SHANGHAI—Drugs that failed to make it to the market in the U.S. and elsewhere are finding new life in China.
In 2013, Bristol-Myers Squibb Co. BMY 2.28 % stopped global trials of a first-line liver-cancer drug after it failed to outperform a rival. Instead, the company licensed the drug, brivanib, to a Chinese startup.
The startup, Shanghai-based Zai Lab Ltd., sees high potential for brivanib in China because its rival—sorafenib, developed by Bayer AG BAYRY 0.55 % and Onyx Pharmaceuticals Inc.—costs around $ 7,500 for one month of treatment and isn’t covered by national insurance.
“We hope to give the Chinese patients a more reasonable price,” said Samantha Du, founder of Zai Lab, one of several Chinese firms joining forces with Western pharmaceuticals over partially developed drugs in China.
They’re chasing a market where the best new global drugs face long delays while regulators clear a speedier path for Chinese medications.
But the new trend also raises the question of whether China has become a dumping ground for inferior drugs.
I. Glenn Cohen, a Harvard Law School professor who studies medical ethics, said that because of differences in regulatory standards it isn’t unusual or unlawful for a company to get a drug approved in one jurisdiction and not another.
For one thing, in China a drug doesn’t have to prove superiority over existing drugs—a major hurdle in the U.S., where 90% of candidates get dropped in the clinical-trial process.
Industry experts say pharmaceutical companies have long sold drugs in China that were never tested or marketed in other countries. “Why? The cynical answer is because they can,” said Laura Nelson Carney, senior research analyst covering Asia-Pacific health care at Bernstein Research.
The stroke drug cinepazide was withdrawn from Spain, Italy and France in the late 1980s and 1990s, after reports of blood disorders associated with its use. By 2010, it had become China’s top-selling drug, according to Credit Suisse Equity Research.
The company that markets it, Sihuan Pharmaceutical Holdings Group Ltd. 0460 -9.06 % , says the generic cinepazide it produces is more purified than the branded version that was sold in Europe, and its safety and efficacy is recognized by Chinese authorities and patients.
China’s State Food and Drug Administration didn’t respond to repeated requests for comments on its drug-approval process or the quality of drugs in China. Officials at the U.S. Food and Drug Administration declined to comment on trials in other countries.
China has long tried to clean up drug approvals. In 2007, it executed Zheng Xiaoyu, who had helped create the Chinese FDA, but who as the head of it was accused of accepting bribes from drugmakers trying to win approvals.
During Mr. Zheng’s tenure, more than 150,000 drug applications were approved.
Problems persist. The Chinese drug regulator says that since it threatened last year to severely punish those who submit fabricated clinical-trial data, drugmakers have withdrawn nearly four-fifths of drug applications.
A recent scandal over improperly handled vaccines has reignited concerns over drug safety.
By finding local partners in China, global drugmakers have a second chance to make money on drugs that have fallen short elsewhere. Beijing, which wants to build a competitive domestic pharmaceutical market, welcomes such partnerships.
For Chinese consumers, the trend could mean shorter wait times and lower costs for new drugs—even if they aren’t the best in their class.
For now, Chinese regulators ask for additional testing of drugs approved by the U.S. FDA. Approval to start trials can take more than a year. By comparison, the U.S. regulator says clinical trials can start 30 days after an application has been submitted.
Only 21% of drugs launched globally between 2008 and 2012 were available in China as of 2013, compared with 68% in the U.S., according to market researcher IMS Health.
For example, revolutionary new hepatitis C treatments, shown to cure more than 90% of patients within a few months, have yet to make it to China, which has one of the world’s highest rates of the disease. Instead, patients rely on older therapies, often with side effects such as nausea and hair loss.
Sun Wei, 46 years old, from Shenyang in China’s northeast, said that after a year of interferon injections, her hepatitis C infection still wasn’t cured, her weight had dropped 93 pounds to 110 pounds, and she had developed severe joint pain. “I looked older than 60,” she said.
In October, she traveled to New Delhi to buy three months’ worth of Gilead Sciences Inc. GILD -0.54 % ’s blockbuster drug Sovaldi, which is still in the testing stage in China. She says she now tests negative for hepatitis C.
Medical tourism from China to countries like India, Laos and Bangladesh—where hepatitis C treatments are available and at a much lower cost than in the U.S.—is potentially a more than $ 50 billion market, according to a recent report by investment firm Founder Securities.
China’s drug regulator has promised to speed up approvals of new drugs for AIDS, cancer and infectious diseases, including those from foreign manufacturers.
Bristol-Myers is seeking approval of its hepatitis C drug asunaprevir in China even though it dropped the drug’s U.S. application shortly before the expected FDA decision, as rivals were near approvals. Regulators in Japan, South Korea and Taiwan, as well as some countries in Latin America and Eastern Europe, have approved asunaprevir to sell in combination with another drug.
A Bristol-Myers spokesman said the company’s hepatitis C strategy focuses on the unique unmet medical need of each local market.
As for brivanib, Bristol-Myers says the drug may have special promise in China, where hepatocellular carcinoma is much more common than in the West due to China’s high prevalence of hepatitis infections.
Stuart Schweitzer, a University of California-Los Angeles professor of health policy and management, says an affordable drug can be preferable to a wonder drug that is too expensive.
“Suppose the drugs worked, but not as well as the drugs already on the market. Are those drugs ‘failures’?”