AMY GOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman, with Part 2 of our conversation with Katherine Eban. She’s the author of a brand-new book, an explosive exposé called Bottle of Lies: The Inside Story of the Generic Drug Boom. It’s just been published. Her previous book on the pharmaceutical industry was called Dangerous Doses: A True Story of Cops, Counterfeiters, and the Contamination of America’s Drug Supply. She’s a contributor to Fortune magazine. She was previously a staff writer for The New York Times and The New York Observer. And we’re very glad to have her back and that you agreed to stay with us for our conversation.

Let’s talk about these maintenance drugs, what they are. When people take a little bit every single day, and they’ve done it perhaps for decades, they may not think of them as so serious, though they need them to live, not as serious as, for example, a drug that saves your life because you have a heart condition.

KATHERINE EBAN: So, as one FDA investigator said to me, those, in a sense, are the most worrying drugs, because—

AMY GOODMAN: The maintenance drugs.

KATHERINE EBAN: The maintenance drugs, because if you take them day in and day out, and there is a company that is taking some manufacturing shortcuts, basically leaving behind a residue of toxic impurities in the drugs, those can build up in your liver without you even knowing it. And so, you know, his concern is: What is the quality of those drugs, day in and day out? So that’s certainly one issue.

AMY GOODMAN: And since this is Part 2 of our discussion, if you can just, once again, very quickly, talk about what a generic drug is.

KATHERINE EBAN: Right. So, a generic drug is a version of a brand-name drug that falls within the same—within a range that the FDA deems bioequivalent, that it reaches a peak concentration in the blood that is sort of similar or makes it therapeutically equivalent to the brand-name drug, as determined by the FDA.

AMY GOODMAN: Now, you have said that—I mean, these numbers are just astounding. Let’s see, a few statistics. Nearly—generics comprise nearly 90% of the drug supply in the U.S. Over 40% of those generics are made in India. Nearly 80% of active ingredients of all drugs, generic and brand, are made outside the United States, as well as virtually all antibiotics.

KATHERINE EBAN: Right.

AMY GOODMAN: So this really matters.

KATHERINE EBAN: Yeah. As one pharmaceutical importer said to me, without drugs from overseas or drug ingredients from overseas, not a single drug could be made. I mean, we are completely dependent on overseas manufacturing for our drug supply.

AMY GOODMAN: And so, for example, in India and China, one of them may be making the drug; the other one is sending them some of the ingredients for the drug.

KATHERINE EBAN: Right. I mean, so, for example, a lot of the active ingredient, which is the sort of essential molecule of the drug, is manufactured in China and then shipped to India, and then the finished dose will be made and shipped to the U.S. for consumers to take.

AMY GOODMAN: So, describe the climate inside the FDA.

KATHERINE EBAN: You know, it’s an agency that is completely overwhelmed. Just, you know, there is not enough staff. There’s not enough people to go overseas.

AMY GOODMAN: Has it gotten worse under the Trump administration?

KATHERINE EBAN: You know, I’ve really—in my reporting, I look at this as a kind of bipartisan failure, because, basically overnight, the FDA had to turn into a global agency, and starting around 2005, they had more manufacturing plants to inspect overseas than in the U.S. So they had to scramble to figure out how are they going to inspect all of these plants. And they created this jury-rigged system whereby they’re going to announce their inspections months in advance, get the overseas plants to arrange travel, to arrange hotels, and then they show up as invited guests of these plants, where the plants have had two months lead time to fabricate documents.

AMY GOODMAN: I mean, that’s another amazing part, and we talked about that in Part 1.

KATHERINE EBAN: Yeah, yeah.

AMY GOODMAN: That the inspections at the plants are announced.

KATHERINE EBAN: Yeah.

AMY GOODMAN: What happens when they’re not announced?

KATHERINE EBAN: I’m glad you ask that, because I wanted to talk about something called the India pilot program. So, in about 2013, there was a new head of the FDA’s India office, a fellow named Altaf Lal. And he came in, and he took stock of this situation: widespread fraud in these plants, a kind of regulatory tourism on the part of FDA investigators. And so, he pitched what would seem like an absolutely obvious proposal to the head bureaucrats back in Maryland at the FDA, which is to create something called the pilot program, whereby all the inspections of drug plants in India would be unannounced or with short notice, within 24 hours, say. And that program, he got approval.

And the results were really instantaneous. So, for example, they were going to do an unannounced inspection of a Ranbaxy plant in the north of India at a plant called Toansa.

AMY GOODMAN: And Ranbaxy was the largest drug company in India.

KATHERINE EBAN: Yeah.

AMY GOODMAN: Disbanded now.

KATHERINE EBAN: Now disbanded, basically absorbed into another company. But they were concerned that Ranbaxy had gotten word in advance that they were coming. So what they did is, they were supposed to come on a Monday; they decided they’re going to come on a Sunday instead. So, they show up completely unannounced on a Sunday. They go in. This is Peter Baker and a colleague of his. They go into the quality control laboratory of this plant. And they see all of these people with Post-it Notes lining the surfaces, saying what data they should change and fabricate in advance of the inspection that they thought was the following day.

So, I mean, literally, they exposed this elaborate machinery, which had existed for years, which is how to make not perfect drugs, but how to make perfect data. So, the pilot program, they assumed, was going to become the—you know, the way that the FDA would, going forward, do inspections around the world. But instead, after a year and a half, the FDA put a stop to the pilot program—

AMY GOODMAN: Put a stop to the unannounced—

KATHERINE EBAN: Yes.

AMY GOODMAN: —investigations or inspection trips.

KATHERINE EBAN: Yes, and went back to preannounced inspections.

AMY GOODMAN: Why? And when was that?

KATHERINE EBAN: It was in about 2015. And went back to preannounced inspections.

AMY GOODMAN: That was during the Obama years.

KATHERINE EBAN: Yeah.

AMY GOODMAN: Why?

KATHERINE EBAN: Well, I could never get an answer out of the FDA, but I have my suspicions, which are, namely, that the pilot program was exposing so much fraud. The rate of the most serious findings increased by almost 60%. And I think that they felt that the drug supply could not absorb all the sanctions and restrictions that were required in the wake of these findings. I literally think the FDA preferred not to know.

AMY GOODMAN: Talk about some of the most common drugs and how they’re made, like amoxicillin, the antibiotic. I mean, again, virtually all antibiotics are made outside the United States.

KATHERINE EBAN: Right, right. Well, this is something that your guests might find interesting, which is, antibiotics require fermentation. And that is one of the reasons that the Chinese took over antibiotic manufacturing in the world, is because they are so good at fermentation, like making soy sauce, which they have done for eons. And so, they became manufacturers, on a very wide scale, of what are called antibiotic salts, and those sort of form the core ingredients that antibiotics are made out of.

AMY GOODMAN: Talk about Vicodin.

KATHERINE EBAN: I don’t know if I can talk specifically about Vicodin, about the painkiller Vicodin.

AMY GOODMAN: Yes.

KATHERINE EBAN: But—

AMY GOODMAN: One of the most popular drugs for treating pain.

KATHERINE EBAN: Yeah. I mean—

AMY GOODMAN: And where it’s made?

KATHERINE EBAN: Right. So, you know, I don’t know specifically. I mean, my guess is, off the top of my head, that there’s going to be multiple generic manufacturers who are making Vicodin, and that, like most drugs, it’s going to be manufactured overseas.

AMY GOODMAN: So, your book is being hailed by many as perhaps the new Silent Spring. Silent Spring had to do with DDT. Your book would have to do with generic drugs. But, again, that doesn’t leave brand names off the hook.

KATHERINE EBAN: Absolutely not. I mean, brand-name drugs are 100% implicated in this globalized system. And I’ll give you an example of that, again from Peter Baker’s—one of Peter Baker’s inspections. He went into a plant operated by a company called Fresenius Kabi, which is a German brand-name company, makes oncology drugs. They had purchased a plant in India, like so many brand manufacturers. And Peter Baker went in, and he figured out that this company was running a sort of hidden manufacturing operation—oh, I’d like some of that, too—beneath the surface of the sort of transparently run system. They were engaging in hidden tests, secret tests, of the drugs. They were mixing a pure active ingredient with less pure active ingredient, to try to slip it past and cutting costs, and that this hidden system was being run by the head of the plant. And Fresenius Kabi, back in Germany, didn’t know about this. So, he was able to uncover that through one of his investigations. I mean, that’s just an example of the way in which this is not just a generic issue. This is just a worldwide—thank you—this is a worldwide issue.

AMY GOODMAN: Can you talk about “first to file” and that—

KATHERINE EBAN: Yeah.

AMY GOODMAN: —how that essentially changed the generic drug industry?

KATHERINE EBAN: Yeah. So, in 1984, there was a crucial legislation called the Hatch-Waxman Act, which really started the generic drug revolution in this country. And what it did was it created a separate pathway, at the FDA, for generic drug manufacturing. It stipulated generic drug manufacturers can now submit abbreviated applications. They don’t have to prove safety and efficacy, because it’s already proven by the brands, so they can submit a shorter application just proving that the drug is bioequivalent.

But they created an additional incentive for generic manufacturers as part of that legislation, and it was called “first to file.” Basically, it said the first generic drug plan that files its application with the FDA, if it is approved for a certain drug, will get six months of exclusivity on the market, so like a virtual monopoly on the generic before other companies are allowed to come in. And in that six months, they can charge about 80% of the brand-name price. So, that was really what incentivized these companies to be first. And, in fact, it was a gold rush. These companies were parked out in the FDA parking lot in tents, with limos overnight, waiting to be first to walk in through the FDA’s doors to file these applications.

AMY GOODMAN: We’re talking to Katherine Eban. She’s the author of the explosive new exposé, Bottle of Lies: The Inside Story of the Generic Drug Boom. This is Part 2 of our conversation. Previously, she wrote Dangerous Doses: A True Story of Cops, Counterfeiters, and the Contamination of America’s Drug Supply. Talk about that book and how—and the difference between what you were looking at there and here.

KATHERINE EBAN: So, that book, which I published in 2005, started with a tip from actually a longtime FDA source to look into why counterfeits were coming into the nation’s pharmacies. And in that book, which I worked on for three years, I exposed how middlemen, the big wholesalers, were buying cut-rate pharmaceuticals off the gray market. And the gray market was populated by narcotics traffickers, who had gotten wholesale licenses from various states to sell life-saving pharmaceuticals. So, you know, in that case, it was really a domestic scandal. This was about U.S. drugs, U.S. wholesalers, and how counterfeits were getting into the supply chain.

And this, you know, this book, the level of difficulty—I mean, this was a global investigation. I had to travel to four—I did reporting on four continents, hundreds of interviews. So, it’s a very different kind of book. I mean, it’s a really—I like to think of it as a book about integrity in a globalized world.

AMY GOODMAN: And then, summarize this book, Bottle of Lies.

KATHERINE EBAN: So, Bottle of Lies is the story of widespread fabrications in the generic drug plants around the world that we all rely on, and how a group of individuals who were dedicated to saving patients tried to expose it and blow the whistle.

AMY GOODMAN: Well, I want to thank you so much for your work, Katherine Eban, author of Bottle of Lies: The Inside Story of the Generic Drug Boom. It’s just been published.

If you’d like to see Part 1 of our discussion, go to democracynow.org. I’m Amy Goodman. Thanks so much for joining us.