Department of Health and Human 
 Servces 

OFFICE OF - J INSPECTOR GENERA 

OIG OVERSIGHT OF FDA ACTIVITIES:


A SUMMARY REPORT


Richard P. Kusserow 

INSPECfOR GENERA 

cIa JANARY 199
OFFCE OF INSPECTOR GENRA


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 

Offce of Investigations, and the Offce of Evaluation and Inpections. The OIG alo inorm 

the Secretary of HHS of program correCt them. , 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 out their respetive responsibilties and are intended to provde independent 

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 

unjust enrichment by providers. The investigative effort of 01 lead to crial 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. 

OFFCE OF EVALUATION AN 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


INSPECTOR GENERA


OIG OVERSIGHT OF FDA ACTIVITIES:


A SUMMARY REPORT


Richard P. Kusserow 

INSPECfOR GENERA 

'~cIa OEI-12-92-0 
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 

blood ban. 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 

requiring attention. The conclusions sumari 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


are in place to provide FDA management with necessar inormation to track 

workload and workfow, and to ensure that inormation being obtained from 

regulated industries meets FDA monitorig needs for tiely, accurate inormation; 

identif resource needs, delegatig authorities to the States where appropriate 

and relyig on user fees to supplement budget authority and augment 

resources, where necessar; and 

develop a fu-scale crial investigative capabilty with trained, 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. 
............................................. . . .............. ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........... ................................. 

..... .................... ..... ........................ . . . . . . . . . . . . .

TABLE OF CONTENTS


EXCU SUMY


INODUCION . 


ISUE . . . . . . . . . . . . 3 

Integrty of product approv pro . . . . . . . 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, medical evices, and 

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. 

To accomplish its mission, FDA has a budget of alost $700 mion (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 years DIG audits, investigations, and evaluations in FDA have

identified several common problems which FDA management must address. These include the need to 


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. 

These problems are widely recognd. 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 

implement the recommendations found in the origial report. 
, 

ISSUES


TH FDA NES TO RERE INRI 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. 

Gen Dr Sca 

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 

two phases: a corrption phase, which involved generic drg companes gig 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 s generic product in testig for bioequialency. The 

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. 

LDck of Intl Contls in Pr 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 

review of applications, and the lack of a "first-in, fist-out" review policy.2 The lack of 

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. 

Problems of this kid continue to plague the Offce of Generic Drugs. Recently, the 

OIG has documented serious problems with FDA' s review of drg master fies 

(DMFs) in approvig ANAs. 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 

ANDA; and stil others do neither. Without such DMF reviews, FDA caot 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' 

SlO(k) process, through which device manufacturers noti FDA of their intent to 

market a medical devi e. In this audit, we documented FDA' s lack of procedures to 

sequence reviews and document decisions to ensure tiely, fai, and complete S10(k) 

evaluations. We also found that FDA lacks a comprehensive qualty control system to 

0ffce of Inpector General, "Vulnerabilties in the Food and Drug Admtration 

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 

identified in the ANA 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. 

TI FDA NES TO VIGOROUSLY DET AN INGAff POTE 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 

to have reservations about FDA' s abilty to conduct crial investigations due to a 

lack of trained, experienced investigators. We are also concerned about the lack of 

close coordination between FDA and the U.S. Attorney s offce when crial activity 

is first alleged. 

Rev of th FDA Dever Di Of 

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 s abilty to detect and investigate possible fraud in the ANA approval process. 

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 

Administration s Medical Device 510(k) Proces " A-15-89-005, July 199. 
Rev of th FDA Or Di Of 

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 

persistent tye of crial actity. In addition, normal FDA inspection processes have 

not proven successful in detectg and investigatig these cries. Traied crial 

investigators employig traditional law enforcement methods rather than FDA 

inspection activities are necessary to adequately pursue these cries. 

Cordn wi th U.S. Atrn 

Another signcant problem which we have identied in reviewig and assessing FDA

crinal investigations is that the investigatie process is insulated from the 

prosecutorial process. It is our position that when cral actties are intialy 

alleged, FDA should consult imediately with the U.S. Attorney s offce. FDA should 

then proceed with its crial investigation under the diection of the U.S. Attorney 

offce, in order that any prosecution waranted by the fact wi be succssfu. 

TH FDA NES TO INGORA1E IT INSPECONS OF MAACfG AN PROCING FACI. 

Another signficant outcome of our ongoing work in investigatig the generic drg 

scandal was to document the importce of FDA sureilance and inspection actity. 

A generic drg fi offcial we intervewed in 199 put it bluntly: "(FA sta do not 

go to laboratories or plants as part of their review. They underutie their field sta 

one of their best assets." Yet FDA field offces are vialy 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 

various ways of addressing it. In October of 1990, FDA instituted new policies 

regarding the use of field inspection staf as par of the ANA 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 

Insctins of Medal Deve Fir 

In a recent study, we found that FDA is not meeting its biennal good manufacturig 

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 

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. 

manufacturers had 


Insctins of Low-Rik Foo Fir 

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


conduct over 14 000 food safety inspections; it conducted only 54 percent of them


because of other priorities and lack of resources. In addition, not all food fis 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) design a unorm 

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 

States meet these requirements; (3) alow certed States to conduct inspections of 

low-risk fis (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 


, food fis 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 

to Recall " OEI-09-90-000, February 1991. 

0ffice of Inspector General FDA Food Safety Inpection," OEI-05-90-01070, Augut 

1991. 
User Fee 

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 

in other Federal regulatory agencies (including the Nuclear Reguatory Commssion 

the Federal Communications Commssion, the Envionmental Protection Agency, and 

the Federal Energy Regulatory Commssion), have met with some success. 

The OIG has assessed the applicabilty of user fee systems to FDA We concluded 

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. 

'T FDA MUST BE ABLE TO REPOND TO INIVUAL AN 

BUSJNES our OF COMPUACE WI TH Acr. 

Once violators are identifed, FDA must have the necessar authority to tae 

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. 

Businesses are also begig to test the boundares of the Federal Food, Drug, and 

Cosmetic Act. One area in which this appears to be especially true is drg 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 tyes of payments and gis to physicians used by 

manufacturers to promote prescription drugs: payments for physicians involved in 

studies, payments for speaking engagements, payments for attending educational and 

Office of Inspector General,. "Implementing User Fee at the Food and Drug 

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 

work by our offce revealed that one drug company was improperly claig that an 

experimental animal drug is safe and effective, prior to its approval by FDA 10 To 

combat these tyes of practices, FDA has established a hotlie for whistleblowers and 

is augmentig staff in the division of drg advertising and labelig to oversee drg 

promotion. 

TH FDA MUST CRTE AN USE RELE DATA MAAGEM 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 

systems which track activities and results ca 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 

manipulation of the generic drg review and approval process. The management 

inormation system also does not provide specic inormation for effciently and 

effectively using curent staf resources or adequately forecatig futue sta resource 

needs.ll 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 

Gifts " OEI-Ol-90-000, Augut 1991. 

0ffce of Inpector General, "Nee for the Food and Drug Admitration to Review 

Possible Improper Pre-approval Promotional Activities " A-15-91-007, May 1991. 

Offce of Inspector General Review of the Food and Drug Admitration s Generic 

Drug Management Information System " A-15-89-003, July 199. 
, 

, 

The Edwards Commssion confed our fidings, concluding that "information 

relating to performance, workload activity trends, and resource allocations is uneven 

and not consistently available."12 Ths situation must be corrected. 

FDA'S Drg Regn an Li Sy 

In addition to creatig information systems which provide managers with important 

information on internal matters, it is essential that FDA have in place data systems 

which provide managers with accurate intellgence about regulated industry. 

discussed earlier, our work in food safety revealed that some unown 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 

been used in the generic drug investigations to identi questionable products, for 

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 

the initiative in the imported foods area to li FDA sytems with those maitaed 

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; 

identif resource needs, delegatig authorities to the States where appropriate 

and relyig on user fees to supplement budget authority and augment resources 

where necessary; and 

develop a full-scale crial 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


OIG REORTS CONCEG 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 Preapproval 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 ­