An official from the FDA's center for drug evaluation and research (CDER) told the media that when the Chinese supplier of the heparin active pharmaceutical ingredient (API) applied for FDA approval, the agency mistakenly thought the application had been made by another company with a similar sounding name that already been inspected and approved by the FDA.
Because the regulator thought it had already inspected the plant and given it the thumbs up, it did not inspect the facility again, as is the usual practice - the FDA regards a positive initial inspection as evidence that a facility is abiding by good manufacturing practice (GMP) and so it routinely approves the supply of new drugs or drug ingredients from the same plant based on this.
Commenting on the mix up, the FDA spokesperson said that: "To date this is an isolated situation", adding that the wrong firm was put into the [inspection] database.
No details as to the identity of the firm have been forthcoming as yet.
Last week Baxter suspended the production of its blood-thinning drug heparin in multi-dose vials, following the deaths of four patients in the US who were given the drug in high doses, along with 350 reports of severe allergic reactions to the drug, with symptoms including a rapid drop in blood pressure, burning sensations, headaches, throat swelling and a shortness of breath.
It later emerged that it has emerged that the FDA has never inspected the facility.
The watchdog has now said that that a team of inspectors is on its way to China to take a look at the plant in question and assess whether it may have played a role in causing the heparin side effects.
The incident adds further fuel to the fire of those who are campaigning for better policing by the FDA of the thousands of foreign manufacturers that are now supplying their wares and services to the US.
Meanwhile, Baxter's woes are good news for its rival in the US heparin market, APP Pharmaceuticals.
Together the companies share this market evenly, although with Baxter bowing out as a contender, for now at least, APP is left in a position where it will supply the entire US market on its own.
The firm, which also has some of its heparin raw materials supplied from China, said its manufacturer and API suppliers for the drug have been inspected by both the FDA and China's state food and drug administration (SFDA).
Its drug has not been associated with a spike in serious side effects like Baxter's.
AAP said it is now ramping up production of its heparin in order to meet the increased demand and the FDA has acted rapidly to approve the company's new production lines for the purpose.