Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

FDA HAS MADE PROGRESS 

ON OVERSIGHT AND 

INSPECTIONS OF 

MANUFACTURERS OF 

GENERIC DRUGS 

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 FDA’s 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 agency’s plans for conducting inspections. 

(3) Use its authority to request records in lieu or in advance of an inspection. Such 

requests could increase FDA’s 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. FDA’s 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 drug—in other words, that it performs in the same manner.2 

To be approved, generic drugs must—in most cases—have 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 drug’s identity, 

strength, quality, and purity.4

 ____________________________________________________________ 

1

FDA, 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 

FDA’s 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 FDA’s 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 

manufacturers—both those of generic drugs and those of brand-name 

drugs—for 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 

manufacturer’s 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 inspector’s 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 FDA’s resources for generic drug oversight and 

strengthened the agency’s 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 Directive—Establishment 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 Guides—Fraud, 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 FDA’s 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 2011–2013. It also assesses the 

extent to which FDA conducted surveillance inspections and identified 

violations at manufacturers in FY 2013. 

This study also assesses FDA’s 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. 

	 FDA’s Field Accomplishments and Compliance Tracking System 

(FACTS), which contains data on all drug manufacturer 

inspections. 

	 FDA’s User Fee Facility Data Management (UFFDM) database, 

which contains manufacturer self-reported registration data. 

	 FDA’s Establishment Evaluation System (EES), which FDA uses 

to manage ANDAs and request preapproval inspections. 

	 FDA’s 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. 

	 FDA’s lists of generic drug manufacturers prioritized for 

surveillance inspections for FY 2013. 

	 Structured interviews with FDA staff in CDER’s 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 FDA’s resources for conducting inspections; the agency 

collected nearly $300 million in user fees in FY 2013.19 FDA used these 

additional resources for—among other things—hiring 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, 

2011–2013 

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 
 

100% 

Percentage of Preapproval Inspections 90% 

80% 

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

68 

113 129 

101 

113 142 

2011 2012 2013 

Year 

Foreign Domestic 

 

Figure 2: FDA Preapproval Inspections of Manufacturers of Generic Drugs 

by Manufacturer Location, 2011–2013 

Source: OIG analysis of FDA FACTS data, 2011–2013. 

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 

G . D 2011 2013 

Final Inspection Classification 

Year 

2011 2012 2013 

No Action Indicated, n (%) 

Foreign 

Domestic 

74 (52%) 

44 

30 

93 (51%) 

50 

43 

108 (52%) 

52 

56 

Voluntary Action Indicated, n (%) 

Foreign 

Domestic 

59(41%) 

46 

13 

78 (43%) 

43 

35 

87 (42%) 

48 

39 

Official Action Indicated, n (%) 

Foreign 

Domestic 

10 (7%) 

3 

7 

10 (6%) 

3 

7 

14 (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 of preapproval 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 

Gener1c. Drugs, 2011 2013 

Year 

Total Preapproval 

Inspection Requests 

All Outstanding 

Preapproval Inspection 

Requests* 

n (% of requests) 

Outstanding 

Preapproval Inspection 

Requests for Foreign 

Manufacturers* 

n (% of outstanding 

requests) 

2011 153 37 (24%) 37 (100%) 

2012 267 97 (36%) 94 (97%) 

2013 241 155 (64%) 150 (98%) 

enenc rugs, -

-

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 inspections—FY 2013—FDA prioritized at 

least 283 manufacturers of generic drugs for routine surveillance 

inspections and conducted inspections at all of them.21 FDA’s current riskbased 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 

letters—one of which applied to two manufacturers—and 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 OIG’s 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 

Final Inspection Classification* 

No Action 

Indicated 

Voluntary 

Action 

Indicated 

Official Action 

Indicated 

Foreign 

n (%) 116 (42%) 144 (53%) 14 (5%) 

Domestic 

n (%) 83 (41%) 108 (53%) 12 (6%) 

Total** 

n (%) 199 (42%) 252 (53%) 26 (6%) 

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. FDA’s 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 Limited’s warning 

letters noted, among other violations, that Wockhardt delayed FDA 

inspection by denying access to requested documents and obstructing 

FDA’s direct observation of the manufacturing process. FDA also noted 

problems with laboratory records and stated that it was “particularly 

concerned about Wockhardt’s 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 FDA’s 

authorities and increased the agency’s 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 

Country or Region 

Number of 

Manufacturers 

Number of Surveillance 

Inspections 

Asia 

n (%) 624 (41%) 180 (31%) 

Europe 

n (%) 396 (26%) 126 (21%) 

Canada 

n (%) 45 (3%) 20 (3%) 

Other 

n (%) 46 (3%) 11 (2%) 

United States 

n (%) 403 (27%) 252 (43%) 

Total* 

n 1,514 589 

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 manufacturers—specifically, 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 FDA’s Ability to Monitor and Inspect Foreign Clinical Trials, OEI01-08-00510, 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 agency’s 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 agency’s efforts. Of the 432 

generic drug manufacturers listed on ANDAs approved in 2013, 45 (10 

percent) did not match entries in FDA’s 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 manufacturer’s 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, FDA’s 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 2011–2013, 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 FDA’s 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 FDA’s 

capacity for inspections; record reviews could be completed in advance, 

rather than using up the inspection staff’s 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 FDA’s efforts to improve oversight and inspections of 

manufacturers of generic drugs. We will continue to monitor these efforts. 

For the full text of FDA’s 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: 

FDA’s 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. 

FDA’s 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. 

FDA’s 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. 

FDA’s 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 FDA’s public Web site. 

FDA policies and procedures. We reviewed policies and procedures, 

including those regarding FDA’s 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 FDA’s policies and 

procedures for requesting documents in advance or in lieu of an 

inspection. 

FDA’s 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 CDER’s 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 OIG’s 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.