Nearly Hundred Shanxi Children Die or Are Gravely Ill, Cause Might Be Vaccines, Cont'd

Reports 1-3

Investigative Report 4: Behind the Problematic Vaccines (Parts abridged).

Reporter is again Wang Keqin (王克勤)

How were the vaccines handled before? Why did Shanxi suddenly see an influx of vaccines illegally exposed to high temperatures?

Previously, China exerted tight control over the production and distribution of vaccines. They must be manufactured in factories certified by the central government; ordering, dissemination, and storage are then taken care of by government-funded CDCs. Furthermore, the law requires the vaccines to be used under the "supervision and guidance of sanitation and epidemic prevention agencies." Therefore, one of the main duties of Shanxi CDC and similar departments, built from 100% government money, is to ensure proper management and delivery of vaccine to the 35 million people living in Shanxi.

Prior to October 2005, Shanxi was like any other province by making one of its internal divisions responsible for allocation and delivery.

There are two kinds of vaccines. Government provides Type 1 vaccine free of charge to the public, and inoculation is mandatory. The packages are correspondingly marked "free" and "immunization planning." The second kind is not free. Citizens who wish to be vaccinated must pay for the shots themselves. However, in the past, Shanxi CDC managed both types. The revenues generated by the second type are given back to the national treasury.

On June 1, 2005, when Vaccine Ordinance (疫苗条例) went into effect, the manner under which the second type is sold changed.

People saw business opportunities

The Vaccine Ordinance announced: "Vaccine manufacturers may supply Type 2 vaccine to CDCs, immunization centers, and wholesale business units. Wholesale business units may supply Type 2 vaccines to CDCs, immunization centers, and other wholesale business units."

The new rule broke traditional monopolies. The goals were to encourage fair competition and lower costs so that common citizens can benefit.

Chen Taoan told the reporter: some people saw in this change an enormous opportunity to make money.

First, Communicable Disease Prevention Act and Vaccine Ordinance granted control to health administrative departments and CDCs, while at the same time, it enlarged the pool of potential vaccine suppliers. Second, there is a large gap between production cost of Type 2 vaccine and its unit sale price. Vaccines produced at 10 yuan per piece are sold for 30-50 yuan per piece. Third, as people grow more knowledgeable about disease prevention, the demand for vaccines continually increase. On top of all this, health administrative departments can make "suggestions" to citizens concerning Type 2 vaccines.

Sudden emergence of "The Ministry of Health Enterprise"

In July 2005, Information Chief at Shanxi CDC Chen Taoan was removed from his post.

In October, both director Chen Hongsheng (陈宏生) and deputy director Zhang Junshu (张俊书) of the division responsible for vaccine allocation and delivery were removed from their respective posts.

In December, Treasurer Du Bijie (杜碧杰) was removed from his post.

Chen Taoan said: "Our head Li Wenyuan (栗文元) was very serious when he told me, after discussions within the organization, we decided to move you to Logistics Property Management Division. It means long term rest for you, but salary and bonuses will stay the same. You have done well on your job. Transferring you is a decision made by the Party."

Just when many officials were being removed from crucial posts, Tian Jianguo was appointed Director of Biological Product Distribution Center. The old department headed by Chen Hongsheng and Zhang Junshu was disbanded.

The reporter saw the following paragraph in the December 12, 2005 "Meeting Minutes":

After careful consideration, study and screening, Beijing Huawei Era Pharmaceutical Biotechnology Co. Ltd. (北京华卫时代医药生物技术有限公司) is named Ministry of Health Enterprise. The company has been long been in the business of making biological projects and is familiar with Shanxi market. We establish the new Biological Product Distribution Center, which will be operated by Huawei. Huawei will hand over 3.80 million yuan per year with a payment in each quarter. Huawei will also pay 500,000 yuan as risk deposit.

16 days later, Shanxi CDC announced the opening of the new Biological Product Distribution Center, whose new director is Huawei's CEO Tian Jianguo. The CDC announcement also ordered immunization agencies at all levels along with biotechnology companies to support and cooperate with Huawei.

Health Department promote specially labeled vaccines

Beginning January 1, 2006, vaccine supply and management rights went to Huawei. The delivery itself is not very lucrative, so Tian Jianguo came up with the idea "labeled vaccines."

Chen Taoan mentioned that, starting March 2006, Tian Jianguo called in hotel waiters and temporary workers to affix "To be used only by Shanxi CDC" to all Type 2 vaccines packages.

Families of those who have been vaccinated showed the packages to the reporter. Each label is a little smaller than a Chinese one cent coin. The top half shows a "CDPC Great Wall," the unified trademark for all government CDCs. The lower half is occupied by "HW", pinyin abbreviation of Huawei. Finally at the bottom are the words "To be used only by Shanxi CDC".

According to national rules and regulations, medicine labels should only be explanatory in nature. It can describe the drug uses but not imply efficacy. In other words, affixing "To be used only by Shanxi CDC" and "HW" to vaccines is not legally sound. Furthermore, before use, all tags are required to be approved by the State Food and Drug Administration.

Under "Regarding a unified symbol for CDC institutions" from Shanxi Ministry of Health, the said label will be limited to "CDC buildings, objects and equipment." It serves as a sign indicative of disease control institutions. As long as it is in use, the label shall not be altered in anyway.

"With this label, Tian Jianguo could dominate Shanxi market for Type 2 vaccine, eliminate competition, and generate huge profits."

"Tian Jianguo not only invented the first tagged vaccines, he also made Shanxi Ministry of Health market his products."

In several 2006, 2007 documents, the province's Ministry of Health promoted "To be used only by Shanxi CDC" labels as the sole method of identifying good vaccines that are dispensed by Shanxi CDC.

"Huawei became the government-sponsored business to monopolize the vaccine network"

"Since the special labels did not give Tian enough control, he set up additional distribution centers in several Shanxi areas. A giant marketing and sales network formed." Recounted Chen Taoan.

Starting from April 2006, Huawei CEO Tian Jianguo acted in proxy for Shanxi CDC (authorized by Director Li Wenyuan) to sign various cooperation agreements with Changzhi, Chengcheng, Lyu Liang, Xinzhou, Shuozhou (长治、晋城、临汾、吕梁、忻州、朔州), and other local CDCs.

The province CDC promised not to sell Type 2 vaccines to any outside parties. In return, local CDCs would only purchase Type 2 vaccines from the province.

Shanxi Ministry of Health and CDC further required all vaccines within Shanxi to be purchased from Disease Control and Prevention Centers, and these vaccines must have the special labels. Violators will be held responsible for any unsafe and ineffective products. Any employers or individuals who do not obtain their shots through approved channels will be punished when discovered.

Huawei thus achieved its double identity both as the market regulator and as the sole salesman for vaccines.