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GUANGZHOU, China (Reuters) - China, saddled with the world's second largest tuberculosis burden after India, is fighting an uphill battle against drug-resistant forms of the disease which will only drain the country's health budget.Drug-resistant TB, far more expensive to treat, emerges when patients fail to follow treatment regimens and take substandard drugs or stop treatment too early.Liu Zhongwu, a stonecutter working in southern China, for example, stopped taking his TB medication midway through a standard six-month course in 2007 because it was too costly."Even though one or two drugs were free, I had to pay 500 yuan ($73) a month for other drugs (to reduce side effects) and the side effects were bad, I suffered terrible gastric pain and had to stop work, I didn't even have energy to walk," said Liu.It is precisely this sort of behaviour that health experts are trying to stop because if the TB bacteria is not fully eliminated, it can mutate, resurge later and become resistant to the small arsenal of drugs that can fight the disease.China has 4.5 million TB cases currently; and each year 1.4 million people fall ill with the disease. TB killed 160,000 people in China in 2008, according to the World Health Organisation.TB killed 1.8 million people across the world in 2008, or a person every 20 seconds. It is not only a scourge in poor countries but also in the West, where it has flared anew in the last 20 years because of AIDS, which weakens the immune system.DRUG-RESISTANT STRAINTB is also a big drain on China's health budget because of a high incidence of people with a drug-resistant strain of the disease, which is a lot harder and more expensive to treat.In such cases, patients need to take drugs for up to two years and the worst type of TB, for which there is no cure, kills one out of every two patients."If there are more drug-resistant cases, the cost of TB treatment will rise by a lot, that's for sure. With drug resistance, we can't use first-line drugs and other drugs cost a lot more," said Lin Yan, director of the China office of the non-profit International Union Against TB and Lung Disease."When these patients infect others, the others will get drug-resistant TB. That increases the cost of treating that person and increases the chances of him not recovering."Regular TB costs 1,000 yuan to treat in China but drug-resistant TB ranges from 100,000 to 300,000 yuan per person, said Zhong Qiu of China's TB Expert Consultative Committee.China ranks second in the world with 112,000 drug-resistant TB cases in 2007, after India with 131,000. Russia has 43,000 cases, while South Africa has 16,000 and Bangladesh 15,000.China spent $225 million on tackling TB in 2008, up from $98 million in 2002, according to WHO. These figures do not take into account what patients pay out of their pockets, typically between 47 and 62 percent of their hospital bills.Drug-resistant TB made up 27.8 percent of all TB cases in China in 2000 versus five percent in advanced countries."There are many reasons for China's drug-resistant TB problem. Patients stop taking drugs when they feel better, maybe after a month. Some have no money for drugs if the treatment is not free and they don't even know this is a serious disease," said Lin."Some are so afraid of stigma they don't see a doctor, they just buy drugs over the counter."IGNORANCE, POVERTY, STIGMATB affects mostly poor people, who typically live in places where healthcare is not easily accessible. Many patients pay not only for treatment but also transportation, and any chronic, long-term disease can bankrupt entire families.Li Jiachuen, 45, quickly ran out of money and had to borrow from relatives and friends after he was diagnosed with TB."I don't take drugs now. I don't even have money to pay off my 20,000 yuan debt. I spent thousands of yuan on diagnosis and treatment and even more on transportation," Li said.WHO recommends all TB treatment be free because the disease is a public health threat.But in China, diagnosis and treatment is only free in specialist TB outpatient clinics. General hospitals, which have been self-financing since the 1990s, impose charges."TB is a political problem because it is infectious. It has societal impact, it is a threat to public health ... free treatment is very important," said Zhong, who also heads the Anti-TB Research Institute in China's southern Guangdong province.The world's only TB vaccine is 100 years old and there has been no new TB drug for more than 40 years. But the resurgence of TB due to AIDS has forced the West back into TB research in the last 20 years and a string of experimental drugs and vaccines are now in the pipeline.Chinese scientists are working on a new class of TB drugs based on an old drug called clofazimine, used in the past to treat leprosy, said Ann Ginsberg, chief medical officer of the TB Alliance, a US-based non-profit scientific group that pulls together partners to develop new TB drugs."They (scientists) found a very promising lead compound and we hope within the next six months ... it will come into formal pre-clinical development and get the formal animal and non human studies that are required to convince the regulators it can go onto people," said Ginsberg.