Servces 
Department of Health and Human 

OFFICE OF 
GENERA 
-J  INSPECTOR 
OIG OVERSIGHT OF FDA ACTIVITIES:

A SUMMARY REPORT

Richard P. Kusserow 
INSPECfOR GENERA 
JANARY 199
cIa  GENRA

OFFCE OF INSPECTOR 
The mission of the Offce of Inpector General (OIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrty of the Departent of Health and Human Servce' (HHS) 
programs as well as the health and welfare of beneficiaries seNed by those programs. 
statutory mision is carred out through a nationwide network of audits, investigations, and 
inspections conducted by three OIG operatig components: the Offce of Audit Servce, the 
correCt them. 
Offce of Investigations, and the Offce of Evaluation and Inpections. The OIG alo inorm 
the Secretary of HHS of program, and management problems, and recmmends coures to
OFFCE OF AUDIT SERVICE 
The OIG's Offce of Audit Servce (OAS) provides all auditing servce for HHS, either by 
conducting audits with its own audit resource or by overseeing audit work done by others. 
Audits examie the performance of HHS programs and/or its grantee and contractors in 
carrg 
and are intended to provde independent 
out their respetive responsibilties 
assesments of HHS program and operations in order to reduce waste, abuse, and 
mismanagement and to promote ecnomy and effciency throughout the Departent. 
OFFCE OF INTIGATIONS 
The OIG's Offce of Investigations (01) conducts crial ci, and  dmini tratie 
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiares and of 
crial 
unjust enrichment by providers. The investigative effort of 01 lead to  convictions, 
administrative sanctions, or civi money penalties. The 01 also oversee State Medcad fraud 
control units which investigate and prosecute fraud and patient abuse in the Medcad program. 
AN 
OFFCE OF EVALUATION  INSPECfONS 
The OIG's Offce of Evaluation and Inpetions (OEI conduct short-term management and 
program evaluations (called inpetions) that focus on isues of concern to the Deparent, 
the Congress, and the public. The fidigs and recmmendations contaed in these inpection 
report generate rapid, accurate, and up-to-date inormation on the effciency, vulnerabilty, 
and effectiveness of departmental programs. 
Th 
report was prepared under the direction of Emie Baebel, Chief, Public Health and 
Human Servce Branch. Participating in thi project were the followig people: 
Penny R. Thompson 
Mary Beth Clarke, R.Ph.  Department of Health and Human Servces

OFFICE OF

GENERA

INSPECTOR 
OIG OVERSIGHT OF FDA ACTIVITIES:

A SUMMARY REPORT

Richard P. Kusserow 
INSPECfOR GENERA 
92-0 
'~cIa  OEI-12- EXECUTIVE  SUMMAR 

PUROSE 
This summary report provides inormation on the oversight activities of the Offce of 
Inspector General (DIG) in connection with the Food and Drug Admstration 
(FDA). It discusses five major management chalenges facing FDA which have been 
identied through DIG audits, investigations, and inspections, and DIG 
recommendations for improvement. 
BACKGROUN 
The FDA is responsible for regulatig a wide array of products, including most of the 
nation s food supply, human and veteriar drugs, cosmetics, medical devices, and 
ban. 
blood  Though product approval activties, FDA ensures that drgs and 
devices are safe and effective for their intended uses before they are. marketed to the 
nation s consumers. Though surveilance and monitorig actties, FDA ensures that 
standards are met in the day-to-day processing, manufactug, and handlg of 
products it reguates. 
The Offce of Inspector General (OIG) is charged with preventig and detectig fraud 
waste, and abuse, and promoting effectveness and effciency in the Deparent' 
programs, including FDA. The DIG conducts and supervses audits, investigations 
and evaluations related to the Department s programs, identifes systematic 
weaknesses givig rise to opportunties for fraud and abuse, and makes 
recommendations to strengthen management systems and to promote effectveness
and effciency. 
ISUE 
Over the past several years OIG audits, investigations, and evaluations in FDA have 
identifed several common problems which FDA management must address. These 
include the need to 
restore integrty to FDA's product approval process; 
vigorously detect and investigate potential fraud and abuse; 
invigorate FDA' s inspections of manufacturig and processing facilties; 
ensure that FDA can respond to individuals and businesses out of compliance 
with the Food, Drug, and Cosmetic Act; and 
create and use reliable data management systems.  These problems are widely recognized. In addition to the DIG's discussion of these 
problems, the Advisory Committee on the Food and Drug Admistration (the 
Edwards Commission) discussed them at some length in its final report, and the 
Commissioner of Food and Drugs has discussed the challenge of addressing these 
issues in public statements and testiony before the Congress. 
CONCLUSIONS 
The issues and conclusions in this report sumarie those presented in greater deta 
in previously released DIG report. The issues here highght the major areas 
sumari 
requiring attention. The conclusions  more detailed recommendations in 
the individual report. The OIG is monitorig FDA's effort to implement the 
recommendations found in the origial report. In general, we believe FDA must aCt 
improve its product approval systems to ensure equitable and fai treatment of 
applicats, includig the development of "first-in fist-out" policies, and 
standard operatig procedures and gudelies for reviewers; 
obtai necessary enforcement authorities, such as embargo authority, subpoena 
authority, and civi monetary penalty authority, and use those authorities to 
encourage compliance with the Food, Drug, and Cosmetic Act and punsh 
violators; 
conduct appropriate systems analysis to ensure that usefu inormation systems

iare nin plaoce to prrovmide FDA amanatgemienot with nneces;sar  inormation to track 
workload and workfow, and to ensure that inormation being obtained from 
regulated industries meets FDA monitorig needs for tiely, accurate
, delegatig authorities to the States where appropriate 
identif resource needs
fees to supplement budget authority and augment 
and relyig on user 
resources, where necessar; and 
crial 
investigative capabilty with trained, experienced 
develop a fu-scale 
investigators. 
We believe that these steps are essential if FDA is to meet its numerous statutory 
responsibilties and meet the challenges of the comig decade.  ................................... ................ .................... ........ ................................................ .................. .................
. . . ..  ..  ..  ..  ..  ..  ...  ...  ....  ..   ...  .... .  ...    ....    ....    ....    .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     ....    ....    ....    ....    ....    ....   ...   ...   ...   ...   ...   ..  .. 
TABLE OF CONTENTS

EXCU SUMY

INODUCION . 

ISUE 
. . . . . . . . . . . . 3 
pro 
Integrty of product approv  . . . . . . . 3 
Detecon of mud and ab1l . 
. . 5 
Improvement of inons proc 
Compliance wi the Foo Dr and Coetic Ac . . . . . . . . . . . . . . . . . . . . . 8 
Use of relible data, sytems. . . . 
CONCLUSIONS 
APPENIX. .  . . . . . . . . . .. A INTRODUCTION

PUROSE 
This summary report provides inormation on the oversight activities of the Dffce of 
Inspector General (OIG) in connection with the Food and Drug Admistration 
(FDA). It discusses five major management chalenges facing the FDA which have 
been identied through OIG audits, investigations, and inspections, and OIG 
recommendations for improvement. 
BACKGROUN 
The FDA is responsible for reguating a wide array of products, includig most of the 
nation s food supply, human and veteriary drugs, cosmetics evices, and 
, medical 
blood bank. Though product approval actities, FDA ensures that drgs and 
devices are safe and effectie for their intended uses before they are marketed to the 
nation s consumers. Though surveilance and monitorig actities, FDA ensures that 
standards are met in the day-to-day processing, manufactg, and handlg of 
products it regulates. 
mion 
To accomplish its mission, FDA has a budget of alost $700  (Fiscal Year 
1991). Over 5 000 staff are distributed among the Center for Drug Evaluation and 
Research, the Center for Food Safety and Applied Nutrtion, the Center for Biologics 
Evaluation and Research, the Center for Devices and Radiological Health, and the 
Center for Veterinary Medicine in FDA headquarers. A field force composed of 
almost 2,500 persons organed in 6 regions and 21 distrct offces inspect and 
monitors facilties such as food warehouses, blood ban, and drug and device 
manufacturers. 
The Offce of Inspector General (010) is charged with preventig and detectg fraud 
waste, and abuse, and promoting effectiveness and effciency in the Deparent' 
programs, including FDA. The DIG conducts and supervses audits, investigations 
and evaluations related to the Departent' s programs, identies systematic
weaknesses givig rise to opportunities for fraud and abuse, and makes 
recommendations to strengten management systems and to promote effectiveness 
and effciency. 
Over the past several  audits, investigations, and evaluations in FDA have
includyears  eDIG   the need to 

identified several common problems which FDA management must address. These
restore integrty to FDA's product approval process 
vigorously de ect and investigate potential fraud and abuse  invigorate FDA' s inspections of manufacturing and processing facilties 
ensure that FDA can respond to individuals and businesses out of compliance 
with the act, and 
create and use reliable data management systems. 
recognd. 
These problems are widely  In addition to the DIG's discussion of these 
problems, the Advisory Commttee on the Food and Drug Admistration (the 
Edwards Commssion) discussed them at some length in its fial report, and the 
Commissioner of Food and Drugs has discussed the challenge of addressing these 
issues in public statements and testimony before the Congress. 
The issues and conclusions in this report summarie those presented in greater detail 
in previously released DIG report. The fidigs here highght the major areas
requirg attention. The recommendations sumare more detaied 
recommendations in the indidual report. The OIG is monitorig FDA's effort to 
origial report. 
implement the recommendations found in the  , "
ISSUES

INRI 
NES  RERE 
TH FDA  TO  TO IT PRODUcr APPROVAL
PROC. 
The Edwards Commission noted in its fial report that lithe generic drg scandal 
exposed the agency s vulnerabilty to fraudulent data (and) improper inducements. III 
Our work in investigatig the generic drg scandal, as well as audits we have 
conducted documentig inadequate internal controls in the drug approval process and 
the medical device 510(k) process, lead us to conclude that ensurg integrty 
product approval is of the utmost importance and warrants continued scrutiny. 
Sca 
Gen Dr 
Over the past 3 years, the generic drg industry has been rocked by a series of 
prosecutions resultig from OIG investigations. The prosecutions have occured 
gig 
two phases: a corrption phase, which involved generic drg companes  ilegal 
gratuities to FDA employees, and a fraud and false statements phase, in which the 
companes engaged in various deceptions regardig testig and manufacturg their 
products. 
Prosecutions are completed on corrption charges resultig from these investigations. 
Over a 2-year period, three generic drug companes, five company offcials, one 
industry consultant, and five FDA employees were convicted and sentenced in ths 
phase, in which companies paid to receive favorable processing of their generic 
equivalents. 
In the second round of prosecutions on charges of fraud, false statements, and 
manufacturig malpractce, two companes have been sentenced for obstrctig an 
FDA investigation into iregularties in the bioequialency testig required for generic 
drug approval. A major generic drg company was fied $10 mion, plus $380 000 to 
defer the cost of the OIG and FDA investigations, for substitutig a brand name 
product for the company  bioequialency. The 
s generic product in testig for 
laboratory which conducted the tests was fied $200 000 for its part in the deception 
which included replacing the brand name product with the generic when FDA 
investigators arrved on the scene. One company offcial was sentenced to 2 years and 
2 months in jail for making these statements to FDA An additional 13 company 
representatives and 2 laboratory representatives have been charged. 
Afer these revelations, the OIG embarked on a joint effort with the FDA to provide 
bribery awareness trainig to its employees. We hope that this traing wi help 
Adviory Committee on the Food and Drug Administration, U.S. Department of Health 
and Human Servces  Final Report of the Advisory Committee on the Food and Drug 
Administration " May 1991, p. 25.  ,,  ""
restore integrty to all the approval processes performed by the FDA by heightening 
FDA employee sensitivity to the fiancial impact of their day-to-day decisions and 
regulatory activities. 
Pr 
Intl 
LDck of  Contls in  Apprval 
An OIG audit of FDA's generic drug approval process identifed systemic weaknesses 
in conducting and managig reviews which alowed fraud and abuse to occur, includig 
the lack of guidelies and standard operating procedures to ensure the consistent 
2 The lack of 
review of applications, and the lack of a "first-
in, fist-out" review policy.
consistency and standard operatig procedures in reviewig Abbreviated New Drug 
Applications (ANAs) was also a priary concern expressed by generic drug 
manufacturers in a series of intervews we conducted in 1990 to assess the perspecties 
of industry on FDA' s generic drug approval process. 
kid 
Problems of this  continue to plague the Offce of Generic Drugs. Recently, the 
OIG has documented serious problems with FDA' s review of drg master fies 
ANAs. 
(DMFs) in approvig  These drug master fies provide important inormation 
on the facilties, processes, or articles used in manufacturg, processing, packagig, 
and storig drugs or drug ingredients. Our audit documented that no policies or 
procedures are in place at FDA to requie review of DMFs. As a result, some FDA 
chemists always review DMFs which are referenced in an ANA; others rely on 
previous reviews of DMFs conducted by other chemists in connection with a prior 
caot 
ANDA; and stil others do neither. Without such DMF reviews, FDA  ensure 
that generic drug ingredients are safe and effective. 
The lack of internal controls to ensure that product applications are reviewed and 
approved in accordance with accepted policies and procedures is an FDA-wide 
problem. Some of these same weakesses were also identied in our audit of FDA' 
noti 
SlO(k) process, through which device manufacturers  FDA of their intent to 
market a medical devi e. In this audit, we documented FDA' s lack of procedures to 
tiely, fai
sequence reviews and document decisions to ensure  , and complete S10(k) 
evaluations. We also found that FDA lacks a comprehensive qualty control system to 
, "Vulnerabilties in the Food and Drug Admtration 
0ffce of Inpector General
Generic Drug Approval Proces " A-15-89-0051, Augut 1989. 
0ffce of Inspector General  Perspectives of Drug Manufacturers: Abbreviated New 
Drug Applications," OEI-12-90-00770, February 1990; Offce of Inpector General 
Perspectives of Drug Manufacturers: Investigational New Drug and New Drug Applications 
OEI-12-09-0771, February 199. 
0ffce of Inspector General  Evaluation of Drug Master File Reviews by the Food and 
Drug Administration " A-15-90- , July 1991.  , "
evaluate and critique the adequacy of manufacturer submissions, or a management 
information system that tracks reviewer workload and productivity. 
In recognition of the common vulnerabilties in all of FDA' s product approval 
activities, internal control weakesses were characteried as a FDA-wide problem in 
the Department s 1990 Federal Manager s Financial Integrty Act report. We are now 
conducting an audit to determe what actions FDA has taken to recti problems we 
ANA 
identified in the  review process and plan future follow-ups in other product 
review areas. 
To correct these deficiencies, FDA must establish a system of strict accountabilty in 
which procedures and policies are in place regardig product approval and 
management ensures staff adherence to those policies and procedures. One way FDA 
management can accomplish this is through the use of data systems which track 
activities and results, a subject discussed in more detail later in this report. 
INGAff
NES  DET AN 
TPIO FDTAE    TO VIGOROUSLY 
FRUD AN ABUSE 
The generic drg scandal brought to light the importance of strengtenig fraud and 
abuse detection among reguated industry and FDA employees. The OIG contiues 
crial 
to have reservations about FDA' s abilty to conduct  investigations due to a 
lack of trained, experienced investigators. We are also concerned about the lack of 
crial 
close coordination between FDA and the U.S. Attorney s offce when  activity 
is first alleged. 
Rev  th  Di Of 
of  FDA Dever 
The Subcommttee on Oversight and Investigations, Commttee on Energy and 
Commerce, U.S. House of Representaties, has expressed concern regardig some 
generic drug investigations which were conducted by FDA, involvg possible 
fraudulent statements provided durig the ANA approval process. At the 
Subcommttee s request, we conducted a review to assess the FDA Denver Distrct 
Offce  ANA approval process. 
s abilty to detect and investigate possible fraud in the 
We determed that inspectors in the FDA' s Denver Distrct Offce failed to identi 
fraud durig the course of one of the generic drug company inspections because they 
lacked the requisite experience and traing. As a result, they faied to request and 
review the pertinent documents from which fraud was eventually disclosed. 
0ffce of Inpector General  Internal Control Weaknesses in the Food and Drug 
005
Administration s Medical Device 510(k) Proces " A-15-89- , July 199.  Rev  th  Or Di Of 
of  FDA 
The Subcommittee on Oversight and Investigations also asked the OIG to examie the 
activities of the Orlando District Offce and comment on that offce s activities to 
detect, investigate, and prosecute ilegal drug diversion. From a review of the 
allegations received and investigations undertaken by the Orlando District Offce, we 
are concerned about the resources and investigative methods employed to address 
Prescription Drug Marketig Act violations in South Florida. The Orlando District 
Offce does not have the resources to devote the time necessary to address ths 
crial 
persistent tye of  actity. In addition, normal FDA inspection processes have 
crial 
not proven successful in detectg and investigatig these cries. Traied 
investigators employig traditional law enforcement methods rather than FDA 
cries. 
inspection activities are necessary to adequately pursue these 
Cordn wi th U.S. Atrn 
Another signcant problem which we have identied in reviewig and assessing FDA
crinal 
investigatie process is insulated from the 
investigations is that the  cral 
prosecutorial process. It is our position that when  actties are intialy 
alleged, FDA should consult imediately with the U.S. Attorney s offce. FDA should 
crial 
then proceed with its  investigation under the diection of the U.S. Attorney 
offce, in order that any prosecution waranted by the fact wi be succssfu. 
NES 
TMH AFDAA  CfGT O INGORA1E IT FINASPCECOIN. S OF
AN PROCING 
drg 
Another signficant outcome of our ongoing work in 
investigatig the generic 
scandal was to dfoicu ment the importce of FDA sureilance and inspection actity. 
A generic drg  offcial we intervewed in 199 put it bluntly: "(FA sta do not 
sta 
go to laboratories or plants as part of their review. They underutie their field 
vialy 
one of their best assets." Yet FDA field offces are  inundated with mandates 
and responsibilties, and their priorities are often to deal with the latest crsis at the 
expense of routine monitorig. The Edwards Commssion sumed up the problem 
well: "Too often, staffg litations shape FDA's inspection decisions." In several 
reports, we have documented the effects of this resource squeeze and suggested 
, FDA instituted new policies 
various ways of addressing it. In October of 1990
ANA 
regarding the use of field inspection staf as par of the  approval process. 
Inspection records are veried and a plant inspection is conducted if one has not been 
performed within the past 2 years prior to approvig the application by FDA 
Fir 
Insctins of Medal Deve 
we found that FDA is not meeting its biennal good manufacturig 
In a recent study, 
practices (GMP) inspection requirement for medical device fis. An internal FDA 
review found that, between 1981 and 1987, half of all fis FDA inspected for 
compliance with GMP requirements were not reinspected withi 24 months. We also  ,,  ""
documented that as of August 1988, 19 percent of all active class II and III device 
never been inspected. According to district offce offcials 
manufacturers had 

understaffing, combined with the need to respond to various public health crises on 
foods, blood bank, as well as drugs and devices, leaves FDA unable to meet all of its 
regulatory responsibilties. 
Fir 
Rik Foo 
Insctins of Low-
Although FDA believes that the potential exists for serious problems with low-risk

food fis, it assigns a low priority to these inspections. In 1989, FDA planned to

000 food safety inspections; it conducted only 54 percent of them

conduct over 14  fis 
because of other priorities and lack of resources. In addition, not all food  are

known to FDA or state inspectors; these fis may never be inspected.

In a recent report, the OIG has recommended completely reorientig the way FDA 
conducts food inspections. We believe that FDA should delegate low-rik food 
inspection authority to the States and concentrate its effort on stadard settg and 
other monitorig activities. We have recommended that FDA (1)  unorm 
design a 
system that ensures both a sytematic identifcation of al food fis and inspection 
results; (2) develop requiements for low-risk food safety inspectons and certif which 
certed 
States meet these requirements; (3) alow  States to conduct inspections of 
fis 
low-risk  (conductig its own inspectons only in those States which are not

certifed); (4) seek legislation to provide inspectors with the enforcement tools

necessary to do their job effectively; and (5) collect an inspection user fee from 

fis 
, food  to fund low-risk food safety inspections of both FDA and the States that 
meet FDA's certifcation requiements. In ths kid of system, FDA ca target its 
scarce inspection resources to drug and device facilties, and concentrate its food 
safety work on monitorig States' activities and providig technca assistance and 
coordination. 
FDA has indicated its support of the general priciples we espoused. A subsequent 
survey of 10 States revealed that considerable support exists in the States for such a 
system. The key to cooperation from the States is that the user fees collected by FDA 
be used to support their activities. 
0ffce of Inspector General  FDA Medical Device Regulation: From Premarket Revew 
000
to Recall " OEI-09-90- , February 1991. 
0ffice of Inspector General  FDA Food Safety Inpection," OEI-05-90-01070, Augut 
1991.  Fee 
User 
User fees may be one answer to FDA' s resource squeeze. We believe that user fees 
properly structured, could help aleviate staffg and resource diffculties in other areas 
of FDA. User fee systems supportg application review and approval and inspectons 
Nuclear Reguatory Commssion 
in other Federal regulatory agencies (including the 
the Federal Communications Commssion, the Envionmental Protection Agency, and 
the Federal Energy Regulatory Commssion), have met with some success. 
The OIG has  FDA We concluded 
assessed the applicabilty of user fee systems to 
that FDA user fees represent a legitimate method of recoverig reguatory costs. 
Although there are many ways of structurg a user fee system at FDA-a hybrid 
system of annual registration charges and processing fees for applications and 
inspections might be most workable--imposition of such fees would be consistent with 
principles upheld in other Federal agencies: that regulation provides benefits to the 
regulated, and that those who benefit from the agency s activities ought to be requied 
to P!iY for them. 
INIVUAL AN 
'T FDA MUST BE ABLE TO REPOND TO 
BUSJNES our OF COMPUACE WI TH Acr. 
tae 
Once violators are identifed, FDA must have the necessar authority to 
appropriate action. Our 1990 work on medical devices, referenced earlier, provided 
information to the Congress that was useful in developing the Safe Medica Device 
Act of 1990. Until this act was passed, FDA lacked authority to impose civi money 
penalties on medical device fis. Furthermore, as our work in food safety has 
documented, the agency lacks the power to embargo products such as suspected 
adulterated foodstus, even though al States have such powers. Thus, FDA depends 
on States to effect an embargo to prevent potentialy hazdous foods from being 
marketed. 
begig 
Businesses are also  to test the boundares of the Federal Food, Drug, and 
drg 
Cosmetic Act. One area in which this appears to be especially true is  promotion. 
Some drug manufacturers are advertising their products prior to FDA approval, in 
clear violation of the law; some are promotig their products to physicians and 
hospitals in a way that might violate the Medicare and Medicaid anti-kickback statute; 
many are testing FDA' s commitment and vigiance in regulating their promotional 
activities by callng their activities "exchanges of scientic inormation. 
The OIG has categoried four  gis to physicians used by 
tyes of payments and 
manufacturers to promote prescription drugs: payments for physicians involved in 
studies, payments for speaking engagements, payments for attending educational and 
Implementing User Fee at the Food and Drug 
Office of Inspector General,. "
Administration: A Case Study," OEI-12-90-02020, July 199.  , ," "
promotional programs, and unsolicited gi. Some of these practices are pure 
promotion disguised as legitiate business arangements. We believe that these tyes
of practices deserve continued attention by FDA and the OIG. 
Some manufacturers are promoting drgs before they are approved by FDA Recent 
claig 
work by our offce revealed that one drug company was improperly  that an 
10 To 
experimental animal drug is safe and effective, prior to its approval by FDA 
combat these  , FDA has established a hotlie for whistleblowers and 
tyes of practices
drg  drg 
is augmentig staff in the division of  advertising and labelig to oversee 
promotion. 
CRTE AN  RELE  MAAGEM
TH FDA MUST  USE  DATA 
SYST. 
The need for FDA to establish a system of strict accountabilty, in which management 
oversight plays a key role, was briefly mentioned earlier in ths report. Using data 
ca 
systems which track activities and results  help achieve ths goal. 
Ge Dr 
Mangem InfoTmn 
Our fidings in auditig the generic drg approval process, in which managers were 
not monitorig assignents and the progress of chemists in conductg their reviews 
demonstrates the vuerabilties which result from poor, nonexistent, or unused 
management inormation systems. Our report documents that the management 
information system in the generic drug dision does not produce report FDA needs 
to effectively monitor day-to-day operations or to detect indications of possible 
drg 
manipulation of the generic  review and approval process. The management 
inormation system also does not provide specic inormation for effciently and 
sta 
effectivlel ly using curent staf resources or adequately forecatig futue  resource 
needs. The FDA is attemptig to use the management inormation sytem 
project resource needs but to date has not corrected the other noted vuerabilties. 
0ffce of Inpector General  Promotion of Prescription Drugs through Payments and 
000
Gifts " OEI-Ol-90- , Augut 1991. 
0ffce of Inpector General, "Nee for the Food and Drug Admitration to Review 
007
Possible Improper Pre-approval Promotional Activities " A-15-91- , May 1991. 
Offce of Inspector General  Review of the Food and Drug Admitration s Generic 
003
Drug Management Information System " A-15-89- , July 199.  , " , "
confed 
The Edwards Commssion  our fidings, concluding that "information 
relating to performance, workload activity trends, and resource allocations is uneven 
"12 Ths situation must be corrected. 
and not consistently available.
Regn  Li Sy 
an 
FDA'S Drg 
managers with important 
In addition to creatig information systems which provide 
information on internal matters, it is essential that FDA have in place data systems 
which provide managers with accurate intellgence about regulated industry. 
unown 
discussed earlier, our work in food safety revealed that some  number of food
fis 
are never subject to inspection because FDA does not know they exist. A recent 
report just released by our offce documents problems with another data 
system, the 
drug registration and listing system (DRL) maintaied by the agency. As a catalog of 
all commercially distributed drugs, the DRL is used for a varety of purposes: it has 
identi 
been used in the generic drug  questionable products, for 
investigations to 
example, and in support of Operation Desert Storm, it was used by the Defense 
Department to identi antidotes for poison gas.

We found that the DRL is not complete or accurate: 8 000 product were on the 
market but missing from the fie, and approxiately 1 400 products were in the fie 
but off the market. Ths inaccuracy was due to deficiencies at FDA as well as 
failure of drug companes to supply the needed inormation as requied by reguation. 
FDA is now rectifg some of these problems by redesigng procedures, convertg 
to a new computer system, and considerig penalties for manufacturers who do not 
provide accurate data. 
The Commssioner of Food and Drugs responded to concerns about the adequacy of 
FDA' s data management systems in testiony before the Senate Commttee on 
Governent afais, sayig, "Supportg FDA's mission with state-of-ar inormation 
systems is essential to support the complex process of decisionmakg thoughout the 
agency.  FDA has taken acton in some areas to introduce new data systems--such as 
maitaed 
the initiative in the imported foods area to li FDA sytems with those 
the U.S. Customs Servce-but much more is left to accomplish in ths area. As an 
indication of this need, the Edwards Commssion recommended imediately reviewig 
information system needs and systems upgrading. 
Adviory Committee on the Food and Drug Admitration, U.S. Department of Health 
and Human Servce  Final Report of the Adviory Commttee on the Food and Drug 
Administration," May 1991, p. 33. 
0ffce of Inspector General  The FDA's Prescription Drug File " (draft), OEI-03-90
02300, July 1991.  CONCLUSIONS

. In connection with its many audits, inspections, and investigations of FDA, the OIG 
has made numerous specifc recommendations for correctig identifed problems. The 
OIG is monitoring FDA's efforts to implement the recommendations found in the 
origial reports. In general, we believe that FDA must. act to 
improve its product approval systems to ensure equitable and fair treatment of 
applicants, including the development of "fist- , fist-out" policies, and 
standard operating procedures and guidelies for reviewers; 
obtain necessary enforcement authorities, such as embargo authority, subpoena 
authority, and civi monetary penalty authority, and use those authorities to 
encourage compliance with the Food, Drug, and Cosmetic Act and punsh 
violators; 
conduct appropriate systems analysis to ensure that usefu inormation systems

are in place to provide FDA management with necessar inormation to track 
workload and workfow, and to ensure that inormation being obtaed from 
reguated industries meets FDA monitorig needs for tiely, accurate 
information; 
, delegatig authorities to the States where appropriate 
identif resource needs
fees to supplement budget authority and augment resources 
and relyig on user 
where necessary; and 
crial 
develop a full-scale  investigative capabilty with traied, experienced 
investigators. 
We believe that these steps are essential if FDA is to meet its numerous statutory 
responsibilties and meet the challenges of the comig decade.  , "
APPENDIX A

CONCEG 
OIG REORTS  FDA 
Vulnerabilties in the Food and Drug Admistration s Generic Drug Approval 
Process " A-15-89-00051, August 1989. 
Perspectives of Drug Manufacturers: Abbreviated New Drug Applications " OEI-12
90-00770, February 1990; Offce of Inspector General  Perspectives of Drug 
Manufacturers: Investigational New Drug and New Drug Applications " OEI-12-09
0771, February 1990. 
Evaluation of Drug Master File Reviews by the Food and Drug Admstration," A

15-90-00004, July 1991.

Internal Control Weakesses in the Food and Drug Admstration s Medica Device 
510(k) Process " A-15-89-00065, July 199. 
FDA Medical Device Reguation: From Premarket Review to Recall " OEI-09-90
00040, February 1991. 
FDA Food Safety Inspection " OEI-05-90-01070, August 1991. 
Implementing User Fees at the Food and Drug Admstration: A Case Study," OEI
. 12-90-02020, July 1990. 
Promotion of Prescription Drugs through Payments and Gif," OEI-01-90-00480 
August 1991. 
Need for the Food and Drug Admistration to Review Possible Improper Pre-
approval Promotional Activities," A-15-91-0007, May 1991. 
Review of the Food and Drug Admistration s Generic Drug Management 
Information System " A-15-89-00063, July 1990. 
The FDA's Prescription Drug File," (draft), OEI-03-90-02300, July 1991. 
A