China slaps $1.3B penalty on vaccine scandal culprit

Heralding an end for Changchun Changsheng Life Sciences, whose name literally means "long life," a furious Chinese government handed out its verdict on the company's role in a high-profile vaccine scandal that provoked nationwide anger and doomed the careers of several top-ranking government officials.

The Changchun, China-based vaccine maker will be fined a whopping 9.11 billion Chinese yuan ($1.32 billion) on eight violations of drug regulations, China’s National Medical Products Administration said in a release (Chinese) Tuesday as the agency concluded its investigation.

The sheer size of the punishment—rarely seen, if not unprecedented in China’s biopharma history—shows just how far Beijing is willing to go to placate public anger and deter future offenders that could damage its drug industry’s reputation.

Confirming what the agency had found during an on-site probe, the charges said Changsheng mixed different batches of active vaccine ingredients, including expired ones; failed to run proper efficacy tests; fabricated vaccine production dates; and manipulated or destroyed original records to cover its tracks.

According to Changsheng’s disclosure to Shenzhen Stock Exchange, the charges said the company illegally produced 748 batches of rabies vaccines dated as early as January 2014. It had mixed antigen ingredients in all those batches and used expired ingredients to make 12 batches.

Of the total penalty, 1.89 billion yuan will recoup the company’s revenue from selling rabies vaccine. It also includes a fine of 7.21 billion yuan——three times its illegal revenue along with 7.79 million doses of unsold rabies vaccine—and 12.03 million yuan tied to Changsheng's withdrawing previously released batches. Approval for Changsheng’s rabies vaccine has been rescinded, along with the company's permit to manufacture drugs of any kind.

Separately, the China Securities Regulatory Commission uncovered problems with the Shenzhen-listed company’s disclosures and decided (Chinese) to impose a 0.6 million yuan fine—the maximum allowed by Chinese securities regulations.

Changsheng’s chairwoman Gao Junfang has been barred from the drug industry and will also be banned from serving as a director or executive at a publicly traded company or running any stock-related business.

While those punishments wrapped up the administrative side of the business, Gao and several other company executives could also face criminal charges.

Changsheng’s vaccine scandal first emerged in July after Chinese drug regulators found data integrity problems during a surprise inspection. It soon progressed into a nationwide outcry, compounded by previous reports that the company had sold hundreds of thousands of substandard DTaP vaccines meant for children.

Because Changsheng is one of China’s largest vaccine suppliers, citizens took to social media to express their distrust in the country’s domestic drug industry, and that kind of public reaction quickly drew attention from the very top of the government.

President Xi Jinping and Premier Li Keqiang both urged severe punishments for those involved. Since then, the stock regulator has quickly added actions that threaten public health as a new condition for enforced delisting. Dozens of top government officials—including a former China FDA chief—have either resigned, been sacked or been demoted. As the government works to restore public confidence in the industry, the drug agency has made a round of sweeping inspections on all 45 vaccine makers in the country and cleared them all.

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