Principal Bottle of Lies: The Inside Story of the Generic Drug Boom

Bottle of Lies: The Inside Story of the Generic Drug Boom

From an award-winning journalist, an explosive narrative investigation of the generic drug boom that reveals fraud and life-threatening dangers on a global scale—The Jungle for pharmaceuticals

Many have hailed the widespread use of generic drugs as one of the most important public-health developments of the twenty-first century. Today, almost 90 percent of our pharmaceutical market is comprised of generics, the majority of which are manufactured overseas. We have been reassured by our doctors, our pharmacists and our regulators that generic drugs are identical to their brand-name counterparts, just less expensive. But is this really true?

Katherine Eban’s Bottle of Lies exposes the deceit behind generic-drug manufacturing—and the attendant risks for global health. Drawing on exclusive accounts from whistleblowers and regulators, as well as thousands of pages of confidential FDA documents, Eban reveals an industry where fraud is rampant, companies routinely falsify data, and executives circumvent almost every principle of safe manufacturing to minimize cost and maximize profit, confident in their ability to fool inspectors. Meanwhile, patients unwittingly consume medicine with unpredictable and dangerous effects.

The story of generic drugs is truly global. It connects middle America to China, India, sub-Saharan Africa and Brazil, and represents the ultimate litmus test of globalization: what are the risks of moving drug manufacturing offshore, and are they worth the savings?

A decade-long investigation with international sweep, high-stakes brinkmanship and big money at its core, Bottle of Lies reveals how the world’s greatest public-health innovation has become one of its most astonishing swindles.
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Dedication


For my mother, Elinor Fuchs, and my father, Michael Finkelstein, the first and best writers and editors in my life





Contents


Cover

Title Page

Dedication

Author’s Note

About the Reporting

Important People and Places


Prologue

Part I: Shifting Ground

Chapter 1: The Man Who Saw Further

Chapter 2: The Gold Rush

Chapter 3: A Slum for the Rich

Chapter 4: The Language of Quality

Chapter 5: Red Flags

Part II: India Rises

Chapter 6: Freedom Fighters

Chapter 7: One Dollar a Day

Chapter 8: A Clever Way of Doing Things

Chapter 9: The Assignment

Part III: A Cat-and-Mouse Business

Chapter 10: The Global Cover-Up

Chapter 11: Map of the World

Chapter 12: The Pharaoh of Pharma

Part IV: Making a Case

Chapter 13: Out of the Shadows

Chapter 14: “Do Not Give to FDA”

Chapter 15: “How Big Is the Problem?”

Chapter 16: Diamond and Ruby

Chapter 17: “You Just Don’t Get It”

Part V: Detectives in the Dark

Chapter 18: Congress Wakes Up

Chapter 19: Solving for X

Chapter 20: A Test of Endurance

Chapter 21: A Deep, Dark Well

Chapter 22: The $600 Million Jacket

Part VI: The Watershed

Chapter 23: The Light Switch

Chapter 24: We Are the Champions

Chapter 25: Crashing Files

Chapter 26: The Ultimate Testing Laboratory

Part VII: Reckonings

Chapter 27: Flies Too Numerous to Count

Chapter 28: Standing

Epilogue


Acknowledgments

Glossary

Notes

Index

About the Author

Also by Katherine Eban

Copyright

About the Publisher





Author’s Note


This book grew out of a puzzle I couldn’t solve.

In the spring of 2008, Joe Graedon, a host of the National Public Radio program The People’s Pharmacy, contacted me. In my decade reporting on the drug industry, I’d been a guest on his radio program a number of times. But this time he wanted my help. Patients had been calling and writing in to his program with serious complaints about generic drugs that either didn’t work or caused devastating side effects. The drugs, though made by different manufacturers and for a range of conditions from depres; sion to heart disease, were all generic—less expensive versions of brand-name drugs, made legally after the patents on those medications lapsed.

Graedon had forwarded the patients’ complaints to top officials at the Food and Drug Administration (FDA), but they insisted that generics were equivalent to the brand and the patients’ reactions were subjective. Their response struck Graedon as more defensive than scientific. Generic drugs had become essential to balancing budgets across America. Without them, every large-scale government health program—the Affordable Care Act, Medicare Part D, the Veterans Health Administration, charitable programs for Africa and the developing world—would be unaffordable. Graedon himself had long advocated making generic drugs more widely available. But the complaints were compelling and similar in nature. He felt that something significant was wrong with the drugs, but didn’t know what. He wanted someone with “investigative firepower” to look into the patients’ claims.

For years I’d reported on pharmaceuticals and public health as an investigative journalist. I had broken stories about brand-name drug companies, including efforts by opioid makers to increase sales by concealing addiction risks. In my first book, Dangerous Doses, I exposed how a shadowy gray market allowed pharmaceutical wholesalers to sell and resell our drugs, a practice that obscured their origin and opened the door to drug counterfeiters. To the extent that I’d thought about generic drugs, I knew they made up more than 60 percent of our drug supply (90 percent today) and were an essential counterweight to the ever-rising prices of brand-name drugs.

I began exactly where Graedon pointed me: with the patients. In June 2009, I published an article in Self magazine that documented how patients who had previously been stabilized on brand-name drugs relapsed when switched to certain generics. Their doctors had little data and no significant comparative studies to explain these reactions. Although the FDA reviewed data from the generic drug companies and inspected manufacturing plants, it was not systematically testing the drugs. As Dr. Nada Stotland, a psychiatrist in Chicago and then the president of the American Psychiatric Association, told me, “The FDA is satisfied that generics are okay. My question is, are we satisfied?”

Even as I worked on the article, I recognized its limits. Proving that patients were harmed might tell me that something was wrong with the drugs. But what? And even if I proved there was something wrong, why was that so? The answer to those questions almost certainly lay in the laboratories, manufacturing plants, and corporate boardrooms of the drug-making companies, many of which operated overseas. Roughly 40 percent of our generic drugs are manufactured in India. A full 80 percent of the active ingredients in all our drugs, whether brand-name or generic, are made in India and China. As one drug-ingredient importer told me, “Without products from overseas, not a single drug could be made.”

Ultimately, my effort to answer a single question—what is wrong with the drugs?—launched me into a decade-long reporting odyssey on four continents as I delved into how globalization had impacted the drugs we need to survive. In India, I sought out reluctant whistleblowers, visited manufacturing plants, and interviewed government officials. In China, as I endeavored to meet with sources, the government followed me, hacked my cell phone, and sent a photo of a security official sitting in my hotel lobby, holding up an English-language newspaper, to my phone’s home screen. It was an unmistakable warning: We are watching you. In a bar in Mexico City, a whistleblower slipped me stacks of internal communications from a generic drug company’s manufacturing plant. Doctors and scientists in Ghana met with me in hospitals and laboratories. In a manufacturing plant in Cork, Ireland, I watched as one of America’s most popular drugs, Lipitor, was manufactured.

I followed the trail of certain drugs around the world, trying to connect the dots. What had patients complained of? What had FDA investigators found? What actions had regulators taken? What had companies claimed? What had CEOs decided? What had criminal investigators turned up? I mined thousands of internal company documents, law enforcement records, FDA inspection records, and internal FDA communications, stacks of which piled up in my office.

My reporting led me into a maze of global deception. In 2013, I published a 10,000-word article on Fortune magazine’s U.S. website about fraud at India’s largest generic drug company. It detailed how the company had deceived regulators around the world by submitting fraudulent data that made its drugs appear bioequivalent to brand-name drugs. That article, however, left me with unanswered questions. Was that company an outlier or the tip of the iceberg? Did its conduct reflect a one-off scandal or an industry norm?

In my reporting, some important sources helped me answer that question. A generic drug executive contacted me anonymously under the pseudonym “4 Dollar Refill.” He explained that there was a gulf between what the regulations required of generic drug companies and how those companies behaved. To minimize costs and maximize profit, companies circumvented regulations and resorted to fraud: manipulating tests to achieve positive results and concealing or altering data to cover their tracks. By making the drugs cheaply without the required safeguards and then selling them into regulated and more costly Western markets, claiming that they had followed all the necessary regulations, companies could reap enormous profits.

An FDA consultant who had spent considerable time in overseas factories also contacted me. She was an expert at examining the cultural “data points,” or situational forces, that drive corporate behavior. One factor is company culture—the tone set by executives, the admonitions or slogans that hang on office or manufacturing-plant walls, the training that workers receive. If a company’s culture permits small lapses in safety regulations, catastrophic failure is all the more likely. As a pharmaceutical manufacturing executive put it, “When I get on a plane and there are cup stains on the tray table, you wonder if they’re taking care of the engine.”

But company culture is also affected by country culture, the FDA consultant explained: Is a society hierarchical or collaborative? Does it encourage dissent or demand deference to authority? These factors, though seemingly unrelated, can impact manufacturing quality and lead to variance between certain generics and brand-name drugs, as well as between generics that are supposedly interchangeable with one another, the consultant posited.

Before I embarked on this project, I had always assumed that a drug is a drug—that Lipitor, for example, or a generic version, is the same for any market in the world. And since generic drugs are required to be bioequivalent to the brand and to create a similar effect in the body, I assumed that there isn’t necessarily variation between different generic versions. I was wrong. Cheaply made pharmaceuticals hold up no better than cheap clothes or cheap electronics that are made swiftly in overseas sweatshops. Drugs reach the consumer “at a very low dollar price,” said the FDA consultant, “but perhaps at the expense of other principles for which it is difficult to measure a dollar value.”

Consumers understand that cheddar isn’t simply cheese, said the consultant. There’s “artisanal cheddar, Cabot cheddar, Velveeta, or a plastic block painted to look like cheese.” Unwittingly, patients face similar choices about quality every time they go to a drugstore. Yet because they have no idea such distinctions exist, they have no way to request one drug that is better than the next. Patients implicitly trust the FDA to ensure the high quality of their medicine. As a result, most patients do more due diligence when they change their cell-phone provider or buy a car, yet will walk into CVS “and not think for one second about what they put in their mouth that could kill them,” a lawyer who represented a pharmaceutical whistleblower told me.

We are dependent on distant drug manufacturers, yet have little visibility into their methods. In the factories where my reporting led, the FDA’s investigators are an infrequent presence and pressure for profits is intense. The result is a facade of compliance that papers over a darker reality. “It’s like it was at the turn of the twentieth century,” a Dutch pharmaceutical executive, who encountered a frog infestation at a manufacturing plant in China, told me. “It’s like The Jungle,” he said, referring to the book by Upton Sinclair that exposed gruesome conditions in America’s meatpacking plants.

There is no disputing the benefit of well-made generic drugs. When generics work perfectly, and many do, the results can be miraculous. “Basically, the ability of India and other countries to produce generic medicine at a fraction of the cost of the patented drugs saved the lives of millions of people in developing countries,” said Emi MacLean, formerly the U.S. director of the Access to Essential Medicines Campaign at Doctors Without Borders. The plunge in prices has also made medicine affordable and treatment possible for millions of Americans who have no alternative to generics without significant price regulation of brand-name drugs.

Generic drugs are essential to our health care system, and their quality is critical to us all. Nonetheless, in my effort to answer the question that Joe Graedon posed ten years ago—what is wrong with the drugs?—I uncovered the labyrinthine story of how the world’s greatest public health innovation also became one of its greatest swindles.

Katherine Eban

Brooklyn, New York

March 2019





About the Reporting


This book, including all the scenes, dialogue, and assertions in it, is based on extensive interviews, firsthand reporting, and documentation. I interviewed over 240 people, a number of them multiple times, including regulators, drug investigators, criminal investigators, diplomats, prosecutors, scientists, lawyers, public-health experts, doctors, patients, company executives, consultants, and whistleblowers. Primary reporting for this book took place between January 2014 and November 2018, and included on-the-ground reporting trips to India, China, Ghana, England, Ireland, and Mexico and travel throughout the United States. The book also includes material I gathered from 2008 to 2013, while reporting a series of articles about generic drugs in both Self and Fortune magazines.

In every scene with dialogue, I have reconstructed quotes from the recollections of participants as well as documentation, including meeting minutes, handwritten notes, and memoranda of interviews by criminal investigators. The quotes I use from emails and other documents are verbatim, and I have not corrected spelling errors. No names of characters have been changed.

In the course of reporting, I obtained a significant number of confidential documents. These include roughly 20,000 internal documents from the U.S. Food and Drug Administration, including emails, memorandum, meeting minutes, reports, and data; thousands of internal government records related to the investigation of the generic drug company Ranbaxy; and thousands of internal corporate records from several generic drug companies, including emails, reports, strategy documents, correspondence, and sealed court records.

Documentation also came from sixteen Freedom of Information Act requests that I filed with the FDA, as well as from a lawsuit I filed to obtain calendar and meeting records for an FDA official. I also read through years of publicly available FDA inspection records.

Wherever an individual or company has chosen to respond to questions or allegations, relevant portions of their statements can be found incorporated into the book’s endnotes or main text. The endnotes are intended to guide readers to publicly available resources and documentation or to offer more detail on certain topic areas. They do not contain citations for nonpublic material, such as private emails, sealed court records, or other confidential documents.

Funding for this book came only from impartial sources with no stake in the outcome of the events described. These include an advance from HarperCollins and grants from the Carnegie Corporation, the Alfred P. Sloan Foundation, the McGraw Center for Business Journalism at Craig Newmark Graduate School of Journalism, and the George Polk Foundation.





Important People and Places


Affiliations listed are those held at the approximate time characters appear in the book. Dates have been included for titles held by multiple characters. The names of some FDA divisions have since changed due to government reorganization.

DRUG COMPANIES

Ranbaxy

MANAGING DIRECTORS

Arun Sawhney, CEO and managing director, 2010–2015

Atul Sobti, CEO and managing director, 2009–2010

Malvinder Singh, CEO and managing director, 2006–2009

Shivinder, brother

Brian Tempest, CEO and managing director, 2004–2005

Davinder Singh “D.S.” Brar, CEO and managing director, 1999–2004

Parvinder Singh, chairman and managing director, 1992–1998; joint managing director, 1976–1991, with his father, Bhai Mohan

Bhai Mohan Singh, chairman and joint managing director, 1976–1991; chairman and managing director, 1961–1975

RESEARCH AND DEVELOPMENT

Rajinder “Raj” Kumar, director, 2004–2005

Rashmi Barbhaiya, director, 2002–2004

Rajiv Malik, head of formulation development and regulatory affairs

Arun Kumar, associate director of regulatory affairs

Dinesh Thakur, director and global head of research information & portfolio management

Sonal Thakur, wife

Andrew Beato, attorney at Stein, Mitchell, Muse & Cipollone LLP

U.S. BUSINESS

Jay Deshmukh, senior vice president of global intellectual property

Abha Pant, vice president of regulatory affairs

OUTSIDE LAWYERS AND CONSULTANTS

Kate Beardsley, partner, Buc & Beardsley

Christopher Mead, partner, London & Mead

Warren Hamel, partner, Venable LLP

Agnes Varis, consultant

Cipla Limited

Yusuf “Yuku” Khwaja Hamied, chairman and managing director

Khwaja Abdul “K.A.” Hamied, founder

Daiichi Sankyo Company

Tsutomu Une, head of global strategy

Mylan N.V.

EXECUTIVES

Heather Bresch, CEO

Rajiv Malik, president

Deborah Autor, senior vice president, head of global strategic quality

INDIAN GOVERNMENT

Central Drugs Standard Control Organization

Gyanendra Nath “G.N.” Singh, drug controller general

Ministry of Health and Family Welfare

Harsh Vardhan, minister

U.S. GOVERNMENT

Congress

David Nelson, senior investigator, House Committee on Energy and Commerce

Food and Drug Administration

OFFICE OF THE COMMISSIONER

Scott Gottlieb, commissioner, 2017–present

Margaret Hamburg, commissioner, 2009–2015

OFFICE OF THE CHIEF COUNSEL

Marci Norton, senior counsel

Steven Tave, associate chief counsel for enforcement

CENTER FOR DRUG EVALUATION AND RESEARCH

Janet Woodcock, director

Robert Temple, deputy center director for clinical science

OFFICE OF COMPLIANCE

Deborah Autor, director

Thomas Cosgrove, director, Office of Manufacturing Quality

Carmelo Rosa, director, Division of International Drug Quality

Edwin Rivera-Martinez, chief, International Compliance Branch

Douglas Campbell, compliance officer

Karen Takahashi, compliance officer

OFFICE OF PHARMACEUTICAL SCIENCE

Office of Generic Drugs

Gary Buehler, director

OFFICE OF GLOBAL REGULATORY OPERATIONS & POLICY

Office of International Programs

FDA India Office

Altaf Lal, director

Atul Agrawal, supervisory consumer safety officer

Muralidhara “Mike” Gavini, senior assistant country director

Peter Baker, assistant country director

Regina Brown, international program and policy analyst for drugs

Office of Regulatory Affairs

Dedicated Drug Team

Jose Hernandez, investigator

Office of Criminal Investigations

Debbie Robertson, special agent

Department of Justice

OFFICE OF CONSUMER LITIGATION

Linda Marks, senior litigation counsel

U.S. ATTORNEY’S OFFICE, DISTRICT OF MARYLAND

Stuart Berman, assistant U.S. attorney

DOCTORS AND PATIENT ADVOCATES

Joe Graedon, cohost of the NPR program The People’s Pharmacy

William F. Haddad, generic drug advocate

Harry Lever, director, Hypertrophic Cardiomyopathy Center, Cleveland Clinic

Randall Starling, head, Section of Heart Failure and Cardiac Transplant Medicine, Cleveland Clinic

MANUFACTURING PLANTS

Fresenius Kabi

Kalyani, Nadia District, West Bengal, eastern India

Mylan

Morgantown, West Virginia, southeastern United States

Nashik, Nashik District, Maharashtra, western India

Pfizer

Dalian, Liaodong Peninsula, Liaoning Province, northeastern China

Ringaskiddy, County Cork, southern Ireland

Zhejiang Hisun (affiliate), Taizhou, Zhejiang, eastern China

Ranbaxy

Dewas, Dewas District, Madhya Pradesh, central India

Mohali, SAS Nagar District, Punjab, northern India

Ohm Laboratories, New Brunswick, New Jersey, northeastern United States

Paonta Sahib, Sirmour District, Himachal Pradesh, northern India

Toansa, Nawanshahar District, Punjab, northern India

Wockhardt

Chikalthana, Aurangabad District, Maharashtra, western India

Waluj, Aurangabad District, Maharashtra, western India





Prologue


MARCH 18, 2013

Waluj

Aurangabad, India

Peter Baker, a drug investigator for the U.S. Food and Drug Administration, traveled two hundred miles east of Mumbai, along a highway choked by truck traffic and down a road with meandering cows, to get to his assignment. Behind a metal fence lay a massive biotech park, run by the Indian generic drug company Wockhardt Ltd. Amid the dozens of buildings, Baker’s job was to inspect a particular area of the plant—Plot H-14/2—to ensure that it could safely make a sterile injectable drug used by American cancer patients.

Baker, thirty-three, had arrived lightly provisioned. He had just a few items in his backpack: a camera, a gel-ink pen, a green U.S. government–issued notebook, and his FDA identification. He had a graduate degree in analytical chemistry and a command of the Code of Federal Regulations, Title 21, the rules that governed drug manufacturing. But more importantly, he had his instincts: a strong sense of what to check and where to look, after completing eighty-one inspections over four and a half years at the FDA.

At 9:00 a.m., the sun already burning, Baker and his colleague, an FDA microbiologist, showed their identification to guards at the gate and were ushered into the plant, where the vice president of manufacturing and other company officials waited anxiously to greet them. In a world of drab auditors toiling with checklists, Baker stood out. He was handsome and energetic. He wore his brownish-blond hair in a buzz cut. On one bicep, he sported the oversized tattooed initials of his motorcycle group. As the officials began their opening presentation, he interrupted with a staccato burst of questions. Was there any other manufacturing area on-site that made sterile drugs for the U.S. market, aside from Plot H-14/2? he asked repeatedly. No, the officials assured him.

Baker’s job—part science and part detective work—had been transformed by the forces of globalization. From 2001 to 2008, the number of drug products imported into the United States had doubled. By 2005, the FDA had more drug plants to inspect abroad than it did within U.S. borders. Baker had been dispatched to Wockhardt, in an industrial area of Aurangabad, because of a global deal that had evolved over more than a decade. Drug makers in India and other countries gained entry to the U.S. pharmaceutical market, the world’s largest and most profitable. In return, the American public got access to affordable versions of lifesaving drugs. But this boon came with a serious caveat: foreign drug manufacturers had to comply with the intensive U.S. regulations known as “current good manufacturing practices” (cGMP) and submit to regular inspections. If everything went according to plan, the result was a win-win for foreign drug makers and American consumers alike.

Though few Americans knew Wockhardt by name, many took its medicine. The company manufactured about 110 different generic drug products for the American market, including a beta blocker—metoprolol succinate—to treat hypertension, which reached about a quarter of U.S. patients taking a generic version of the drug. Because the Aurangabad plant manufactured sterile injectable medicine, the regulations it had to follow were particularly strict.

Every detail mattered. Every digit of data had to be preserved in its original form. As one moved closer to the plant’s sterile core, where vials of medicine sat exposed, the rules became even more restrictive. Employees there had to move slowly and deliberately, so as not to disturb the unidirectional air flow. Even to take notes, FDA investigators had to use sterile, lint-free paper. There was a good reason for these rules. One small slip—a failure to filter air properly, a misreading of bacterial samples, the exposed wrist of a technician—could result in a contaminated product that would kill instead of cure.

Given the high stakes—lives on one side, and profits on the other—fear governed the inspection. Baker feared that he would miss something that would endanger the lives of U.S. patients. Wockhardt officials feared that he would find something that would restrict the company’s access to the U.S. market. They needed every advantage to survive the FDA’s inspection. Here, Wockhardt had several things stacked in its favor. The plant was massive, roughly the size of a small city. Baker and his colleague had just one week to inspect the site. With only five working days, how much could they find?

But Wockhardt had an even bigger advantage. Company executives had known for weeks that Baker was coming to inspect their factory. In the United States, FDA investigators simply showed up unannounced and stayed as long as was needed. But for overseas inspections—due to the complex logistics of getting visas and ensuring access to the plant—the FDA had chosen a different approach: to announce its inspections in advance. As was typical, Wockhardt had “invited” the FDA to inspect and the agency had accepted. Plant officials served as hosts and Baker was their guest—albeit one whose arrival they dreaded.

Given weeks of lead time, the officials worked feverishly to prepare for Baker’s arrival. They polished floors, cleaned equipment, and combed through files to rid them of anomalies. They warned their employees to remain polite but silent, and to let their supervisors answer questions. They had fixed everything in every place where investigators were likely to look, a drill they’d endured fifteen months earlier when a different inspection team had arrived from the FDA.

On that visit, the investigators had found some troubling shortcomings: live bugs in a water storage tank, flooring in disrepair, ineffective cleaning procedures. But the investigators had recommended, not demanded, that the plant make corrections. In the FDA’s coding system, they had given the plant a passing grade, one known as “Voluntary Action Indicated” (VAI). This meant that the Wockhardt operation had survived the inspection with no restriction to its most lucrative franchise—the sale of drugs to the United States.

This time, though company officials had planned for an inspection, they had not planned for Peter Baker. Unlike so many other FDA investigators, he was hard to prepare for—and control. He wouldn’t tolerate an opening slide show or a guided tour, which were typical ways for plant officials to run down the clock. He seemed to be everywhere at once. He studied the employees for signs of evasion as he questioned them repeatedly. Company officials quickly ascertained that his visit posed a serious threat, one that would require drastic action on their part if the plant was to emerge unscathed.

On the second day of his inspection, Baker and his colleague entered a hallway far from the sensitive areas of the facility. It was a place where he could let down his guard. But as he looked down the long, gleaming corridor, he noticed a man at the far end who was walking toward him just a little too quickly. The man, a plant employee, had a furtive demeanor. In one hand, he carried a clear garbage bag full of papers and assorted refuse, making his hurried walk seem even stranger. As the man glanced up, he noticed Baker and momentarily froze. The two men locked eyes.

Abruptly, the man pivoted and returned the way he had come. Baker followed him, quickening his pace. The employee sped up, too, until the two men were engaged in a low-speed chase beneath the fluorescent lights.

“Stop!” yelled Baker’s colleague, the microbiologist. The man broke into an open run. As he bolted, the investigators gave chase until the employee flung open a side door, careened from the hallway, and hurled the bag onto a pile of garbage in a dim storage area beneath a stairwell, then scrambled up a flight of stairs and vanished into the building’s concrete maze.

Baker, close behind, retrieved the bag. Inside, he discovered roughly seventy-five manufacturing records for the company’s insulin products. They had been hastily torn in half, but he was able to piece some together. As he did, his concern grew. They revealed that many of the vials contained black particles, potentially deadly contaminants, and had failed visual inspection.

Under good manufacturing practices, every record created at the plant had to be made available to regulators. But these documents were marked “for internal dept. use only.” Baker suspected that the records were secret for a reason. The testing results were so bad that, had they been disclosed, the plant would have had to launch a costly internal investigation and likely reject every batch it produced.

Over the next three days, Baker demanded that Wockhardt officials open their computers, as was his right, and he began scouring records. One by one, he uncovered the company’s deceptions. As he suspected, the records from the garbage bag had not been logged into the company’s official system. The drugs flagged in the records had been released to patients in India and the Middle East. Baker discovered that the drugs had been manufactured in a secret formulation area that the FDA had never known about or inspected. Once he arrived there, he learned that Wockhardt had used the same defective equipment, in the same secret area, to make medicine for the U.S. market—including the injectable drug adenosine, which treated irregular heartbeat.

The result was a disaster for Wockhardt. Two months after Baker’s inspection, the FDA restricted the import of drugs from the Waluj plant into the United States, a potential $100 million loss in sales for the company. The next day, Wockhardt’s CEO held an emergency conference call with anxious investors to assure them that the company would bring the plant into compliance “in a month or two months maximum.”

At a glance, the plant appeared perfectly run, the equipment shiny and new, its procedures meticulous and compliant. But the torn records Baker had uncovered led him beneath the plant’s impeccable surface and into a labyrinth of lies, where nothing was what it appeared to be. The records were false. Drugs were manufactured in a secret area. Some of them contained visible contaminants that endangered patients. Baker, who had pieced all this together over the course of five punishing days, was left to wonder: if so much inside this plant was fake, what, if anything, was real?





Part I


Shifting Ground





Chapter 1


The Man Who Saw Further

LATE FALL 2001

Hopewell, New Jersey

Dinesh S. Thakur was fastidious. He wore perfectly ironed khakis, a white button-down shirt, a dark sports jacket, and well-polished loafers. Stocky and of medium height, he had a round face, full head of dark hair, and deep-set eyes that gave him a doleful appearance. On this chilly afternoon, the leaves just beginning to turn gold and crimson, the thirty-three-year-old information scientist set out across the grassy slope toward the man-made lake. It was a favorite destination on the Bristol-Myers Squibb campus, where employees went to clear their heads or escape the highly regimented corporate culture, if only for their lunch hour.

But today Thakur had come at the behest of an older and more senior colleague, who’d invited him for a walk to discuss an unspecified opportunity.

Bristol-Myers Squibb’s research and development center sat on a manicured campus, just beyond a network of leafy residential streets and imposing stone homes. Inside the gated guard posts, low-slung concrete buildings with dark windows dotted the hillsides. The few trees were planted at regular intervals. The lush grass around the lake had been mowed with such precision that it looked like a striped carpet. Every hundred feet stood an emergency assistance pole, to summon aid if needed. Cars were kept to fifteen miles per hour. Even the lake’s turtles had a demarcated crossing lane.

The orderly grounds reflected the painstaking research that went on there. Scientists from this campus developed drugs that had entered the worldwide lexicon, from Pravachol for high cholesterol to Plavix to prevent blood clots. Decades earlier, what was then Squibb had developed an antibiotic to treat tuberculosis, for which its scientists won the prestigious Lasker Award. Bristol-Myers had forged new ground in cancer research. In 1989, the two companies merged. Nine years later, Bristol-Myers Squibb was awarded the National Medal of Technology and Innovation at a White House ceremony.

Thakur played a small but cutting-edge role in the company’s endeavors. He ran a department that built robots, automated laboratory helpmates intended to make the work of drug testing more efficient and reliable. Thakur’s lab buzzed with innovation. More than a dozen scientists reported to him. Pulleys, motors, bells, and levers were scattered about, and bright-eyed college students cycled through, pitching in as needed. Thakur set his own hours, which were long and sometimes involved staying overnight to watch the robots. They needed to repeat the same tasks faultlessly, with the goal of eliminating human error from the laboratory.

The results often did not turn out as desired, which was standard for a manufacturing scale-up. On these occasions, Thakur and his team were forced to scrap their work and start again. Yet they felt confident that the company viewed these failures as a normal part of the scientific process. When it came to Thakur’s lab activity, the old advertising slogan from Squibb seemed to still hold sway: “The priceless ingredient in every product is the honor and integrity of its maker.”

The work, with its scrupulous attention to detail, suited Thakur’s temperament. He was promoted steadily with strong performance reviews, one of which noted that he was “very logical, ethical and loyal” in dealing with peers and superiors. Over six years, he had steadily ascended to his hard-won title: Director, Discovery Informatics.

Punctual as ever, he made his way to the walking path that looped around the lake, where his older colleague, Rashmi Barbhaiya, was waiting. Heavy-set, with snowy white hair and dark circles beneath his eyes, Barbhaiya had been developing drugs at BMS for twenty-one years. He had an intimidating aura and the smooth manner of a senior executive. By contrast, Thakur was reserved and somewhat awkward, with little gift for small talk. But this had not hindered him at BMS, where few people understood his robotics work or sought to discuss it.

Both men were originally from India. Two years prior, Thakur had built an automated computer program for Barbhaiya’s group. More recently, as Barbhaiya oversaw BMS’s purchase of a small pharmaceutical company, he’d tapped Thakur to help transfer and reconcile the data. Today Barbhaiya was about to propose an opportunity Thakur did not predict.

As they walked along the footpath, Barbhaiya disclosed that he was leaving BMS—and the United States—to become the research and development director of India’s largest drug company, Ranbaxy Laboratories, which made generic medicine. Thakur was surprised. Barbhaiya had spent his whole career climbing to the upper ranks of one of the world’s top pharmaceutical research companies. At BMS, he had lived and breathed the prestige of creating new molecules. He’d become a recognized expert in whittling down the long odds that any drug maker undertakes when setting out to develop a new cure.

But Barbhaiya was planning to leave it all behind. To go from the brand-name sector in the United States to the generic one in India. By name, it was the same work—pharmaceutical research—but it was a seismic identity shift. The BMSes of the world invented. The Ranbaxys of the world duplicated. BMS did innovative science versus Ranbaxy’s copycat engineering. But the more Barbhaiya explained his decision, the less skeptical Thakur became.

In India, Ranbaxy was legendary, and the family that built it, the Singhs, were hailed as corporate royalty. As one of India’s oldest and most successful multinationals, Ranbaxy had reinvented the perceived capabilities of an Indian corporation. In 2001, it was on track to clock $1 billion in global sales, with its U.S. sales reaching $100 million after only three years in the American market. The FDA had already approved over a dozen of its drug applications. Ranbaxy had offices and manufacturing plants around the world, including in the United States, but was headquartered in India. Looking to the future, Ranbaxy was going to be investing heavily in innovative research. The company was aiming to develop new molecules. Barbhaiya would be building the company’s research capacity, almost from the ground up. “Why don’t you come with me?” he proposed. “You’ll be closer to your parents and doing something for the country.”

It was an offer that, on the face of it, made little sense. BMS had paid for Thakur’s ongoing schooling, a master’s program in computer engineering. He’d received years of in-house training on the best manufacturing and laboratory practices. But like Barbhaiya, Thakur knew that the ground was shifting beneath his feet. The generic drug business was booming around the world. Generic drugs—legally produced copies of brand-name drugs—comprised half of the U.S. drug supply, a number that was steadily growing. The patents that protected dozens of best-selling drugs, from Lipitor to Plavix, would expire within the next decade, meaning that generics companies would be able to manufacture and sell copies approved by the Food and Drug Administration (FDA). With the demand for generics growing, all their jobs would be reconfigured soon enough. One of the main drivers behind this shift was India itself, which was fast becoming a global player in the pharmaceutical industry.

As Thakur contemplated the pros and cons of Barbhaiya’s offer, he had a further thought. The goal in the brand-name world was to make the best possible drugs for the highest possible price. It was the heyday of the branded drug industry, with companies reaping billions in profits on the success of big-name drugs. The largesse at BMS reflected this. Office Christmas parties included caviar and champagne. Sometimes Thakur caught an empty seat on the corporate helicopter that shuttled executives between the company’s hubs in Princeton, New Jersey, and Wallingford, Connecticut, marveling at the easy commute for those at higher pay grades.

In the generic world, the culture would be different because the goal was different: to make the best cures affordable and available to all. But it would mean leaving the United States, where he’d spent decades focused on building the best possible life he could.

Thakur had first come to know America through its movies. In college, as an engineering student in Hyderabad, he had gone to see classic films such as Citizen Kane and Gone with the Wind.

In college, he took the GRE, applied to graduate programs in the United States, and got a scholarship to the University of New Hampshire, where he lived in the graduate dorm as one of only a few minority students. He had never been out of India before, had never seen snow. In his new home, he marveled at the beauty of the White Mountains, the serenity of old New England towns, each with its own church and town square. He drove to Acadia National Park whenever he could and loved biking its rocky shoreline. Otherwise, he studied almost continuously, producing a doorstop of a master’s thesis, which he later published in a journal under the title “Soluble and Immobilized Catalase: Effect of Pressure and Inhibition on Kinetics and Deactivation.”

Shortly after graduating, he was hired by a small biotechnology company to help automate its laboratories. There, though a picture of Thakur and his robots made it into the company’s annual report, his unsupportive boss told him that he lacked the requisite talent for the job. So he moved on to BMS, where he continued the same work successfully.

As he climbed the corporate ladder, his mother grew worried that he had not yet married. Through a family connection, his parents visited the parents of a young woman named Sonal Kalchuri, who was fun loving and well educated and had long dark hair and almond eyes. Thakur met her on a trip to Mumbai, and the two began a phone relationship and correspondence over the following eight months.

In most ways, they were opposites. He was compulsively organized. She was laid-back. He was a workaholic who “never let his hair down,” as she put it. She was social and loved parties. But they shared an interest in science. Sonal was just completing her undergraduate degree in engineering. And they both loved to sing. His childhood home had been filled with music. Both his parents sang in the classical Hindustan style. Over the years, Thakur had developed an excellent voice and a love of the genre’s sinuous improvisations. He and Sonal would go on to perform together in classical Hindustani bands.

They married in 1995 and had a traditional days-long wedding, with both of them draped in flowers. Thakur wore the customary turban for grooms. Sonal was wreathed in gold jewelry, and her hands were hennaed with intricate patterns. She loved the event, but Thakur found the socializing taxing. Afterward, the couple made a home in Syracuse, and he returned to work. For Sonal, the transition was painful. The twenty-three-year-old had never been away from her family before. Now she was alone in a house in a foreign country.

Nonetheless, she enrolled in a computer-engineering graduate program at Syracuse University and emerged with a master’s degree. She got an excellent job at the Carrier Corporation as a software engineer. Thakur moved up steadily at BMS. In 1999, he was promoted to an associate director position. This involved a move from the Syracuse office to the research institute in Hopewell, New Jersey, just a few miles from the company’s Princeton offices. The couple found a spacious home with a high-ceilinged family room that appealed particularly to Sonal. They were getting ready to start their own family.

Their son, Ishan, was born a week after the 9/11 attacks. The Princeton area was devastated. Typically, the parking lot at the Princeton Junction train station filled with the cars of workers who commuted an hour to their Manhattan jobs every weekday, then emptied every night. But after 9/11, cars remained, waiting for commuters who never returned from work.

Though Ishan was born amid tragedy, he brought unalloyed joy into the Thakurs’ lives. Sonal’s mother came to stay for eight months. And Thakur’s parents came to visit, too, for the first time since he’d left for graduate school in the United States eleven years earlier. It was during these hectic months that Barbhaiya proposed to Thakur that he return to India.

Thakur did not immediately share the offer with Sonal. He continued to think about it quietly, as his work progressed at BMS. The family moved again, to Belle Mead, New Jersey, which had better schools and was closer to Sonal’s work. Thakur continued his ongoing schooling, a master’s program in computer engineering, for which BMS was paying. And in-house training in the best manufacturing and laboratory practices also continued. To leave all of this for an Indian generics company seemed like a big step down.

But Thakur was getting restless at BMS and knew that he’d probably risen as far as he could, with little opportunity—at least in the short run—for further advancement. During a summer vacation in 2002, he went to India and stopped by Ranbaxy’s research and development center in Gurgaon. He was impressed by the company’s bustle and sense of potential. He’d have far more freedom and authority there. The offer was excellent. To his surprise, Sonal also became interested. She missed her family and wanted to return home. They resolved to give it a try.

Thakur set about recruiting several members of his BMS team. It struck his colleague Venkat Swaminathan, a software engineer, as an exciting opportunity. If Ranbaxy was really looking to develop new medications, it could be a welcome change from BMS’s restrictive bureaucracy. Dinesh Kasthuril, too, was intrigued. Though he loved his current job and was halfway through Wharton business school, also on BMS’s dime, he was impressed that Ranbaxy wanted to try to develop new drugs. And though they were all born in India, none of them had ever worked there before. All three wanted to contribute to their native country’s emergence onto the world stage. “A lot of it was from the heart,” Kasthuril recalled.

Their similar views further bolstered Sonal’s confidence about the move. She felt that her young family would have friendship and support. The three colleagues thought of themselves as setting off on a momentous adventure: to help build an Indian company dedicated to research, a Pfizer for the twenty-first century. Even as Kasthuril’s boss at BMS tried to convince him not to leave, he had to acknowledge that Dinesh Thakur was “able to see things further” than most people could.

Three months before their departure for India, Thakur achieved a long-awaited milestone: he became an American citizen, a fact that he noted proudly atop his curriculum vitae. But by then, he and his colleagues had set their course.





Chapter 2


The Gold Rush

AUGUST 17, 2002

New Delhi, India

On a humid day one year before Dinesh Thakur arrived at Ranbaxy, a company executive boarded a plane at the Indira Gandhi International Airport, bound for Newark, New Jersey. He’d left the office in a “crazy rush,” an employee recalled, to catch the almost sixteen-hour flight.

His mission was top-secret. In his luggage were five binders, each about three inches thick, containing reams of data. The documents comprised key portions of what would become an Abbreviated New Drug Application or ANDA, to be filed with the FDA. The application, once completed, would become known in industry parlance as a “jacket.”

But this was no run-of-the-mill jacket. The executive carried the most potentially lucrative dossier ever compiled in the generic drug world: the data the company would use in its application to make the first U.S. generic version of the world’s best-selling drug of all time: Lipitor. Pfizer’s vaunted cholesterol fighter was “the Sultan of Statins,” as Wall Street analysts called it. The molecule itself, atorvastatin calcium, was a descendant of Nobel Prize–winning science. Coupled with Pfizer’s marketing might, it had become the world’s first $10-billion-a-year drug.

Had the Ranbaxy executive’s mission been known, a good portion of people in the United States—from patient advocates to members of Congress to the 11 million Americans who relied on Lipitor to lower their cholesterol—would have welcomed him. Everyone in America, it seemed, wanted cheap equivalent drugs. State and federal budgets were buckling under astronomical drug costs. Brand-name Lipitor, though less expensive than its competitors, cost the many uninsured Americans who depended on it roughly $800 a year. Even for some with insurance, the copays alone were a reach.

In theory, the contents of Ranbaxy’s binders could solve that. The data showed that Ranbaxy’s version reached roughly the same level of absorption in the bloodstream as Pfizer’s and used the same active ingredient, the atorvastatin calcium molecule. If all the claims in its application were true, Ranbaxy’s version of the drug would be a godsend for American patients.

At Newark airport, the sun had just risen when a waiting car whisked the man to 600 College Road East in Princeton, New Jersey, Ranbaxy’s U.S. corporate headquarters. There the regulatory team—headed by Abha Pant, an intense company loyalist and the only woman to have climbed into Ranbaxy’s executive ranks—immediately got to work, combining the core documents from the five binders with other necessary paperwork.

By that night, the final submission was ready. It spanned seventeen volumes and totaled more than 7,500 pages. The jacket covered four different dosage strengths that Ranbaxy planned to make and package at its plant in Paonta Sahib, in the northern Indian state of Himachal Pradesh. The application was handed off to an overnight courier and arrived at the FDA’s Rockville, Maryland, campus the next morning, where it was stamped “RECEIVED: August 19, 2002.”

But neither Pant nor her colleagues were satisfied, because they had no idea if they’d filed first, which was what mattered most. The first company to file its application, if approved, won the exclusive right to sell the generic for six months, before others joined in. There was a rumor that the generic drug company Teva had already filed. And word had it that the generics companies Sandoz, Mylan, and Barr had also been doing clinical tests. Days and weeks went by with ominous silence.

Inside the FDA, Ranbaxy’s application—the cornerstone of the company’s plans to reach $1 billion in U.S. sales by 2015—became Abbreviated New Drug Application 76-477. Meanwhile, Ranbaxy executives waited.

Jeffrey Myers, Pfizer’s senior patent attorney, was in his office at the company’s headquarters on East Forty-Second Street in Midtown Manhattan when he got the notice—a generic drug company had filed an application to make generic Lipitor. That application contained a full-on challenge of the Lipitor patent, known as a “paragraph IV certification.” Myers sat up straighter in his chair. At that point, Lipitor had been on the market for five years, and its patents were not set to expire until 2011.

Myers learned of patent challenges all the time, but this one drew his attention. “We didn’t have any forewarning,” he recalled.

Of course, Myers knew this day would come. But he was expecting the challenge to come from a well-established generics company, like Mylan or Sandoz. He regularly had lunch with his counterparts from those companies. This was the first challenge he’d ever gotten from an Indian company, one he barely knew. To him, the move was about as legitimate as a pirate scaling the side of his ocean liner.

As he scrutinized the fine print of Ranbaxy’s challenge, he began to see problems. The drug had to be in the same dosage form. Lipitor was sold in tablets. Ranbaxy had filed for capsules, as though its chemists had never seen the original drug. It also proposed to make it in a different molecular form, amorphous rather than crystalline—which was a trick, as Myers well knew, since Pfizer scientists had tried for years to make an amorphous version but had failed because the drug became highly unstable.

Lipitor could not be replicated with ease. It had taken a team of scientists to formulate, the industry’s best marketers to launch, and a manufacturing team that understood its intricacies and challenges. Since 1998, all of the active ingredient for the world’s supply of Lipitor had been made in Cork County, Ireland, at three vast Pfizer-owned plants. Pfizer had expected production to top out with 50 metric tons of active ingredient. Just five years after the drug had launched, that number had quadrupled to 200 tons.

The Ringaskiddy manufacturing plant, which sits on a 200-acre campus and operates twenty-four hours a day, has a “quality culture,” which means that it aims to operate with as close to zero defects as possible. Its employees are routinely trained to GUARD PFIZER QUALITY, as a sign on the wall of one company plant admonished them.

Lipitor is as moody as the slate-gray landscape, but Ringaskiddy has developed a failproof manufacturing system. “The drug is finicky, and we know how to make it,” said Dr. Paul Duffy, Pfizer’s vice president of biopharma manufacturing operations. “When you work with something for twenty years, it’s like your baby, you know its moods.”

In New York, Myers—a lawyer with a PhD in chemistry from Cornell University—suspected that Ranbaxy’s chemists were outclassed in the face of a drug they barely understood and probably couldn’t even make. Given that, he felt an inkling of excitement for the battle that lay ahead. “I live to obliterate these guys,” he later reckoned of his generic drug opponents. “My job is to stop them.”

How you saw Ranbaxy depended on where you sat. Myers’s view from Pfizer’s Midtown Manhattan headquarters was, “once you get down to Ranbaxy, you start to swim with the bottom-feeders.” But in many ways, it was an upstart’s market. The triumphalism of the branded drug industry was being eroded from beneath by a surging generic drug industry that had both public and political support. Once Ranbaxy’s bid to make Lipitor became public, a CNN business reporter assessed it as “a classic David versus Goliath scenario—Pfizer’s revenues are about 50 times the size of its diminutive challenger.”

Prior to 1984, the Ranbaxys of the world had no way to challenge the Pfizers. There was no clear pathway for a generic drug to be approved in the United States. Under FDA rules, even if a drug’s patent had expired, generic drug companies were required to repeat extensive and costly clinical trials, even though the brand companies had already proven the safety and effectiveness of their drugs.

A crusading journalist at the time, William F. Haddad, who relished his role as an underdog, set out to change that. According to one of his colleagues, Haddad had an “extra gland that produces publicity instead of sweat,” and he became a media-savvy advocate for generics. He had first worked as an assistant to Senator Estes Kefauver (D-TN), who, as chair of the Senate Antitrust and Monopoly Subcommittee, had fought for consumer protections and battled the pharmaceutical industry. Kefauver had told Haddad about a suspected Pfizer-led cartel to control the price of the antibiotic tetracycline in Latin America. After Kefauver’s death in 1963, Haddad wrote a high-profile series about the price-fixing cartel for the New York Herald Tribune.

Haddad left journalism and became the head of the all but invisible Generic Pharmaceutical Industry Association. With a small cadre of sympathizers, he began lobbying Congress to create a distinct process for the FDA to approve generic drugs. Politically, the brand companies “had control of every avenue,” he recalled. So Haddad and his group walked the hallways of Congress, trying to make their argument to the few who would listen.

The turning point came in the early 1980s, when Haddad got a meeting with Senator Orrin Hatch, a conservative Utah Republican. He expected the senator to be aligned with the Big Pharma cause. Unexpectedly, Hatch listened with real engagement and interest. In a two-hour meeting, Haddad explained to the senator that the patents for more than 150 drugs had expired, yet the brand-name medications faced no competition because there was no way to get a generic approved through the FDA. As a result, Americans were forced to pay too much for their medicine. “He was questioning me like a district attorney,” Haddad recalled.

He was stunned when, a few days after the conversation, Hatch called him up and said, “I think you may be right.” The senator joined forces with a Democratic congressman from California, Henry Waxman. Together, they pressured the Big Pharma CEOs into agreement and drafted a law that established a scientific pathway at the FDA to get generic drugs approved. It was the Abbreviated New Drug Application. No longer did generic drug companies have to prove the safety and effectiveness of their drugs from the ground up, as the branded companies did with costly long-term clinical trials. Instead, the companies could win FDA approval with more limited tests to prove their drugs were bioequivalent and performed similarly in the body.

But there was another major hurdle. During the deliberations, one generic drug executive pulled Haddad into a corner and said, “Look, what if I sue and I win. What do I get?” What incentive was strong enough to justify the up-front costs of developing a generic version of a drug, the possibility of litigating against brand-name drug companies intent on defending their patents, and perhaps failing on both counts?

The solution, called the “first-to-file” incentive, transformed the generic drug industry. It allowed the company that first filed its generic application with the FDA to reap a big reward: the right to sell its drug exclusively for six months at close to the brand-name price, before other generic competitors jumped in and the price plunged. Being first became the difference between making a fortune and making a living.

The Drug Price Competition and Patent Term Restoration Act, which became known as Hatch-Waxman, passed unanimously in the House of Representatives, 362–0, in 1984. Though a huge victory for generic drug makers, it also extended by a few years the length of patents for brand-name companies. President Ronald Reagan signed the legislation in a Rose Garden ceremony that September. Touting the benefits of lower-cost drugs, he told his audience, amid laughter, “Senior citizens require more medication than any other segment of our society. I speak with some authority on that.”

The Hatch-Waxman bill “really started the generics industry,” said Haddad. “It gave it its footing, it gave it its foundation, it allowed the companies to grow, it reduced the prices dramatically.”

It was also clear from the outset that generic drug companies could make a huge profit. The day the bill went into effect, companies sent “tractor trailers full of ANDAs” to the FDA, recalled a former agency bureaucrat. “We got one thousand applications within the first month of the program.” The volume of bids—coupled with the potential jackpot of first-to-file—underscored that a generic drug factory was, as one of the FDA’s earliest generic drug chiefs, Dr. Marvin Seife, claimed, “a place where you put raw materials into a mixing vat, turned the spigot and out comes gold.”

Inside generic drug companies, the first-to-file incentive ignited a frenzy. “Nothing was more important,” said Jay Deshmukh, Ranbaxy’s former senior vice president for global intellectual property. At issue was not just what day the application arrived at the FDA’s Rockville, Maryland, campus, the agency’s headquarters for generic drugs, but in what order. “Minutes mattered,” said Deshmukh.

As the competition grew, so did the waiting. In the run-up to a patent expiration date, it was not uncommon to see generic drug executives asleep in their cars in the FDA parking lot overnight in order to be first at the door when the building opened. Periodically, a tent city would sprout in the parking lot, with executives camping out for weeks at a time. Each company had a strategy for how to wait and how to be first. Some paid line-sitters to wait in the parking lot. Teva booked hotel rooms nearby and rotated staff throughout the night.

On the cold, clear night of December 23, 2002, with Christmas just two days away, the FDA parking lot was crowded. The FDA had shut its doors hours earlier. But representatives from four different generic drug companies—Ranbaxy, Teva, Mylan, and Barr—were waiting in line, stamping their feet and clapping their gloved hands to stay warm. Ranbaxy had sent two of its most reliable staffers in a stretch limousine, so they could take turns sleeping and waiting.

Everyone had just one goal: to be first through the FDA’s doors when the agency opened the next morning. They had all brought applications to make generic versions of a drug called Provigil, manufactured by Cephalon, to combat daytime sleepiness—a bonanza for whichever generics company filed its application first.

As the sky began to lighten, a Ranbaxy executive fully intended to keep his place at the head of the line. But just as the doors opened, a Mylan employee, a petite young woman, pushed him out of the way and rushed through the door to get the coveted time stamp, signifying first place.

Back at Ranbaxy corporate headquarters, the director of U.S. regulatory affairs, Abha Pant, had to console herself with second place. It was not a total loss, because being first was not a guarantee of success. The FDA would consider only applications it deemed “substantially complete.” This was to prevent generics companies from tossing down half-baked applications as placeholders so as to be designated first while they figured out how to actually make the drug. So Pant never gave up hope. Being second was as critical. She would be waiting for the first one to trip and fall.

The FDA struggled to put a stop to the camping problem. In July 2003, the agency amended its rules so that any generics company that delivered its application on a certain set day could potentially share six months of exclusivity. In written guidance to the industry, the FDA noted:

Recently, there have been a number of cases in which multiple ANDA applicants or their representatives have sought to be the first to submit a patent challenge by lining up outside, and literally camping out adjacent to, an FDA building for periods ranging from 1 day to more than 3 weeks. Concerns about liability, security, and safety led the property owners to prohibit lines of applicants before the date submissions may be made.

Though shared exclusivity was somewhat less attractive, first-to-file remained the most lucrative opportunity for generic drug companies.

For Ranbaxy, the applications remained essential to its strategic plan, dubbed “Garuda Vision,” after a soaring Hindu eagle. Lest any employee forget the company’s goal, a framed poster headlined “2015 Strategy” hung on the walls of the New Jersey office. The first bullet point, in bold, was “significant FTF filings annually” below the headline “USA: $1 billion sustainable profitable business by 2015.” As one of Ranbaxy’s CEOs, Davinder Singh Brar, explained in a company-sponsored book, the billion-dollar dream was a “vision . . . etched in every employee’s mind.”

Inside Ranbaxy, overseeing the first-to-file applications fell to Jay Deshmukh, the lean, sardonic attorney who specialized in intellectual property. Back in 1998, as a bored young lawyer in Cincinnati, he saw a surprising ad in the Journal of the Patent and Trademark Office Society. Ranbaxy was looking for a patent lawyer. “I had never seen an Indian company asking for a patent lawyer,” Deshmukh recalled. He applied on a whim.

Deshmukh, an Indian-born chemical engineer by training, was intrigued by the prospect of working at Ranbaxy, especially after meeting the visionary managing director Dr. Parvinder Singh, whom he found to be “extremely smart and personable.” Deshmukh ended up taking the job and doubled his salary. He relocated his young family to Princeton, New Jersey. Though it seemed like an excellent career move, above all he viewed the job as a “going home kind of thing, contributing to India.”

Knowing little about Indian corporate culture, he immediately found himself in a “very paternalistic” environment, where “your boss is your father—he’s always right.” Deshmukh immediately locked horns with his boss. Within a year of joining the company, he requested a meeting with Parvinder, in which he asked to report directly to the CEO, D. S. Brar, instead. Parvinder consented. In doing so, Deshmukh cemented his future role in the company, as Brar became Ranbaxy’s managing director a year later. It was Brar who encouraged Deshmukh to aim for generic Lipitor.

Inside the company, the Lipitor quest was not just your average commercial endeavor. “The lure of the drug was irresistible, like a gorgeous naked woman who is not your wife,” said Deshmukh. “It’s hard for guys to say no. How could we not?”

On October 9, 2002, almost two months after Ranbaxy had filed Abbreviated New Drug Application 76-477, the FDA broke its silence, first with a phone call and then with an official letter: Ranbaxy had indeed filed first, and its application to make atorvastatin, the company’s generic version of Lipitor, would be evaluated.

The news led to rejoicing inside Ranbaxy. The FDA parking lot had been empty when Ranbaxy filed its application, because the company was so far ahead of its rivals. Now there was a path to the largest generic drug jackpot in history. But huge obstacles remained. First, FDA regulators had to deem the science in the dossier to be worthy. Ranbaxy’s testing data would have to demonstrate, to the agency’s satisfaction, that its generic Lipitor would release an equivalent amount of the active ingredient into a patient’s bloodstream. After that, Ranbaxy would have to survive attack by an army of Pfizer’s patent lawyers, who’d successfully been standing sentinel around the drug for years. Ranbaxy would have to follow the careful choreography, and withstand the scrutiny, of the world’s most dominant drug market.

In theory, all the companies had to follow the same rigid set of good manufacturing practices. But for companies that were inclined to emphasize profits instead of quality, there were many avenues for improvisation—and shortcuts. Deshmukh acknowledged that the incentive of first-to-file created a “Wild West” environment in which companies had to not only become first filers but protect those applications at all costs. That drive—to be first and stay first—led to a stark choice for Ranbaxy, just months before Dinesh Thakur arrived at the company.

In May 2003, Ranbaxy’s top executives gathered in the conference room of a hotel in Boca Raton, Florida, for what was supposed to be a nuts-and-bolts operational meeting. The company CEO, D. S. Brar, presided in his impeccable turban. Rashmi Barbhaiya, the director of research and development who had recruited Thakur, was there. So was company president Brian Tempest. Their discussion was quickly subsumed by a topic that had dominated email chains and led to the creation of a closely guarded report, its contents restricted to those in the room.

Three months earlier, the company had launched Sotret, its version of the brand-name anti-acne drug Accutane made by Roche, onto the U.S. market. As the first low-cost version available to American patients, it resulted in instant market share and was another vital step toward the company’s larger goal to achieve $5 billion in global sales within a decade.

But just a few days prior to the meeting, the Ranbaxy executives had suspended the profitable Sotret launch. They told U.S. regulators that they had seen a “downward trend” in how rapidly the 40-milligram capsule dissolved and would temporarily withdraw three lots of it from the market while they completed their probe of the cause. But that was a lie. Their random tests of Sotret had shown that the formulation was failing. Under rules set by the FDA, they had but one choice: to make a full disclosure to regulators, recall Sotret from the market, and return to the laboratory to try to reengineer the drug until it worked.

Unless there was another choice. “Go find Malik,” snapped Brar, glaring at his deputies, one of whom went scrambling from the conference room in his direction. Rajiv Malik, a canny and ebullient process chemist who was Ranbaxy’s head of formulation development and regulatory affairs, was viewed by his colleagues as a Houdini of the generic drug world. He had unsurpassed skills at reverse-engineering and seemed to know how to turn anything into anything. If the problem could be escaped, he’d figure out how.

On that day, the usually jovial Malik—who’d been with the company on and off for eighteen years—appeared uneasy as he entered the room. Malik had led the laboratory effort to develop Sotret. Now his colleagues wanted him to fix the situation quickly. He could feel their impatience.

“This is not a quick-fix problem,” he told the group. “I don’t have a magic wand.”

For his visibly frustrated Ranbaxy colleagues, Malik then reviewed the excruciating history of the Sotret development he’d overseen. Despite more than five years of costly laboratory work, Ranbaxy’s chemists still could not get the drug to dissolve correctly. As a soft gel product in a suspended form, it was difficult to control the particle size.

The batches they’d tested for approval from the FDA had been manufactured in a controlled environment and had finally worked well enough, mimicking the original drug. But when they’d scaled up the manufacturing to create commercial-sized batches, impurity levels spiked and the drug dissolved incorrectly. Malik explained his working hypothesis: that when the soft gelatin was exposed to oxygen, it set off a reaction that affected the dissolution. It would take time to engineer a solution. In the meantime, they would need to stop selling the drug.

“I have no idea how long it will be before Sotret can be marketed,” he told the executives.

He hadn’t said what everyone in the room already knew. Even if formulated perfectly, the drug was uniquely dangerous. The FDA required a “black box” warning on the label, alerting patients that the drug could cause severe birth defects or miscarriages if taken while pregnant or prompt suicidal tendencies in those who took it, many of whom were teenagers. The drug, in its brand version, had been the subject of a congressional hearing after a U.S. congressman’s son had killed himself while taking it. To restrict the drug, regulators required companies to report any sales, expiration, or destruction of it. The dangers demanded caution and transparency.

Given the circumstances, the FDA’s regulations required Ranbaxy executives to withdraw the drug from the market and suspend making it until the failures could be remedied. But the heated discussion kept returning to the commercial pressures. If the company fumbled, there would be a rival drug maker waiting to launch its own version right behind them. Not marketing the drug would gut their profits.

Malik looked around the table. He saw “irrationality,” as he later put it, in the mind-set of his colleagues. The executives who ringed the conference table faced a stark choice. Stopping the launch would mean abandoning the company’s financial goals. Continuing it with no further disclosure to regulators would endanger patients and violate the FDA’s rules.

The push for profits won out. They chose to continue the launch and conceal the problems from regulators, even as they returned to the laboratory in search of a solution. Years later, D. S. Brar would say that he could not remember the Boca Raton meeting specifically, but remarked of his tenure at Ranbaxy, “Nowhere at any time did I hear any executive say that we shall short-circuit the process and the procedure to circumvent time to market.” To the contrary, he added, “we were always very scared to do anything which would go wrong in the U.S. That was the kind of scrutiny the company had internally.”

But shortly after the Sotret meeting, the executives memorialized the faulty quality of their acne drug in a document titled “Sotret—Investigation Report,” which Abha Pant, the vice president of regulatory affairs, later filed away in her office at the company’s New Jersey headquarters. The cover page read, in bold letters, “Do Not Give to FDA.”





Chapter 3


A Slum for the Rich

AUGUST 2003

Gurgaon, India

If globalization can be said to have a headquarters, then it may well be Gurgaon, an entire city built from the outsourcing efforts of the world’s Fortune 500 companies. Gurgaon lies just eighteen miles southwest of New Delhi. Two decades ago, it was a sleepy farming town ringed by forest, nestled below the beautiful Aravalli mountain range. As global multinational companies looked to move their back-office functions to India, developers sensed opportunity. Office towers rose from the fields. Roads named Cyber City and Golf Course were built. In short order, Gurgaon became known as “Millennium City.”

Its skyline was branded by global capitalism: Accenture, Motorola, IBM, Hewlett-Packard, and many others tacked their logos onto newly acquired buildings. Thousands of people and cars, as well as numerous shopping malls, followed, with the encouragement of the Haryana Urban Development Authority, which seemed to have no urban plan other than to welcome developers. Ranbaxy, too, established its research headquarters here, on an elegant, well-guarded campus.

Amid Gurgaon’s building frenzy, there were few restrictions and little in the way of infrastructure. A patchwork of after-the-fact water treatment plants, sewers, subway stations, and power lines could not keep up with the demand. Corporate residents and their well-heeled employees were left to scramble for dwindling water and electricity. They bought most of the latter privately, at exorbitant rates, using diesel generators that further fouled the already polluted air.

Donkeys and pigs wandered amid the chauffeured town cars on the clogged, potholed streets. Officials estimated that, owing in part to the numerous bore-wells drilled by private residences and businesses seeking water, the plummeting water table would be entirely depleted within two decades. India had intended Gurgaon to be a showcase of the nation’s central role in the twenty-first-century economy. Instead, the BBC suggested it was a “slum for the rich.”

Still, for corporations and their employees, it was the place to be. In the summer of 2003, the Thakurs settled into a freestanding gated house with a small guard post outside, manned overnight by a hired guard. Their very address reflected Gurgaon’s dramatic development: they lived in “Phase 1,” the first area of Gurgaon to be built. Their house had a planted lawn, white tiled floors, and gracious rooms for entertaining. Its own diesel generator kicked in when Gurgaon’s overtaxed grid blinked out. Thakur set up a home office in the basement, right next to a play area for Ishan, where the boy watched Barney and Clifford videos as Thakur worked through the weekends.

As a foreign citizen of Indian origin, Thakur was supposed to register with the local police upon his arrival. So he went to the decrepit Gurgaon police station, where the police officers looked baffled as Thakur explained that he was there to try to meet the requirements of his visa. Determined to educate them about the policies they were supposed to enforce, Thakur went home, printed out the relevant forms, and returned to explain them in more depth. His effort to comply with the law took almost a whole day.

He left the police station with a new form, filled out by hand and signed in multiple places, which he laminated to forestall ever having to return. In India, paperwork seemed to be a hedge against chaos, as well as a contributor to it. “We’ve created mountains of paper to create the assurance that if something happens tomorrow, there’s a file,” Thakur later mused. “It’s a great mechanism for justifying any action you take. It has to be in a file someplace.”

Thakur was not naive about the challenges of living in India. But he was determined not to compromise his ethical values to do so. He would remain a stickler for rules in a country where subterranean agreements, often accompanied by cash payments, governed so many interactions. As Thakur focused on his work at Ranbaxy, he remained confident that private Indian companies operated differently than the corrupt and bloated public sector. And he believed that the efficiency of corporations could help lift India into the twenty-first century.

Motorcycles, trucks, taxis, and auto-rickshaws whizzed along Gurgaon’s main thoroughfare, the Mehrauli-Gurgaon Road. Fruit carts pulled by donkeys dotted the roadsides, as did stray goats and buffalo. Encampments of people by the hundreds lived on the roadside beneath fraying tarps.

Tucked along a side street, behind a guard post and sliding gate, sat the main research and development center of Ranbaxy Laboratories. The entryway was framed by impeccable shrubs and plantings. Inside the main entrance, above the gleaming tile floors, hung a portrait of the company’s former managing director Parvinder Singh, who had died four years earlier of cancer, at age fifty-six. The white-bearded Parvinder sat with hands folded beneath an opulent red drape, in a white Sikh turban with a matching handkerchief in the breast pocket of his dark suit, a serene smile on his face, as though monitoring—and blessing—the goings-on. The Indian press had dubbed Parvinder, the son of the company’s founder, “the alchemist who saw tomorrow.” Under his leadership, Ranbaxy had become a global company—the transformation that had helped create Thakur’s new job.

Thakur’s mandate, as director of research information and portfolio management, was to impose some order and transparency on the burgeoning global pipeline. He was an information architect, expected to build a scaffold for the company’s data. This newly created position made him one of the few company executives with a clear grasp of all Ranbaxy’s far-flung world markets. He threw himself into the work. He hired six people, trained them in portfolio management, and developed a complex Excel spreadsheet to map the progress of the drugs the company was making for each part of the world.

Thakur frequently stayed long after his colleagues left. Sometimes, in the evenings, the family driver, Vijay Kumar, brought Sonal and little Ishan to pick Thakur up at work. The toddler would scribble letters on the whiteboard in his father’s office or gleefully race up and down the empty hallways before the family returned home for the night.

Though Vijay had to take the Mehrauli-Gurgaon Road every day by necessity, he tried to get off it as quickly as possible. Stretches were deteriorating. Traffic backed up. When it flowed, it was a free-for-all, with few traffic lights, rules posted but ignored, the actual lanes a mere suggestion that few heeded. At night the potholes, poor streetlights, and wandering buffalo made it downright dangerous.

Vijay had first met Thakur the previous summer, when the executive had come to interview at Ranbaxy. In his early twenties, he worked at a taxi company and had been assigned to drive Thakur around. Thakur had been impressed with his quiet and responsible demeanor, as well as his skill in navigating the awesome hazards of Gurgaon’s roads. When Thakur moved back to India, he hired Vijay as the family driver, a big step up for a young man who’d come from a family of subsistence farmers.

One late evening, just months into his employment, Vijay picked up Thakur at Ranbaxy, then reentered the Mehrauli-Gurgaon Road. Motorcycles and trucks sped around them on the dark thoroughfare. Suddenly, vehicles ahead swerved around what looked like a pile of trash in the road. As Vijay drove closer, they saw it was a man’s motionless body.

Like most of the other drivers, Vijay had deemed it smartest and safest to ignore the man. But as other cars swerved around the body, Thakur ordered him to pull over. Vijay begged for permission to keep going, but Thakur refused. He made Vijay pull onto the shoulder and get out with him. As traffic broke around them on the shadowy road, they reached the man, who was alive but drunk and bleeding from the head. They lugged him to safety. It was a crazy rescue, one that violated every rule of safe driving—and defensive living—that most Indians knew: namely, keep your head down and your car moving, and don’t volunteer aid to strangers. No good could come of it. Such a rescue was more likely to invite any number of bad outcomes.

But for Thakur, getting the man off the road was not enough. Though he was generally a wary and reluctant observer, he had a countervailing tendency: to lean into whatever project he’d started, regardless of the possible result. He insisted to Vijay that they carry the man to a local hospital, a block and a half away.

To Vijay, lugging the man down the street was one of the stranger projects he’d ever undertaken. Why do this when they had no stake in whether the man lived or died? At the hospital, the surprised staff seemed to agree with Vijay and refused treatment unless Thakur paid in advance. He peeled off 7,000 rupees (about $140, a lordly sum and twice what Vijay earned in a week) and left his business card behind. He did not even think to help anonymously. To Vijay, his new boss seemed to have weird American ideas about coming to the rescue. And as the young driver correctly predicted, the outcome was bad.

The next day, a police officer showed up at Ranbaxy and accused Thakur of running the man over. Why else would Thakur have paid so much money to help him, unless he’d done something bad to him in the first place? Thakur called the Human Resources Department and directed them to deal with the situation. The officer ultimately went away, which to Thakur almost certainly meant he was paid to no longer press his inquiry.

Coming to the attention of “the system” in India had almost no upside. Altruism was often greeted with suspicion. Had Thakur not worked for a company with resources, one able to pay to make an allegation vanish, who knows where the confrontation with the police officer might have led? Companies were king in India, while people were more likely to be treated as dispensable. Though the incident left Thakur uneasy about his decision to return to India, his lingering doubts were soon erased by an extraordinary event at Ranbaxy.

On November 21, 2003, Ranbaxy’s corporate communications director, Paresh Chaudhry, watched in amazement as U.S. Secret Service officers swept rooms and posted snipers on the rooftop of Ranbaxy’s headquarters. Former U.S. president Bill Clinton was arriving that day to publicly thank Ranbaxy and two other Indian generic drug companies for agreeing to manufacture AIDS drugs that would be sold for about 38 cents a day in African and Caribbean countries. The price was roughly 75 percent less than the lowest possible cost for equivalent brand-name drugs. Although U.S. taxpayers would foot the bill, it was the William Jefferson Clinton Foundation that had closed the deal.

Chaudhry, hardworking and innovative, had never in his wildest dreams imagined that he’d be running logistics for an event involving a former U.S. president, let alone Bill Clinton, who was particularly beloved by Indians. When Clinton had visited India in late March 2000, he became the first U.S. president to do so in more than twenty-two years. On that visit, he’d emphasized the need for the two countries to cooperate in tackling diseases such as AIDS.

Clinton’s passion for the country was more than pro forma. He’d returned in April 2001, three months after a devastating earthquake in Gujarat killed 20,000 people. Through the American India Foundation, which he was chairing, Clinton raised millions to resurrect devastated villages. He declared to adoring throngs, “I intend to come back to India for the rest of my life.”

He was back now, the third time in four years, making good on his pledge to unite India and America in the fight against AIDS. For almost two weeks straight, Chaudhry had been immersed in preparations, his world becoming a blur of Secret Service agents, lists of names, badges for employees who would be there, what food would be served, which route Clinton would take, and who was going to receive him. The visit was a potential marketing bonanza. As Chaudhry well knew, he could work his whole career and never have a chance like this again.

For years, he had invited international journalists to visit Ranbaxy. He’d shown them the company’s research facilities and modern manufacturing plants. He’d explained the robust efforts to develop new chemical entities. But the response was generally the same: “Thank you very much. We’ll come back to you if we’re interested in something.” And then silence.

As Chaudhry knew, he was up against the widespread assumption that low cost equals low quality. Indian generic drug makers—who, by and large, invented little but rather reengineered existing brand-name drugs—were viewed around the world as fakers and copycats. Even in Africa, their drugs were held in low esteem. In Cameroon, doctors referred to their products as pipi de chats—cat urine. Things had begun to shift in their favor in 2001, during the U.S. anthrax scare following the attacks of September 11. Bayer had proposed to sell the U.S. government ciprofloxacin—an antibiotic that was one of the few remedies for anthrax poisoning—at almost two dollars a pill. Ranbaxy’s price was one-fifth that. “Bayer and the lobbyists in the U.S. and Washington tried their best to say that this is a fake company,” Chaudhry recalled. But patents blocked the U.S. government from purchasing Ranbaxy’s version. Today’s event, Chaudhry hoped, would finally be the game-changer.

As Clinton walked through the sliding doors in a dark suit and deep red tie, Chaudhry was among the first to extend a hand in welcome. The others in the vestibule, all in their best suits, canted forward, anxiety and excitement etched into every face as they stood ready to anticipate the former president’s wishes.

Eager employees gathered in the auditorium to listen, along with many members of the media whom Chaudhry had been chasing for so long. Thakur got a front-row seat. Clinton stood shoulder-to-shoulder with Ranbaxy’s CEO, D. S. Brar, who wore a black turban, dark suit, and patterned tie against a crisp white shirt. He had been appointed Ranbaxy’s CEO after Parvinder Singh’s death and was hailed as a professional manager, his appointment viewed as a milestone for the family-owned company.

Clinton explained that he had come to thank the Indian companies—including Ranbaxy, Cipla, and Matrix Laboratories—for agreeing to make such low-cost drugs. “It’s very important to give these companies some credit here, because they have basically believed in us,” he told those assembled. Their efforts, he added, ensured “that we can go out and work with other countries and convince them that treatment was a viable option and an affordable option.”

Brar then had his turn. “The drugs can be priced at a lower price only if there are volumes, and for that the large AIDS-inflicted nations have to come forward and purchase in bulk. This was not happening till the Clinton Foundation stepped into the picture and brought together the nations and the producers of the drugs.”

After the speech, as Clinton pressed into the crowd, Thakur got a turn to shake his hand.

The visit was everything Chaudhry had hoped for, and more. From that moment, the company’s sales increased and its reputation improved. “We arrived as a company,” Chaudhry recalled. Ranbaxy was poised to surge in Western markets. “We can kill these big guys in the U.S. with all our products,” Chaudhry summed up the feeling. “It’s good for humanity. It’s good for the government. It’s good for the people. Why should anyone block us, for heaven’s sake?”

Clinton’s visit was a boost for the entire industry. Before it, governments around the world had faced aging populations, the AIDS epidemic, and soaring drug prices. How could they afford to treat these patients? Clinton had shown them a solution. India’s drug companies, it appeared, were on the side of the angels. As Ranbaxy’s next managing director, Dr. Brian Tempest, later told the Guardian: “We don’t make a lot of money out of selling AIDS treatments cheaply. . . . This is really out of social responsibility, because we are based in the developing world and have all its issues on our doorstep.”

Whether the companies could profit by selling vastly discounted AIDS drugs or not, Clinton had vouched for Indian generics. His visit led to new opportunities and potential profits all over the world. On a later trip, Clinton went to Cipla’s facility in Goa, where he planted a pine tree in the gardens, a tradition for important visitors started by the company’s legendary chairman, Yusuf Hamied. For companies that had no fancy lobbyists in Washington, D.C., the visits proved invaluable. “Our humanitarian effort has been our public relations,” Hamied later explained. “Every door is open now.”

After his stop at Ranbaxy, President Clinton used the same visit to head to Agra to see the Taj Mahal, the white marble mausoleum built in the seventeenth century by a Mughal emperor for his wife. There, Clinton followed visitor protocol and took an electric bus from the outskirts of the monument to its gates, a requirement that protected the World Heritage site from air pollution. But on the return to his hotel, the electric bus stalled, and the former president had to walk the rest of the distance. In a country that prided itself on spectacular ceremony and magnificent hospitality, the lapse risked becoming an international embarrassment—suggesting that the nation’s old, broken-down infrastructure still lurked beneath the gleaming facade.





Chapter 4


The Language of Quality

FEBRUARY 25, 2000

New Iberia, Louisiana

Jose Hernandez sniffed the air. The forty-three-year-old FDA investigator stepped deeper into the K&K Seafoods crab-processing plant, which looked none too appetizing. His mind clicked over the regulations enshrined in the U.S. Food, Drug, and Cosmetic Act. Gazing inside the plant, he could practically see the relevant pages: the fish and fishery products “Hazard Analysis Critical Control Point” plan, Title 21, Code of Federal Regulations, part 123, 6 (b).

But his nose signaled the most trouble. What was that odor? It reminded him of his Labrador, Livy, after a bath—that sodden, damp-wool smell of a dog soaked to the skin. Not a good sign in a seafood facility that was supposed to be operating under good manufacturing practices. He doubted the plant was safe for consumers.

Hernandez, balding with a dark mustache, glasses, and a runner’s physique, was the FDA’s resident-in-charge of the Lafayette, Louisiana, office, a four-man outpost. His job, as a badge-carrying FDA investigator, was to inspect the seafood manufacturing plants and small medical centers in the area. Hernandez got paid $45,000 a year, a salary on which he was supporting his wife and four children. The agency had no laptops, so Hernandez took handwritten notes while inspecting, then signed up for time to use the single desktop computer at the office to type them up. He wore coveralls and plastic boots while inspecting seafood plants.

It would not be everyone’s choice of jobs, but Hernandez thrived in it, and he’d begun to earn a reputation as one of the FDA’s smarter, more intuitive, and more energetic investigators. He lived in a rambling 5,000-square-foot house, which he was painstakingly renovating. He’d learned expert carpentry skills from his grandfather, who’d helped raise him in Puerto Rico. Hernandez graduated from the Inter American University in San Juan and began at the FDA as a generalist investigator in 1987. Though he didn’t have fancy graduate degrees, he had a mechanical mind. He knew how things were supposed to fit together and could tell when they didn’t. He could readily organize facts and remember them. He also had an uncanny sense for when something was wrong.

To relax, Hernandez worked on his house and, whenever possible, took his kids camping. But his mind was never at rest. It ranged continually over Title 21 of the Code of Federal Regulations of the Federal Food, Drug, and Cosmetic Act. He knew the regulations almost encyclopedically, but also kept them close at hand to reread. They were his scripture. “The guy preaching the Mass for thirty years always goes back [to the Book],” he said. “I never tried to answer from memory. I never tried to guess. You can never charge anybody with anything unless there’s a regulation.”

He mulled over patterns—the visible workflow in a plant versus the invisible machinations, the relationship between what he saw and what the regulations stipulated. During everyday activities, like drinking water from a plastic bottle, he’d recite the regulations to himself: 21 CFR165.110 was for bottled water. The container holding the water was regulated differently than the water itself (21 CFR1250.40). To him, the inspections were puzzles, and he was always trying to find the missing pieces.

Under FDA regulations, he only had to show his badge and any manufacturing facility regulated by his agency had to allow him full access to the plant and grounds. He never gave advance notice—none was required. Refusal to admit an FDA investigator could lead to a plant being shut down. He would stay as long as he felt was needed for a thorough review. That could mean one day or two weeks. He began each inspection by driving around the perimeter, taking in the broadest view. He thought of it as first looking through the wide lens of a camera. He could then zero in on the important stuff. When it came to K&K Seafoods, he knew exactly what to do. He needed to return when least expected, and presumably least wanted. Nighttime was when they cooked the crabs. “If you want to build a case,” he said, “you have to be there when things are happening.”

He went home for dinner. Once the kids were asleep, he returned to the plant at 9:00 p.m., and an unhappy-looking employee let him in. This time the wet-dog smell was even stronger. Hernandez followed it to the back of the plant, where he found a small kitchen and a pan on the stove with pieces of meat in it—dog meat. He headed out to the plant floor, where a man cooking the live crabs was chewing as he worked. He’d caught the employee red-handed, though the violation itself, 21 CFR110.10 (b)(8), was rather understated: no eating allowed in areas where food is being processed.

The FDA’s regulations were narrow and specific. It made no difference whether the man was chewing a cracker or a dog haunch. What Hernandez thought about it made no difference either. He couldn’t impose deeper sanctions for something particularly repulsive.

On the face of it, the K&K crabmeat plant was a noisome place that might have raised anyone’s suspicions. But Hernandez had a gift not just for aggressively following up obvious clues but for seeing beneath the surface of even pristine-looking manufacturing plants. He’d proven this during his inspection at the Sherman Pharmaceuticals plant in Abita Springs, Louisiana, which made eye lubricants for contact lenses and prescription eye solutions. In 1994, he’d arrived, with two trainees, seven months after the plant had emerged unblemished from an inspection.

His domain was plant and grounds. So as usual, Hernandez began with the grounds, working his way from the outside in. He wandered into the woods ringing the plant. In the distance he noticed a smoldering pile, as though for a barbecue. He directed one of the trainees to find a stick and poke around in the embers. They uncovered a pile of charred medicine that the company was burning. But why? The investigators were able to spot lot numbers on the partially burned containers. The medicine, as it turned out, had not yet expired. “You’re not going to destroy product that is actually sound, so what happened to the rest?” Hernandez wondered. As it turned out, the company was burning medicine that had been returned because of contamination. Instead of investigating the cause and reporting it to the FDA, as required, the company chose to try to destroy the evidence. Hernandez detailed his findings in an inspection form called a 483.

The FDA’s investigators codify their findings in three ways: No Action Indicated (NAI) means that the plant passes muster; Voluntary Action Indicated (VAI) means that the plant is expected to correct deficiencies; and Official Action Indicated (OAI), the most serious designation, means that the plant has committed major violations and must take corrective actions or face penalties. Under Hernandez’s watchful eye, both K&K and Sherman Pharmaceuticals received an OAI, putting them at risk of even greater sanctions.

In 1995, the FDA imposed on Sherman Pharmaceuticals its most stringent penalty, a so-called Application Integrity Policy (AIP)—one of only about a dozen such restrictions imposed by the FDA. This placed the plant under strict monitoring and required it to prove that it was not committing fraud. Sherman Pharmaceuticals went out of business shortly afterward. Hernandez never felt any sympathy toward the company—or any other, for that matter. It was not his job to take things lightly or to look the other way.

The Food and Drug Administration serves one of the most important functions of any government agency. Its job is to safeguard public health by ensuring that our food, drugs, medical devices, pet food, and veterinary supplies are safe for consumption and use. In doing this, the FDA regulates about one-fifth of the U.S. economy—essentially, most of the products Americans are exposed to and consume. It operates from a sprawling headquarters in Silver Spring, Maryland, and has a workforce of over 17,000 employees, twenty satellite offices around the country, and seven offices overseas.

Whatever one may think of regulators—heroic public servants or pests with clipboards counting the number of times workers wash their hands—there is no doubt that in the world’s estimation, the FDA is viewed as the gold standard. If you hold its regulators up against those from most other countries, it’s like comparing “the latest model Boeing to an old bicycle,” said a senior health specialist for the World Bank.

Part of the FDA’s vaunted reputation comes from its approach. It does not just regulate with a checklist or scrutinize the final product. Instead, it employs a complex, risk-based system and scrutinizes the manufacturing process. Under FDA standards, if the process is compromised, the product is considered compromised too.

The FDA requires companies to investigate themselves under a review system called Corrective Action and Preventive Action. The drug company Merck was famous for doing this and discarding drug batches if it had the slightest concern about their quality. “You have to look to know the truth, and you have to have people who know how to look,” a former FDA investigator explained. “[And] unless agencies start looking, companies don’t look.”

Inspector Hernandez’s methods might seem simple: sniffing, looking, poking with a stick. But he was armed with concepts and regulations that had evolved over more than a century, related to both drug and food safety, which developed in sync. Today a manufacturing plant must disclose and investigate quality problems, rather than simply burn bad drugs in the woods. Workers can’t eat dog meat (or anything else, for that matter) as they work on canning crab, since a manufacturing plant must control its environment against contaminants. The concepts of control, transparency, and consistency fall under current good manufacturing practices (cGMP), the elaborate architecture of regulations that govern the processing of food and the manufacturing of medicine.

Such regulations did not exist at the dawn of the twentieth century. The phrase “good manufacturing practices,” now ubiquitous in facilities around the world, made its debut in a 1962 amendment to the U.S. Food, Drug, and Cosmetic Act. For today’s drug manufacturers, cGMP is understood to be the minimum requirements a manufacturer must follow to ensure that each dose of a drug is identical, safe, and effective and contains what its packaging says it does. Those requirements evolved after a centuries-long debate over how to best guarantee the safety of food and drugs.

The medicine men of the Middle Ages were among the first to promote the idea that the quality of a drug depends on how it’s made. In 1025, the Persian philosopher Ibn Sina penned an encyclopedia called the Canon of Medicine in which he laid out seven rules for testing new concoctions. He warned experimenters that changing the condition of a substance—heating honey, say, or storing your St. John’s wort next to rat poison—could change the effect of a treatment.

Medieval rulers recognized the perils of inconsistency and the temptation for food and drug sellers to cheat their customers by replacing edible or healing ingredients with poor substitutes. In the mid-thirteenth century, an English law known as the Assize of Bread prohibited bakers from cutting their products with inedible fillers such as sawdust and hemp. In the sixteenth century, cities throughout Europe began publishing standardized recipes for drugs, known as pharmacopoeias. In 1820, eleven American doctors met in Washington, D.C., to write the first national pharmacopoeia, which, according to its preface, was meant to rid the country of the “evil of irregularity and uncertainty in the preparation of medicine.”

The same year, a German chemist named Frederick Accum published a controversial book with a mouthful of a title: A Treatise on Adulterations of Food, and Culinary Poisons. Exhibiting the Fraudulent Sophistications of Bread, Beer, Wine, Spirituous Liquors, Tea, Coffee, Cream, Confectionery, Vinegar, Mustard, Pepper, Cheese, Olive Oil, Pickles, and Other Articles Employed in the Domestic Economy. And Methods of Detecting Them. Accum railed against factories’ use of preservatives and other additives in packaged foods, such as olive oil laced with lead and beer spiked with opium. Widely read throughout Europe and the United States, Accum’s treatise brought the issue of food safety and the need for oversight to the public’s attention. In the United States, it wasn’t until 1862 that a small government office, the Division of Chemistry, began investigating food adulteration, with a staff housed in the basement of the Department of Agriculture—a fledgling effort that would later morph into the FDA.

In 1883, a square-jawed, meticulous doctor from the Indiana frontier, Harvey Wiley, took over the division. At thirty-seven, Wiley was known as the “Crusading Chemist” for his single-minded pursuit of food safety. He rallied Congress, without success, to introduce a series of anti-adulteration bills in the 1880s and ’90s. By 1902, his patience worn out, Wiley recruited twelve healthy young men and fed them common food preservatives such as borax, formaldehyde, and salicylic, sulfurous, and benzoic acids. The diners clutched their stomachs and retched in their chairs. The extraordinary experiment became a national sensation. Wiley called it the “hygienic table trials,” while the press named it the “Poison Squad.” Outrage fueled the movement for improved food quality.

Meanwhile, officials at the Laboratory of Hygiene of the Marine Hospital Service (later the National Institutes of Health) grappled with a different public health crisis. In 1901, an epidemic of diphtheria—a sometimes fatal bacterial disease—broke out in St. Louis. The disease was cured