04/24/2008- WASHINGTON -(Dow Jones)- A top Food and Drug Administration official said Monday the agency has found a link between contaminated lots of Baxter International Inc.'s (BAX) blood-thinner heparin and hundreds of allergic reactions and dozens of deaths.

The agency said the same contaminant in the Baxter heparin has also been found in heparin products sold by other companies in at least 10 other countries. In Baxter's case, the active ingredient used to make heparin was supplied by Scientific Protein Laboratories LLC of Waunakee, Wis., which has a facility in China known as Changzhou SPL.

FDA officials said batches of contaminated heparin found outside the U.S. have been linked to 10 Chinese- based suppliers. Earlier Monday, Chinese officials suggested that the heparin contamination problem was not linked to the allergic reactions.

Janet Woodcock, the head of the FDA's drug division, said the agency saw a sharp increase in the number of reports of allergic reactions and deaths in the U.S. starting in November 2007, and the trend continued through February, when Baxter recalled most of its heparin products. The reports of allergic reactions and deaths are not separated by company and are not necessarily all tied to Baxter products.

Woodcock said the agency believes the allergic reactions occurred in patients receiving large bolus doses of heparin that were rapidly injected. While other countries have found contaminated heparin, Woodcock said so far only the U.S. and Germany saw a temporary spike in the number of adverse events.

Last month, the FDA said it found that some batches of recalled Baxter heparin contained oversulfated chondroitin sulfate, an altered version of chondroitin sulfate that's used as a dietary supplement and is typically made from animal cartilage. Oversulfated chondroitin sulfate is chemically similar to the active ingredient in heparin, which is derived from pig intestines, and is cheaper to make.

Woodcock said health regulators have found contaminated active ingredients used to make heparin dating back to 2006. She said the first batches of finished heparin products likely entered world-wide markets in 2007.

"We don't know where the contamination occurred, but the one thing we all have in common is China," said Deborah Autor, the head of the FDA's office of compliance.

From January 2007 through March 2008, the FDA said it received 131 reports of deaths associated with heparin made by Baxter and other companies. Of the 131 deaths, 81 were reported after an allergic reaction. For all of 2006, the FDA said it received 55 reports of deaths associated with heparin, three of which were reported as an allergic reaction.

Earlier Monday, the FDA sent Baxter supplier Changzhou SPL a warning letter detailing the agency's concerns raised during a February plant inspection, saying, "There's no assurance that the processing steps used to manufacture heparin sodium ... are capable of effectively removing impurities."

In the warning letter, the FDA noted that Changzhou responded to the agency on March 17 and April 15 about the concerns raised in the inspection, but said, " Your response does not further address some of the deficiencies."

The agency also said the company doesn't have an adequate system in place to evaluate suppliers of crude materials or the crude materials themselves to ensure the materials are acceptable for use, and that the equipment used to make heparin sodium "is unsuitable."

In a statement, Changzhou SPL and Scientific Protein Laboratories said, "We regret FDA's decision to send a warning letter to Changzhou SPL, and we do not believe that the warning letter reflects Changzhou SPL's actual state of compliance with current good manufacturing practices."

SPL said it would continue to work with the FDA to identify the cause of the contamination, but said the contaminate "was not introduced in the manufacturing processes at Changzhou SPL or SPL" and was introduced earlier in the supply chain.

Scientific Protein is majority-owned by American Capital Strategies Ltd. ( ACAS), a buyout and financing firm based in Bethesda, Md.

Baxter did not immediately return a request for comment on the letter.

Baxter shares closed down 33 cents, or 0.5%, at $60.95.