Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
FDA H M P
  AS  ADE  ROGRESS 
 
 
O
ON  VERSIGHT AND 
 
  I
NSPECTIONS OF 
 
  M
ANUFACTURERS OF 
 
  G D  
ENERIC  RUGS 
 
 
 
 
 
 
 
 
 
 
Daniel R. Levinson   
Inspector General  
 
May 2015 
OEI-01-13-00600   
   
EXECUTIVE SUMMARY:  FDA HAS MADE PROGRESS ON OVERSIGHT 
AND INSPECTIONS OF MANUFACTURERS OF GENERIC DRUGS 
OEI-01-13-00600 
 
WHY WE DID THIS STUDY 
The Office of Inspector General (OIG) received a Congressional request expressing 
concerns about the safety and quality of generic drugs produced by foreign manufacturers 
and requesting that OIG evaluate whether the Food and Drug Administration (FDA) is 
achieving parity in inspections of foreign and domestic manufacturers.  In 2012, nearly 
80 percent of prescriptions filled in the United States were for generic drugs.  But in 
recent years, several recalls of generic drugs have raised concerns about FDAs oversight 
of manufacturers.    
 
HOW WE DID THIS STUDY  
We analyzed FDA data for inspections and registered manufacturers of generic drugs for 
2011-2013 to determine the number and types of inspections.  We also analyzed FDA 
data to determine whether manufacturers listed on approved applications had registered 
with FDA as required. We also analyzed FDA records and interviewed FDA staff to  
determine the extent to which it is progressing toward achieving parity in domestic and 
foreign inspections and more efficient processes for inspections.   
 
WHAT WE FOUND 
FDA increased its preapproval inspections of manufacturers of generic drugs by 60 
percent between 2011 and 2013. However, it did not conduct all of the preapproval 
inspections requested by its own generic drug application reviewers during this time  
period. The graphic below illustrates the distribution of generic manufacturers and 
surveillance inspections worldwide (for more information, see Table 4 in the report).  
 
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)  
   
   
In 2013, FDA conducted surveillance inspections of all generic manufacturers that it had 
identified as high risk. FDA also reported progress toward achieving parity in 
inspections of foreign and domestic manufacturers of generic drugs and ensuring 
compliance with generic manufacturer registration.  Finally, FDA has created some  
policies and procedures to request manufacturer records in lieu or in advance of an 
inspection, but has not yet used these procedures to request records.   
 
WHAT WE RECOMMEND  
FDA should: 
 
(1) Conduct outstanding preapproval inspections of manufacturers of generic drugs, 
where appropriate, which could lead to more timely approval of these drugs.   
(2) Ensure compliance with the requirement for manufacturers of generic drugs to 
register with FDA as a complete and up-to-date registration database would facilitate the 
implementation of the agencys plans for conducting inspections.   
(3) Use its authority to request records in lieu or in advance of an inspection.  Such 
requests could increase FDAs capacity for inspections, and review of the records could 
be completed in advance, which could free up staff time during the onsite portion of the 
inspection. 
 
FDA concurred with all three recommendations. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)  
   
   
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 

Background..................................................................................................1 

Methodology................................................................................................5 

Findings........................................................................................................7 

Although FDA increased preapproval inspections of manufacturers 

of generic drugs from 2011  to 2013, it did not conduct all 

preapproval inspections requested by its own reviewers of 

applications for generic drugs..........................................................7 

In FY 2013, FDA conducted routine surveillance inspections of all 
generic manufacturers that it had prioritized as high risk ..............11 
 
FDA has made progress toward parity and registration of 

manufacturers of generic drugs, but it has not used its authority to 

request records in lieu of or in advance of an inspection ...............13 

Conclusion and Recommendations ............................................................17 

Agency Comments and Office of Inspector General Response .....19 

Appendix....................................................................................................20 

A: Detailed Data Sources and Analysis ........................................20 

B: Agency Comments  ...................................................................22 

Acknowledgments......................................................................................25 

 
 
 
 
 
 
 
 
 
 
   
 
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)  
   
   
OBJECTIVES 
To determine the extent to which: 
1. 	  The Food and Drug Administration (FDA) conducts preapproval and 
surveillance inspections of foreign and domestic manufacturers of 
generic drugs. 
2. 	  FDA made progress toward implementing the Food and Drug 
Administration Safety and Innovation Act (FDASIA), including 
achieving parity in inspections of foreign and domestic manufacturers 
of generic drugs, registering manufacturers of generic drugs, and 
requesting records in lieu of or in advance of an inspection.  
BACKGROUND 
Generic drugs are intended to be safe, effective, low-cost alternatives to 
brand-name drugs.  In 2012, nearly 80 percent of prescriptions filled in the 
United States were for generic drugs.1  FDA must approve generic drugs 
before they can be marketed in the United States.  FDAs Center for Drug 
Evaluation and Research (CDER) is responsible for reviewing and 
approving applications for generic drugs, which are referred to as 
Abbreviated New Drug Applications (ANDAs).  FDA may approve 
ANDAs without requiring clinical data to prove safety and effectiveness.  
Instead, applicants must prove that the generic drug is bioequivalent to the 
brand-name drugin other words, that it performs in the same manner.2  
To be approved, generic drugs mustin most caseshave the same active 
ingredient, strength, dosage form, labeling, and route of administration as 
an FDA-approved brand-name drug.3  FDA may reject an application if 
the manufacturing process is inadequate to ensure the drugs identity, 
strength, quality, and purity.4 
 ____________________________________________________________ 
1FDA, Facts About Generic Drugs, September 19, 2012.   Accessed at 
http://www.fda.gov/drugs/resourcesforyou/consumers/buyingusingmedicinesafely/unders 
tandinggenericdrugs/ucm167991.htm  on December 4, 2013.  
2 FDA,  Abbreviated New  Drug Application (ANDA): Generics. Accessed at 
http://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandAp 
proved/ApprovalApplications/AbbreviatedNewDrugApplicationANDAGenerics/default. 
htm on August 27, 2014. 
3   505(j)(2) of the Federal Food, Drug, and Cosmetic  Act  (FD&C Act)  (21 U.S.C.  
 355(j)(2)); 21  CFR  314.92  and 314.105(c).  Certain deviations  from  the brand-name  
drug can  be  permitted upon FDA grant of a suitability petition. See FD&C Act 
 505(j)(2)(C) (21 U.S.C.  355(j)(2)(C)); 21  CFR  314.93.    
4  21 U.S.C.  355(d)(3).  
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   1 
   
   
In recent years, several recalls of generic drugs have raised concerns about 
FDAs oversight of manufacturers.  In May 2013, the generic drug 
company Ranbaxy pleaded guilty to Federal charges that it failed to follow 
requirements in the manufacturing process and made false statements to 
FDA.5  Ranbaxy recalled drugs that were produced at two of its facilities 
in India. 
Following the Ranbaxy settlement, the Office of Inspector General (OIG) 
received a congressional request to evaluate FDAs oversight of 
manufacturers of generic drugs.  The requestor expressed concern about 
the safety and quality of drugs produced by foreign manufacturers and 
requested that OIG evaluate whether FDA is progressing toward its goal of 
achieving parity between inspections of foreign manufacturers and 
inspections of domestic manufacturers.   This evaluation responds to that 
request. 
Inspections of Manufacturers of Generic Drugs 
FDA inspects manufacturers of generic drugs to ensure compliance with 
the FD&C Act and other requirements, including current good 
manufacturing practices (cGMPs).6 Manufacturers include facilities that 
produce the final dosage form of a drug as well as those that produce 
active pharmaceutical ingredients in the final product.     
Within FDA, CDER and the Office of Regulatory Affairs (ORA) prioritize 
and conduct inspections. CDER sets manufacturing standards and 
prioritizes manufacturers for inspection on the basis of risk.  ORA plans 
and conducts the actual inspections. 
Preapproval inspections. FDA may inspect the manufacturer(s) prior to 
approving an ANDA.  The applicant must list all manufacturers involved 
in producing certain components of the drug; however, FDA does not 
require a preapproval inspection for every manufacturer listed.7    
CDER established the criteria for determining whether the manufacturers 
listed on ANDAs need preapproval inspections.  If FDA has never 
inspected the facility before, the agency will conduct a preapproval 
inspection. In most cases, FDA will also conduct a surveillance inspection 
____________________________________________________________ 
5 Department of Justice, Generic Drug Manufacturer Ranbaxy Pleads Guilty and Agrees 
to Pay $500 Million to Resolve False Claims Allegations, cGMP Violations and False 
Statements to the FDA, May 13, 2013.  Accessed at 
http://www.justice.gov/opa/pr/2013/May/13-civ-542.html  on August 27, 2014. 
6 FDA cGMP  regulations for drugs set out minimum requirements for the methods, 
facilities, and controls used in  the manufacturing, processing, and  packaging  of a drug.   
7 Facilities that package generic drugs and conduct bioequivalence testing are also subject 
to  inspection. FDA, About FDA:  What does FDA inspect?   Accessed at 
http://www.fda.gov/AboutFDA/Transparency/Basics/ucm194888.htm on  August 27, 
2014. 
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   2 
   
   
while onsite for a preapproval inspection.  ORA schedules inspections on 
the basis of priority level and available resources.  Inspectors seek to 
verify that the manufacturer provided accurate information in the ANDA  
and is complying with laws and standards. 
Surveillance inspections. FDA also inspects manufacturers to monitor 
compliance with cGMPs, laws, and regulations.  These inspections cover 
their facilities and procedures for producing drugs. 
Once a year, FDA uses a risk-based model to create a list of prioritized 
manufacturersboth those of generic drugs and those of brand-name  
drugsfor surveillance inspections.8  This list includes production, testing, 
and packaging facilities both for active pharmaceutical ingredients and 
finished pharmaceuticals.  FDA gives highest priority to manufacturers 
without prior inspections. 
FDA may also conduct a surveillance inspection of a manufacturer on a 
for-cause basis to investigate a specific problem.    
Violations and Enforcement 
Inspectors identify violations of FDA regulations on a specific form. 9   The 
manufacturers management may respond in writing with a corrective 
action plan. FDA makes a final determination of violations after 
reviewing the form, the written response, the inspectors report, and other 
evidence collected during the inspection.  Either ORA or CDER can make 
this final determination, depending on the type and results of the 
inspection. 
FDA then classifies the inspection into one of three categories: 
	   No Action Indicated. This classification signifies few or no 
significant violations of FDA regulations.  FDA generally does not 
require the manufacturer to address any violations.  
	   Voluntary Action Indicated. This classification is used when 
inspectors find violations that are serious enough to record but do 
not meet the threshold of regulatory significance. 
 ____________________________________________________________ 
8 FDASIA, P.L. No. 112-144, Title VII  705. 

9 FDA,  FDA Form 483 Frequently Asked Questions. Accessed at http://www.fda.gov/ 

ICECI/EnforcementActions/ucm256377.htm  on August 27, 2014. 

FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   3 
   
   
 	  Official Action Indicated. This classification signifies significant 
violations that may warrant regulatory action.  They may lead to an 
enforcement action if the manufacturer does not correct them.10    
If the result of an FDA inspection is Official Action Indicated, the agency 
may take action.  FDA may issue a warning letter and then follow up with 
the manufacturer to ensure that it has made the appropriate corrections.11   
If the manufacturer does not correct the violations, FDA may request or 
recommend recalls of marketed products and require new testing of 
products.  FDA may issue an Import Alert to detain and possibly refuse 
violative drugs.  FDA may also pursue other actions, including seizure, 
injunction, civil penalty,  and criminal prosecution.12  FDA can also bring 
criminal cases against a manufacturer that is found to be in violation of 
cGMPs. 
Strengthened FDA Oversight of Manufacturers of Generic 
Drugs 
FDASIA increased FDAs resources for generic drug oversight and 
strengthened the agencys authority over manufacturers of generic drugs.  
Applicable FDASIA provisions include: 
Record requests. FDASIA authorized FDA to request records from  
manufacturers in advance of or in lieu of inspections, such as those related 
to drug testing, drug manufacturing, facility maintenance, and 
administration.13  
Manufacturer self-identification. The Generic Drug User Fee Act 
(GDUFA) requires manufacturers of generic drugs to identify themselves 
to FDA.14  (In this report, we refer to this self-identification process as 
registration.)  This requirement includes manufacturers of final-dosage 
forms and manufacturers of active pharmaceutical ingredients.15  FDA 
 ____________________________________________________________ 
10 FDA,  Field Management DirectiveEstablishment Inspection Report  Conclusions  and  
Decisions (FMD# 86).   Accessed at http://www.fda.gov/downloads/ICECI/Inspections/  
FieldManagementDirectives/UCM382035.pdf on January 20, 2015. 
11 FDA,  About Warning and Close-Out Letters.  Accessed at http://www.fda.gov/ICECI/ 
EnforcementActions/WarningLetters/ucm278624.htm on  August 27, 2014. 

12 FDA, Compliance Policy GuidesFraud, Untrue Statements of Material Facts, 

Bribery, and  Illegal Gratuities, July 1, 1991,  120.100. 
  
13 FDASIA, Title VII   706.  

14  Generic Drug User Fee Amendments of 2012 (P.L. No. 112-144, Title III).  See also 

FDA, Guidance for Industry: Self-Identification of Generic Drug Facilities, Sites, and 
 
Organizations, August, 2012.  Accessed at http://www.fda.gov/Drugs/ 
 
GuidanceComplianceRegulatoryInformation/Guidances/ucm316721.htm on August 27, 
 
2014. 

15 Sites and facilities involved in repackaging and bioequivalence testing of generic drugs 

must also register with FDA. 
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   4 
   
   
created a database that has been available for registration since the start of  
fiscal year (FY) 2013. FDA maintained no such list of manufacturers of 
generic drugs prior to FY 2013.   
Generic drug user fees.  Since FY 2013, FDA has had the authority to 
collect user fees from manufacturers of generic drugs.16   These fees are 
intended to speed ANDA review times and increase FDAs resources for 
inspecting facilities where generic drugs are manufactured.    
Parity in inspections of foreign and domestic manufacturers. FDA  
committed to achieving parity in surveillance inspections of foreign and 
domestic drug manufacturers by FY 2017.17 Section 705 of FDASIA  
requires a risk-based approach for inspecting drug manufacturers, whether 
domestic or foreign.   
Related Work 
In 2010 the Government  Accountability Office (GAO) released a report on 
its review of FDA inspections from FYs 2007 through 2009 of 
manufacturers of brand-name and generic drugs.  GAO found that in 
FY 2009, FDA inspected 40 percent of domestic drug manufacturers, but 
only 11 percent of the foreign drug manufacturers in its inventory.18  
METHODOLOGY 
Scope 
This study focuses on FDA preapproval and surveillance inspections for 
manufacturers of generic drugs.  It assesses the extent to which FDA  
conducted preapproval inspections and identified violations at 
manufacturers during calendar years 20112013.  It also assesses the 
extent to which FDA conducted surveillance inspections and identified 
violations at manufacturers in FY 2013.   
This study also assesses FDAs progress toward meeting FDASIA goals 
specifically, achieving parity in inspections of foreign and domestic 
manufacturers of generic drugs, creating a registry of those manufacturers, 
and requesting records in lieu of or in advance of an inspection. 
 
 ____________________________________________________________ 
16 FDASIA, Title III,  744B. 

17 FDA,  Generic Drug User Fee Act Program  Performance Goals and Procedures. 
  
Accessed at http://www.fda.gov/downloads/ForIndustry/UserFees/GenericDrugUserFees/ 
 
UCM282505.pdf  on August 27, 2014. 

18 GAO, Drug Safety:  FDA Has Conducted More Foreign  Inspections and Begun to 
 
Improve Its Information on  Foreign Establishments, but More Progress Is Needed, 

GAO-10-961, September  2010. 

FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   5 
   
   
Data Sources and Analysis 
We used seven data sources.  A fuller description of these and the ways in 
which we used them appears in Appendix A. 
 	  FDAs Field Accomplishments and Compliance Tracking System  
(FACTS), which contains data on all drug manufacturer 
inspections. 
	   FDAs User Fee Facility Data Management (UFFDM) database, 
which contains manufacturer self-reported registration data. 
	   FDAs Establishment Evaluation System (EES), which FDA uses 
to manage ANDAs and request preapproval inspections.   
	   FDAs Compliance Management System (CMS), which contains 
data on enforcement actions taken by FDA.   
	   FDA policies and procedures regarding the risk-based model for 
prioritizing inspections, identifying violations, and taking 
enforcement action.  We also requested policies and procedures for 
requesting documents in lieu of or in advance of an inspection. 
	   FDAs lists of generic drug manufacturers prioritized for 

surveillance inspections for FY 2013.   

	   Structured interviews with FDA staff  in  CDERs Office of Generic 
Drugs and in ORA.   
Limitations 
FDA did not begin collecting until FY 2013 the data as to which drug 
manufacturers are involved in producing generic drugs.  Therefore, we 
were unable to determine whether manufacturers that received 
surveillance inspections prior to FY 2013 produced generic drugs.  
We did not analyze the review times for ANDAs, so we were unable to 
determine whether outstanding preapproval inspections caused delays in 
ANDA approvals. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency.   
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   6 
   
   
FINDINGS 
Although FDA increased preapproval inspections of 
manufacturers of generic drugs from 2011 to 2013, it 
did not conduct all preapproval inspections requested 
by its own reviewers of applications for generic drugs 
	
When FDA reviews an ANDA for a generic drug, it evaluates the FDA  
inspection history of each manufacturer listed on the application.  FDA  
then determines which manufacturers require preapproval inspections and 
requests that ORA conduct them.  In most cases, ORA must conduct 
requested preapproval inspections before FDA approves an ANDA.  
FDA increased its preapproval inspections of manufacturers of 
generic drugs by 60 percent from 2011 to 2013   
FDA increased preapproval inspections every year from 2011 through 
2013 (see Figure 1). The GDUFA was implemented in FY 2013, 
increasing FDAs resources for conducting inspections; the agency 
collected nearly $300 million in user fees in FY 2013.19  FDA used these 
additional resources foramong other thingshiring and training staff to 
conduct additional inspections of manufacturers of generic drugs.  For this 
period, FDA conducted the majority of preapproval inspections in 
conjunction with surveillance inspections. 
   
____________________________________________________________ 
19 FDA,  FY 2013 GDUFA  Financial Report.  Accessed at 
http://www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/UserFeeRepo 
rts/FinancialReports/GDUFA/UCM395905.pdf on February 25, 2015. 
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   7 
   
   
Figure 1: FDA Preapproval Inspections of Manufacturers of Generic Drugs, 
20112013 
 
Source: OIG analysis of FDA FACTS data, 2011-2013. 
Furthermore, FDA conducted more preapproval inspections of foreign 
manufacturers from 2011 to 2013 than in previous years.  FDA performed 
101 ANDA  preapproval inspections of foreign manufacturers in 2011 and 
142 such inspections in 2013.  However, the proportion of ANDA  
preapproval inspections conducted at foreign manufacturers as a share of 
all ANDA preapproval inspections decreased from 60 percent in 2011 to 
about 50 percent in 2012 and 2013 (see Figure 2).  
   
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)  8 
   
   
Figure 2: FDA Preapproval Inspections of Manufacturers of Generic Drugs  
  by Manufacturer Location, 20112013 
 
100% 
s 
n
o 90% 
ti
c
e 80%  68 
sp 113  129 
n 70% 
al I
v 60% 
o
r
p 50% 
p
a
e
r 40% 
P
of  30%  101 
e  113  142 
g
a 20% 
t
n
e 10% 
c
r
e
P 0% 
2011  2012  2013 
Year 
Foreign  Domestic 
 
 
Source: OIG analysis of FDA FACTS data, 20112013. 
 
During a preapproval inspection, FDA  may find problems that require 
corrective actions from the manufacturer.  The proportion of preapproval 
inspections with findings of Official Action Indicated remained constant at 
about 7 percent from 2011 through 2013 (see Table 1).  A finding of 
Official Action Indicated indicates that some type of corrective action 
would be required before FDA would approve the ANDA.  An applicant 
may decide to work with a new manufacturer if the one listed on the 
original ANDA receives a classification of Official Action Indicated.  
About half of preapproval inspections resulted in a final classification of 
No Action Indicated.  
 
 
   
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   9 
  Table 1:  Results of FDA Preapprovallnspections of Manufacturers of 
Genen.c  Drugs, 2011-2013 
Year 
Final Inspection Classification  2011  2012  2013 
No Action Indicated, n (%)  74 (52%)  93 (51%)  108 (52%) 
Foreign  44  50  52 
Domestic  30  43  56 
Voluntary Action Indicated, n (%)  59(41%)  78 (43%)  87 (42%) 
Foreign  46  43  48 
Domestic  13  35  39 
Official Action Indicated, n (%)  10 (7%)  10 (6%)  14 (7%) 
Foreign  3  3  7 
Domestic  7  7  7 
Total  143  181  209 
Source : OIG analysis of FDA FACTS data, 2011-2013. 

*As of March 31, 2014, 26 inspections conducted in 2011, 45 inspections conducted in 2012 , and 

62 inspections conducted in 2013 did not have final classifications. 

During this period, almost all outstanding preapprova/ 
inspection requests were for foreign manufacturers 
Although preapproval inspections increased from 2011-2013 , as of 
December 31, 2013, ORA had not conducted all preapproval inspections 
requested by CDER during that period.  Each year, most ofthose 
unfulfilled requests were for inspections of foreign manufacturers.  For 
example, 24 percent ofpreapproval inspections requested in 2011 were 
outstanding as of December 31, 2013 , and all ofthose requests were for 
inspections of foreign manufacturers (see Table 2).  FDA staff attributed 
outstanding preapproval inspections to a lack ofresources and said that 
they expect the percentage of inspections conducted to improve with 
additional funding from user fees from manufacturers of generic drugs. 
Table 2: FDA Preapproval Inspection Requests for Manufacturers of 
Gener1.c  Drugs, 2011-2013 
Outstanding 
Preapproval Inspection 
All Outstanding  Requests for Foreign 
Preapproval Inspection  Manufacturers* 
Total Preapproval  Requests*  n (% of outstanding 
Year  Inspection Requests  n (% of requests)  requests) 
2011  153  37 (24%)  37 (100%) 
2012  267  97 (36%)  94 (97%) 
2013  241  155 (64%)  150 (98%) 
Source : OIG analysis of FDA FACTS data and FDA List of Requested Preapproval Inspections from 

2011-2013 . 

*As of December 31, 2013 . 

FDA does not necessarily conduct preapproval inspections in the order in 
which they are requested.  For example, FDA may take drug shortages into 
account when prioritizing preapproval inspections.  Other factors that FDA 
may consider include staff availability and travel schedules, particularly 
for foreign inspections. 
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01 -13-00600)  10   
   
Outstanding preapproval inspections can delay ANDA approvals.20   
However, FDA may have reasons for not conducting all outstanding 
preapproval inspections. For example, if resources are limited, FDA may 
review the results of a recent surveillance inspection rather than 
conducting a separate preapproval inspection.  Finally, a preapproval 
inspection could also be deferred in cases in which an ANDA cannot be 
approved for many years.   
In FY 2013, FDA conducted routine surveillance 
inspections of all generic manufacturers that it had 
prioritized as high risk 
In the first year of risk-based inspectionsFY 2013FDA prioritized at 
least 283 manufacturers of generic drugs for routine surveillance 
inspections and conducted inspections at all of them.21  FDAs current risk-
based model incorporates the outcomes of previous surveillance 
inspections, the type of establishment, and the type of product 
manufactured, among other factors.  Of the 283 generic manufacturers that 
FDA prioritized for inspection in FY  2013, 185 (65 percent) were foreign.   
On the basis of these high-priority inspections, FDA required corrective 
action for 11 generic manufacturers, 2 of which are foreign.  FDA took 
enforcement action against 9 of the 11 manufacturers with classifications 
of Official Action Indicated.22   These actions included four warning 
lettersone of which applied to two manufacturersand four regulatory 
meetings.  The two manufacturers against which FDA did not take 
enforcement action are both located in the United States.  
In FY 2013, FDA conducted additional surveillance inspections beyond 
those of prioritized manufacturers of generic drugs.  In FY 2013, FDA  
conducted a total of 589 surveillance inspections of generic drug 
manufacturers, 337 (57 percent) of which were inspections of foreign 
manufacturers.  Most of these inspections were routine surveillance 
inspections, which are periodic inspections to ensure manufacturers  
compliance with cGMPs.   
These 589 inspections also included 20 surveillance inspections that FDA  
performed as followups (i.e., following up on an enforcement action or a 
____________________________________________________________ 
20 OIGs analysis did not address whether outstanding preapproval inspections delayed or 
prevented the approval  of ANDAs.  
21 In FY  2013, 283 of the 720  unique manufacturers that FDA  had prioritized  for  
inspection registered as  generic manufacturers.  It is  possible that some of the remaining 
437 manufacturers may have produced  generic drugs in  FY 2013, but  failed to register 
with FDA as makers of  generic drugs.   
22  As of  March 28, 2014. 
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   11 
   
   
previous inspection with a final classification of Official Action Indicated) 
and 6 inspections performed as a result of consumer complaints. 
 
Table 3: Results of FDA Surveillance Inspections of Manufacturers of 
Generic Drugs by Location, FY 2013  
 
Voluntary  
 
No Action   Action   Official Action  
 
Final Inspection Classification*  Indicated   Indicated   Indicated  
 
Foreign  
  116 (42%)   144 (53%)   14 (5%)  
n (%)  
 
Domestic 
  83 (41%)   108 (53%)   12 (6%)  
n (%)  
 
  Total**   199 (42%)   252 (53%)   26 (6%)  
n (%)  
Source: OIG analysis of FDA FACTS data, FY  2013. 

*Data on surveillance-only inspections were available as of FY  2013.  As of March 31, 2014, 

111 surveillance inspections conducted in 2013 did not have final classifications.  One 

surveillance inspection was referred to the State.
  
**Percentages in each row do not sum to 100 percent because of rounding. 
 
 
 
FDA required corrective action for 26 surveillance inspections conducted 
in FY 2013 (see Table 3). FDA took action against 20 of the 
26 manufacturers with inspection results of Official Action Indicated. Of 
these 20, 7 are domestic and 13 are foreign.  The actions that FDA took 
included 13 warning letters, 7 import alerts, 4 regulatory meetings, and 
1 untitled letter. 23,  24    
Of the 20 manufacturers against which FDA took action, there were 
4 against which it took multiple enforcement actions.  All four are located 
in India: 
 	  Sentiss Pharma: FDA issued an import alert and a warning letter.  
 	  RPG Life Sciences Limited: FDA issued a warning letter and an 
import alert that applied to two separate manufacturers owned by 
this company.  
	   Hospira Healthcare India: FDA issued one import alert and a 
warning letter.  
	   Wockhardt Limited: FDA issued two warning letters to two 
different manufacturers owned by this company, as well as two 
import alerts.25 
  
 ____________________________________________________________ 
23 Section 801  of the FD&C Act explicitly authorizes FDA to  refuse admission of articles 

that appear to  violate the Act.  FDAs Import Alerts identify the products and firms that 

meet this criterion.  

24 Two warning letters each referenced two inspections that resulted in classifications of 

Official Action Indicated. 

25 One of these warning letters was issued in  FY 2014. 

FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   12 
   
   
In all cases, the warning letters resulted from significant violations of 
cGMPs for finished pharmaceuticals.   The import alerts authorized 
detaining pharmaceuticals produced at these manufacturers when they 
were offered for import.  For example, Wockhardt Limiteds warning 
letters noted, among other violations, that Wockhardt delayed FDA  
inspection by denying access to requested documents and obstructing 
FDAs direct observation of the manufacturing process.  FDA also noted 
problems with laboratory records and stated that it was particularly 
concerned about Wockhardts ability to implement a robust and 
sustainable quality system, as well as the lack of adequate washing and 
toileting facilities for workers; FDA  had observed urinals without drainage 
piping and stagnant urine on the facility floor.26   
FDA has made progress toward parity and registration 
of manufacturers of generic drugs, but has not used 
its authority to request records in lieu of or in advance 
of an inspection 
When FDASIA was signed into law in July 2012, it strengthened FDAs 
authorities and increased the agencys resources for oversight of 
manufacturers of generic drugs.  When this law was enacted, FDA  
committed to achieving parity in inspections of foreign and domestic 
manufacturers of generics by FY 2017.  FDA also gained new authorities, 
including the authority to require manufacturers of generic drugs to 
register and the authority  to request manufacturer records in lieu of or in 
advance of an inspection. 
FDA has made progress toward achieving parity in inspections 
of foreign and domestic manufacturers 
FDA defines parity as equal frequency of foreign and domestic 
inspections plus or minus 20 percent, with both kinds of inspections 
conducted with comparable depth and rigor.27  In its FY 2013 GDUFA  
performance report, FDA reported achieving parity in inspection 
frequency on the basis of this definition. 
Our analysis supported that assertion; of the 589 surveillance inspections 
that FDA conducted in FY 2013, 337 (57 percent) were of foreign 
manufacturers.  In FY 2013, 1,514 manufacturers of generic drugs 
registered with FDA, 1,111 (73 percent) of which are foreign.  Of these 
____________________________________________________________ 
26 FDA,  Inspections, Compliance, Enforcement, and Criminal Investigations. Accessed 
at http://www.fda.gov/ICECI/EnforcementActions/WarningLetters/2013/default.htm on:  
October 3, 2014. 
27 FDA,  GDUFA Program Performance Goals and Procedures. Accessed at  
http://www.fda.gov/downloads/ForIndustry/UserFees/GenericDrugUserFees/UCM28250 
5.pdf  on September 3, 2014.  
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   13 
   
   
foreign manufacturers, 624 are located in Asia and 396 are located in 
Europe (see Table 4).   
Although FDA documented a similar frequency of domestic and foreign 
inspections in FY 2013, its FY 2013 GDUFA performance report did not 
fully address the commitment to achieve parity based on risk.   To reach 
that goal, FDA is using a risk-based model to select manufacturers for 
surveillance inspections without distinguishing between whether the 
manufacturers are foreign or domestic.  FDA planned to report, in FY  
2014 and future years, on steps it was taking to schedule and conduct 
inspections of both domestic and foreign manufacturers according to 
identical risk factors.  
FDA did not report on progress for the second metric of parity, i.e., 
conducting inspections with comparable depth and rigor.  FDA planned to 
present information addressing this metric in its FY 2014 performance 
report on GDUFA. 28  
 
Table 4: Distribution of Generic Manufacturers and Surveillance 
Inspections, FY 2013  
 
Number of   Number of Surveillance 
  Country or Region   Manufacturers   Inspections  
Asia  
624 (41%)   180 (31%)  
n (%)  
Europe 
396 (26%)   126 (21%)  
n (%)  
Canada  
45 (3%)   20 (3%)  
n (%)  
Other  
46 (3%)   11 (2%)  
n (%) 
United States  
403 (27%)   252 (43%)  
n (%)  
Total*  
1,514  589 
n 
 
Source: OIG analysis of FDA FACTS data and FDA database of manufacturers of generic drugs, 
FY 2013.  
 
FDA faces a number of challenges in conducting foreign inspections.  
Because of travel costs, these inspections are more resource intensive.  In 
earlier work on FDA inspections of foreign clinical trials, OIG identified 
additional logistical challenges that likely also apply to inspections of 
foreign drug manufacturersspecifically, the time constraints of travel 
and difficulty in obtaining work visas and translators.29  In recent years, 
FDA has established international offices in countries such as China and 
____________________________________________________________ 
28 FDA,  FY 2013 Performance Report to the President and  Congress for GDUFA. 
Accessed at http://www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/  
UserFeeReports/PerformanceReports/UCM384177.pdf on  September 3, 2014. 
29 OIG, Challenges to  FDAs Ability to Monitor and  Inspect Foreign Clinical Trials, OEI-
01-08-00510, June 2010. 
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   14 
   
   
India. These new offices should increase the agencys capacity for foreign 
inspections by alleviating some of these challenges.  
FDA has taken steps to ensure that manufacturers of generics 
comply with registration requirements, but the registry may be 
incomplete  
The registration of manufacturers of generic drugs began in FY 2013.  
FDA has encouraged generic manufacturers to register through industry 
outreach, by releasing draft guidance on registration, and by announcing 
registration reporting periods in the Federal Register.30 For known generic 
manufacturers that failed to register in FY 2013, FDA sent letters as 
reminders to register in the FY 2014 registration period.  FDA has issued 
two warning letters to manufacturers for failing to register in FY 2013.  
According to FDA, warning letters were sent only to manufacturers that 
are in the GDUFA Facility Arrears List for failure to pay required annual 
fees. 
As of December 31, 2013, not all known generic drug manufacturers had 
registered accurately with FDA, despite the agencys efforts.  Of the 432 
generic drug manufacturers listed on ANDAs approved in 2013, 45 (10 
percent) did not match entries in FDAs registry of generic manufacturers 
as of that date.31  Furthermore, 62 percent (28 of 45) of the manufacturers 
that we were unable to locate in the registry are foreign.  Registration 
provides FDA with information on the universe of generic manufacturers 
so that it may more effectively conduct surveillance and inspections.  FDA  
staff attributed this discrepancy primarily to generic manufacturers  
registering with incorrect identifying information and said that it is 
working with industry to fix this problem.    
FDA made progress toward implementing policies and 
procedures for requesting manufacturers records in lieu of or 
in advance of an inspection, but has yet to use this authority 
FDA has started to implement official policies and procedures for 
requesting records in lieu of an inspection, focusing first on cases 
involving public health emergencies.  In October 2014, FDA published 
interim policies and procedures for requesting records in the event of a 
____________________________________________________________ 
30 78 Fed. Reg. 22553  (April 16, 2013).  
31 As part of its  review of  our draft report in January  2015, FDA informed us that it had 
subsequently been able to identify additional manufacturers in the registry.  As a result of  
that further analysis, FDA reports that only eight  ANDAs approved in  2013  have no  
counterpart in the registry and that five of these eight are foreign. 
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   15 
   
   
public health incident involving human or animal drugs.32  FDA has not 
yet used these policies and procedures to request records from a drug 
manufacturer.  However, FDA plans to use these interim policies and 
procedures to inform the development of policy for use of this authority in 
inspections broadly, with a focus on foreign surveillance inspections.  
Reviewing a manufacturers documentation of its laboratory and 
manufacturing practices is a significant component of FDA inspections of 
drug manufacturers.  By conducting this review in advance of visiting 
a facility, inspectors could focus their onsite time on observing and 
inspecting areas in need of attention, rather than on reviewing paperwork.  
For a manufacturer with a positive record in its inspection history, FDA 
could even go so far as to opt for a record review in lieu of actually 
visiting the facility. 
   
____________________________________________________________ 
32 FDA, Interim Framework for Requesting Records in  Advance of or in Lieu of a Drug  
Inspection in the Event of a Public Health  Incident Related  to Drugs (effective 
October 9, 2014), FDA Staff Manual Guides, SMG  9004.1, vol. IV. 
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   16 
   
   
CONCLUSION AND RECOMMENDATIONS 
Generic drugs are generally less expensive than their brand-name  
counterparts and therefore are widely used in the United States.  In 2012, 
nearly 80 percent of prescriptions filled in the United States were for 
generic drugs, and the use of these drugs is increasing.33, 34  Ensuring the 
quality and safety of generic drugs through inspections of manufacturers is 
essential for maintaining the supply of these drugs.  When Congress 
passed FDASIA in 2012, FDAs resources for such inspections increased 
significantly.   
Our review found that FDA has increased inspections of manufacturers of 
generic drugs and has made progress toward other inspection-based 
performance goals resulting from FDASIA.  FDA increased the number of 
preapproval inspections it conducted each year from 20112013, and in 
FY 2013 conducted surveillance inspections of all manufacturers it had 
prioritized as high-risk. In addition, FDA reported progress toward 
achieving parity in the frequency of inspections of foreign and domestic 
manufacturers.     
We recommend that FDA:  
Conduct outstanding preapproval inspections of 
manufacturers of generic drugs, where appropriate  
As of December 31, 2013, FDA had not conducted all preapproval 
inspections requested by its own reviewers of applications for generic 
drugs.  Many factors affect the order and timeframe in which FDA  
conducts such inspections. However, to ensure timely approval of generic 
drugs, FDA should develop an appropriate timeline to reduce the backlog 
of preapproval inspections. 
Ensure compliance with the requirement for 
manufacturers of generic drugs to register with FDA 
Since FY 2013, all manufacturers producing or planning to produce 
generic drugs have been required to register with FDA, but our review 
found that registration data may not be complete.  Registration provides 
FDA with information on the universe of manufacturers producing or 
____________________________________________________________ 
33FDA, Facts About Generic Drugs, September 19, 2012.   Accessed at 
http://www.fda.gov/drugs/resourcesforyou/consumers/buyingusingmedicinesafely/unders 
tandinggenericdrugs/ucm167991.htm  on December 4, 2013. 
 
34 Health Care Cost Institute. 2012  Health Care Cost and Utilization Report, 

September 2013.  Accessed at http://www.healthcostinstitute.org/files/2012report.pdf on 
 
December 9, 2013. 

FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   17 
   
   
intending to produce generic drugs. To ensure the completeness of this 
registration information, FDA should continue to: 
 	  cross-check manufacturers listed on approved ANDAs to ensure 
that all of the manufacturers listed have registered,  
 	  cross-check its list of registered manufacturers against other lists of 
known generic manufacturers, and  
 	  send warning letters to manufacturers that do not comply with 
registration requirements.  
Such actions enhance FDAs ability to track and oversee manufacturers of 
generic drugs.  
Use its authority to request records in lieu of or in 
advance of an inspection  
In 2012, FDASIA granted FDA the authority to request records in lieu of 
or in advance of an inspection. This authority could increase FDAs 
capacity for inspections; record reviews could be completed in advance, 
rather than using up the inspection staffs time during an onsite inspection.  
FDA has published interim policies and procedures for using this authority 
in the event of a public health incident, but the agency is still in the 
process of determining the most appropriate way to use this authority for 
surveillance inspections. FDA should establish a plan to use this authority 
for surveillance inspections and then  move expeditiously to implement the 
plan. 
Once FDA implements policies and procedures, FDA could direct its ORA  
staff to take full advantage of them as a potential way of reducing costs 
and enhancing flexibility in conducting inspections. 
 
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   18 
   
   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
FDA concurred with all three of our recommendations.   
In response to our first recommendation, FDA stated that it is working 
diligently to conduct all outstanding preapproval inspections.  FDA  
continues to expand and train its workforce in support of this goal.   
In response to our second recommendation, FDA stated that it will 
continue to send letters to generic drug manufacturers that fail to register 
and follow up with warning letters to those that fail to register and pay 
required annual fees.  
In response to our third recommendation, FDA agreed to the use of its new  
authority to request records in lieu or in advance of an inspection.  FDA is 
developing policies, guidance, and pilot projects to implement this 
authority.  
OIG supports FDAs efforts to improve oversight and inspections of 
manufacturers of generic drugs.  We will continue to monitor these efforts. 
For the full text of FDAs comments, see Appendix B.  
   
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   19 
   
   
 
APPENDIX A 
Detailed Data Sources and Analysis 
We used seven data sources in our review: 
FDAs Field Accomplishments and Compliance Tracking System 
(FACTS). FACTS includes data on all drug manufacturer inspections.  For 
preapproval inspections, FACTS contains data on whether the inspected 
manufacturer produced generic drugs.  We analyzed FACTS inspection 
data to determine the number of preapproval inspections conducted from  
2011 through 2013.  We also analyzed FACTS data to determine the final 
classifications of these inspections.  For surveillance inspections, FACTS 
does not differentiate between manufacturers of generic drugs and 
manufacturers of brand-name drugs.  As a result, we were able to identify 
surveillance inspections and their results only for generic manufacturers 
registered with FDA in FY 2013.   
FDAs User Fee Facility Data Management (UFFDM) database. UFFDM  
contains the data that manufacturers of generic drugs have self-reported to 
FDA. Because FDA began collecting these data at the start of FY 2013, 
UFFDM does not contain complete data on generic drug manufacturers 
that were in operation in 2011 and 2012. We analyzed FY 2013 data along 
with data from FACTS to determine how many generic drug 
manufacturers in operation at this time had surveillance inspections in 
FY 2013. 
FDAs Establishment Evaluation System (EES).  FDA uses EES to manage 
ANDAs and request preapproval inspections.  We requested EES data on 
all ANDAs approved from 2011 through 2013.  We analyzed these data 
along with data from UFFDM to determine the number of manufacturers 
associated with approved ANDAs during that time period as well as the 
percentage of these manufacturers that registered with FDA as required. 
FDAs Compliance Management System (CMS). The CMS database 
includes data on enforcement actions taken by FDA.  We reviewed 
information on all enforcement actions recommended and taken against 
manufacturers of generic drugs from 2011 through March 28, 2014, the 
date FDA extracted data from this system.  For manufacturers that CMS 
indicated had received warning letters in this period, we reviewed the 
warning letters on FDAs public Web site. 
FDA policies and procedures. We reviewed policies and procedures, 
including those regarding FDAs risk-based model for prioritizing 
inspections of manufacturers of generic drugs, identifying violations, and 
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   20 
   
   
taking enforcement action.  Additionally, we requested FDAs policies and 
procedures for requesting documents in advance or in lieu of an 
inspection. 
FDAs lists of generic drug manufacturers prioritized for surveillance 
inspections. We requested the list of generic drug manufacturers that FDA  
prioritized for inspections in FY 2013 using its risk-based model.  We  
compared this list with FACTS data to determine the extent to which FDA  
completed prioritized inspections.  
Structured interviews with FDA staff.   We conducted structured interviews  
with FDA staff in CDERs Office of  Generic Drugs and in ORA to obtain 
a first-person account of how staff prioritize and conduct inspections, 
decide to take enforcement action, and ultimately approve ANDAs.  
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   21 
  APPENDIX 8 
Agency Comments 
DEPARTMENT OF HEALTH AND HUMAN SERVICES 
----------- ---------
DATE:  March 11,2014 
TO:  Inspector General 
FROM:  Associate Commissioner for Public Health Strategy and Analysis 
SUBJECT:  FDA's Comments to OIG Draft Report entitled, FDA Has Made Progress on Oversight 
and Inspections ofGeneric Drug Manufacturers 
FDA is providing the attached comments to the Office of Inspection General Draft Report entitled, FDA 
Has Made Progress on Oversight and Inspections of Generic Drug Manufacturers. 
We appreciate the opportunity to review and comment on this draft report before it is published. 
PeterL~MPH 
Attachment 
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)  22   
   
APPENDIX B (CONTINUED)
  
 
 
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   23 
   
   
APPENDIX B (CONTINUED)
  
 
 
 
 
 
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   24 
   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Joyce Greenleaf, Regional 
Inspector General for Evaluation and Inspections in the Boston regional 
office; Russell Hereford, Deputy Regional Inspector General; and 
Kenneth Price, Deputy Regional Inspector General.  
Jessica Fargnoli served as the team leader for this study, and 
Elizabeth Havener served as the lead analyst.  Central office staff who 
provided support include Meghan Kearns and Christine Moritz.  
 
 
 
 
 
FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs (OEI-01-13-00600)   25 
   
Office of Inspector General
http://oig.hhs.gov  
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as  
amended, is  to protect the integrity of the Department of  Health and Human Services  
(HHS)  programs, as well as the health and welfare of beneficiaries  served by those 
programs.  This statutory mission  is  carried  out through  a nationwide network  of  audits, 
investigations, and inspections conducted by the  following operating components: 
Office of Audit Services 
The Office  of  Audit Services  (OAS) provides auditing services  for HHS, either by  conducting  
audits  with its own audit resources or by  overseeing  audit work done by others.  Audits  
examine the performance of HHS programs and/or its grantees and contractors in carrying  
out their respective responsibilities and are intended  to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and  
mismanagement and promote economy and efficiency  throughout  HHS. 
Office of Evaluation and Inspections 
The Office  of  Evaluation and Inspections (OEI)  conducts national evaluations to  provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud,  waste, or abuse  and promoting  
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations  
of  fraud and misconduct  related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI  utilizes its resources 
by actively  coordinating with the Department  of Justice  and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to  criminal 
convictions, administrative sanctions,  and/or  civil monetary  penalties.  
Office of Counsel to the Inspector General  
The Office of Counsel to the  Inspector  General (OCIG) provides general legal services to 
OIG, rendering  advice and opinions on HHS programs and operations and  providing all  
legal support for OIGs  internal operations.  OCIG represents  OIG in all civil and 
administrative fraud and abuse cases involving HHS programs,  including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In  connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program  guidance, publishes fraud alerts, and provides other  
guidance  to  the health care industry concerning the anti-kickback statute and other  OIG  
enforcement authorities.