China Imposes Record Fine on Vaccine Maker Over Safety Scandal

BEIJING — China has imposed a potentially crippling $1.3 billion fine on the company responsible for faulty vaccines given to hundreds of thousands of children, sending its strongest signal yet of a stricter legal environment for the scandal-prone industry.

The fine against the Changchun Changsheng Biotechnology Co. dwarfs previous penalties imposed on vaccine makers embroiled in safety scandals. It comes at a time of increasing anxieties among the country’s growing middle class, already furious about a spate of drug and food safety scandals that have threatened their sense of security.

“The government is imposing this heavy punishment to build effective order,” said Wang Yuedan, professor of immunology at Peking University. “From now on, no one will dare to touch this high-voltage wire.”

The government also barred Gao Junfang, the company’s chairwoman, and 14 other executives from working in the vaccine industry. They are still under investigation and could face criminal penalties.

Chinese officials said late Tuesday that they had levied the fine against the Changchun Changsheng, which is based in the northeastern Chinese province of Jilin and whose shares trade in the southern Chinese city of Shenzhen. The penalty disclosed Tuesday related specifically to the fabrication of data related to a rabies vaccine. The government did not disclose the number of doses or the number of people affected.

But the company’s vaccine scandal was much broader than rabies. Government investigators said in August that the company had also produced nearly 500,000 substandard doses of a vaccine for diphtheria, tetanus and whooping cough.

According to the government, Changchun Changsheng used expired vaccine materials, changed production batch numbers and destroyed and fabricated production records. The company also destroyed a computer hard disk to cover up its illegal acts.

Unlike previous vaccine scandals, the incident involving Changchun Changsheng angered many nationwide because it involved hundreds of thousands of faulty vaccines that are mostly given to babies, in a country where many couples have only one child.

The state-run news agency Xinhua called the penalty “top-level punishment” and “the most stringent” decision ever imposed on a vaccine company.

“I’ve never heard of such a big fine,” said Shi Luwen, the head of the department of pharmaceutical administration at Peking University and an adviser to the government on health care. “It will give the people peace of mind about the ecological environment.”

According to a New York Times analysis of previous vaccine scandals in China, vaccine makers paid an average $1.4 million in previous episodes.

Separately, Changchun Changsheng will pay consumers who were injected with their rabies vaccines compensation of $29,000 to $94,000 each, according to a joint statement released by four government agencies Tuesday. The company said it would set up a special compensation fund, according to a Tuesday filing to the Shenzhen stock exchange.

While the fine is likely to bring the current incarnation of Changchun Changsheng to an end, the company probably will not disappear forever. China needs a robust vaccine industry and is unlikely to fully close facilities that can help the country reach its health care ambitions.

“The state will not want to shut it down or completely eliminate it because of this matter,” said Wang, of Peking University. “This is not in line with the overall plan for our nation’s vaccine production.”

In the wake of the latest scandal, President Xi Jinping has fired dozens of senior officials and promised a swift cleanup of the industry.

Li Jiang, the legal counsel for the China Food and Drug Administration, said Changchun Changsheng had engaged in “organized, persistent and harmful illegal activities.”

“It was a shocking and an extremely rare illegal case in the field of drug safety,” he was quoted by Xinhua as saying.

The fine was imposed by the China Food and Drug Administration and the Jilin Provincial Food and Drug Administration. Trading of Changchun Changsheng has been halted since Aug. 31, after the company failed to disclose its half-year earnings report in time.