Washington Report: FDA Maps Strategy to Counter Supply-Chain Threats

Published on: 
Pharmaceutical Technology, Pharmaceutical Technology-08-02-2011, Volume 35, Issue 8

Rising imports and overseas production spur realignment of enforcement.

Food and Drug Administration officials acknowledge that its established system for ensuring the quality of medical products marketed in the United States cannot cope with the soaring volume of pharmaceuticals and active ingredients coming into the country from all over the world. Because of the potential for consumer harm from intentional adulteration, fraud, and counterfeiting, these developments require major changes in the way FDA does business. Instead of sending inspectors abroad to scrutinize foreign facilities or trying to examine more products at US borders than before, agency officials seek to collaborate more with other regulatory authorities, to make greater use of third-party auditors, and to establish global-information networks that can better alert officials to potential safety hazards.

Jill Wechsler

The call for a new approach to food and drug regulation will have a notable impact on FDA field inspections and compliance operations. The Office of Compliance (OC) in FDA's Center for Drug Evaluation and Research (CDER) has reorganized to heighten its focus on supply chain and international issues. At the same time, manufacturers are supporting new approaches and collaborative efforts to prevent drug theft, diversion, and distribution of counterfeit products around the world. These changes also reflect FDA's need to cope with increasingly tight resources at government agencies and healthcare organizations. FDA faces a potential $250-million reduction in its budget for fiscal year 2012, which begins Oct. 1, 2011, as Congress moves to cut funding for most federal programs. Such a cut would severely limit funds for FDA field inspections in all regions and limit the increased oversight of food producers and imports that has been mandated by new food-afety legislation.

Global challenges

The lines between domestic and foreign production are increasingly blurred. The difficulties of ensuring the safety and quality of imported food and drugs in such a world are outlined in the report, "Pathway to Global Product Safety and Quality," which FDA Commissioner Margaret Hamburg unveiled in June 2011. Although the report contains few really new proposals for overseeing food and drug imports and outsourced production, the document is noteworthy for providing a comprehensive overview of the forces reshaping biopharmaceutical product development.

In the face of pressure to cut costs and increase productivity, pharmaceutical companies are shifting manufacturing to foreign locations and searching for less expensive ingredients. The cost of formulating an active pharmaceutical ingredient (API) is 15% to 40% less expensive in India, than in the US. Consequently, drug manufacturers now import 80% of APIs, primarily from China and India. Imports of pharmaceutical products have increased about 13% per year for the past seven years. This shift is boosting the US trade deficit in pharmaceutical products, which has jumped from less than $2 billion in 2000 to $18 billion in 2008.

Additional overseas outsourcing, however, fragments the drug-production process. Contract manufacturing has more than doubled during the past decade to an estimated $46 billion business in 2010. China and India now have the largest number of foreign, FDA-registered drug manufacturing establishments. These and other emerging nations also are producing more complex, high-risk biologics, and vaccines and are becoming more prominent in biopharmaceutical research and development (R&D). India and China already have more than 30% of the world's drug master files, and more clinical trials are taking place in these regions. With a growing volume of foreign manufacturers and producers to monitor, FDA concedes that it is not viable to scale up its current regulatory model, even if it had the resources to do so.


These developments inevitably open the door to more economically-motivated abuse, drug counterfeiting, fraud, and intentional adulteration. The FDA report observes that it has become "difficult to identify the 'source' of a product and to ensure that all players along the supply chain meet with safety and quality responsibilities." The US already has suffered the consequences of adulterated heparin and counterfeit glucose-monitoring strips, and low-quality counterfeit medicines are widely available, particularly in developing countries. Americans feed illegal operators, moreover, by purchasing pharmaceuticals online, often from unknown sources and without oversight and safeguards.

Call for collaboration

In response, FDA proposes a more collaborative regulatory approach, somewhat along the lines of the International Civil Aviation Organization, which promotes common global standards for aviation safety. Another model is information sharing, promoted by the International Criminal Police Organization (Interpol). Access to international data on manufacturers, pharmaceutical suppliers, and regulatory operations would help FDA identify potential risks that can be monitored and addressed before they lead to public harm.

Although FDA has been engaging foreign regulatory counterparts in collaborative initiatives as well as in joint inspection and information-sharing pilot programs, these partnerships "are not sufficient" to deal with an increasingly complex global environment, the report concedes. What is needed are "global coalitions of regulators" that allow countries to maintain sovereignty in setting standards and making decisions, but rely more on the work of other regulators and encourage the pooling of resources to manage the global pharmaceutical inventory. Increased information sharing with trusted counterparts would be easier if FDA did not need to redact all trade secret information from documents, for example, a process that seriously stymies the communications process.

Such collaboration reflects FDA's recognition that its own inspectors cannot reach the growing volume of foreign sites: The average cost of a foreign-plant inspection is $52,000, more than twice the $23,000 outlay for a domestic site visit. More than 54% of foreign drug making facilities went uninspected from 2002 to 2007, and the record is even worse for foreign medical device producers. Even though FDA increased foreign-drug inspections by 27% between 2007 and 2009 and opened a series of international offices, that still falls hopelessly short of covering the field.

The good news is that collaborative initiatives are proliferating as regulators seek to conserve their own resources. Mexico and Costa Rica, for example, are accepting FDA medical-device review decisions. FDA recently put a company on import alert based on an inspection report from a European agency, and is exploring other ways to streamline operations. EMA reliance on "qualified persons" employed by drug manufacturers to verify the quality and safety of all approved drug batches is an approach worth looking at, says OC Director Deborah Autor*. She's also interested in models for third-party audits for drugs, an option already authorized by FDA for medical devices and food imports. A shift to more reliance on outside auditors, however, requires a more sophisticated review and monitoring infrastructure that can verify the integrity of information received from other regulators and private parties.

Related initiatives aim to expand the expertise and capabilities of regulatory agencies around the world. The World Bank is providing resources for building regulatory capacity in developing economies so that less-experienced agencies can better enforce GMPs and other drug quality policies. The US Pharmacopeia similarly is providing technical assistance to help emerging-nation manufacturers comply with GMPs, along with support for regulatory authorities to establish quality drug-surveillance programs. The US Agency for International Development (USAID) funds this $35 million, 5-year program, which now is active in about 30 countries in Africa, Asia, and Latin America. A major impetus for regulatory capacity building comes from donor and health funding organizations, such as the Global Fund to Fight AIDS, Tuberculosis, and Malaria, which increasingly require the drugs they purchase to meet GMPs and World Health Organization prequalification standards.

Pharmaceutical companies also are working together to prevent product theft and adulteration and to provide more efficient ways to oversee suppliers and contractors. The Rx-60 consortium aims to ensure product quality through cooperative auditing of suppliers and contractors. More than 50 pharmaceutical, biotech, and supplier companies are participating in the Rx–360 shared audit program, which uses third-party auditors to examine operations and standards at producers of active ingredients, excipients, and other raw materials. The program encourages companies to provide their own audits of suppliers.

Separately, several organizations market third-party audit and certification programs for excipients. A new track-and-trace consortium of manufacturers, distributors, pharmacists, and shippers is working with FDA to develop standards for an interoperable prescription-drug tracking system. The impetus comes from California ePedigree requirements, which are scheduled to begin in 2015.

Expanding compliance

With drug manufacturing and clinical-trial activities expanding overseas and at home, CDER's Office of Compliance is being reshaped into a "super" office that can better manage its growing responsibilities. OC now has a staff of 300, compared with 118 in 2005, explained OC Deputy Director Ilissa Bernstein at the Parenteral Drug Association pharmaceutical supply-chain conference in June. Now a string of top aides manages cross-cutting initiatives, including policy and communications, strategic planning and organization development, data analysis, and risk assessment, directly under OC Director Autor. These staff functions incorporate many of the data-management responsibilities of the former Division of Compliance Risk Management and Surveillance.

The main new OC component is the Office of Drug Security, Integrity, and Recalls (ODSIR), which will oversee import operations, recalls, and a range of supply-chain issues. An Import Operations branch will coordinate import and export compliance activities, including supplies for clinical and preclinical studies. The Division of Supply Chain Integrity (DSCI) will handle anticounterfeiting strategies, track-and-trace initiatives, product authentication, good importer practices, good distribution practices, cargo-theft prevention, intentional adulteration, and efforts to leverage domestic and international partnerships in these areas, explained Leigh Verbois, who will serve as the DSCI deputy director.

Among other responsibilities, ODSIR Acting Associate Director Connie Jung will continue to lead agency efforts to develop track-and-trace programs, building on guidance issued in March 2010 that outlines how manufacturers should provide a standard numerical identifier (SNI) on every product as the basis for tracking products through the supply chain. FDA is digesting comments from a February 2011 public workshop on how to develop interoperable standards that will facilitate adoption of pedigrees and tracking systems, hopefully in time to help manufacturers meet California requirements.

With this reorganization, OC's status is similar to that of CDER's Office of New Drugs, Office of Pharmaceutical Science, and Office of Surveillance and Epidemiology. Most OC divisions will function as before, though with slightly revised names. The Office of Manufacturing and Product Quality (OMPQ) will no longer oversee recalls and shortages, but continues to manage inspections for new and generic drugs and biologics, both domestic and international, to ensure compliance with GMPs. The Office of Unapproved Drugs and Labeling Compliance (OUDLC) oversees drug fraud and labeling and approval requirements for prescription and over-the-counter drugs. The Office of Scientific Investigations (OSI), which monitors clinical trial operations, bioequivalence testing, and patient protections, gains a new division of safety compliance with responsibility for postmarketing activities, including adverse event reporting and risk evaluation and mitigation strategies (REMS) .

The global market "contains a vast amount of counterfeit and substandard drugs," Bernstein commented at the PDA conference, noting the need for more transparency and accountability in the supply chain, both upstream and downstream.

OMPQ Associate Director Richard Friedman emphasized that company management is ultimately responsible for ensuring product quality, including use of safe and reliable raw materials and effective monitoring of outsourced activities. A significant reason for the OC reorganization, Autor explains, "is to recognize the challenges of globalization" and to be able to focus more on international collaboration, data mining, and risk analytics. "It fits together nicely and it's the right direction for us to move in."

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

*As we went to press, FDA announced a major reorganization of the Commissioner's office, with Autor becoming FDA Deputy Commissioner for Global Regulatory Operations and Policy. Bernstein will serve as the Office of Compliance Acting Director.