In 2008, I got an unusual phone call

from a guy named Joe Graedon.

Joe said he was getting flooded
with complaints from patients

who had recently been switched
to generic drugs.

Joe was a trained pharmacologist

and cohost of a radio show on NPR.

Patient after patient said their generics
were causing unwelcome side effects

or even relapses.

Joe believed the patients' claims.

But when he reported
these complaints to the FDA,

officials there argued,
"It was probably psychosomatic.

Patients are upset by pills
that look different from their old ones."

Joe didn't buy it.

He wanted someone
with investigative firepower

to dig into this,

and since I was
an investigative journalist,

he called me.

And then he posed a question

that I couldn't get out of my head:

"Katherine, what is wrong with the drugs?"

I spent the next 10 years
trying to track down the answer.

Our health care system relies on generics.

My family does, too.

But a decade of interviews,

meetings with whistleblowers,

on-the-ground reporting
across four continents

and thousands of confidential files --

from the FDA,

from generic drug companies

and from the courts --

all pointed me in the same direction:

a large number of generic
drug manufacturers

in certain overseas countries

are passing off substandard drugs

as legitimate generics

for profit.

They are deliberately flouting
FDA regulations and standards.

Basically, they are committing fraud.

In the process, they are risking
the health of patients around the world.

They may even be costing patient lives.

One leading company in India
has already shut down

because of this activity.

I wanted to know,

was that company an outlier

or the tip of the iceberg?

What I uncovered is disquieting,

and anyone who takes generic drugs
has the right to be deeply concerned.

If you're skeptical about any of this,

that's fair.

I saw generics as one of the world's
great public health innovations,

a giant win for patients worldwide.

Ninety percent of our drugs
today are generic.

I knew generic HIV/AIDS medicine
had saved many lives in Africa.

Here at home,

programs from Medicare to Medicaid
and the Affordable Care Act

depended on them.

In an overpriced drug market,

generics were the heroic underdog.

But my biggest assumption was based
on the FDA's reassurance

that properly regulated generic drugs

are not only safe and effective,

but bioequivalent,

interchangeable with the brand
and with one another.

Well, that's true --

if companies follow the rules on paper.

But inside far-flung drug plants,

I uncovered a different,
unwritten set of rules.

I started my investigation
by focusing on the regulatory framework.

Right away, one fact surprised me:

the FDA does not vet manufacturer
applications by testing the drugs.

Instead, it reviews company data.

As the FDA's generic drugs director
actually told me,

"The approval system requires
the ethical behavior of the applicant.

Otherwise, the whole house
of cards will fall down."

Really?

It's the honor system?

(Laughter)

After nine months of digging,
I published my first article on generics.

I wrote about patients
who'd been switched to generic drugs

and suffered medical setbacks.

I quoted doctors

who questioned whether generics
really were bioequivalent to the brand.

A month later, I got an anonymous email

from someone calling himself
"Four Dollar Refill."

(Laughter)

Four dollars is what you'd pay
to fill a generic prescription at Walmart.

Four Dollar Refill worked inside
the generic drug industry.

He said if I really wanted
to uncover the problem,

I'd better go look where the majority
of our generic drugs are made:

in India and China.

Four Dollar Refill was right;

80 percent of the plants
making the active ingredient

for all our drugs, brand or generic,

are overseas,

mostly in China and India.

Any generic drug company
anywhere in the world

wanting approval to sell
its drugs into our market

has to follow elaborate rules
known as "Good Manufacturing Practices."

I decided to learn every detail

of how to manufacture
a legitimate generic drug.

At a top New Jersey lab,

I watched as technicians ran tests
on specialized machines

and used flasks that mimic
stomach conditions

to measure drug dissolution.

But one remarkable fact jumped out.

The lab banned Wite-Out --

correction fluid --

across its facility.

Under FDA rules, data serves
as the cornerstone of quality.

It has to be gathered
at each manufacturing step,

preserved

and shared with regulators.

Wite-Out was high-risk.

It invited tampering.

It was clear that for the FDA's
regulatory regime to succeed,

any company applying for approval
had to be ethical,

and its data had to be unaltered.

But what if neither was true?

What if the applicant was not ethical?

What if the data was not pristine?

I started to hear about a company
in India called Ranbaxy,

India's largest drug company,

one of its first successful multinationals

and one of the fastest-growing
generic suppliers to the US market.

A whistleblower was supplying
internal Ranbaxy documents to the FDA.

I got copies.

Deciphering the company's charts,
graphs and numbers

unveiled a shocking swindle.

They substituted unapproved,
lower-purity ingredients.

They invented documents
like standard operating procedures,

steaming them overnight
in a sauna-like room

to make them look old.

They conjured up three-, six-,
nine- and 18-month stability studies,

all generated on the same day.

Gradually, I was able to unearth the story
behind this regulatory nightmare.

In 2004, Ranbaxy hired a new
research and development director.

He suspected something was amiss.

He ordered a young engineer
named Dinesh Thakur

to study the data
in every drug application

to find out if it was real or fake.

Thakur eventually put together
a devastating PowerPoint

showing Ranbaxy had falsified data
for over 200 products

in more than 40 countries.

The new R and D director
showed this PowerPoint

to a subcommittee
of the board of directors.

The subcommittee ordered the report
and the laptop on which it was created

destroyed.

Then they forced Thakur
out of the company.

Thakur couldn't sleep,

thinking about Ranbaxy's
perilously bad drugs.

So he risked his life to alert the FDA.

After an eight-year investigation,
Ranbaxy pled guilty to seven felonies

for faking data.

An FDA consultant taught me

that just like cheap clothing
made in distant factories,

or "fast fashion," as she called it,

there were fast drugs, too,

made in pharmaceutical sweatshops overseas

with low-quality ingredients
and manufacturing shortcuts.

In Mexico City, I sat in a bar
with a whistleblower.

He handed me documents revealing
how the cost-cutting generic drug plant

where he worked

had knowingly released drug batches

that contained glass particles.

In Accra, capital of Ghana,

doctors explained how low-cost
Indian and Chinese medicine of all kinds

barely seemed to work,

even when they doubled
and tripled the doses.

In Mumbai, I met another whistleblower

from a company that
I had believed was ethical.

He sat there and described
the well-oiled machinery

of data manipulation

his company used to get
compromised drugs approved fast.

With tears running down
his cheeks, he said,

"What's going on in the industry

is very, very, very dirty."

In the US, a confidential source
who worked in the government

handed me a thumb drive

containing over 20,000
internal FDA documents.

The emails and memos revealed
how the agency's public health mission --

protecting consumers --

often clashed with
its political mission --

showing Congress a steady stream
of low-cost drug approvals.

I also learned about the FDA's
compromised inspection system

for overseas drug plants.

In the US, FDA investigators
arrive unannounced

to do surprise inspections.

But overseas, the FDA gives
manufacturing plants

months of advance notice.

It asks for the company's help
arranging ground transportation

and hotels.

My sources also talked
about staged inspections,

where teams of data fabricators
invent or alter needed documents

to create a facade of compliance
long before the FDA arrives.

One intrepid FDA investigator
named Peter Baker

figured out how to find the truth.

He ignored the data printouts,

and he looked inside company computers.

When files were deleted,

he found metadata
revealing hidden tests.

The companies were
prescreening their drugs,

figuring how to alter the official tests
so they would meet FDA specifications.

As I said, this problem is more than
a handful of bad actors.

Over four years,
Peter Baker inspected 86 plants

in India and China.

He found evidence of fraud in 67 of them.

Wonder what happens to a batch
of drugs that fails testing?

It should get thrown out.

Instead, low-cost plants usually sell them
into poorly regulated markets

that don't realize what they're getting,

places like Africa,

Southeast Asia

and India itself.

The overseas generics industry
calls this "dual-track production" --

better drugs for some,

failed drugs for others.

In the developing world,

this corrupt system
has flooded the market

with so many bad drugs

that public health researchers link them

to the rise of drug-resistant infections.

But criminal behavior by overseas
companies is only half the problem.

Though some regulators apparently
don't realize they're being conned,

in the US, our regulators appear willing
to overlook transgressions

in order to continue green-lighting
low-cost medicine.

As a result, some American patients

have gotten generic drugs
with toxic impurities,

unapproved ingredients,

dangerous particulates

or that are not bioequivalent.

As the FDA investigator
Peter Baker put it,

if people actually understood,

then nobody
would take these drugs.

Are there ways to solve
this global problem?

Yes, there are.

Solutions begin with recognizing

that our current honor system
for drug regulation

is a relic of a bygone age.

Science evolves. Medicine evolves.

The global economy evolves.

Shouldn't regulation evolve with them?

Only one approach can guarantee
quality generics:

rigorous oversight,

including unannounced inspections
and systematic testing of drugs.

Rigorous oversight means that regulators
don't just look at printouts of data

that may or may not be genuine.

Effective solutions also depend on giving
the average patient more information.

We know where our breakfast cereal
and our running shoes are manufactured.

Why is it different for generic drugs?

Patients can do something else.

They can tell their elected officials
and consumer organizations

to speak up just as loudly
to demand quality

as they do to demand access.

Consumer organizations can do
their members a great service

by testing and ranking generics,

just like cars and washing machines.

The big pharmacy chains
owe it to the public

to test the drugs they dispense.

A trip to the pharmacy
for affordable medicine

shouldn't come with a hidden cost.

Now is the time for all of us
who care about patient safety

to act on what we know.

Thank you.

(Applause)