don't we shut it down? Why don't we take this application integrity policy, this tool that came from the generic

drug scandals of the 80s, and use it to just take all these applications basically offline, which would have the effect of shutting the company down. Why aren't we doing that? And it's weird because I got, the book is based on 20,000 internal FDA documents, among many other interviews. I was sifting, I have all the email records from inside the FDA about this company. Do these serifreadam of information act or are you free to? No, first of all, I mean anybody who's reported on the FDA will tell you, you file a Freedom of Information request and you can, if you're lucky,

expect to get a couple of documents two years later. So I filed 16 Freedom of Information requests for this book. I even sued the FDA. I hired a lawyer to try to get some documents through the FOIA mechanism. But the bulk of the documentation was coming through sources who were leaking documents to. Wow.

Yeah. I didn't realize the FOIA would be that inefficient within the FDA. It is not effective. It is, let's put it this way. If you really want to get information, I mean, almost none of the information that the book is based on, I would have ever gone through

FOIA. I'll keep that in mind. So the next time I'm choosing between a root canal and something equally painful, FOIA, the FDA. I had no idea, actually. Okay. So I just want, I'm sorry, to interrupt you, just keep going this, this story tells itself. Yeah. So then it comes to this point where Rembaixie had the first to file for the biggest generic drug launch in history, which was generic lipitor. And there you have the FDA bureaucrats sort of parsing the details from their application

and saying, well, is there fraud in this application? There's fraud in every other application, but do we know that there's fraud in this one? Ultimately, they didn't find direct evidence of fraud in that application. But based on what, did they inspect a single Indian plant? So they send, so last minute, right? And Congress is writing them letters saying,

we need generic lipitor now. We're going to be saving billions of dollars with generic lipitor. You can't delay this approval any longer. Wait, is Congress at this point aware of what the FDA is investigating? Not fully, because the FDA does not disclose it. They do a raid on Ram Baxi, and a congressional investigator calls over and asks the FDA,

what are you investigating? Are you investigating drug quality? And they say no. What are they investigating? Drug quality. Culturally, why is the FDA hiding their good investigative work from Congress? Wouldn't it give them more breathing room? I mean, Congress is breathing down their back.

And look, if you put yourself in the shoes of Congress, they're doing the right thing. They're trying to protect the American taxpayer. They don't have the window of visibility into the safety issues. They are looking at this purely, they're not even enough to believe, as we all are, prior to your work, that a torvastatin is lipitor, except it costs a fraction of what lipitor costs. So every day this drug is not approved, the US taxpayers on the hook for X more dollars. FDA, come on guys, get it going. And the FDA is somehow doing good work, but being sheepish about it. It's almost like if you didn't know better, you think there was a second conspiracy theory here, which is that this is not incompetence, but rather

political pressure, for example, would be one thing that jumps to your mind, right? I mean, this is, in many ways, the story of Rimbaxi is a cultural damnation of India. If we're just gonna be blunt and create a whole bunch of enemies and everyone on Twitter is going to like you and me up for saying that. But there's no way around it. This is a cultural damnation of an enormous nation. And I will say the book launched about three weeks ago in India and boy has it, yeah, I mean, I have been under fire. And this is funny. All of my workings with people in India, which is, there's only one time in my life, I've really had a lot of interaction with people in India,

which is when I worked at a company, a global company called McKinsey and Company. And we had a huge presence in India, and we had a huge, especially from a technical, sort of analytic standpoint, we had so much of our horsepower in India. So in other words, I want to be careful that I don't misrepresent that I know

a, anything about India, other than my own direct experience, which is these people that were coming out of the IITs, the Indian Institutes of Technology, which is like, I don't know, they've got like an MIT and every state, basically, these IITs. These guys were unbelievable. Like I have nothing but great things to say about all of these people I worked with through McKinsey, who were, again, by and large graduates of the IITs, mathematicians, that physicians,

computer scientists primarily, I mean, they were exceptional people, which tells you that the problem is not the people per se, but something within the hierarchy of companies that somehow slowly can corrupt a subset of people. I mean, like, what do you think is actually at the root cause of this? I know I'm taking us a little bit off the story, but it's, we've sort of been dancing around this issue a little bit and it, I don't know how to reconcile these two things, which is

there's an amazing system of education in India that produces amazingly bright people who are incredibly hardworking. And yet, there is a systemic problem, at least with respect to one industry, which then makes you wonder, well, is petroleum going to be any better? Is textile any better? If you go through all of the other industries,

maybe the stakes aren't as high, I don't know, but what reason do we have to believe that this isn't a broader issue than one company? I had done a big magazine article on Ram Baxi before I launched into the book. And that ran in May of 2013. And we got all these comments in from readers. And I remember one of the comments was talking about a word I'd never heard before, which is, ju-god.

I'm like, what is that? Spell that? J-U-G-A-A-D. It's a Hindi word. So, in some contexts, it has positive connotations, which is, ju-god is a sort of spirit of creativity that allows you to overcome obstacles, okay? So, that can be incredibly positive in India where average daily life is so difficult

and the systems are so onerous. The legal systems, anything, getting a driver's license, navigating contracts, I mean, that's all extremely challenging. But Jugat has a very dark connotation, which means it's basically eliminating all obstacles and getting to the desired goal by the shortest by any means necessary. And Jugaad, as I came to learn, is something that is really prized in Indian companies. And it's a kind of the rules don't matter, the regulations don't matter, what matters is the goal. And Rembaxi was a company

that told its employees what matter because they had posters hanging on the wall which talked about this $15 billion goal for I I think, 2015, basically. It was a financial goal that mattered. And that sort of began to explain why this company behaved the way it did. And frankly, as I began to report and expose that Rembaixie really was not an outlier in the Indian generic industry that in a number of companies, I don't know to the degree of Rembaxy, but this is how you did business. Now, again, before we get back to the story, I think this thread is worth pulling on a

little bit more. We in the United States are not strangers to unbelievable fraud. And we think of WorldCom and Exxon and Theranos and all of these companies that are just complete and total frauds. And so one could argue, it's no different. This just happens to be an example in an industry where the consequences were greater. The consequences of Enron's fraud

were Californians got screwed out of some electricity and a bunch of shareholders lost money and both of those things suck, but it's not as viscerally upsetting as people taking bad drugs. So do you think that it is the case that there is just as much fraud here in the United States, but the denominator is so much larger that it's sort of dwarfed. Do you think it's that, well, culturally we're all the same. And the differences in the United States or in the West, the regulations simply do not permit. You couldn't get away with what they're doing. And this is not a condemnation of Indian people or Indian culture. It's a condemnation of a regulatory environment. That, as you said,

miners in the major and majors in the minor, which is to say, it takes an act of Congress to get a driver's license, but any buffoon can make a drug. It should be the other way around. Not that a buffoon should get a driver's license, but it should be easier to do things that are easier there and harder to do things that are harder there. Like, so I'm giving you the book ends of it.

Where do you think it lies? First of all, whenever we have these exposés of companies that are corrupt to the core, it's always shocking. I mean, it's shocking to see such a big fraud. The RANOS, Enron, VW, the Volkswagen fraud with emissions, it's always shocking. Interesting. The examples you give are exposed within. I don't know about VW, but Enron was exposed internally. Theranos exposed internally. You could argue that that is a cultural difference, is even though it was ultimately exposed internally, you could argue it was much harder to expose Rambexian internally. I mean, it ultimately was exposed internally,

but the culture of dissent might be greater in the United States. Is that possible? So, first of all, people talk about a culture of compliance. And companies have cultures. And they sort of reflect these cultures to their and train their employees in these cultures. And employees from Western drug companies that I talked to, a lot of them talk

about the training, the cultural training of compliance, and what that's like. And part of the way that you develop a culture like that is you have to, because you have regulators who are vigilant. You have regulators who are on the scene. So, Red's really not the case in India. They're not worried about their own regulators. They could buy off their own regulators or their regulators simply don't show up. And so you don't have the same culture of compliance.

It's not something that is sort of organic to a company. And you wonder if you took Pfizer, BMS, Novartis, and moved them to India under the exact same regulatory environment, would it be a matter of years or generations, if at all, that the internal culture of manufacturing excellence would vanish? I mean, it's a good-donk in experiment, but has it been done?

Is there any example of Western or European companies degrading or the reverse? Well, it's interesting you should mention this because Novartis has just found itself in the middle of quite a sizable scandal. So they just got approval for a drug called Solgenzma, which is the most expensive drug ever approved. It's the treatment is $2.1 million. It's a gene therapy drug. One month after they got approval from the FDA, they disclosed to the FDA that there was data manipulation in some of the animal studies for that drug.

And apparently they knew about it two months before they got approval. So right now, obviously this book has stirred up a lot of emotions in India. And one of the accusations that has been locked against me is, well, why don't you talk about fraud in Western companies, and they're not impervious, and it's a very complicated issue. I mean, there's certainly fraud in Western drug companies and in Western companies generally. But I think the difference, and the difference as it sort of filtered down to the FDA,

is that here was a company that seemed completely lawless where employees across the board were directed to violate regulations that they did what they were told, which would be very, very hard to have as a situation in the US where you have anybody could go run to the FDA. Whistleblowers are legally protected here. There's financial rewards for them. Yeah, I mean, I think that's fundamentally the difference is systemic versus non-systemic corruption.

And when you think of the most egregious examples in North America, they are systemic. They're fortunately not that many, but when they're there, so using Theranos as an example, Theranos had very few corrupt individuals, but because the corrupt individuals were at the very top of the pyramid, they could organize the exact nature of the silos to perpetuate the fraud until internally it was no longer sustainable. I don't know enough about Enron, but my recollection of the story is Andy Fasta was probably the architect of that, the CFO. My reading of history is that Ken Lay, the CEO, probably not, but he was sort of too uninvolved and who knows what the truth is about Jeff Skilling.

I suspect Skilling sort of sheepishly encouraged fast out and whatever, but the point is you had the two of the top three lieutenants in a company and then who knows what the trickle down was, but again, eventually a senior person there basically said, well, I mean, it actually started through an analyst questioning things, but internally the house of cards fell down when internal people sort of came forward. So I don't know. I mean, this Rambexia is so clearly an example of the most, that might be the single most systemic example of correction because it went to the board and fully permeated the board. I mean, I would argue at least at Theranos, the board was just incompetent, but not outright complicit. Here, you had something epic, and so, again, I want to come back to the story because we're not even done yet.

But do you have any sense of how prevalent this is? Because we're going to end this podcast with a practical discussion, which is, what the hell do we do? I don't want the listener to think I haven't forgotten the question that is on everybody's mind, which is Peter, Katherine, thanks for the saliliqui, but I've got a bunch of pills I'm taking tomorrow morning and my kids got an ear infection.

What do I do? So we're going to end there, I promise you, but I can't help but escape. To answer that question, you sort of also have to understand the prevalence of this problem. Right, so Rembaxy to me was like the jumping off point for the reporting quest, which is to figure out

whether it was a total outlier or the tip of the iceberg. And my question was, how does this industry really work? So my reporting ended up taking me deep into the FDA and to an inspector named Peter Baker. He's a young investigator, an analytical chemist, kind of a badass. He's like a motorcycle group with tattoos.

He's not what you would think of as a regulator with a pocket protector and a checklist. So when the FDA wants investigators to go and work in their India office, which is just chronically understaffed, and nobody wants to go there. I can't understand why. Is it the water?

The water, the food, the difficulty getting around. I mean, so many reasons. But he sticks up his hand. He's up for the adventure. And he's just an interesting character. He grew up in a family of men and nights in a grass seed farm in Lebanon, Oregon. And they would often go on all kinds of missionary work anyway,

but he winds up at the FDA's India office in 2012. And some of the FDA investigators are what are known as conference room investigators. So overseas, the FDA pre-announces its inspections. It tells the companies they're coming. The FDA investigators are the guests of the company who arrange their local travel, arrange their hotels. They show up, they get... I don't see any conflict here.

I'm not sure where you're going with this cat. This seems completely reasonable to me. They get it. They get souvenirs. They get souvenirs. They may arrange for massages. What could possibly go wrong? They get like Gandhi, snow globes,

and they get the welcome ceremony, the opening slideshow. So Peter Baker was like, I don't want any of that stuff. And how old was Peter at the time when he first stepped foot in there? He was 32. Wow.

So the chutzpah of this guy, to just show up. Oh yeah. No, no, no, no, no. It's a new sheriff in town. When I read your book, by the way, I don't know why. Well, I read a summary of it first. And I took him to be a gray beard. I don't know why.

I just had it in my mind. This is the guy with the end of his career. The steely eye, seen it, all done it, all. Been through the 80s, served in, like, that was the impression I had initially. Well, it's really funny. If this book gets made into a movie, which it might, Matt Damon could play him because he's a dead ringer.

That's what he looks like. You heard it here first people. Matt, if you're listening or anyone who knows Matt's listening, this is the pitch for this role. So, some of these investigators are sort of conference room investigators. They go in, they sit in the conference room. I tell you the PowerPoint, I'm going back to the hotel. That's right.

Bring me the document. So, he's like, no, he pioneers this new method of inspection. He goes to these manufacturing plants. They're like huge cities. They could be over dozens of acres. There's a lot of buildings. You're finding a needle in a haystack if you think you're going to actually step foot and see a direct mistake. Instead, you are going to see something that is directionally smelling wrong. Right. So he decides he's going to start by going to what's

called the quality control laboratories. So these are sort of these areas off of the manufacturing floor that audit the manufacturing. And basically, if you are a law abiding pharmaceutical company, you're using the data that's coming in from the manufacturing floor to see if there's any problems. So are there any drugs that should be taken offline that are not meeting specifications? What are the test results?

But if you're a corrupt drug company, you might be using the quality control laboratory to figure out how to manipulate the test results, how to kind of see what drugs don't meet specifications, and figure out how to make failing drugs pass. So he goes into the computers. Instead of saying, print me out a document, he looks in the computers. And that's how he begins to track the metadata in these systems where they have deleted evidence.

I'm not that I know anything about computers, but I'm not an idiot. If you showed me a bunch of computer files, like I wouldn't know anything about how to detect mass deletions, did he have some training in this? No, he had no training, but he figured it out. He figured it out because he had worked in a quality control laboratory in the branded drug sector before he became an FDA. So he knew what the fingerprint or signature of this looked like. Right. Every once in a while, you just, you know, we talk about all the bad things that happened,

but sometimes it's worth contrasting it with just the dumb luck that sometimes just comes our way. And what if Peter hadn't been the guy to put up his hand and say, I'm going to take one for the team and go to India and get diarrhea for a few months. And by the way, I'm competent enough to do this job. Right. Yeah, because in fact, I mean, what he found was incredibly dramatic. I mean, he inspected 86 drug plants in India and China over a course of five years, and he found some element

of data fraud or manipulation in four-fifths of those months. And what's nice about the way he's looking is you can give them all the warning they want. They can put all the window dressing they want in anticipation, even if because I remember you wrote about how often the companies were tipped off. He'd show up on Tuesday, but the company had been tipped off earlier. But where he's looking, they're not going to necessarily fix unless the companies start talking to each other and say, oh, by the way, presumably he's not disclosing where he's

seeing their mistakes. Well, they did start talking to each other. So, in fact, there was like an industry-wide WhatsApp chat that they had where they were talking about him and his inspection methods because he became so... He's like Lucifer to these people. He is Lucifer. He became so devastating to these companies and just to give an example of what's at stake. The book opens with this scene. He goes into inspect this plant run by this company walk heart and he encounters this employee

who's trying to smuggle a garbage bag of documents out of the plant on his second day of the inspection. It's a chase scene. So if you want to know what a chase scene in a sterile drug manufacturing plant looks like it's- I'm picturing Matt Damon just chasing some dude down a hall with a Jason-born swipe kick out at the end. But-

Well, it's actually a low-speed chase beneath these- The speed- It's a speed walk. But as a speed walk beneath these fluorescent lights, and the irony is that it is sterile drug manufacturing plant, the employees are, if they're trained properly, are trained to move slowly because you don't want to disrupt the airflow. It's like a unidirectional airflow,

and so all the movements are supposed to be very controlled. So if you have a chase scene in that environment, it's a low-speed chase, which is how the book opens. It's a scene out of Austin Powers. Yeah, it's crazy. Because it's like the irony of it. It's like it's a chase, but it's really slow. But he figures out where the bodies are buried in these plants. I mean, he used the torn documents in that garbage bag to reconstruct that there was a hidden area of this plant

where they were manufacturing sterile injectable cardiac drug for the US. They were doing it on corroded equipment that left metallic particles in the drug. That's bad, right? That's actually not good, yeah. That's not good. What is Peter doing today?

So Peter has left the FDA and he is a consultant for a auditing company that audits manufacturing plants. You said something a moment ago that I wanted you to finish what you were saying, so I didn't interrupt, but I think it's worth calling out. 80% of the companies he audited, I want to go back to what you were saying. Had some irregularity, so that's option A, option B, were not quite at the standard of the finest Swiss, German, and US plans. Option C, were as bad as Rembaix.

I mean, like walk me through this, what is the implication of what Peter found? The implication of what Peter found is that fraud and particularly data fraud, so that is manipulation of quality data to make failing products sellable is endemic. Do we have a positive control for that? In other words, has someone done Peter's analytics

on the best of the best, and is the background number on that 30%? Because of course at this point now, there's nobody listening to this who trusts anything that comes out of a drug company. And frankly, I don't think the brand is reviewed that much more favorably than the generics, because I think we've made the case

that they're just under more scrutiny and they have deeper pockets, so you could argue, well, they might not be doing the egregious nonsense, like putting glass particles into pellets or giving you sawdust or doing their work on rusted machines, but it certainly wouldn't be hard to make the case that there could be data fraud, which is exactly the stuff that Peters autopsies

and forensics uncovered. So do we have a sense of what that background number is? So I'm actually hopefully going to be publishing something relatively soon that will put some numbers to that, but I think you could say there is really endemic fraud in Indian and Chinese manufacturing plants. And that is not to say that fraud doesn't exist in the US plants, but the kind of egregious

shredding the documents, bringing in data fabrication teams, doing secret tests. What does your business card look like when that's your day job? Honey, please meet my husband, Bob. Bob, great to meet you, Bob. What do you do? I work in Pharma. Oh, great. Are you a chemist? No, no, I'm more on the data side. Or are you a data scientist? No, no.

I'm in data fabrication. Oh, fantastic. Well, so this is one of the mind-blowing things that I learned No, no, I'm in data fabrication. Oh, fantastic. Well, so this is one of the mind-blowing things that I learned is that these companies, a number of them, do have data fabrication teams. They bring in teams to fix these plants and fabricate documents before the FDA comes in. You have to connect with Carol Tavras because the extent of cognitive dissonance

that must exist in a person who's stated, explicit, day job is data fabrication. I'm really curious about that psychology. Because it's basically white collar mob work. If you're a hitman in the mob, that's your job. You get paid and you got to whack people. But we just don't think of that being plausible in the white collar sort of upper echelon of pharmacology.

How is this any different, right? Except it's more efficient at killing. At least the mob guy can only kill like one dude at a time, right? These people have the potential to kill tens of people, thousands of people at a time. They just don't get the blood on their hands. That's really the difference. There's this amazing quote. One thing I've been asked is, what shocked you most in reporting this?

There's this anecdote in the book where this US executive at Ram Baxi becomes suspicious about the data because it's too perfect. It looks exactly like the brand data, right? She realizes that the AIDS drugs are really terrible and on a conference call with like a dozen executives of the company, she raises this question about the quality of the AIDS drugs going to Africa and the medical director of Rambaxi says to her, who cares, it's just blacks dying. Which is like, what do you do again? Like, what's the point of your job? You're working at a drug company. It's something. Yeah, it'd be hard to come up with just one thing that, from your work, that would have

floored you. Because it's really, it's sort of one, with all due respect, I think that's part of what makes this book a little tough is, it seems too impossible at times. It sort of seems like if you made this a movie and it was pure fiction, it would be rejected. Yes. Because it wouldn't have enough suspense. It wouldn't have enough irony. It would be too over the top. With that, let's bring it back to I want to let you,

I keep interrupting you. I apologize. I want to let you get back to the story of, how does at least the tale of this company and Dinesh come to a close? Because there's another point we didn't mention here, which as all of this nonsense is going on, they're in play as an acquisition by a Japanese company.

So, I mean, now we're perpetuating fraud on multiple levels. We are also perpetuating fraud in the context of due diligence for a mega acquisition. That acquisition by Daiichi Sankyo, which was Japan's second largest drug company, I sort of thought of it as almost like a reverse Godzilla movie, where Daiichi Sankyo is coming from this very formal polite culture, the Japanese, they come in to do their due diligence, and Malvin Nersing, the Indian executive, just rolls them. And this is not the guy with the Yahoo address. That's a different one.

Right. This is the real CEO. The FDA's already rated their company. They've got this smoking gun, SAR PowerPoint. They suppress it from the Japanese through the whole due diligence thing. They give their employees a script of how to talk about what the legal troubles are. They create a false set of minutes from the meeting where the PowerPoint is disclosed. They hide any reference to it in the Justice Department documents they disclose. So Daiichi Sankyo ends up having no clue, which I mean a lot of people are like, who were their lawyers?

This is ridiculous. But they end up paying Melvindersing in his brother $2 billion for their shares in Ram Baxi. And Melvinder Singh gets out of the burning house like just before the whole thing collapses. And Diichi Sankyo slowly begins to realize that they have bought this company that is fraudulent to the core and several years in, they realized they're on the hook for $500 million, which is the fine that Rembaixie ends up having to pay to the Justice Department to settle the case against them. Now does ultimately that money get paid by SING himself?

Where does that money actually come from in restitution? No, Diichi Sanquio pays it out. So no one has ever gone directly after seeing? No, so then what happened is once the case settled and Diichi Sanquio was out of pocket 500 million to pay for Rambaxis crimes, they end up Diichi ends up taking Malvinder Singh to a court of arbitration in Singapore and get all of Ram Baxi's lawyers, because now Daichi Sanco is Ram Baxi to testify against Melvinder Singh in this arbitration hearing. And the court in a turnaround awards Daichi Sanco 500 million that Malvinder Singh is now on the hook for. And so right now, I mean, his offices were just rated in India. Amazingly, he took this to an Indian court to say that the judgment is not enforceable in India. And amazingly, an Indian court ruled

against him. Well, I mean, as a skeptic, I would say it's easier to turn on one man than one culture. Yeah. I mean, it's been very, very interesting to watch it play out. And Daichi has, of course, divested this entire bomb of crap. This little turd bag has now been purchased by Sun, hasn't it? It has. It has. Ranbackse does not exist in the same way that it used to, so this once, you this wants very proud Indian company no longer exists. In the end, at least financially, though I suspect not emotionally, Dinesh was made whole through the whistleblower.

Yes. So, he becomes a formal whistleblower under what's called the key-tam legal case. So his identity was secret. They reach a settlement. He gets a percentage of the settlement. So he ends up with $48 million. But his life really unraveled. He and his wife break up.

He's had a very difficult road to hoe. Is he in the US now? He goes back and forth between India and the US. And he feels safe in India? You know, it's quite extraordinary because whistleblowers are routinely killed in India. So when he was thinking about blowing the whistle on Ram Baxi, that was a sort of central calculation, was the danger to himself. And he ended up really rolling the dice on that.

And he's become an ongoing antagonist to the industry because he's now an activist and an advocate for safe drugs. And he has just decided that that's how he's gonna live. But he has survived this ordeal. But emotionally, I think it's been very scarring. So it seems to me that perhaps the most compelling answer we have to the question that is probably

at the top of everybody's mind, which is what is the prevalence of this problem? What is there, or maybe another way? What's the penetration of this? You've done a case study of hopefully the worst of it. We don't know, but you've gone a few inches wide and several miles deep, but then Baker comes along and Peter's assessment is well, I've casted a much broader net

I haven't gone as far into each one, but I have found the fingerprints of fraud on 80% of what I viewed. By the way, that was 80% of what I viewed. By the way, that was 80% of non-US generic manufacturers or all manufacturers, inclusive of US. So these were 80% of the plants he inspected in India and China. That's right. Okay. So they were all in China. So 80% of what he inspected in India and China. And that, again, that was a big number. So you could argue the law of large numbers starts to kick in and that is representative of your sample size. So are we to take away from this that if you go into CVS Walgreens, pick your favorite pharmacy, you buy your drug and assuming you can even figure out what company sold it, which turns out not to be

easy, we're gonna talk about that. If it comes from a company that is Indian or Chinese, you wouldn't be overly paranoid to assume there's an 80% chance that there's some misinformation in what you're taking, which means, again, that could mean it's still fine. That could mean it's not as potent as it says it is. It doesn't have the shelf life it says it is. I don't want to create mass hysteria. I want to walk through what really is implied by what you're saying. It is hard to know for certain, and it's hard to put a number on it.

But here's some sort of things that I can say. We know that because of the kinds of frauds exposed in the book, Americans have gotten drugs that in some cases are not bio-equivalent, have foreign particulate matter in it, or toxic impurities, or are not as sort of represented. So we know that for certain. We know, for example, that millions of Americans were taking blood pressure medication, bowel-sarton, low-sarton, herbacarten.

That was found to have the active ingredient contain carcinogens. And these came from Chinese and Indian manufacturing plants. And dozens of versions of those drugs have been recalled and those carcinogens were in the drugs for maybe about six years and I'll throw in my own personal story here. I have seen three examples of this in my practice which prior to seeing your book were really really infuriating, because I thought I was crazy having these arguments, but sometimes you prescribe drugs

for which they have a predictable measured response. There's nothing subjective about it. Oh, an antidepressant, did you? I don't feel like this is helping me any. Maybe I have a placebo, those are very difficult to figure out, even the antibiotics, they're hard to figure out. Maybe it just took a while for the drug to kick in and now it kicked in sort of thing.

But when you look at lipid lowering drugs, it's really clear what's supposed to happen and when it's working or not working. Now, there's gradation. So we might be missing things that are underworking, but on three occasions, over the past two years, I have prescribed a patient crestor. And again, as a doctor, when you write crestor,

it means nothing. It means, for the most part, the patient will be substituted, Resuvistatin, unless otherwise specified, Resuvistatin being the generic equivalent of Crestor. And in these three particular examples, there was zero change in the LDL cholesterol. Now, when a patient is on 10 milligrams of Crestor for three months and there is zero change in the LDL cholesterol, there are only two explanations that I can think of, theoretically three.

But for argument's sake, the patient's not taking the drug or the drug doesn't work. I like to think that I have a non-threatening tone with my patients, so I always assume it's the first. I'm like, hey, any chance you ran out of your meds before a couple of weeks before the drug test? And by the way, the answer to that question is often yes. So a lot of times I will see these issues or you give somebody alipurinol for uric acid. The uric acid doesn't go down or it's been down and then all of a sudden it's back up.

And a lot of times, yeah, the answer is, you know what, the last two weeks I forgot, I needed a refill. I was on the road, blah, blah, blah. But there are three occasions where that was clearly not the case. And this patient, and I just, I really, I have great confidence that the patients were, in fact, taking the medication, not a budge.

And after the second one, I said, I asked my staff to kind of dig in a little bit. And I said, is the patient actually getting crestor, or were they getting a generic equivalent? And one thing led to another, and basically in those situations, because it was too difficult to get the patient back on branded, it just switched to a torvostat, and which I now realize you're just rolling the dice going from one piece of BS to another piece of BS. But I've seen this issue.

There's no question I've seen it. And I suspect I'm not seeing it to its full extent because I'm only seeing it for drugs in which the measured response is so clear and so objective. You think of, as you said, pales in comparison to the myriad problems that could exist, the contaminants, the partial efficacy, the time-release drug that is not a time-release drug, and therefore is delivering too high a dose in a short period of time,

and does that explain the GI upset? I mean, I give you another example. Tons of patients complain that generic, extended release metformin, which is a drug I prescribe with some regularity, doesn't work as well as the true glucophage XR does, and metformins that can produce a lot of GI side effects. So I'm kind of stuck. The book describes, for example, these two doctors at the Cleveland Clinic

who began to piece together that some of their patients who, and these are cardiac drugs, were stabilized on the brand and then became unstable when they were switched to the generic and in some cases, heart transplant patients were suffering or good rejection from a generic. Tachylinmas. Yeah, the Tachorlinmas. I think for doctors, once they become aware of this as a kind of category of thought as a possibility,

some of them begin to diagnose the drug supply, not just their patients. Well, so we're in the process of doing something that's going to take a while, but after reading your book, I sent along long apologizing email to three people on my staff who were going to be the ones to take one for the team on this, which was, we're going to go through every drug we prescribe.

And luckily, that's a very small list for our practice because we don't have many patients and we really narrow the focus of the type of stuff we're working on. I mean, we're not the ones out there writing antibiotics and stuff routinely. But that's still a list of probably 30 drugs. For every one of those drugs, I need to know every single generic manufacturer, and then we need to do the full colonoscopy on everyone, according to publicly available information. Have there been any filings against these companies? Just do a quick Google search news or Google this name FDA blah blah blah blah, kind of go through that exercise. And I think this will take us three months to do. That's how miserable an exercise it's going to be. But what I hope emerges from this is a probabilistic

heat map that basically says going forward. Again, I don't think we can ever ensure with certainty even with the branded drugs, but the goal here is probabilistic. It's increased the odds in your favor that if you need Rizuva statin, a Torvastatin, pick your favorite generic anything hydrochlorothiazide, which one are you absolutely not touching, where do we preferentially do it? Anything else you would recommend that I do as a physician or a patient do as they navigate this? So on my website because I mean let me just say since the book came out I have been flooded with emails from patients who want to know are their drugs safe? Where were they manufactured? By the way, just a thought of that is to me personally, like, I can't imagine a bigger torture.

Anyone, people listening to this know how much I hate email. I waste no opportunity to talk about how much I hate email. The only thing that I could hate more than email would be getting 1,000 emails a day asking me to dig up the answer to a question like that. They're the only ones sending you that email. Oh yeah, I mean, it's impossible. I am inundated, but I also feel.

There's an obligation, but you need to, you need a system to solve this. Exactly, right. You're not personally going to be the one that gives them the answer to their question. Right, so what I created on my website is a guide to investigating your own drugs, which is basically like, okay,

what are patients going to do? Now, we need new laws. I mean, you shouldn't have to be Sherlock Holmes for your own drugs, but basically it leads them step by step, figure out who manufactured your drug. Is that readily available in the front of the bottle? It should. Because you don't often get the actual bottle from the manufacturer. You're almost always getting a bottle that's a plane, you know, whatever yellow or green bottle that has

a sticker on it that the pharmacy puts on. Does that sticker usually contain the generic companies name? So it varies from state to state. I mean, there are different disclosing requirements and it should. But I mean, if you're not getting that information on dispensing label, you need to ask your pharmacist, who's the manufacturer? And when I go to a pharmacy or actually before I even go and pick up a prescription, I ask, who's the manufacturer? Who else makes it? I mean, I switch all the time from one generic to another. Is the pharmacy willing to do this without your physician's intervention? Yes. Because I go to an independent pharmacy.

But I think, you know, if you're in express scripts, if your CVS, I think it's harder. I think for the big chain pharmacies, it's harder. Yeah, the PBMs, I contemplated in the last couple of days, whether I wanted to go down the PBM rabbit hole with you, and I hope you'll be okay with the fact that I have decided not to. That's fine. I think it's too big a topic. Do you want to say two sentences about it?

So people would understand why care mark or CVS or express grips are gonna be harder to navigate in as much as it offers the many hope. I mean, is it worth, are we just opening up a can of worms that's way too complicated? I mean, I can basically say that I think the optimal thing is to go to a brick and mortar pharmacy and have an exchange with a human being.

I mean, that is ideal. I mean, pharmacists some don't really know about this issue, but some know a lot. I mean, I've gotten a lot of mail from pharmacists saying, like, I've been hearing this for years from my patients that this drug didn't work or that. I mean, you can have a dialogue with your pharmacist about it, okay? This is good RX, the app on your site.

Do you let patients know about that? No, I don't even know about it. So good RX, a really, really brilliant app that allows you to at least price compare them. And that is a way that you can, if you decide you want to go down this route of being brick and mortar, you can basically price shop. And it's really interesting. Like if I didn't have my phone on airplane mode right now and wasn't worried about a buzzing nonstop, I'd turn it on and show you you sitting right here right now, I would just type in a torvastatin, it would say select your dose 10 milligrams, use current location right. It's got the GPS I can tell it the zip code. And it will, in a radius of ascending order, tell me the price for 30, 10 milligram at Orbis Datens cash pay by pharmacy. And you'd like to think they're all the same, aren't they? Not even close. So then you compel that with your analysis, and you at least can get into the situation where you walk in and you could know your maximum out of pocket. And by the way, there's still a good chance your insurance company will cover it because

typically the insurance company is just differentiating between the generic and the branded. They're not going to at least until you tell me different. I assume they're not going to fiddle between two different generics if you specify one versus the other, are they? Right, but the problem with the price is that often the drugstore chains will be dispensing the lowest cost generics, which may be the worst manufacturer in India. The drugstore is typically carry more than one generic. Well, they often can order one generic or another one from their wholesalers, because they're ordering from, you know, Cardinal and Amerisource Bergen and the Kessler.

I mean, I have the feeling I know how this is going to work for our patients. What I suspect we will end up doing is partnering with one brick and mortar pharmacy and saying, we will make you our exclusive partner on this and in exchange for it, you will do exactly what the F we say, which means you are absolutely under no circumstance, selling us anything other than XYZ, do, do, do, do, do, do, do, do, do, do, do, do, do, do, do, do, do, do, do, do, and we will never think about this again and all of our patients will mail order from that pharmacy directly to them. But that's, I don't know that doctors will have the time to do that.

Or, I mean, I don't know, this is, you hit the nail on the head, which is, on some layer, the patients need to put pressure on the payers, which is both the insurance company indirectly through the PBM and Medicare. And because patients, I don't think individually, think individually or even frankly collectively outside of this, have the ability to pressure the FDA and or the drug manufacturers, but the payers certainly can. I mean, if the payers decide we are not reimbursing you wholesale as a company until you get your act together, well that should be a sign to fix things, right? Well, let's take this one step further. Imagine if there was a pharmacy chain that said, you know what, we're going to test every drug that we dispense. Not every pill.

Right, but do a random sampling. Do a random sampling, which is what should be happening, by the way. Outside of, like, could any of them afford to do this, or would they do this, unless that was a big enough error that, big enough issue that this could become a differentiating sales factor. Well, okay. So there's this small pharmacy called Valescher and that's what they do. That's their business model. Where are they based?

So they're based in New Haven, Connecticut and that is their business model, which is that they test every drug. How do you spell that? V-A-L-I-S-U-R-E. And presumably they can sell across state lines? They're a male order pharmacy. They're a male order pharmacy. They're a male order pharmacy.

You know, you've got it. So here's something very interesting, which is with the recall of these blood pressure medications that were found to have this carcinogen and NDMA, which is actually created in the production of liquid rocket fuel, and that is bad for you. Which makes you wonder, what on earth were these doing? Anyway, I'm sure there's some reasonable reason why these things could have been in. Well, one of the questions that the FDA

has been investigating is whether they were reusing solvents. Ah, yeah, that would make sense. Anyway, so the FDA detected three different carcinogens in these drugs, Valescher through their testing identified a fourth. That is not very reassuring. I mean, it's great that they found one, but like, why didn't the FDA find this? And why didn't the FDA find it?

How does Valescher afford to do this? Are they that large ofalorod or pharmacy? Well right now they have got funding. I mean they are a startup. Oh I see, okay got it. So this is all baked into the business model. The business plan. What is interesting about this is just to go take a small tangent.

The FDA does these pre-announced inspections overseas. And their inspector went to one of these plants in China. It's Zajeng Huahai plant. And the investigator found that the company was not investigating impurity spikes in its own drugs as required. So, the inspector recommended that this plant be sanctioned as official action indicated, like the most serious, which would have forced them to take action. Back in Maryland, FDA officials said, eh, it's okay, voluntary action indicated, not such a big deal.

One year later, this plant is in the middle of this worldwide recall of drugs because there are impurities in the drugs. So the FDA actually found this, did nothing about it, and now here we are. It's not a positive story. Let's go back to the question I posed a long time ago that I told Jed come back to, which I've been thinking about a lot. Only again for the purpose of like, sometimes history just offers us insight. If it were the Hatch Waxman Eben Act of 1982 or whatever,

and you have the advantage of being transported back in time, knowing everything you know today, how would you amend that act to reduce the probability of this? So the key thing would be to reform the first to file deal-sweetener, and it has been reformed since then, because now it's not which minute you file, but which day you file, which means a lot of these generic companies are all filing on the same day

and sharing the exclusivity, which takes a little bit of heat out of the market, gets rid of that sort of Lord of the fly's environment in the parking lot that we talked about. But I think the biggest reform wouldn't necessarily be to the Hatch-Waxman Act, it would be to the FDA. In terms of authority?

First of all, overhauling their foreign inspection program. I mean, my God, a pre-announced inspection. Does that solve anything for anybody? Except for the drug companies. Why give a plant eight weeks advance notice that you're coming and then ask them to plan the trip for you. I mean, you could argue that Peter Baker found a way around it. In other words, it's probably less about the regs around the inspection and more about the chops of the inspectors, although an ideal world you want both of those on your side.

That's a huge part of it. How do you get more Peter Baker's at the FDA? Well Peter Baker proposed that very thing. He said, let me run a training program and train all of the inspectors to do these kinds of inspections, and they sidelineed him. I mean, he was basically taken off of inspections, and he left. He left the FDA. He's no longer there.

He was passionate about what he did. So, the book really exposes, to some extent, that the FDA does not really want to know what's going on in these plants. This has the sad ending of a Michael Lewis story, you know, where you have some conclusion, but then there's a realization that you haven't really solved the problem. Like mortgage-backed securities, still kind of suck,

and there are still a whole bunch of these sort of crappy credit default swaps out there. And oh, by the way, we haven't really reformed lending as much as we'd like to think we have. And oh, and by the way, nobody really got spanked for the egregious mistakes that got made. And I had a different idea, by the way, on that disruptive idea around the regulation of this. I think part of this could be addressed by doing something

a derivative of the following. So it wouldn't be this, because this is just the first dumb idea that I have. If you extended the protection for the primary drug maker, so that branded drug currently has whatever it's 20 years and it's complicated because that's from the first patent filing, there's different patents. But you basically say, look, you will have longer to sell this drug exclusively, but in exchange for that, you are now transferring all of the know-how to the generics.

So we're basically... You could make it such that the NPV is the same to them. You will make the same amount of money on this drug. We will delay the time the generics can come in. But basically, the generics now have nothing to do except assume full manufacturing and production capacity. In other words, the Act of 82 said you don't have to do clinical trials anymore. We're now basically saying you don't have to reverse engineer anymore.

It's an interesting idea. So there is a kind of generic that is somewhat like that. It's called an authorized generic. So that's one of the things that's in my guide to investigating your own drugs, which is that brand companies because they don't want to let go of all their market share necessarily and all their profits. What they'll do is they'll partner with a generic company. They'll authorize that generic company to make the generic and they will transfer their recipe. And with that does the FDA grant that other generic producer exclusivity for a period of

time in exchange for that? No, not at all. So what is the advantage? Why is the main company transferring, basically giving that one generic producer such a head start? They make money off of it. They can make money off of it. They still retain a piece of it, basically, through some sort of licensing agreement.

Okay, so that's even a more elegant way than what I said. What I said, that's actually just a smarter way to make that happen. I mean, maybe that just becomes the way to do it. There are only basically authorized generics where the parent company still shares some of the rent and in exchange for that, they guarantee, And you know what? You want to go really draconian on those guys? By the way, you're on the hook to determine the authenticity of the product. So bring it all the way back to the parent company. So you're going to get paid more money,

but now you have more responsibility. If you're authenticated, generic producer goes rogue, you're paying for it. So don't have the FDA exclusively be the one that has to police them, have them all policed from the parent. It's another way of saying, look, it would be great if we could catch

every drunk driving teenager out there. And yeah, we could put more cops on the street and we could give them more tools and more breathalyzers, but wouldn't it be great if every parent was policing their own 16 year old as well? It's a belt and suspenders approach. So maybe that's part of the answer. Interesting. That's possible. I mean, at the moment, who knows what is possible? I mean, we can't come to any agreement over drug pricing. Every seeming approach has failed. Brand name drug prices continue to rise.

And it's just, our drug supply is really in a free fall. We've got drug shortages. There's no incentive for quality here. And a lot of these companies are really getting away with it. FDA investigators are walking into these plants, finding egregious conditions, and the FDA is downgrading their findings. So it's hard to say what can practically

be made to happen, but I do think Congress for whatever it's worth is looking into it. I mean, it is sad because so many problems. The people that have the means both educational and financial will be okay. Like, I'm not worried about me and my family or you because we have the knowledge, we can take the time to do it. And by the way, in a moment, if we have to, we're willing to pay more, and we have the disposable income to do that. There are a lot of people from whom that's not true.

They simply don't have the time, they don't have the knowledge, they don't have the extra income to do that. And those people will disproportionately suffer here. And those are really, if you really stop to think about it, I mean, that's the for alarm fire for Congress. Congress exists first and foremost to make sure that it's that floor that doesn't fall any lower.

We can sort of talk about the ceiling, and I didn't realize that you had put together sort of a tool on your site to make this easier, because I do think that in the short run, we can't wait for Congress to solve this. I think we're just going to individually have to take ownership over this to some extent. It's important for patients to realize most patients that they go to a pharmacy, they

get to spend drugs, they don't think about who makes it, they don't even think about it. I mean, they may be switched from a brand to generic, not realize it, they may be switched between generics, they may be switched from a brand to generic, not realize it. They may be switched between generics. They don't realize it. I've never personally paid attention to this until a couple of years ago when I started noticing this funny business with Rizu Vistatin. And if I'm not paying attention to this, how could I possibly expect anyone else to? Right.

I mean, most people don't pay attention to it because the FDA has told us that it's all equivalent. There's nothing to pay attention to it because the FDA has told us that it's all equivalent. There's nothing to pay attention to. They've got it. There's no difference between brand and generic generic and generic. It's all the same. So the first step is for everybody to pay attention to who's making the drug and how it works.

Well, Katherine, we're going to link really heavily to your work and your site, a number of other things. If you decide to release the beautiful 24 page self-assessment report document the most innocuous title to a document in the history of corporate espionage, we would love to host it. Well, I guess they're thinking of a great compendium to this interview. Is there anything I didn't ask you that you wanted to talk about? We joked about this off mic at the beginning. You know, I said, do you when you walked in? I said, don't worry, this is not a 20 minute interview with sound bites and stuff.

We can talk about this stuff in as much detail as you want, but I want to be sure we've talked about everything you wanted to talk about and we didn't leave anything on the table. Oh, I think we've basically covered it, but just sort of my closing thought is that generics are supposed to be this great leveler. You know, it's like the democratization of drugs that like the rich and the poor alike can have access to these great cures. And to find out, I think that the companies sort of cashing in on that image are really selling that short in a very devious way is painful to realize.

It's a real sort of great hope, public health hope, that has a very dark underbelly. Well, I think I, and the listeners now, probably have a better sense of why even Sam Harris could become angry. Which says that anger is not always a bad thing. And you've probably taken a lot of your own anger and rage and channeled it into something incredibly productive. I gather that you're still quite involved, I mean, based on what you've said, I mean you're still involved in seeing that attention is brought to this topic. Specifically, are you spending much time in DC? I have been talking to Congress and I think they are I can't say that they're gearing up to get results, but they're gearing up to look into it. Catherine, where can people follow you on social media? Yep, so on Twitter where I'm pretty active, it's at Catherine Eban. My website is CatherineEban.com.

LinkedIn, I think, is Catherine Eban. So I see a theme here on what it is, but I see a pattern. And I will say that my 12-year-old is my Instagram page manager, so you'll have to bear with me there. Hello, Kitty. By the way, that makes me want Olivia, my daughter, to manage my insides. Yeah, it's the way to go. I'm telling you.

I would take so much time off my hand. Absolutely. Catherine, it's been an absolute pleasure. I thank you first for taking the time to come here. I can only imagine how mind numbing it must feel to talk about the same thing over and over again with yet another stupid person interviewing you. I hope this wasn't that painful. I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure if I'm not sure go through a few tapachicos. Thank you. You can find all of this information and more at peteratiamd.com forward slash podcast. There you'll find the show notes, readings, and links related to this episode. You can also find my blog at peteratiamd.com.

Maybe the simplest thing to do is to sign up for my subjectively non-lame once a week email where I'll update you on what I've been up to, the most interesting papers I've read, and all things related to longevity, science, performance, sleep, etc. On social you can find me on Twitter, Instagram, and Facebook, all with the ID, Peter, ATF, MD, but usually Twitter is the best way to reach me to share your questions and comments. Now for the obligatory disclaim. This podcast is for general informational purposes only, and does not constitute the practice of medicine, nursing, or other professional healthcare services, including the giving of medical advice. And note, no doctor-patient relationship is formed.

The use of this information and the materials linked to the podcast is at the user's own risk. The content of this podcast is not intended to be a substitute for professional medical advice, diagnoses, or treatment. Users should not disregard or delay in obtaining medical advice for any medical condition they have and should seek the assistance of their healthcare professionals for any such conditions. Lastly, and perhaps most importantly, I take conflicts of interest very seriously for all of my disclosures. The companies I invest in and or advise please visit peteratiamd.com forward slash about.