The heparin problem arose less than four months after the US Government Accountability Office (GAO) presented testimony highlighting the deficiencies in FDA's oversight of foreign drug manufacturers. The active pharmaceutical ingredient in Baxter's heparin was supplied by Changzhou SPL in Changzhou, China, which is partly owned by Scientific Protein Laboratories LLC (Waunakee, WI). GAO noted that FDA "does not know how many foreign establishments are subject to inspection," and that its two principal internal databases counted vastly different numbers of foreign establishments (3000 in one case, 6800 in another). The GAO report estimated that FDA was inspecting only about 7% of foreign establishments deserving inspection each year, meaning it would take more than 13 years to visit each site once. The report noted other problems, including the need to preannounce FDA inspections of foreign facilities and the lack of translators on FDA inspection teams.
In fact, GAO noted, FDA does not have the authority to compel foreign establishments to allow it to inspect their facilities. Further, foreign drug establishments making product for the US market do not have to be inspected every two years, as domestic requirements must be. FDA's authority is currently limited to inspecting imported drugs and preventing their entry into the US. There is now a movement in Congress, backed by the Bush administration, to give FDA more explicit responsibility for imported drugs.On the supply-chain learning curve
Baxter and SPL's heparin problems, and the difficulties FDA has keeping up with foreign establishment inspections, represent just some of the issues that pharmaceutical companies are likely to encounter as they source key ingredients and intermediates from countries such as China and India. Pharmaceutical supply chains are getting longer and more complex; companies are not only geographically farther from their suppliers, they are transactionally farther as well, because they increasingly depend on their primary suppliers to source intermediates and other inputs used to manufacture the products they are ultimately purchasing. This is a far cry from just a few years ago when vertically integrated pharmaceutical companies controlled much more of the supply chain and manufactured most active ingredients and late-stage intermediates in-house.
The globalization of supply chains is creating new political, logistical, and scientific challenges for the pharmaceutical industry. Establishing inspection programs of foreign establishments, for example, will require agreements with foreign governments to allow FDA to exercise some oversight authority over manufacturers in their countries. That will be especially tricky with countries such as China, where there is no history of mutual recognition and cooperation such as exists with European governments.