Limited Resources, Expanding Imports Challenge Regulators

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Pharmaceutical Technology, Pharmaceutical Technology-02-02-2008, Volume 32, Issue 2

The rise in overseas manufacturing undermines FDA oversight of drug quality.

Twenty years of expanding assignments and declining budgets have changed the US Food and Drug Administration from the world's gold standard for drug regulation into a "debilitated, underperforming organization," according to the agency's advisory Science Board. In a scathing analysis issued in December 2007, the panel asserted that FDA suffers from "serious scientific deficiencies" and cannot meet its regulatory responsibilities, according to Gail Cassell, Eli Lilly vice-president and chair of the science board subcommittee that produced the report, "FDA Science and Mission at Risk."

Jill Wechsler

The main culprit is inadequate funding. FDA lacks the staff and resources to support regulatory functions and to keep up with scientific discoveries important to understanding and ensuring the safety of medical products and the nation's food supply. Fast-expanding user fees have made up for some of the deficit, but increased reliance on industry payments has created inequities within the agency. An analysis by panel member and attorney Peter Barton Hutt reveals that budget increases during the last 20 years have been lost to inflation. FDA has gained only 700 appropriated staffers during this period, although its work was expanded by hundreds of statutes, executive orders, and other mandates.

A key FDA need is an information technology (IT) system able to process and integrate vast amounts of scientific information. FDA's IT budget generally totals about $200 million. This amount is much less than the $500 million that the Centers for Disease Control and Prevention (CDC) spends in this area, according to science panel member Dale Nordenberg, a former CDC IT official now with PriceWaterhouseCoopers. The report says that FDA probably requires another $200 million to be able to assess reams of clinical-trial data and track thousands of manufacturing sites around the world.

The many specifics in the report about how scientific research supports FDA assessment of clinical trials, manufacturing facilities, and product applications inspired Senate Health Committee Chairman Edward Kennedy (D-MA) to term the analysis a "wake-up call" to provide FDA with the resources needed to do its job. Rep. Henry Waxman (D-CA) called on FDA and administration leaders to tackle these problems.

Flat funding

Only a few days later, though, Congress approved long-delayed funding legislation for fiscal year 2008 (which began Oct. 1, 2007). The legislation boosted FDA's total budget funding to $2.2 billion—$1.7 billion without user fees. In light of heavy spending cuts across the federal government, FDA was fortunate to receive any budget increase at all. The extra funds are largely intended to expand food-safety programs. Agency advocates seek $2 billion in FDA appropriated funding in five years, and this year's budget takes only a small step toward achieving that goal.

The Center for Drug Evaluation and Research (CDER) has a $682.8-million total budget for 2008, almost half of it ($356 million) from user fees. The Center for Biologics Evaluation and Research (CBER) will have a $237-million total budget, with $81 million from user fees.


Although these may seem like large amounts, Congress uses the appropriation process to specify how FDA should spend the money and to micromanage agency policies. CBER is instructed to spend much of its added funds on pandemic influenza preparedness. Almost half of CDER's $40-million increase in appropriated funds is earmarked for drug safety, and much of that is directed to CDER's Office of Surveillance and Epidemiology. The Office of Generic Drugs gained $6 million more to boost its budget to $42 million.

Congress also provided an added $4 million to oversee direct-to-consumer (DTC) advertising instead of implementing a new user-fee program established by the FDA Amendments Act (FDAAA) of 2007. The user-fee program would have collected $6.5 million from manufacturers for timely DTC advertising reviews. The critical path initiative will receive $7.5 million—much less than the Senate initially proposed. Some of the money is earmarked for grants to universities and nonprofit organizations. For example, $563,000 will go to the Critical Path Institute and the University of Utah to support research about warfarin dosing.

The legislators also instruct the agency to work with pharmacies and patient groups to improve the MedGuide program, reflecting pharmacists' fears of being overwhelmed by the program's growing volume of patient leaflets on specific drugs. And the bill seeks a more efficient FDA process for vetting long-established medicines that were never approved by the agency and have been targeted for enforcement action in recent years.

In Washington This Month

FDA also must produce a long list of studies and reports about everything from the safety of Sanofi Aventis's Ketek to microbial resistance. The final legislation omits an earlier provision to expand drug reimportation, but still requires FDA to analyze how well it oversees the foreign manufacture of active pharmaceutical ingredients (APIs).

Undue influence?

In addition to dropping the user-fee program for DTC advertising, the funding bill includes other measures that reflect ongoing concerns on Capitol Hill about pharmaceutical companies' influence on FDA policies. Congress used the bill to remind FDA to reduce the number of advisory committee members with conflicts-of-interest. And it took a big swipe at the Reagan–Udall Foundation, which was authorized by FDAAA, by stipulating that FDA cannot use any appropriated funds to support this new organization.

That curb reflects the concerns of Rep. Rosa DeLauro (D-CT), chair of the House Appropriations Subcommittee that oversees FDA. DeLauro fears that Reagan–Udall will permit drug manufacturers to shape FDA actions related to drug safety in a way similar to how the Tobacco Institute supported research refuting health concerns about tobacco. FDAAA allows FDA to provide as much as $1.25 million for this public–private entity to support critical path initiatives. But when FDA officials complied with FDAAA by naming a blue-ribbon board of directors for the foundation, DeLauro flexed her muscle by inserting a funding hold in the final appropriations bill.

Joining forces to rescue FDA

Though FDA officials hope to assuage DeLauro's concerns, the rift is likely to slow down Reagan–Udall initiatives such as helping to establish a new active surveillance system for drugs, another project supported by FDAAA. Former FDA commissioner Mark McClellan, who was named the chair of Reagan–Udall, is a leading advocate of using health system databases and advanced IT systems to detect and analyze drug safety signals earlier and faster to prevent safety problems and facilitate new drug development. Establishing such a system is no easy task and will require new data standards and collaborative efforts. These are tasks that could be accomplished by such a public–private foundation.

Dropping the DTC user fees is an unusual step for Congress. Even though industry payments account for almost one-fourth of FDA's $2.2-billion FY 2008 budget, members of Congress usually are eager to tap this ready source of revenue to fund FDA programs. In fact, FDAAA boosted drug user fees by another $25 million for each of the next five years to support additional drug safety initiatives, and Congressional leaders have proposed new legislation that would raise millions more through fees on food and drug imports.

Inspections and imports

Congress is likely to enact such food and drug import legislation this year because FDA's Office of Regulatory Affairs (ORA) has suffered from the budget crunch even more than most FDA operations. ORA is unable to cope with the soaring volume of imported food and regulated medical products. Agency officials proposed a major field consolidation plan two years ago to confront staff reductions that would have closed all five of ORA's regional offices, reduced the number of district offices from 20 to 16, and shut 7 of 13 field laboratories (see "FDA Seeks Streamlined, More Effective GMP Inspections," Pharmaceutical Technology, May 2007). But Congressional leaders blocked the closures, and ORA Director Margaret Glavin promised last summer to take a "fresh look" at how ORA could meet its many challenges. Even so, Congressional leaders reiterated in the 2008 appropriations bill that FDA should not close or consolidate any of its field offices or laboratories pending a re-examination of how the agency will address rising concerns about unsafe food and drug products from abroad.

In recent months, FDA has had to tackle melamine-contaminated pet food and tainted toothpaste from China that moved into the US through the nation's hole-ridden import-control system. Although Americans escaped medicines laced with diethylene glycol (DEG) that took lives in developing countries, the risk that DEG might appear in imported products prompted the agency to recommend that manufacturers test to ensure that glycerin used to prepare liquid drugs is not contaminated (see "Ensuring Quality for Dietary Supplements," Pharmaceutical Technology, August 2007). Chinese regulatory authorities promised improvements and even executed the head of the State Food and Drug Administration for corruption.

The Bush administration established an import-safety task force headed by Health and Human Services Secretary Mike Leavitt to map out improvements to the US food and drug import system. And Congress ramped up investigations and held hearings about how to improve systems for detecting and halting the importation of unsafe foreign food and drug products. Several legislative proposals emerged, including one from House Energy and Commerce Committee Chairman John Dingell (D-MI) that would impose user fees on imported food and drug shipments to bolster US border controls and foreign inspections. The Senate Finance Committee has indicated interest in tackling import safety this year, and Sen. Kennedy is working on a comprehensive food safety bill that would address these issues. Most legislative initiatives would enhance FDA's authority to mandate product recalls, halt imports from noncompliant producers, boost penalties for illegal activities, and require foreign manufacturers and importers to certify compliance with quality standards.

At a November Energy and Commerce hearing, Dingell and his colleagues examined FDA's foreign drug inspection program more closely. Subcommittee Chair Bart Stupak (D-NJ) described the program as being "simply in shambles." Ben England, attorney and former FDA enforcement official, pointed out that FDA's inspection and import control program was designed in the 1970s, when few regulated products were imported into the US. Now FDA oversees nearly 2 million imported drug shipments per year, including tons of bulk APIs and cases of finished medicines. Although more than 80% of APIs come from abroad, especially from India and China, FDA inspections of foreign manufacturers have decreased to only a few hundred per year. It's costly and time-consuming for FDA to send inspectors around the world. These constraints result in short, preannounced site visits primarily related to the approval of new drug applications. FDA's antiquated information systems, moreover, are unable to track foreign manufacturers and inspections or exchange information between databases.

The Synthetic Organic Chemical Manufacturers Association petitioned FDA two years ago to tighten inspections of foreign drug-ingredient producers. The association claimed that lax regulation of those firms is luring more drug manufacturing operations overseas and creating an uneven playing field in the bulk-chemical manufacturing industry.

Reformers within and outside FDA seek a life cycle approach to import regulation that follows products through the supply chain and delivers assessments of product risk to border inspectors, compliance offices, and electronic screening systems. These and other proposals were included in an FDA Import Strategic Plan. The plan was developed four years ago, but never implemented because of a lack of funds to establish necessary IT systems and expand inspection staffs.

One idea gaining support is for FDA to establish permanent overseas inspection offices in major drug-exporting countries such as India and China. In December 2007, FDA signed a memorandum of agreement with China that encourages the safety certification of exported drugs. The memo also calls for regulators to share information related to inspections and the quality of drugs, excipients, and medical devices. The agreement initially will require manufacturers to register and certify only certain designated drugs that have raised specific concerns about safety or counterfeiting. These drugs include human insulin, paclitaxel, sildenafil, human growth hormone, atorvastatin, oseltamivir, and blood-screening diagnostics. Chinese and US regulators will work to establish a system for cooperative plant inspections and an export-product tracking system, according to FDA Deputy Commissioner Murray Lumpkin.

It remains to be seen whether FDA will gain the resources it needs to support more foreign inspections and clamp down on hazardous drug imports. Despite safety concerns, some policymakers still press for more liberal drug reimportation as a way for consumers to access less costly medicines. Brand-name manufacturers are leery that flexible import policies could open US borders to more counterfeit drugs and unregulated products unless the necessary safeguards are put in place. The makers of generic drugs, however, have raised concerns that high import fees could block the importation of high-quality APIs, as well as generic drugs that meet standards. An appropriate regulatory approach may be difficult to establish.

Jill Wechsler is Pharmaceutical Technology's Washington editor, 7715 Rocton Ave., Chevy Chase, MD 20815, tel. 301.656.4634,