SHANGHAI/LONDON — Philippe Andre, a detective in the murky world of Chinese pharmaceuticals, has some alarming tales to tell.

Keith Bedford / Reuters

U.S. Customs and Border Protection officer Boris Sapozhnikov looks at counterfeit drugs seized by the agency on Aug. 15 at its offices at John F. Kennedy Airport in New York.

In May last year, he visited a factory an hour outside Shanghai that supposedly produced a pharmaceutical ingredient. While shown around by men wearing protective clothing and spotless hard hats, Andre noticed oddities: the floor was immaculately clean and some workers sat around idle.

The factory had an inspection log that spanned eight years with perfect record-keeping, but the handwriting was the same for all those years and not a single page was dog-eared. What's more, while the factory had equipment to dry its product, there were no connecting pipes to funnel steam or waste gases out of the plant.

"Obviously the product was not made there," said Andre, a Belgian who runs a pharmaceutical auditing firm in the eastern Chinese city of Tianjin that advises foreign drug companies buying ingredients in China. The building, he says, was just one of the "showroom" factories intended to disguise China's thriving industry in substandard and counterfeit drugs.

Four years ago, Beijing promised to clean up its act following the deaths of at least 149 Americans who received contaminated Chinese supplies of the blood-thinner heparin. But an examination by Reuters has found that unregulated Chinese chemical companies making active pharmaceutical ingredients (API) are still selling their products on the open market with few or no checks.

Interviews with more than a dozen API producers and brokers indicate drug ingredients are entering the global supply chain after being made with no oversight from China's State Food and Drug Administration (SFDA), and with no Good Manufacturing Practice (GMP) certification, an internationally recognized standard of quality assurance.

"There is falsification of APIs going on, we know it," said Lembit Rago, coordinator for Quality Assurance and Safety in Medicines with the World Health Organisation (WHO). "The regulated markets like Europe and the United States are relatively safe because they have well-resourced regulatory authorities. But the situation is different in places like Africa, where there are a lot of local medicine manufacturers who all use APIs from China."

The export of unregulated drug ingredients may be putting lives at risk, particularly in poor countries where local pharmaceutical controls are minimal. Medicines containing faulty active ingredients or the wrong dose do not work properly and can contribute to the emergence of drug-resistant strains of dangerous diseases, such as malaria.

'Crime against public health'
"We see this as a global crime against public health," said Edward Sagebiel, a spokesman for Eli Lilly and Co., a multinational pharmaceutical company that says it imposes high standards on its own products, but has seen the unauthorized production of the active ingredients for its drugs by unsupervised Chinese firms. "Because these bulk chemicals are unregulated, they are inherently unsafe."

China's dominant position in the global market for pharmaceutical ingredients makes the issue both pressing and hard to tackle.

"Illegal ingredients in bulk are a big problem, but nobody talks about it," said Guy Villax, chief executive of Hovione, an API supplier based in Portugal with factories there and in China, the United States and Ireland.

About 70 to 80 percent of all active drug ingredients — the biologically active component in medicines — originate in China and India, estimate industry experts, with China accounting for the lion's share. Its export market in these products is worth $22 billion in annual sales, according to the China Chamber of Commerce for Import and Export of Medicines and Health Products.

"If China for some reason decided to stop exporting APIs, within three months all our pharmacies would be empty," said Villax.

The risks go beyond approved drugs. Unlicensed Chinese chemical firms advertise substances that have been pulled from western markets on safety grounds, such as the weight-loss treatment rimonabant, once sold by French firm Sanofi SA as Acomplia.

Rimonabant was withdrawn in Europe in 2008 after being linked with users having suicidal thoughts, and it was never approved in the United States. Yet in August, Chinese suppliers were advertising the chemical compound online as available for export. Other unlicensed Chinese manufacturers offer active ingredients still protected by patent in western markets.

Meanwhile China's SFDA — the equivalent of the U.S. Food and Drug Administration — says foreign companies should take responsibility for standards by buying products only from properly certified exporters.

A spokesman for the SFDA told Reuters: "We hope drug watchdogs from importing countries give similar suggestions."

After the heparin scandal of 2008, Beijing issued a white paper stating that pharmaceutical companies making any APIs, not just those manufacturing APIs for a designated final product, must have a license from the SFDA. The authorities have also introduced more stringent manufacturing standards.

However, loopholes remain and legal experts say the tougher framework is not strictly enforced.

This year fake versions of Roche's injectable cancer drug Avastin appeared in the United States after transiting Europe. At the time, Roche said it was aware of many cases where counterfeiters had tried to fake other drugs in its portfolio and it was working with law enforcement agencies to stop the trade.

The precise origin of the fake Avastin remains unknown, but in June last year a Shanghai court sentenced 11 people to jail in connection with another case involving bogus Avastin.

A key regulatory weakness in China is the distinction between pharmaceutical and chemical companies. While the former are regulated by the SFDA, the latter, making everything from sweeteners to solvents, are not. Yet many chemical companies also churn out drug ingredients, exploiting a loophole by describing the products as chemicals, which they are, rather than the more specific designation of APIs.

Unregulated trade
The company New-Sensation Chemical, based in Zhengzhou, the capital of China's Henan province, is one chemical company involved in the unregulated trade. It specializes in producing peptides, a relatively complex class of compounds used in a range of drugs.

Grace Xi, a sales representative, said the company does its own manufacturing, quality control and export. While there is no suggestion its products are substandard, the firm is not GMP-certified or registered with the SFDA.

A New-Sensation product list reviewed by Reuters showed the chemical names of APIs used to treat prostate cancer, bone disease and abnormally low blood pressure, alongside growth hormones used by bodybuilders to build muscle.

The list also showed bremelanotide, touted as a female version of Viagra, which is still under testing by the U.S. company Palatin Technologies Inc. Though the drug is not yet approved for use in western markets, the product list of New-Sensation Chemical offered the active ingredient for $13 a vial.

When asked about bremelanotide, Xi said the chemical, though on the product list, was not really for sale. She said the company sold only chemical compounds, "not APIs".

Another chemical company, Jinan Hongfangde Pharmatech (JHP), of Jinan city in Shandong province, had a product list showing at least five patented products for sale. They included tiotropium bromide, a blockbuster lung drug co-promoted by Boehringer-Ingelheim and Pfizer Inc. and sold under the name Spiriva, and Eli Lilly's chemotherapy drug pemetrexed, sold under the name Alimta.

A spokeswoman for Boehringer-Ingelheim said the German group was aware there were problems with unlicensed suppliers, adding that it only bought ingredients to make its branded products from trusted sources and was rigorous on quality controls.

Pfizer and other multinational drug manufacturers, some of which have long-standing deals with respected Chinese companies, also said they were confident in their supplies and only bought from GMP-certified firms.

Allen Li, a sales representative of JHP, said his firm, which has no GMP certification and is not registered with the SFDA, was doing nothing wrong. "We do not infringe on patents, we respect the original manufacturer's research," he said.

When pressed about the production of APIs still under patent, Li said those substances were not for sale despite being advertised. He declined to answer further questions. "I'm tired of the criticism. Internet, print media, newspapers are keen to criticize," he said.

No senior executive from JHP or New-Sensation Chemical was available for comment.

Fatal consequences
The rise of the Internet has facilitated exports of drug ingredients. An online search brings up websites offering hundreds of Chinese API sellers. Those not GMP-certified or SFDA-registered are not necessarily substandard, but buyers lack independent quality assurance.

The pervasive presence of brokers in the supply line is another risk. Pharmaceutical companies looking to source APIs in China typically hire middlemen to help them navigate the language, red tape and protocol. That system helps Chinese companies making substandard APIs avoid detection.

Robert Walsh, managing director of biotech advisers Samsara Biopharma Consulting, which has offices in the United States and China, believes big-name multinational drug companies typically select Chinese suppliers on the basis of quality and core manufacturing competence, but says not all buyers are so picky, particularly low-cost generic drugmakers.

"Any number of foreign pharmaceutical companies go no further than looking for API suppliers at CPhI (an international pharmaceutical fair) based only on price," Walsh said.

Reuters spoke to brokers who said an API made by an unregulated chemical company would cost less than one from a company that had a GMP certificate.

"Different (API) grades have different prices. Sometimes we accept an order sheet and we happen to find a factory that can do it cheaper than our factory, we will outsource to them and make a bigger margin," said one broker based in China who sources for a South African outsourcing firm.

In China there are few legal repercussions for broker firms who relabel or misrepresent products, and tracing counterfeit and substandard APIs is extremely difficult.

"There are a lot of brokers who are relabeling (APIs) which means you can't trace where the API comes from and that adds to the risk," said the WHO's quality assurance expert Rago.

Andre, the Belgian drug detective, estimates he has uncovered fraud or misrepresentations in as many as 25 percent of cases where he has been hired to audit factories all over China. "If you can substitute an API that is expensive to make and manufactured at a high level with something that costs much less, then that can happen," Andre said. "It's impossible to give an exact number, but it's not rare. It's a minority, but not tiny minority."

The human cost can be high. Low-quality and fake anti-malarial drugs accounted for more than a third of samples recently analyzed in sub-Saharan Africa, according to a study in the Lancet Infectious Diseases journal in May. Separate research in the journal Research and Reports in Tropical Medicine found Chinese-made drugs to treat malaria and other common tropical infections performed particularly poorly in tests.

"I think Chinese exporters to Africa know that bad products will be less likely spotted there," said Roger Bate, resident scholar at the American Enterprise Institute, who led the second study.

Sometimes the effects of substandard medicines can be fatal: in 2006 about 100 people died in Panama after taking cough syrups containing a Chinese-made sweetener tainted with diethylene glycol, an industrial chemical used in antifreeze. Other cases, though not immediately lethal, pose long-term health threats. Earlier this year, Chinese authorities announced they had discovered millions of medicine capsules made with industrial gel containing chromium, a carcinogenic heavy metal.

Tougher enforcement
In August, Chinese authorities arrested nearly 2,000 people in a nationwide crackdown on counterfeit drugs, seizing more than $180 million worth of fake products purporting to treat illnesses ranging from diabetes to high blood pressure and rabies.

Officials are also deploying more technology. By 2015, China hopes to be able to electronically track different types of drugs from their production to end-market to prevent counterfeit and inferior drugs from being distributed, although this will only apply to products traded inside the country.

Despite these advances, legal experts and international officials still think China is not doing enough. Eli Lilly says it is unfortunate that the crackdown does not specifically target bulk pharmaceutical ingredients.

At the U.S. FDA, Commissioner Margaret Hamburg said her agency now had three offices in China and had identified a number of other products, in addition to heparin, where there could be particular "vulnerabilities".

She declined to give details, but brokers said any API with a potentially lucrative return was at risk if it could be made more cheaply by unregulated companies. Hamburg said: "We do think there's more work to be done in this area and we're very interested in working closely with China."

The United States and Europe both plan to tighten regulations to control API quality better. Washington recently approved the Generic Drug User Fee Amendments, which require inspections of foreign and domestic generic drug manufacturing facilities once every two years.

From next year the European Union will implement a Falsified Medicines Directive, putting the onus on drug companies to prove the purity of the ingredients they use, whether they are produced in Europe or imported.

These new measures will further protect western markets, where the risk of dangerous or counterfeit medicines entering the legitimate supply chain is already low. But developing countries with weak domestic regulations remain vulnerable.

Melanie Lee reported from Shanghai and Ben Hirschler from London; Additional reporting by Anna Yukhananov in Washington and Bill Berkrot in New York.

Related content:

• In India, oversight lacking in outsourced drug trials
• ‘People keep falling sick’; poor Indians recruited for clinical drug trials
• Reports: China stiff-arms FDA on jerky pet treat testing

GUJARAT, India – Rambha Gajre was desperate. She and her family faced eviction from their cramped, tin-roof hut if she didn’t soon repay loans she used to cover life-saving medical treatment for her son.

David Lom/NBC News

When Rambha Gajre and her family faced eviction from their cramped hut in Gujarat, India, she signed up to be a human guinea pig in drug trials for foreign pharmaceutical companies.

Hauling bags of concrete mix for $1 a day wasn’t nearly enough to pay back the money she borrowed to pay a doctor to repair a hole in her son’s heart, let alone feed her family of five more than one meal a day.

“Many people commit suicide,” she told “Dateline NBC,” “and I didn’t want to become one of those and I didn’t want people to think I did it to avoid repaying. I have two young kids, 10 and 12 years old. What would become of them?”

So Rambha did what thousands of other desperate women and men from India’s slums, and across the world, now do to survive -- she signed up to be a human guinea pig in drug trials for foreign pharmaceutical companies.

“I am helpless, I have to do this,” she said. “They don’t really force us, but I don’t have a choice.”
--------------------------------------------------------------------------------

Now, with the money she earns from drug studies -- up to $250 per trial -- Rambha is slowly repaying her loans.

Drug trial outsourcing to foreign countries is rapidly becoming an attractive alternative for pharmaceutical companies that are looking to save millions of dollars, avoid regulatory scrutiny and tap into a seemingly endless supply of drug study participants. 

But a year-long Dateline investigation into one of the preferred destinations for overseas drug trials, India, raises questions about lax regulatory oversight in these studies, the integrity of some of the companies contracted to run them and the reliability of the data they produce. 

Foreign drug trials have become crucial to pharmaceutical companies looking for approval from the U.S. Food and Drug Administration to sell their products to Americans. Eighty percent of the drugs that the FDA reviews for approval now rely on some tests done on foreign soil, according to a 2010 report issued by the U.S. Health and Human Service’s Office of Inspector General. 

The same report included another startling figure: The FDA inspects fewer than 1 percent of foreign drug trial sites, a number slightly higher than the percentage of sites inspected in the U.S. 

“We have no idea what's going on in these clinical trials,” said Dr. Carl Elliott, a professor at the Center for Bioethics at the University of Minnesota and author of “White Coat, Black Hat: Adventures on the Dark Side of Medicine.”

Elliot worries that the lack of oversight in foreign drug studies leaves poor, and often illiterate, people vulnerable to exploitation when companies consider test subjects part of a profit-making equation. 

Tim Sandler/NBC News

"Dateline NBC" correspondent Chris Hansen interviews "Rekha," another drug trial participant, in her home in Gujarat, India, which she shares with her husband and six children.

“The faster you can get the subjects, the faster that you can do the trials,” he said. “The faster you do the trials, the faster you get the drug approved.  The faster you get the drug approved, the sooner it goes on the market and the more money it makes.”

Testing the Testers

With each drug trial costing an estimated $180 million in the U.S., many pharmaceutical companies are turning to places like India, where they can often pay less than half as much for their human experiments. 

Some pharmaceutical companies, including Pfizer and Bristol Myers Squibb, have their own research operations in India. But other companies rely on foreign middlemen -- contract research organizations, or CROs -- to recruit patients, conduct tests, and analyze data that will be submitted to the FDA.

The proliferation of CROs in India worries Dr. Chandra Gulhati, editor of the “Monthly Index of Medical Specialties,” an Indian medical journal. Indian CROs, he cautioned, are entirely unregulated and unmonitored by the government. 

“They've just come, opened the shop and nobody is asking them any questions,” he said. “To my knowledge, not even one trial has been monitored from A to Z. … They have no legal status in this country.  Who are they?”

To test the integrity of those unregulated companies, Dateline set up a fictitious pharmaceutical company called Malum Kinetics. The company was little more than a $13-a-month homemade website, a post office box address in New York, business cards, cell phones and an answering machine. 

Using publicly available information, Dateline put together a plan to test a drug identical to Vioxx, a pain reliever withdrawn from the market in 2004 and linked by studies to thousands of strokes, heart attacks and deaths.  The plan was virtually the same one that Vioxx’s manufacturer, Merck, used to test whether Vioxx could shrink colon polyps. The test was halted after Merck discovered an increased risk of heart attacks and strokes.

Dateline producers removed Vioxx’s brand and generic names from the plan, but left in other red flags that clearly identified the drug, including the drug maker’s original abbreviation for Vioxx: MK-0966. A simple Google search shows MK-0966 is Vioxx. The plan also included other simple clues, such as Vioxx’s chemical name and its approval history as a pain reliever.

The test: Would the CROs have the basic scientific knowledge to question proposed experiments on humans with a drug already withdrawn from the worldwide market? And how thoroughly would a foreign CRO check the legitimacy of an unknown drug company offering a potentially lucrative business opportunity?

Dateline sent the plan to two prominent Indian contract research companies, Lambda Therapeutic Research and Synchron Research Services. Both firms claim to do business with large pharmaceutical companies. 

Along with reviewing the Dateline study plan, they were asked to develop their own plan to recruit patients, get necessary approvals, and run the actual tests. 

Both companies put together plans, and meetings in India were arranged. 

‘Doctor is God’ 

In the sprawling central city of Hyderabad, Synchron’s director of clinical operations, Narasimha Murthy, warmly greeted Dateline correspondent Chris Hansen, the purported CEO of Malum Kinetics, and his team (all of whom were outfitted with hidden cameras). They were escorted to a bare-bones conference room in a building prone to power outages.

During a laptop PowerPoint presentation, Murthy said that Synchron was well equipped to manage a drug company’s testing from start to finish. 

“It’s one-stop shopping,” he said.

Murthy never indicated that he knew the drug he was bidding on to test was identical to Vioxx.

In fact, he told Hansen that he showed part of the plan to private doctors who would be conducting the clinical trials and they did not spot any safety issues.

“They have not come up with any queries as such,” he said. “They have no issues.”

Murthy also noted that those same doctors would not have a problem finding patients to test the drug. Poor patients getting free treatment obediently follow their doctors’ orders, he assured Hansen. 

“Doctor is god,” Murthy said. “So if I go to him, I will blindly follow what he says.” 

Related story: How poor Indians are recruited for clinical drug trials

Synchron, he said, was ready to move ahead with the plan to test Malum Kinetics’ drug on humans, though he raised the prospect that an Indian ethics panel might have concerns -- not due to safety risks, but because some patients in the study would be receiving a placebo and would not benefit from the drug. 

“Personally, I don’t see any issues,” he said. “We can do it. I am confident that we can do it.” 

The price tag: just over $1 million.

Hansen was invited to meet Murthy a month later at a huge expo in Chicago, where drug companies and hundreds of potential contractors from around the world were to gather to promote their products and services. 

Dateline's Chris Hansen confronts Narasimha Murthy, director of clinical operations for Synchron Research Services, an Indian company that claims to do business with major pharmaceutical companies, at a trade show in Chicago.

When the two met, Hansen disclosed to Murthy that he was in fact a journalist, not Malum Kinetic’s CEO. He asked how it was possible that Synchron did not pick up that the drug they were to test on humans was identical to Vioxx, a drug so potentially dangerous that it was withdrawn from the market worldwide. 

At first Murthy said Synchron would have detected it after more research. But minutes later, he claimed the company knew what the drug was all along. 

“We did pick up, we did pick up,” Murthy said. “But the only thing is we didn’t share it with you at that point of time. We didn’t bring it to your notice.” 

Synchron, he added, would never have agreed to take on the test. 

“We definitely wouldn’t have taken it up,” Murthy insisted.  And, he added, an Indian ethics committee would have found problems with the study too, contradicting his optimism about getting approval during the meeting in India. 

“The ethics committee would definitely halt it,” he said before turning away and walking back to Synchron’s promotion booth. 

‘This is a very risky trial’

Dateline’s meeting with executives at the other CRO, Lambda Therapeutic Research, in India ended more contentiously. 

In the fast-growing western Indian city of Ahmedabad, Lambda’s immaculate headquarters and test facilities rise above desolate slums that supply an endless stream of drug study volunteers. 

Armed guards met Dateline’s team at the gate and directed them to an expansive reception area. A sign greeted them: “Lambda welcomes Mr. Hansen & Malum Kinetics team." 

Dr. Philip Mathew, a Lambda vice president who ran clinical trials for a contract research company in the U.S. before joining the firm, led a tour of the vast facility, pointing out  offices, labs and scores of human test subjects. 

“These are our volunteers,” Mathew said, walking past test recruits watching a wide-screen television in a waiting area.  The test subjects earn an average of $150 per study, he said, noting it was a fraction of what researchers in the U.S. would pay their volunteers. 

“That’s for the entire study, as opposed to, say $150 a day, which is what the U.S. rates are,” he said. 

In a plush boardroom, Lambda’s presentation was projected onto a large screen. One company executive said four specialists, all physicians, had reviewed the Malum Kinetics plan.

“They came to the conclusion it’s practical,” he said. 

Lambda’s price tag for the project: $775,000. 

Well into the discussion, Mathew raised a concern that suggested he knew that the proposed study was fictitious. After months of correspondence with Malum Kinetics, he said his team had just realized the test drug was the same as Vioxx. 

“It’s withdrawn currently worldwide, right?” he said. “It’s not sold …This is a very risky trial.” 

But rather than turn down the business because of the drug’s potential deadly side effects, Mathew said Lambda was still interested in getting the trial started. 

“We are willing to give it a fair trial,” he said. “We are in the business of doing research regardless of how challenging the project is, but we have to be also realistic.” 

Mathew and his team said they would need to take precautions to protect patients, such as monitoring those with cardiac risks and lowering doses if necessary. 

But the major challenge, he explained, would be persuading an Indian regulatory board to approve human testing. 

“We have to have a huge, huge scientific argument to make the case for doing a study with Vioxx,” he said, noting that Malum Kinetics would have to help Lambda prepare a scientific case. 

To help build the scientific argument, Mathew proposed a strategy: hire a well-connected medical opinion leader as a consultant to persuade Indian regulators to allow the drug be tested on humans. 

“Nothing works like consultants from within India who are in this field who can speak for the drug,” Mathew said. 

By paying a $5,000-to-$10,000 consultant fee, he added, “We can take whoever we want who is a big heavyweight in India.” 

Asked how confident he was that a consultant could help make a winning case for a drug like Vioxx, Mathew replied, “Very confident. Very confident.” 

He estimated the odds for approval were “fifty-fifty.” 

 “From our perspective,” he added, “we’d love to take on the challenge.” 

“Lockdown now!” 

The meeting ended with Lambda ready to take the study to the next level. With most of the executives gone from the room, Hansen pulled Dr. Mathew aside, and, with two open cameras now trained on him, informed the Lambda executive that he was a news reporter. Malum Kinetics, he told him, did not exist. 

“I knew that,” Mathew said, laughing nervously. “You must be out of your mind to come here with a withdrawn drug.” 

Unaware that hidden cameras had recorded the entire tour and meeting, Mathew backpedaled. 

“We are fully aware of the risks of Vioxx and we never agreed to do your study,” he said. “We want to discuss with you what this is all about.” 

Hansen reminded Mathew, “Even after we talked about this being Vioxx, you said that we could go ahead and very likely do a study.” 

“No. Fifty-fifty it will get rejected,” he replied. 

“Fifty-fifty we could go ahead,” Hansen said. 

Mathew said he took offense that Lambda’s integrity was being questioned. 

“We stand for ethics,” he said. “We work for sound scientific principles.” 

Another Lambda executive, Mrinal Kammili, stepped in and angrily declared the interview over. With the tension in the room rising, Hansen told the executives, “If you want us to leave, we’ll respectfully leave.” 

But Kammili blocked the door. Raising his voice, he told the NBC crew, “Please have a seat! Please have a seat!” 

“You can’t hold us against our will,” Hansen said, moving toward the doorway. 

Kammili responded that they were calling the police, and once again insisted that the crew be seated. 

Security guards at Lambda Therapeutic Research, a contract research company in Ahmedabad, India.

Mathew yelled to other staff in the room. “Call security! Lock the doors! Lock down now!” 

A security detail quickly arrived to guard the door, detaining Hansen and the rest of the Dateline team for nearly five hours. 

Local police arrived and logged complaints from Lambda and the Dateline crew, who were eventually escorted out of the building and brought to a small police station. 

After reviewing the allegations, the top police inspector informed Lambda’s executives that the Dateline crew had not violated any laws.  The crew was free to leave, he said, on the condition that copies of footage taken openly at Lambda be provided to police and Lambda executives. Neither group was aware of Dateline’s hidden camera footage. 

Assessing the risks 

Dateline took its findings to former FDA Commissioner Dr. David Kessler. 

“No contract research organization should undertake any clinical trial without being sure that the risks are acceptable in light of the benefits,” he said.  “And in light of what was known, that conduct is just totally unacceptable.” 

Kessler said questions about the integrity of foreign drug trials, and those who run them, will only increase until a universal system is in place that roots out unqualified researchers. 

“Any doctor who runs a clinical trial should be certified, should be trained, should have specific qualifications to do those trials,” he said. 

Doug Peddicord, the director of the Association of Clinical Research Organizations, defended the industry's track record. 

“Concerns notwithstanding, on the whole the clinical research enterprise is amazingly safe and amazingly productive,” he said. 

Peddicord, whose organization does not include Lambda or Synchron as members, says there is too much at stake for the industry to tolerate unethical behavior. 

“In the instances where we have seen bad actors,” he said, “we’ve often seen that those bad actors go out of business rather promptly.” 

The pharmaceutical industry's lead trade group, Pharmaceutical Research and Manufacturers of America, declined comment. 

U.S. Sen. Charles Grassley, R-Iowa, an outspoken critic of the FDA’s oversight of pharmaceutical companies, faulted the agency for not taking a more active role in policing clinical trials from the very beginning. 

“They don't oversee those clinical trials until most of them are completed. Then they see the results,” he said. “To what extent can they trust the results?” 

The FDA declined requests for an interview, but said in a statement that the agency is already "strongly engaged in the clinical research process" -- from inspecting drug makers and their contractors to monitoring drugs after they are approved for sale. 

The agency also said it is establishing international offices to "improve its ability to oversee" the growing number of foreign drug trials. 

Kessler believes the situation will not improve until Congress provides the FDA with the resources it needs to more fully monitor and regulate the clinical trial system. 

In the meantime, Kessler worries about the ongoing risks -- risks for volunteers testing the drugs and for the people to whom they are ultimately prescribed. 

“What's going to happen, and I can predict this … it’s been the history over the last 100 years.  We don't act until there's a problem.”  

“Until people die?” Hansen asked. 

“Regrettably.”

This week, the White House drug czar called the death of Whitney Houston a “teachable moment.” Why do so many celebrities struggling with addiction keep relapsing, even after pricey rehab?

Investigative correspondent Jeff Rossen looks at the issue for TODAY, touring a celebrity rehab center. He finds that the cushy facilities, lack of consequences, and an army of willing enablers for celebrities, all make it difficult to go straight.

See the Rossen Reports for his report and a video tour of Promises, a Los Angeles rehabilitation center where patients enjoy luxurious suites, massages and gourmet food while getting treatment for addictions.