The pharmaceutical supply chain is extremely complex and relies on manufacturing sites located throughout the world. The COVID-19 pandemic has placed significant strain on this complex system.  It has also drawn attention to the extent to which the U.S. drug supply relies on foreign manufacturers, and renewed pressure on FDA to promote U.S. drug manufacturing capacity and increase scrutiny of foreign drug manufacturers. 

Against this backdrop, on June 2, 2020, the U.S. Senate Committee on Finance held a hearing on FDA’s oversight of the global pharmaceutical supply chain. The hearing, entitled “COVID-19 and Beyond: Oversight of the FDA’s Foreign Drug Manufacturing Inspection Process,” included testimony from FDA senior leadership, including the Associate Commissioner for Regulatory Affairs, the Center for Drug Evaluation and Research’s (CDER) Deputy Director for Regulatory Programs, and the Associate Commissioner for Global Policy and Strategy, the Government Accountability Office (GAO), and industry executives.

Underscoring the Senate’s concerns, Chairman Chuck Grassley opened the hearing by noting that the Committee on Finance has an “obligation” to ensure that drugs paid for by the government and U.S. taxpayers “satisfy quality standards.” Several of committee members also noted that the pharmaceutical supply chain is a national security issue.  The hearing covered a broad array of FDA and health care related issues. Below are five key takeaways from the hearing regarding FDA’s oversight of foreign drug manufacturing.

1.  FDA stands behind the agency’s foreign inspection practices 

In the face of committee member skepticism about FDA’s oversight of foreign drug manufacturing facilities, FDA officials presented a strong defense of the agency’s foreign inspection program in prepared testimony and in response to questioning. While senators raised repeated concerns about U.S. reliance on foreign-manufactured active pharmaceutical ingredients (API) and finished drug products, the FDA response indicated that the agency was not likely to pursue major changes to inspectional practices or COVID-19 response measures. 

Judith McMeekin, FDA Associate Commissioner for Regulatory Affairs, noted that since 2014, FDA has consistently performed more foreign drug facility inspections than domestic, reflecting the growth of foreign manufacturing. 

CDER Deputy Director for Regulatory Programs, Douglas Throckmorton, testified that the agency’s oversight was effective, noting that FDA proactively tests finished pharmaceutical ingredients, and those tests find only about 1% of drugs fail to meet quality standards. 

With respect to drug supply chain security during the COVID-19 pandemic, Throckmorton added that FDA has been expanding its interagency partnerships as part of the agency’s pandemic response, including collaborating with FEMA regarding drug supply distribution and information sharing, HHS and BARDA regarding the Strategic National Stockpile, and DEA regarding controlled substances. 

FDA Associate Commissioner for Global Policy and Strategy Mark Abdoo also defended the agency’s work to develop new enforcement and regulatory tools, increase collaboration with foreign bodies, craft internationally harmonized standards, educate foreign industries about FDA requirements, and increase transparency in the supply chain. Abdoo cited the Mutual Recognition Agreement as permitting FDA to rely on inspectional information obtained from certain foreign countries to reduce duplication of inspection efforts. In addition, Abdoo testified that FDA coordinates with China’s National Medical Products Administration to help unify inspections standards.

2.  FDA is under pressure to increase unannounced foreign inspections 

The committee’s concerns largely centered on manufacturing practices and quality oversight in China and India, the largest foreign suppliers of API and finished drug products. Senators repeated criticism that the agency’s foreign inspections are less stringent than domestic inspections due to FDA’s practice of providing advance notice of foreign inspections. FDA faced renewed calls to “level the playing field” by performing more unannounced inspections at foreign facilities and to do more to maintain the integrity of FDA inspections in light of reports of intentional attempts to deceive FDA investigators during foreign inspections. 

FDA officials testified that the agency conducts both announced and unannounced inspections of foreign drug manufacturing facilities. McMeekin acknowledged that “most foreign inspections are preannounced” but explained that preannouncements are often necessary to verify that a site is performing activities that fall within FDA’s jurisdiction and to ensure the availability of personnel and records. In addition, McMeekin noted that because FDA’s statutory inspectional authority, 21 USC 374, does not apply to foreign facilities, preannouncement is used to ensure FDA will be permitted to conduct the inspection. 

GAO health care director Mary Denigan-Macauley expressed concerns that FDA provides up to three months’ notice prior to foreign inspections and relies on foreign personnel to translate key documents. In addition, Denigan-Macauley stated that although FDA is conducting more inspections overseas in recent years, many foreign drug manufacturing facilities have never been inspected. Denigan-Macauley concluded by testifying that FDA’s foreign inspections are “absolutely critical” to ensuring drug quality in the U.S. 

Several questions highlighted concerns about FDA’s preannouncement of inspections and reluctance to increase unannounced inspections. Asked about why FDA ended an agency “pilot program” of increased unannounced inspections in India, Abdoo responded that the program was always meant to be limited in nature but that the agency used the experience to strengthen the foreign inspection program. McMeekin also pointed out that prior to the pandemic, FDA was still conducting unannounced inspections in China and India, but with a focus on for-cause inspections. 

FDA did not commit to changing its practices on advanced notice, but given the pressure from Congress and beyond, foreign facilities may see an increase in unannounced inspections, including for routine inspections, in the future.

3.  FDA believes “alternative tools” are adequate to ensure the quality of foreign manufactured drugs during the COVID-19 pandemic 

In response to questions regarding the agency’s COVID-19 response, FDA officials highlighted measures already taken to ensure safety and quality of foreign manufactured drugs despite FDA’s indefinite suspension of routine foreign inspections. These include: 

-Denying entry of unsafe products in to the U.S.; 

-Increasing physical examination at the U.S. border, which may include product sampling; 

-Reviewing a foreign manufacturer’s previous compliance history; 

-Utilizing information sharing from foreign governments through mutual recognition; and 

-Requesting records directly from manufacturers “in advance of or in lieu of” on-site drug inspections. 

FDA also stated that it will continue its work with U.S. Customs and Border Protection to seek out FDA-regulated products that are in violation of the FDCA and applicable regulations. In doing so, FDA is relying on its authority to refuse the importation of any FDA-regulated products that “appear” to violate the FDCA or its implementing regulations, and will adjust risk scores generated by the agency’s import screening tool (PREDICT), as necessary during the COVID-19 outbreak. In practice, this has led to increased physical examination and sampling of products from high-risk areas. 

Although FDA has resisted making significant changes to its current program, the agency may ultimately implement additional measures to verify foreign facility compliance as COVID-19 related disruptions continue.  This is particularly true for foreign manufacturing sites that would traditionally require an on-site pre-approval inspection prior to FDA approving a relevant drug application, as well as those sites currently on a compliance hold and awaiting FDA re-inspection to clear the site.

4.  FDA offered no indication as to when it will resume international drug inspections 

In their statements and questions, Senators expressed concerns that U.S. reliance on foreign-manufactured API and finished drug products posed a risk to national security. And lawmakers applied pressure on FDA to resume foreign drug facility inspections. 

In response, McMeekin stated that the agency refused to jeopardize public safety or that of its staff, noting that foreign inspections and the novel coronavirus present unique challenges, including the hiring of qualified personnel. McMeekin testified that FDA has been continuing to focus on enforcement efforts at international ports and mail authorities, and the agency has additional staff investigating online sales. No specific target or estimate was provided by FDA as to when it would resume its foreign drug inspections.

5.  There is a clear push for more domestic drug manufacturing and solutions to drug shortages 

Senators used the prospect of COVID-19-related drug supply disruptions to renew attention to two perennial issues: preventing drug shortages and increasing U.S. drug manufacturing. FDA officials said reducing drug shortages has been a longstanding agency priority and noted ways in which increased domestic capacity could be part of the solution. Throckmorton cited FDA’s October 2019 drug shortages report, which examined the underlying factors responsible for drug shortages and recommended solutions for these problems; we summarized the agency’s actions in this arena online here and here. 

Throckmorton emphasized that one way to address this issue would be to improve quality management transparency throughout the pharmaceutical supply chain, including establishment of a quality rating system. He stated that allowing manufacturers to advertise their quality rating could result in premium pricing for drugs from highly rated, high-quality sources, increasing incentives for companies to invest in quality. FDA has previously stated that quality maturity is an accurate predictor of drug shortages. Accordingly, introducing market-based incentives for high-quality manufacturing could reduce drug shortages by attracting more manufacturers and reducing quality-related supply chain interruptions. Such a system could, in theory, make high-quality domestic manufacturing more economically attractive. 

Throckmorton added that the U.S. advantage in “advanced manufacturing” could provide an opportunity to build out domestic manufacturing capabilities in a way that also addresses drug shortage issues.

As the coronavirus pandemic response evolves, we will continue to monitor FDA’s foreign and domestic drug inspection programs, related pharmaceutical supply chain issues, and the agency’s response to the COVID-19 outbreak more broadly. Please contact us if you have any questions.    

Authored by Jim Johnson, Scott Kaplan, and Chris Fanelli