After Heparin
Protecting Consumers from the Risks of Substandard and Counterfeit Drugs

At the Pew Health Group roundtable conference (March 14 and 15, 2011; see Appendices B and C for list of attendees and full agenda), participants agreed that it is important to improve the FDA's oversight of foreign manufacturing. There was clear agreement among generic and brand industry representatives, API producers and consumer groups that inspections of foreign facilities should occur at the same rate as U.S. facility inspections and should be prioritized based on risk, as recommended by the GAO. One industry participant argued strongly that regulatory inspections should be unannounced whenever possible.
Several participants argued that the FDA must leverage the capacity of third parties, particularly other regulatory agencies, to achieve needed increased oversight. Suggestions included conducting cooperative inspections, reciprocal recognition of inspections by other qualified regulatory agencies and use of independent accredited inspectors. An industry participant suggested that the FDA could immediately alleviate resources by reducing its inspectional activity in the E.U. by relying on the results of inspections carried out by European regulators. One specific suggestion to the FDA was that the agency should participate in EudraGMP, a database launched by the European Medicines Agency in 2007 that catalogs suppliers with E.U. GMP certificates. A GAO official similarly encouraged the agency to take advantage of as much third-party information as is available.

FDA Deputy Commissioner John Taylor indicated that the FDA intends to make better use of third-party sources of information, and sought improved collaboration with foreign regulatory counterparts. The GAO called the FDA's effort to set up foreign offices a good first step, but noted that the staff in those new, small offices needs better feedback from headquarters on what it should be doing and how to manage a workload that can become overwhelming.

Representatives of generic drug and active-ingredient manufacturers spoke in support of new industry fees to cover the costs of increased foreign inspections and create a level playing field for U.S.-based manufacturers. However, a representative of the Pharmaceutical Research and Manufacturers of America (PhRMA) suggested that, while user fees have worked well in other contexts, Congress should offer additional appropriations so that the FDA can better oversee globalized manufacturing. FDA officials suggested that a potential ancillary benefit of facility registration fees would be to disincentivize foreign plants that do not export to the United States from registering with the FDA purely to obtain a "seal of approval." When such fees were introduced for medical devices, the number of registered facilities dropped by one-third.⁴⁴⁸

Stakeholders also discussed measures to improve the FDA's knowledge of foreign manufacturers and imported products. The GAO speaker delineated challenges to the FDA's database systems for overseas plants and emphasized the need to improve information entry for imported products at the border. The FDA and GAO representatives agreed that a unique facility identifier for plants would help improve tracking. An FDA participant said it would help to have the authority to require the provision of additional information with imported products, such as documentation of manufacturer compliance with regulations, and establishing that the drug meets identity, safety and purity standards. An FDA official noted that, unlike most other countries that require companies to show why their product should be allowed into the country, U.S. regulators must prove that there is something wrong with a product to keep it out of the country.

There was widespread agreement among participants that penalties for drug counterfeiters must be stronger. Several speakers made the point that it is currently more profitable and easier to counterfeit and adulterate medicines than to sell illicit drugs. A March 2011 interagency report to the Office of the Vice President also calls for increased penalties.⁴⁴⁹ Penalties provide a deterrent only when coupled with enforcement, a fact noted by a number of stakeholders concerned that criminals may increasingly target the pharmaceutical pipeline.

FDA representatives acknowledged that the agency needs adequate funding for inspections and updated IT systems, as well as novel enforcement tools and new authorities (for example, more comprehensive requirements for industry to report quality problems to the FDA; currently, such reporting is required only in relation to batches of finished products, not components or counterfeits). In addition, FDA personnel suggested that the agency needs mandatory recall authority, subpoena authority (to allow for effective investigations) and authority to keep a product out of the country if the foreign producer of that product delays, limits or refuses inspection. In addition, agency staff indicated that the FDA now lacks the authority to destroy adulterated products at the border.

Finally, three participants stressed the risks associated with OTC drugs, which are produced in large quantities with little regulatory oversight, often by smaller manufacturers with few quality controls.

A. Increase FDA oversight of overseas manufacturing

1. Significantly increase FDA foreign inspections. The FDA must inspect overseas plants at a rate that is high enough to encourage consistent conformance with quality and safety standards. Identified cases of noncompliance must be followed by appropriate sanctions. Inspections should be prioritized based on assessments of risk, but no plant should go uninspected indefinitely. If possible, the inspections should be unannounced as they are for U.S. inspections. Cooperation and coordination with local regulators could help achieve this goal. The FDA should also ensure that it inspects foreign plants making finished drugs, finished APIs or bulk APIs at least once before these facilities may export any such products to the United States. Increasing the FDA inspection rates will require more resources.
2. Use comprehensive risk assessment to prioritize inspections. Because the frequency of inspections will depend on the availability of resources, the task of prioritizing oversight should rely on an intelligent risk-based assessment system, incorporating factors such as inspection histories, counterfeit risk and environmental influences. The FDA has begun to assess the risk of economically motivated adulteration of various APIs; as of October 2010, the agency had risk-ranked more than 1,000 API products.⁴⁵⁰
3. Create a meaningful, dedicated foreign inspectorate. The FDA's foreign inspection "cadre" should be further grown and developed.
4. Add mechanisms to augment FDA oversight through recognition of independent inspections or audits. Ideally, the FDA would have sufficient funding and capacity to conduct all needed inspections of manufacturing plants that make drugs and drug products for the U.S. market. Because this is an ideal that might take years to realize, the FDA should also consider alternate mechanisms for achieving sufficient oversight. There are several possible models for independent inspections or audits:
   a. The FDA recognizes inspections by selected foreign regulatory agencies. The FDA's current authority to do this may not be clearly delineated in statute.
   b. The FDA accredits independent third-party inspectors whose fees are paid by the FDA and supported by industry user fees.
   c. The FDA accredits third-party inspectors whose fees are paid directly by industry. Such a system was created for Medical Device plants under the Medical Device User Fee Act of 2002.^a
5. Make explicit through statute the extraterritorial applicability of the FDCA. The U.S. Supreme Court has upheld the legal principle that Congress must express clear legislative intent for statute to apply to entities overseas. The FDA's authority to oversee foreign plants making drugs and ingredients for the United States is insufficiently delineated in statute, and could allow for challenges to the agency's inspection activities for foreign sites.

B. Ensure adequate FDA resources 

1. Consider new industry fees to support increased foreign inspections. Manufacturer regis-tration fees would represent a significant income source that the FDA could use to increase the number of inspections it conducts overseas; to support ongoing improvements of systems the agency uses to target inspections; and to track foreign manufacturing sites.
2. Consider an importer fee. Assessing a fee on importers would provide further funding for border oversight operations. An importer fee should not be required of manufacturers that import products if they are already assessed a fee when they register with the FDA.
3. Ensure that other appropriations also increase. The FDA has estimated that in fiscal year 2009 the cost of a foreign inspection was between $60,000 and $62,500.⁴⁵² To avoid exclusive reliance on industry fees to support expansion of the FDA inspections, increased public appropriations will also be necessary.

C. Improve FDA infrastructure and tracking systems 

1. Fix tracking systems for manufacturing sites. Current tracking systems for manufacturing sites contain duplicates and errors, and must be overhauled to ensure accuracy and interoperability. The FDA must more diligently verify manufacturer registrations to ensure that information is current and correct. Updated systems should also be able to easily interface with each other and with risk-assessment systems to guide oversight and inspections.
2. Establish a unique facility identifier for manufacturers, importers and brokers. Manufacturers, importers and brokers should be required to submit this unique number to the FDA at various points, such as site registration and importation. This will help with accurate facility identification and will help prevent mistakes due to data errors and duplicate entries. One option for a unique facility identifier is D-U-N-S (Data Universal Numbering System)—a widely used system for identifying business entities.

D. Strengthen oversight of drugs and bulk drug substances at import

1. Ensure that robust risk-assessment systems are used to guide border screening. The FDA is implementing a risk-assessment system called PREDICT to assess imported food, devices and drugs. 
2. Give the FDA authority to destroy products at the border. The FDA is currently authorized to refuse drug products at the border that appear to be adulterated or misbranded, but statutory remedies include reexportation of these potentially violative products.⁴⁵³ This may allow harmful drugs to reenter the United States. The FDA should have the power to destroy drugs and drug products that it determines could pose a threat of injury or death.
3. Allow the FDA to refuse entry of a product if the site at which it was manufactured has refused an FDAinspection. This will help the agency ensure that potentially compromised products do not enter the United States and will incentivize foreign manufacturers to allow the FDA to access plants and facilities.
4. Require importer registration. Tracking importers through a registration system will be an im-portant element of supply chain transparency and will offer a framework for importers to provide more comprehensive documentation.
5. Permit the FDA to require more comprehensive documentation at import. The FDA should have the authority to require parties importing drugs and ingredients into the United States to provide more substantive information during the importation process. Documentation could also demonstrate compliance with U.S. requirements on product identity, quality, safety, FDA ap¬proval and FDA registration, as well as other categories at the discretion of the FDA.

E. Ensure the FDA has the regulatory authorities it needs to fulfill its mission

1. Provide the FDA with the authority to require drug recalls and order the cessation of distribution in situations where a drug product could cause illness or injury. Mandatory recall authority will help the FDA ensure patients are not exposed to harmful products, and will also act as an important deterrent to refusing or delaying appropriate action. The FDA may order a recall of medical devices, but may not do so for drugs, a significant limitation to its authority.
2. Provide the FDA with the power of subpoena. The ability to subpoena witnesses and documents will help the FDA quickly investigate issues of medical product quality and safety that may harm the public.

F. Strengthen the FDA's enforcement ability through tougher penalties and clearer accountability for industry

1. Strengthen both criminal and civil penalties for violations of the FDCA. With some exceptions, current FDCA criminal penalties for knowing adulteration, misbranding and counterfeiting of drugs are a maximum of $10,000 or three years in prison. Both financial penalties and allowable prison terms should be increased for criminal violations, including drug and ingredient adulteration caused knowingly or through negligence. Creating new administrative civil penalties for violations of the FDCA will also help deter noncompliance and will give the FDA a much more flexible enforcement arsenal. Currently for drugs, the FDA may assess civil penalties only for violations of certain application requirements in the FDCA.
2. Establish individual accountability for product quality and safety. To permit meaningful enforcement, responsible corporate officials should be clearly responsible for ensuring manufacturing sites, including those of suppliers, comply with quality standards. Within companies, specific responsible individuals should be personally accountable for the quality and safety of drugs and active ingredients that reach U.S. patients. As noted previously, similar controls already exist for medical devices,454 and comprehensive requirements exist for a "qualified person" to assume responsibility for the safety of drugs and active ingredients in the E.U.⁴⁵⁵

G. Improve FDA access to information from other regulatory bodies and industry

1. Require manufacturers, including OTC manufacturers, to inform the FDA of instances where exposure to a drug product may result in illness or injury. All manufacturers should report contamination or failure to meet specifications in distributed products (currently not required of OTC manufacturers that are not subject to marketing applications), and should also report suspected counterfeiting and theft. Access to this information by the FDA should be a legal requirement and is paramount when a potentially harmful product may reach the public. Improved reporting requirements will ensure that the FDA has the best knowledge about drugs that may be adulterated, counterfeit or otherwise harmful and can fulfill its public health mandate.
2. Allow the FDA to confidentially exchange information on manufacturing safety with other countries and government entities. Global expansion of manufacturing increases the importance of information-sharing between regulatory bodies. In some cases, entities are reluctant to provide the FDA with sensitive data because the FDA is subject to the Freedom of Information Act, which could make those data public. Congress must allow the FDA to accept information in a manner that protects that information from public disclosure, and also to share information currently protected under the trade secrets provision of the FDCA.
3. Whistle-blower protections. Industry employees who have information on events that may threaten the public health must be able to share that information with the government or their supervisors without risk. Protections should prohibit retaliation by the whistle-blower's employers, and should permit adequate remedies if retaliation does occur.

^a Recognizing foreign agency inspections that the FDA considers equivalent to its own could spare significant FDA resources. The FDA could also use available resources to develop guidelines, and train and certify third-party inspectors, whose costs could be supported either through pooled industry user fees or by direct payment by industry. Option (c) may create a potential conflict of interest, as manufacturers are requesting and paying directly for the inspections. Ultimately, the FDA and HHS should have the discretion to recognize third-party inspections if they determine them to be necessary to achieve a sufficient level of oversight. The Food Safety Modernization Act establishes a third-party accreditation program for oversight of food production facilities.⁴⁵¹