This is the view of Guy Villax, the chief executive of Portuguese company Hovione, who delivered a strong request for the playing field to be levelled at the Conference on Pharmaceutical Ingredients (CPhI) meeting in Brussels, Belgium, last week.
His proposed solution is to follow the lead of the US, where all suppliers of APIs are license and inspected by the Food and Drug Administration (FDA). This reduces the number of suppliers to those that can implement expensive Good Manufacturing Practice (GMP) standards, and quality - but also prices - are higher.
In Europe, he asserted, an estimated 70 per cent of the APIs used in medicinal products are sourced from plants - based in areas such as Asia - that have never been inspected for GMP by a European Union official.
The reason is that under the regulatory situation in Europe at present GMP certification is not mandatory, and there is only a possibility of inspection of plants. The responsibility for quality lies at the door of the pharmaceutical companies, but it is essentially self-regulation.
So there is nothing to stop a company buying an API on the basis of its low price, regardless of whether it has been made according to GMP.
The results is that rather than a few hundred suppliers as in the US, Europe has literally thousands of companies importing APIs - any company that can meet product specifications can do so - yet only a tiny fraction will be GMP-inspected. Many APIs come in through brokers, who alter labelling to make traceability difficult.
Europe's CMOs now find themselves in a ridiculous situation, in which they can compete in the US but not their home market, said Villax.
But is there really a quality issue in Europe? He believes so, citing an analysis of the 58 inspections that the European Directorate for the Quality of Medicines has carried out since 1999.
Among these, 'the failure rate of Asian plants inspected by European officials was 18 per cent. For Europe-based contract manufacturers it was zero', said Villax.
"The current flood of generic APIs from Asia puts the health of European consumers at risk and also gives a commercial advantage to unregistered manufacturers, creating a very dangerous spiral of increasing risk," he added.
Still, Villax conceded that to date there has been little evidence of a widespread public health issue caused by the quality of generic APIs in Europe. But some cases do exist, he noted, referring to a University of Wurzberg study into the quality and origin of the antibiotic gentamicin sold in Europe.
This found that in around one third of cases, the manufacturers of the ingredient in China were not properly registered or even traceable. "A few years ago patient deaths have been reported in other parts of the world as a result of such practice," said Villax.
The answer to this problem is to adopt an FDA-like system in which inspections are required before a certificate to import APIs into the EU can be given, according to Villax. The European Medicines Agency (EMEA) and EDQM should be responsible for verifying compliance, and set up a foreign inspectorate service.
Ultimately, no new marketing authorisations should be granted in Europe without proper certification of GMP compliance for the API, he added. He also suggested that an interim solution might be to allow the EU to recognise FDA certifications, while acknowledging that there are political issues that could make this difficult.
"It is in the power of the European Commission to ensure that the 'back door' entry of APIs from sources not subject to compliance inspections is closed," concluded Villax. This will ensure a higher standard of medicines and help improve the competitiveness of European fine chemical API manufacturers.