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As COVID Explodes, An Inside Look At China's Gray Market Of Generic Drugs

COVID infections have skyrocketed since China eased restrictions as public health policy has not been able to keep up. Unable to find medications, many have turned to generic drugs of questionable safety. It's the culmination of a longstanding problem.

Photo of a pharmarcist walking past shelves with medication in Yucheng, northern China

A pharmacy in Yucheng, northern China

Xian Zhu and Feiyu Xiang

BEIJING — When her grandfather joined the millions of infected Chinese, Chen quickly decided to buy COVID-19 drugs to limit the effects of the virus. She woke up early to shop on Jingdong, one of China’s biggest online shopping websites, but failed in snatching the limited daily stocks made available.

Fearing COVID's effect on her grandfather, who suffers from dementia, she contacted an independent drug agent and bought a box of generic pharmaceuticals.

With China having suddenly ended its zero-COVID policy, infections have peaked. According to the latest estimates by Airfinity, a British medical information and analysis company, severe COVID outbreaks happened over Chinese New Year with 62 million infections forecast for the second half of January.

In a press conference held by China's State Council on Jan. 11, COVID-19 pills were mentioned as part of the new epidemic control mechanisms. In late 2021, Pfizer developed Paxlovid, the world's first potent COVID drug, with one 100 mg white ritonavir and two 150 mg light pink nirmatrelvir tablets taken every 12 hours. China imported the first batch of Paxlovid for clinical use in March 2022 and included it in the ninth edition of the treatment protocol.

But the first 21,200 boxes of Paxlovid were dispersed to only eight provinces, and no further information is available on where the drug ended up and how much it was used.

For the following eight months, officials continued to devote social resources and mobilization efforts to zero-Covid, with little information campaign on medications.

Is there Paxlovid in China?

As a result, what is engraved in popular conceptions as solutions to COVID infections is not even pain-relieving and fever-reducing drugs such as ibuprofen and paracetamol, but rather Chinese medicine – especially Lianhua qingwen, a formulated traditional Chinese medicine that was promoted by the state since 2020.

Paxlovid is almost impossible to get it in public hospitals.

In mainland China, access to Paxlovid is subject to a selection process, as it is almost impossible to get it in public hospitals. A prestigious private hospital has a stock, but the chain only operates in first rank cities such as Beijing, Shanghai, Guangzhou and Shenzhen. On e-commerce websites, limited amounts were released on a daily basis, with consumers rushing for them.

Many people only came to know the existence of COVID pills after this wave of infections. Now the hashtag #paxlovid has hit 10.35 million reads on Weibo (China's equivalent of Twitter), more and more Chinese are turning to social media seeking to purchase Paxlovid. With genuine drugs hard to come by, many people are turning their attention to Indian generic drugs. As the Chinese New Year came, the price of generic drugs once exceeded 3,000 RMB (about $440). Meanwhile, Pfizer's original drug’s price went over 10,000 RMB (about $1,470).

Generic alternatives

In order to bring the efficacy of Paxlovid to more people as soon as possible, especially in low- and middle-income countries, the UN-backed Public Health International Medicines Patent Pool (MPP) reached a voluntary licensing agreement with Pfizer in November 2021, whereby some companies were allowed to produce generic versions of the drug.

There are several versions of the generic drug currently circulating in China. The Indian generics of Pfizer Paxlovid are Primovir and Paxista. After coming across the ocean from India, the price could reach four times higher in China. Some other options are Monuvir from Bangladesh, Molravir from Vietnam and Molavir from Laos.

Chen went on Twitter to look for generic drugs agents, as it was almost impossible to buy them on official shopping websites. Even doctors suggest patients to “look for their own sources to buy COVID drugs.” Before she had concerns on its reliability, but with the ongoing panic that is exploding with the infection waves, she has no choice other than purchasing the generic drugs.

As seen in Chen’s case, even for generic drugs, few are available on e-commerce platforms. There were still third party shops that pre-sold Indian generic drugs on Jingdong (China’s equivalent to Amazon) in December, but the links were soon taken down. As the infections grow, people could only look to social media for private drug agents.

Drug agents make big profits

Wu is a drug agent who serves as a proxy between wholesalers and buyers. In these two months, he could only sleep for two to three hours a day, as orders for COVID drugs grew on a daily basis. Since the end of Zero-COVID, he could sell a thousand boxes of generic drugs a day. He is careful not to do business on WeChat and only receives orders on foreign apps such as Telegram, Twitter and WhatsApp. The buyer sends the name of the medicine and the receipt information to Wu, who then informs the buyer of the payment information, and a third party helps to collect the money.

Wu started selling generic versions of COVID drugs back in March 2022. "They [the buyers then] were a little ahead of their time, wary of the government and knew they couldn't be relied on." After the end of Zero-COVID, demand for the drugs flooded the market. Other than professional agents like Wu, many Chinese overseas are also joining the business for its huge profit.

India is the world's largest exporter of generic drugs.

In China’s Drug Administration Law, importing small quantities of drugs for individual use are allowed without relevant import permits, which is how agents like Wu could perform their business so easily. “In fact, Chinese customs are used to medicines coming from India.”

India is the world's largest exporter of generic drugs. According to India's National Investment Promotion and Agency (NIPA), India accounts for 20% of the world's generic drug supply; outside of the U.S., India has the largest number of pharmaceutical plants with U.S. FDA approval requirements and supplies 40% of generic formulations to the U.S. market.

In this context, India has long become the supply source of low-cost generic drugs for buyers in China, especially for cancer patients.

In the 2018 Chinese film Dying To Survive, the protagonist works as a drug reseller in India, becoming a generic agent for a drug used to treat leukemia. The film is based on the true story of an agent for leukemia anti-cancer drugs, which brought Indian generic drugs into the public eye. With the new COVID infection wave, more and more people are joining the business like Wu.

Photo of Paxlovid tablets being produced

At a factory producing Paxlovid tablets

Philipp Von Ditfurth/dpa/ZUMA

Drugs for the rich

None of the generic drugs currently entering the mainland have been marketed through the Chinese Drug Administration. And the generic Pfizer drugs produced by MPP-authorised companies are supplied to 95 low- and middle-income countries, of which China is not one.

Negotiations for Paxlovid's entry into China's health insurance failed on Jan. 8, with the China Health Insurance Bureau stating that the failure stemmed from the high price quoted by Pfizer. The current health insurance reimbursement system will be abolished after 31 March and people will have to pay for it themselves. Although almost all countries have a coordinated government procurement of original or generic versions of potent drugs, few regions have a situation where the drugs go to the individual market like China.

On Jan. 9, Pfizer CEO Albert Bourla spoke about negotiations with the Chinese government. He revealed that Pfizer has adopted a tiered pricing approach for Paxlovid, with different pricing for high-income and low- and middle-income countries, the latter being 60-70% lower, and low-income countries being the lowest price with reference to cost. Albert Bourla pointed out that the Chinese government was bargaining for a lower price than the middle-income countries. "They are the second highest economy in the world. And I don't think that they should pay less than Salvador, right?"

The purchase price of Paxlovid is higher than that of China for several countries and regions. The average price for a course of treatment in the U.S. is approximately $530. The German government purchases a course of Paxlovid for €500. In Taiwan and Hong Kong, the purchase price per box is approximately US$700.

Jingyun Feng, a political scientist, revealed that the main reason why Covid drugs are not covered by Chinese health insurance is that "they are too expensive and will drag the whole insurance system down by crowding out other everyday or rare disease drugs." He also believes that the distribution of Paxlovid is market-based. "Why are these drugs more widely distributed in Shanghai and Beijing? People are richer there, so the drug is only allocated to developed areas."

Cost of saving human lives

Feng strongly disagrees with the market-based approach and believes that COVID drugs should be distributed in a state-coordinated way. "The pandemic is a public health crisis, not everyday illnesses, and the state is able to coordinate all resources in a way that goes beyond the original medical system." He pointed out that past approaches such as harsh lockdowns and distributing Lianhua qingwen have already mobilized resources and personnel in ways that go beyond normal procedures and systems.

Can you guarantee that your suppliers do not sell counterfeit drugs?

"Now is when the crisis really erupted," Feng said. "The state can spend a lot of money for epidemic prevention, but it is not willing to spend money for human lives, which is a very irresponsible practice."

Observers commented that the distribution of COVID drugs in China has already gone wrong. "The issue of supply and demand is for the government, the health care system to address. When you intend to open up, you should have prepared (the drug) before."

Wu is still busy with his business. Sometimes he is challenged by customers: I trust you not to sell counterfeit drugs, but can you guarantee that your suppliers do not sell counterfeit drugs? Can you guarantee that if you don't have counterfeit drugs in one batch, you won't have counterfeit drugs in the next batch?

Chen came to the conclusion after she finally received the drugs she bought. "Taking so much effort to survive in China still does not guarantee a good life."

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