Drug Safety: Preliminary Findings Suggest Recent FDA Initiatives Have Potential, but Do Not Fully Address Weaknesses in Its Foreign Drug Inspection Program
Published: 2008-04-22T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Food and Drug Administration (FDA) is responsible for overseeing the safety and effectiveness of human drugs that are marketed in the United States, whether they are manufactured in foreign or domestic establishments. FDA inspects foreign establishments to ensure that they meet the same standards required of domestic establishments. Ongoing concerns regarding FDA's foreign drug inspection program recently were heightened when FDA learned that contaminated doses of a common blood thinner had been manufactured at a Chinese establishment that the agency had never inspected. FDA has announced initiatives to improve its foreign drug inspection program. In November 2007, GAO testified on weaknesses in FDA's foreign drug inspection program (GAO-08-224T). This statement presents preliminary findings on how FDA's initiatives address the weaknesses GAO identified. GAO interviewed FDA officials and analyzed FDA's initiatives. GAO examined reports and proposals prepared by the agency, as well as its plans to improve databases it uses to manage its foreign drug inspection program.
section_title: What GAO Found
paragraphs: Recent FDA initiatives--some of which have been implemented and others proposed--could strengthen FDA's foreign drug inspection program, but these initiatives do not fully address the weaknesses that GAO previously identified. GAO testified in November 2007 that FDA's databases do not provide an accurate count of foreign establishments subject to inspection and do provide widely divergent counts. Through one recent initiative, FDA has taken steps to improve its database intended to include foreign establishments registered to market drugs in the United States. This initiative may reduce inaccuracies in FDA's count of foreign establishments. However, these steps will not prevent foreign establishments that do not manufacture drugs for the U.S. market from erroneously registering with FDA. Further, to reduce duplication in its import database, FDA has supported a proposal that would change the data it receives on products entering the United States. However, the implementation of this proposal is not certain and would require action from multiple federal agencies, in addition to FDA. Efforts to integrate these databases have the potential to provide FDA with a more accurate count of establishments subject to inspection, but it is too early to tell. GAO testified that gaps in information weaken FDA's processes for prioritizing the inspection of foreign establishments that pose the greatest risk to public health. While FDA recently expressed interest in obtaining useful information from foreign regulatory bodies that could help it prioritize foreign establishments for inspections, the agency has faced difficulties fully utilizing these arrangements in the past. For example, FDA had difficulties in determining whether the scope of other countries' inspection reports met its needs and these reports were not always readily available in English. GAO also testified that FDA inspected relatively few foreign establishments each year. FDA made progress in inspecting more foreign establishments in fiscal year 2007, but the agency still inspects far fewer of them than domestic establishments. FDA dedicated about $10 million to foreign drug inspections in fiscal year 2007 and plans to dedicate about $11 million to such inspections in fiscal year 2008. Finally, GAO testified that FDA faced certain logistical and staffing challenges unique to conducting foreign inspections. FDA is pursuing initiatives that could address some of the challenges that we identified as being unique to foreign inspections, such as volunteer inspection staff and lack of translators. FDA has proposed establishing a dedicated cadre of staff to conduct foreign inspections, but the timeframe associated with this initiative is unclear. FDA plans to open an office in China and is considering establishing offices in other countries, but the impact that this will have on the foreign drug inspection program is unknown.

section_title: Letter
paragraphs: I am pleased to be here today as you consider the Food and Drug  Administration’s (FDA) plans to improve its program for inspecting  foreign drug manufacturers whose products are marketed in the United  States. America has become increasingly dependent on drugs and drug  ingredients manufactured in foreign countries. Ten years ago, we reported  that FDA needed to improve its foreign drug inspection program. Among  other things, we noted that FDA had serious problems managing its  foreign inspection data. We were also critical of the number of inspections  FDA conducted at foreign manufacturers. In November 2007, we testified  on the preliminary findings of our current work in which we identified  weaknesses similar to those we found in our previous report. Our  preliminary findings suggested that FDA had weaknesses in its databases,  including conflicting information on the number of foreign establishments  subject to inspection; had information gaps that weakened its process for  selecting foreign establishments for inspection; conducted infrequent  inspections of these establishments; and faced logistical and staffing  challenges unique to foreign inspections. Recent developments involving  heparin sodium, a commonly used blood thinner, have further heightened  concerns about the safety of drugs and drug ingredients and FDA’s ability  to inspect foreign manufacturers of these products. In January 2008, FDA  began an investigation after receiving reports of serious adverse events in  people receiving this drug. The agency later learned that an active  pharmaceutical ingredient (API) found in heparin sodium contained a  contaminant and had been manufactured at a Chinese establishment never  inspected by FDA.
Recently, FDA has begun or proposed initiatives to strengthen its foreign  drug inspection program. You asked us to assess whether FDA’s  initiatives will improve its management of this program. My testimony  today will focus on these initiatives and how they address the weaknesses  we previously identified.
To obtain information about FDA initiatives and how they address  weaknesses in its program for inspecting foreign drug manufacturers, we  interviewed officials from FDA, including from its Center for Drug  Evaluation and Research (CDER) and Office of Regulatory Affairs (ORA),  which each have responsibilities for managing the foreign inspection  program. We examined reports and proposals prepared by the agency on  related initiatives. We also examined FDA’s plans to improve databases it  uses to manage its foreign drug inspection program, including its Field  Accomplishments and Compliance Tracking System (FACTS), Operational  and Administrative System for Import Support (OASIS), and Drug  Registration and Listing System (DRLS). Our November 2007 testimony  included the number of inspections from FACTS as of September 26, 2007.  To provide information to update those preliminary findings, we obtained  FACTS data that contained information on fiscal year 2007 inspections  conducted or entered into this database since our previous analysis. We  also obtained fiscal year 2007 data from OASIS to determine the types of  drug products manufactured in China and offered for entry into the United  States. We assessed the reliability of these databases by (1) reviewing  existing information about the data and the databases that produced them,  (2) interviewing agency officials knowledgeable about the data, and   (3) performing electronic testing of required data elements. We found the  data in the FACTS database reliable for our purposes. In addition, we  found that while OASIS is likely to over-estimate the number of foreign  establishments involved in the manufacture of those drugs because  of uncorrected errors in the data, it provides sufficiently reliable  information about the types of drugs offered for entry into the United  States. The information we present represents the best information  available and is what FDA relies on to manage its foreign drug inspection  activities. Our ongoing work is focused on human drugs regulated by  CDER and not on biologics, medical devices, veterinary medicines, food,  or other items or products for which FDA conducts inspections. However,  we obtained information from the center responsible for medical devices,  the Center for Devices and Radiological Health (CDRH), to learn about a  recent change to one of its databases that addresses problems similar to  those in DRLS. We shared the facts contained in this statement with FDA  officials. They provided technical comments, which we incorporated as  appropriate. We conducted the work for our November 2007 testimony  from September 2007 through October 2007, and we conducted our work  for this statement from March 2008 through April 2008. All of our work is  being performed in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.
In summary, recent FDA initiatives—some of which have been  implemented and others proposed—could strengthen FDA’s foreign drug  inspection program, but these initiatives do not fully address the  weaknesses that we previously identified. For example, we found that  FDA’s databases do not provide an accurate count of foreign  establishments subject to inspection. FDA plans to implement electronic  registration for foreign establishments. Implementing such a process may  reduce inaccuracies in FDA’s database of registered establishments.  However, this will not prevent foreign establishments that do not  manufacture drugs for the U.S. market from erroneously registering with  FDA. For example, in some foreign markets, foreign drug manufacturers  may register with FDA because registration may appear to convey an  “approval” or endorsement by the agency. To reduce duplication in FDA’s  import database, FDA supported a proposal to create a unique  governmentwide identifier for all establishments whose products are  imported into the United States. However, the implementation of this  identifier is not certain and would require action from multiple federal  agencies in addition to FDA. Efforts to integrate these databases have the  potential to provide FDA with a more accurate count of establishments  subject to inspection, but it is too early to tell. FDA has also taken steps  that could help it select foreign establishments for inspection by obtaining  information from foreign regulatory bodies. However, the agency has not  fully utilized arrangements with foreign regulatory bodies in the past that  would allow it to obtain such information. FDA has also made progress in  conducting more foreign inspections, but it still inspects relatively few  establishments. FDA is pursuing initiatives that could address some of the  challenges that we identified as unique to foreign inspections. For  example, the agency has proposed establishing overseas offices, beginning  in China, but the impact that these offices will have on the foreign drug  inspection program is unknown. To date, it is unclear whether the  agency’s proposals will increase the frequency with which FDA inspects  foreign establishments or the quality of information it uses to select  establishments to inspect.
subsections: section_title: Background
paragraphs: FDA is responsible for overseeing the safety and effectiveness of human  drugs that are marketed in the United States, whether they are  manufactured in foreign or domestic establishments. Foreign  establishments that market their drugs in the United States must register  with FDA. As part of its efforts to ensure the safety and quality of imported  drugs, FDA may inspect foreign establishments whose products are  imported into the United States. Regular inspections of manufacturing  establishments are an essential component of ensuring drug safety.  Conducting testing of finished dosage form drug products cannot reliably  determine drug quality. Therefore, FDA relies on inspections to determine  an establishment’s compliance with current good manufacturing practice  regulations (GMP). These inspections are a critical mechanism in FDA’s  process of assuring that the safety and quality of drugs are not jeopardized  by poor manufacturing practices.
Requirements governing foreign and domestic inspections differ.  Specifically, FDA is required to inspect every 2 years those domestic  establishments that manufacture drugs marketed in the United States, but  there is no comparable requirement for inspecting foreign establishments.  FDA does not have authority to require foreign establishments to allow the  agency to inspect their facilities. However, FDA has the authority to  conduct physical examinations of products offered for import, and if there  is sufficient evidence of a violation, prevent their entry at the border.
Within FDA, CDER sets standards and evaluates the safety and  effectiveness of prescription and over-the-counter drugs. Among other  things, CDER requests that ORA inspect both foreign and domestic  establishments to ensure that drugs are produced in conformance with  federal statutes and regulations, including current GMPs. CDER requests  that ORA conduct inspections of establishments that produce drugs in  finished-dosage form as well as those that produce bulk drug substances,  including APIs used in finished drug products. These inspections are  performed by investigators and, on occasion, laboratory analysts. ORA  conducts two primary types of drug manufacturing establishment  inspections:    Preapproval inspections of domestic and foreign establishments are  conducted before FDA will approve a new drug to be marketed in the  United States. These inspections occur following FDA’s receipt of a new  drug application (NDA) or an abbreviated new drug application (ANDA)  and focus on the manufacture of a specific drug. Preapproval inspections  are designed to verify the accuracy and authenticity of the data contained  in these applications to determine that the manufacturer is following  commitments made in the application. FDA also determines that the  manufacturer of the finished drug product, as well as each manufacturer  of a bulk drug substance used in the finished product, manufactures,  processes, packs, and labels the drug adequately to preserve its identity,  strength, quality, and purity.
Postapproval GMP surveillance inspections are conducted to ensure  ongoing compliance with the laws and regulations pertaining to the  manufacturing processes used by domestic and foreign establishments in  the manufacture of drug products marketed in the United States and bulk  drug substances used in the manufacture of those products. These  inspections focus on a manufacturer’s systemwide controls for ensuring  that drug products are of high quality. Systems examined during these  inspections include those related to materials, quality control, production,  facilities and equipment, packaging and labeling, and laboratory controls.  These systems may be involved in the manufacture of multiple drug  products.
FDA has established arrangements with regulatory bodies in other  countries to facilitate the sharing of information about drug inspections.  FDA has entered into arrangements related to GMP inspections with  Canada, Japan, the European Union, and others. The scope of such  arrangements can vary. Some arrangements may allow FDA to obtain  reports of inspections conducted by other countries, for informational  purposes. Other arrangements may involve more than the exchange of  information. For example, FDA and another country may enter into an  arrangement to work towards the mutual recognition of each other’s  inspection standards or the acceptance of one another’s inspections, in  lieu of their own.
CDER uses a risk-based process to select some foreign and domestic  establishments for postapproval GMP surveillance inspections. The  process uses a risk-based model to identify those establishments that,  based on characteristics of the establishment and of the product being  manufactured, have the greatest public health risk potential should they  experience a manufacturing defect. For example, FDA considers the risk  to public health from poor quality over-the-counter drugs to be lower than  for prescription drugs. Consequently establishments manufacturing only  over-the-counter drugs receive a lower score on this factor in the risk- based process than other manufacturers. Through this process, CDER  annually prepares a prioritized list of domestic establishments and a  separate, prioritized list of foreign establishments.
FDA uses multiple databases to manage its foreign drug inspection  program.
DRLS contains information on foreign and domestic drug establishments  that have registered with FDA to market their drugs in the United States.  These establishments must also list any drugs they market in the United  States. These establishments provide information, such as company name  and address and the drug products they manufacture for commercial  distribution in the United States, on paper forms, which are entered into  DRLS by FDA staff.
OASIS contains information on drugs and other FDA-regulated products  offered for entry into the United States, including information on the  establishment that manufactured the drug. The information in OASIS is  automatically generated from data managed by Customs and Border  Protection (CBP). The data are originally entered by customs brokers  based on the information available from the importer. CBP specifies an  algorithm by which customs brokers generate a manufacturer  identification number from information about an establishment’s name,  address, and location.
FACTS contains information on FDA’s inspections of foreign and domestic  drug establishments. FDA investigators and laboratory analysts enter  information into FACTS following completion of an inspection.
According to DRLS, in fiscal year 2007, foreign countries that had the  largest number of registered establishments were Canada, China, France,  Germany, India, Italy, Japan, and the United Kingdom. These countries are  also listed in OASIS as having the largest number of manufacturers  offering drugs for entry into the United States. Specifically, according to  OASIS, China had more establishments manufacturing drugs that were  offered for entry into the United States than any other country. According  to OASIS, in fiscal year 2007, a wide variety of prescription and over-the- counter drug products manufactured in China were offered for entry into  the United States, including pain killers, antibiotics, blood thinners, and  hormones.
In November 2007, we testified on preliminary findings that identified  weaknesses in FDA’s program for inspecting foreign establishments  manufacturing drugs for the U.S. market. Specifically, we found that, as in  1998, FDA’s effectiveness in managing the foreign drug inspection program  continued to be hindered by weaknesses in its data on foreign  establishments. FDA did not know how many foreign establishments were  subject to inspection. FDA relied on databases that were designed for  purposes other than managing the foreign drug inspection program.  Further, these databases contained inaccuracies that FDA could not easily  reconcile. DRLS indicated there were about 3,000 foreign establishments  registered with FDA in fiscal year 2007, while OASIS indicated that about  6,800 foreign establishments actually offered drugs for entry in that year.  FDA recognized these inconsistencies, but could not easily correct them  partly because the databases could not exchange information. Any  comparisons of the data must be performed manually, on a case-by-case  basis.
We also testified that FDA inspected relatively few foreign  establishments. Data from FDA suggested that the agency may inspect  about 8 percent of foreign establishments in a given year. At this rate, it  would take FDA more than 13 years to inspect each foreign establishment  once, assuming that no additional establishments require inspection.  However, FDA could not provide an exact number of foreign  establishments that had never been inspected. From fiscal year 2002  through fiscal year 2007, FDA conducted 1,479 inspections of foreign  establishments, and three quarters of these inspections were concentrated  in 10 countries. (See table 1.) Because some establishments were  inspected more than once during this time period, FDA actually inspected  1,119 unique establishments. For example, of the 94 inspections that FDA  conducted of Chinese establishments, it inspected 80 unique  establishments across this six year period. The lowest rate of inspections  in these 10 countries was in China, for which FDA inspected 80 of its  estimated 714 establishments, or fewer than 14 establishments per year, on  average.
We testified that, while enforcing GMP compliance through surveillance  inspections was FDA’s most comprehensive program for monitoring the  quality of marketed drugs, most of FDA’s inspections of foreign  manufacturers occurred when they were listed in an NDA or ANDA. The  majority of these preapproval inspections were combined with a GMP  surveillance inspection. Although FDA used a risk-based process to  develop a prioritized list of foreign establishments for GMP surveillance  inspections, few were completed in a given year—about 30 in fiscal year  2007. The usefulness of the process was weakened by the incomplete and  possibly inaccurate information on those foreign establishments that FDA  had not inspected recently, as well as those that had never been the  subject of a GMP surveillance inspection.
We also testified that FDA’s foreign inspection process involves unique  circumstances that are not encountered domestically. For example, FDA  relies on staff that inspect domestic establishments to volunteer for  foreign inspections. Unlike domestic inspections, FDA does not arrive  unannounced at a foreign establishment. It also lacks the flexibility to  easily extend foreign inspections if problems are encountered. Finally,  language barriers can make foreign inspections more difficult than  domestic ones. FDA does not generally provide translators to its  inspection teams. Instead, they may have to rely on an English-speaking  representative of the foreign establishment being inspected, rather than an  independent translator.
section_title: Recent Initiatives May Help FDA Select Foreign Establishments for Inspection, but Weaknesses in Its Foreign Drug Inspection Program Are Not Fully Addressed
paragraphs: FDA has initiated several recent changes to its foreign drug inspection  program, but the changes do not fully address the weaknesses that we  previously identified. FDA has initiatives underway to reduce the  inaccuracies in its registration and import databases that make it difficult  to determine the number of foreign establishments subject to inspection,  although to date these databases still do not provide an accurate count of  such establishments. FDA has taken steps that could help it select foreign  establishments for inspection by obtaining information from foreign  regulatory bodies. However, the agency has not fully utilized arrangements  with foreign regulatory bodies in the past that would allow it to obtain  such information. FDA has made progress in conducting more foreign  inspections, but it still inspects relatively few establishments. FDA is also  pursuing initiatives that could address some of the challenges that we  identified as being unique to foreign inspections, but implementation  details and timeframes associated with these initiatives are unclear.
subsections: section_title: FDA Initiatives Could Improve Its Data, but Will Not Ensure an Accurate Count of Foreign Establishments Subject to Inspection
paragraphs: FDA has initiatives underway to reduce inaccuracies in its databases, but  actions taken thus far will not ensure that the agency has an accurate  count of establishments subject to inspection. As we previously testified,  DRLS does not provide FDA with an accurate count of foreign  establishments manufacturing drugs for the U.S. market. For example,  foreign establishments may register with FDA, whether or not they  actually manufacture drugs for the U.S. market, and the agency does not  routinely verify the information provided by the establishment. Beginning  in late 2008, CDER plans to implement an electronic registration and  listing system that could improve the accuracy of information the agency  maintains on registered establishments. The new system will allow drug  manufacturing establishments to submit registration and listing  information electronically, rather than submitting it on paper forms. FDA  hopes that electronic registration will result in efficiencies allowing the  agency to shift resources from data entry to assuring the quality of the  databases. However, electronic registration alone will not prevent foreign  establishments that do not manufacture drugs for the U.S. market from  registering, thus still presenting the problem of an inaccurate count.
Recently, another FDA center implemented changes affecting the  registration of medical device manufacturers, an activity for which we  previously identified problems similar to those found in CDER. In fiscal  year 2008, CDRH implemented, in addition to electronic registration, an  annual user fee of $1,706 per registration for certain medical device  establishments and an active re-registration process. According to  CDRH, as of early April 2008, about half of the previously registered  establishments have reregistered using the new system. While CDRH  officials expect that this number will increase, they expect that the  elimination of establishments that do not manufacture medical devices for  the U.S. market—and thus should not be registered—will result in a  smaller, more accurate database of medical device establishments. CDRH  officials indicated that implementation of electronic registration and the  annual user fee seems to have improved the data so CDRH can more  accurately identify the type of establishment registered, the devices  manufactured at an establishment, and whether or not an establishment  should be registered. According to CDRH officials, the revenue from  device registration user fees is applied to the process for the review of  device applications, including establishment inspections undertaken as  part of the application review process. CDER does not currently have the  authority to assess a user fee for registration of drug establishments, but  officials indicated that such a fee could discourage registrations of foreign  manufacturers that are not ready, are not actively importing, or have not  been approved to market drug products in the United States. Officials also  suggested that such fees could be used to supplement the resources  available for conducting inspections.
FDA has proposed, but not yet implemented, the Foreign Vendor  Registration Verification Program, which could help improve the accuracy  of information FDA maintains on registered establishments. Through this  program, FDA plans to contract with an external organization to conduct  on-site verification of the registration data and product listing information  of foreign establishments shipping drugs and other FDA-regulated  products to the United States. As of April 2008, FDA had solicited  proposals for this contract but was still developing the specifics of the  program. For example, the agency had not yet established the criteria it  would use to determine which establishments would be visited for  verification purposes or determined how many establishments it would  verify annually. FDA currently plans to award this contract in May 2008.  Given the early stages of this process, it is too soon to determine whether  this program will improve the accuracy of the data FDA maintains on  foreign drug establishments.
In addition to changes to improve DRLS, FDA has supported a proposal  that has the potential to address weaknesses in OASIS, but FDA does not  control the implementation of this change. As we previously testified,  OASIS contains an inaccurate count of foreign establishments  manufacturing drugs imported to the United States as a result of unreliable  identification numbers generated by customs brokers when the product is  offered for entry. FDA officials told us that these errors result in the  creation of multiple records for a single establishment, which results in  inflated counts of establishments offering drugs for entry into the U.S.  market. FDA is pursuing the creation of a governmentwide unique  establishment identifier, as part of the Shared Establishment Data Service  (SEDS), to address these inaccuracies. Rather than relying on the  creation and entry of an identifier at the time of import, SEDS would  provide a unique establishment identifier and a centralized service to  provide commercially verified information about establishments. The  standard identifier would be submitted as part of import entry data where  required by FDA or other government agencies. SEDS could thus eliminate  the problem of having multiple identifiers associated with an individual  establishment. The implementation of SEDS is dependent on action from  multiple federal agencies, including the integration of the concept into a  CBP import and export system currently under development and  scheduled for implementation in 2010. In addition, once implemented by  CBP, participating federal agencies would be responsible for bearing the  cost of integrating SEDS with their own operations and systems. FDA  officials are not aware of a specific timeline for the implementation of  SEDS. Developing an implementation plan for SEDS is a recommendation  of the Interagency Working Group on Import Safety’s Action Plan for  Import Safety: A Roadmap for Continual Improvement.
Finally, FDA is in the process of implementing additional initiatives to  improve the integration of its current data systems, which could make it  easier for the agency to establish an accurate count of foreign drug  manufacturing establishments subject to inspection. The agency’s Mission  Accomplishments and Regulatory Compliance Services (MARCS) is  intended to help FDA electronically integrate data from multiple systems.
It is specifically designed to give individual users a more complete picture  of establishments. FDA officials estimate that MARCS, which is being  implemented in stages, could be fully implemented by 2011 or 2012.  However, FDA officials told us that implementation has been slow  because the agency has been forced to shift resources away from MARCS  and toward the maintenance of current systems that are still heavily used,  such as FACTS and OASIS. Taken together, electronic registration, the  Foreign Vendor Registration Verification Program, SEDS, and MARCS  could provide the agency with more accurate information on the number  of establishments subject to inspection. However, it is too early to tell.
section_title: FDA Initiatives to Obtain Information on Foreign Establishments May Have Limited Impact on Its Selection of Establishments to Inspect
paragraphs: FDA has taken steps to help it select establishments for inspection by  obtaining information on foreign establishments from regulatory bodies in  other countries, despite encountering difficulties in fully utilizing these  arrangements in the past. FDA has recognized the importance of receiving  information about foreign establishments from other countries and has  taken steps to develop new, or strengthen existing, information-sharing  arrangements to do so. For example, according to FDA, the agency is  enhancing an arrangement to exchange information with the Swiss drug  regulatory agency. FDA officials have highlighted such arrangements as a  means of improving the agency’s oversight of drugs manufactured in  foreign countries. For example, they told us that in selecting  establishments for GMP surveillance inspections, they sometimes use the  results of an establishment inspection conducted by a foreign government  to determine whether to inspect an establishment. FDA told us that it  received drug inspection information from foreign regulatory bodies six  times in 2007.
FDA has previously encountered difficulties which prevented it from  taking full advantage of information-sharing arrangements with other  countries. Obtaining inspection reports from other countries and using  this information has proved challenging. In order for FDA to determine the  value of inspection reports from a particular country, it must consider  whether the scope of that country’s inspections is sufficient for FDA’s  needs. Evaluation of inspections conducted by foreign regulatory bodies  can be complex and may include on-site review of regulatory systems and  audit inspections. Further, to obtain results of inspections conducted by  its foreign counterparts, FDA must specifically request them—they are not  automatically provided. While FDA has provided certain foreign regulatory  bodies access to its Compliance Status Information System—which  provides information from the results of FDA’s inspections—foreign  regulatory bodies have not established similar systems to provide FDA  access to data about their inspections. FDA indicated that such systems  are under development in some countries and FDA has been promised  access when they are available. However, currently, FDA cannot routinely  incorporate the results of inspections conducted by foreign regulatory  authorities into its risk-based selection process. FDA officials stated that,  in the past, they encountered difficulties using inspection reports from  other countries that were not readily available in English. Consequently,  the existence of such information-sharing arrangements alone may not  help FDA systematically address identified weaknesses in its foreign  inspection program.
Arrangements that have the potential to allow FDA to formally accept the  results of inspections conducted by other countries have been  prohibitively challenging to implement. Although these arrangements  allow countries to leverage their own inspection resources, according to  FDA officials, assessing the equivalence of other countries’ inspections  and the relevance of the information available is difficult. They added that  complete reliance on another country’s inspection results is risky. The  activities associated with establishing these agreements may be resource  intensive, which may slow FDA’s implementation of them. For example,  FDA told us that a lack of funding for establishing such an arrangement  with the European Union effectively stopped progress. Although FDA has  completed preliminary work associated with this arrangement, the agency  has concluded that it will be more beneficial to pursue other methods of  cooperating with the European Union. The agency has no plans at this  time to enter into other such arrangements.
FDA’s current efforts to obtain more information from foreign regulatory  bodies may help it better assess the risk of foreign establishments when  prioritizing establishments for GMP surveillance inspections. However,  most foreign inspections are conducted to examine an establishment  referenced in an NDA or ANDA. The agency conducts relatively few  foreign GMP surveillance inspections selected through its risk-based  process. Therefore, these efforts may be of limited value to the foreign  inspection program if the agency does not increase the number of such  inspections.
section_title: FDA Has Increased Its Inspections of Foreign Establishments, but Still Inspects Relatively Few
paragraphs: FDA has made progress in conducting more foreign inspections, but it still  inspects relatively few establishments. FDA conducted more foreign  establishment inspections in fiscal year 2007 than it had in each of the   5 previous fiscal years. However, the agency still inspected less than   11 percent of the foreign establishments on the prioritized list that it used  to plan its fiscal year 2007 GMP surveillance inspections. The agency also  still conducts far fewer inspections of foreign establishments than  domestic establishments. Its budget calls for incremental increases in  funding for foreign inspections. FDA officials told us that, for fiscal year  2008, the agency plans to conduct more GMP surveillance inspections  based on its prioritized list of foreign establishments. FDA officials  estimated that the agency conducted about 30 such inspections in fiscal  year 2007 and plans to conduct at least 50 in fiscal year 2008.
If FDA were to inspect foreign establishments biennially, as is required for  domestic establishments, this would require FDA to dedicate substantially  more funding than it has dedicated to such inspections in the past. In fiscal  year 2007, FDA dedicated about $10 million to inspections of foreign  establishments. FDA estimates that, based on the time spent conducting  inspections of foreign drug manufacturing establishments in fiscal year  2007, the average cost of such an inspection ranges from approximately  $41,000 to $44,000. Our analysis suggests that it could cost the agency   $67 million to $71 million each year to biennially inspect each of the   3,249 foreign drug establishments on the list that FDA used to plan its  fiscal year 2007 GMP surveillance inspections. Based on these same  estimates, it would take the agency $15 million to $16 million each year to  inspect the estimated 714 drug manufacturing establishments in China  every 2 years. According to FDA budget documents, the agency estimates  that it will dedicate a total of about $11 million in fiscal year 2008 and   $13 million in fiscal year 2009 to all foreign inspections.
In its fiscal year 2009 budget, FDA proposed instituting a reinspection user  fee. Reinspections are conducted to verify that corrective actions the  agency has required establishments to take in response to previously  identified violations have been implemented. FDA’s proposal to institute a  reinspection user fee would allow it to charge establishments a fee when  the agency determines a reinspection is warranted. However, as proposed,  the reinspection user fee would be budget neutral, meaning that the other  appropriated funds the agency receives would be offset by the amount of  collected reinspection fees. As a result, this proposal would not provide  the agency with an increase in funds that could be used to pay for  additional foreign inspections.
section_title: FDA Initiatives May Address Some Challenges Unique to Foreign Inspections, but It Is Too Early to Determine Their Effectiveness
paragraphs: FDA has recently announced proposals to address some of the challenges  unique to conducting foreign inspections, but specific implementation  steps and associated time frames are unclear. We previously identified the  lack of a dedicated staff devoted to conducting foreign inspections as a  challenge for the agency. FDA noted in its report on the revitalization of  ORA that it is exploring the creation of a cadre of investigators who would  be dedicated to conducting foreign inspections. However, the report does  not provide any additional details or timeframes about this proposal. In  addition, FDA recently announced plans to establish a permanent foreign  presence overseas, although little information about these plans is  available. Through an initiative known as “Beyond our Borders,” FDA  intends that its foreign offices will improve cooperation and information  exchange with foreign regulatory bodies, improve procedures for  expanded inspections, allow it to inspect facilities quickly in an  emergency, and facilitate work with private and government agencies to  assure standards for quality. FDA’s proposed foreign offices are intended  to expand the agency’s capacity for regulating, among other things, drugs,  medical devices, and food. The extent to which the activities conducted by  foreign offices are relevant to FDA’s foreign drug inspection program is  uncertain. Initially, FDA plans to establish a foreign office in China with  three locations—Beijing, Shanghai, and Guangzhou—comprised of a total  of eight FDA employees and five Chinese nationals. The Beijing office,  which the agency expects will be partially staffed by the end of 2008, will  be responsible for coordination between FDA and the Chinese regulatory  agencies. FDA staff located in Shanghai and Guangzhou, who will be hired  in 2009, will be focused on conducting inspections and working with  Chinese inspectors to provide training as necessary. FDA has noted that  the Chinese nationals will primarily provide support to FDA staff including  translation and interpretation. The agency is also considering setting up  offices in other locations, such as India, the Middle East, Latin America,  and Europe, but no dates have been specified. While the establishment of  both a foreign inspection cadre and offices overseas have the potential for  improving FDA’s oversight of foreign establishments and providing the  agency with better data on foreign establishments, it is too early to tell  whether these steps will be effective or will increase the number of foreign  drug inspections.
Agreements with foreign governments, such as one recently reached with  China’s State Food and Drug Administration, may help the agency address  certain logistical issues unique to conducting inspections of foreign  establishments. We previously testified that one challenge faced by FDA  involved the need for its staff to obtain a visa or letter of invitation to enter  a foreign country to conduct an inspection. However, FDA officials told us  that their agreement with China recently helped FDA expedite this process  when it learned of the adverse events associated with a Chinese heparin  manufacturer. According to these officials, the agreement with China  greatly facilitated its inspection of this manufacturer by helping FDA send  investigators much more quickly than was previously possible.
section_title: Concluding Observations
paragraphs: Americans depend on FDA to ensure the safety and effectiveness of the  drugs they take. The recent incident involving heparin underscores the  importance of FDA’s initiatives and its steps to obtain more information  about foreign drug establishments, conduct more inspections overseas,  and improve its overall management of its foreign drug inspection  program. FDA has identified actions that, if fully implemented, could  address some, but not all, of the concerns we first identified 10 years ago  and reiterated 5 months ago in our testimony before this subcommittee.  Given the growth in foreign drug manufacturing for the U.S. market and  the current large gaps in FDA’s foreign drug inspections, FDA will need to  devote considerable resources to this area if it is to increase the rate of  inspections. However, FDA’s plans currently call for incremental increases  that will have little impact in the near future to reduce the interval  between inspections for these establishments. In addition, many of FDA’s  initiatives will take several years to implement and require funding and  certain interagency or intergovernmental agreements that are not yet in  place. Taken together, FDA’s plans represent a step forward in filling the  large gaps in FDA’s foreign drug inspection program, but do little to  accomplish short-term change.
Mr. Chairman, this completes my prepared statement. I would be happy to  respond to any questions you or the other Members of the subcommittee  may have at this time.
section_title: Contacts and Acknowledgments
paragraphs: For further information about this testimony, please contact   Marcia Crosse at (202) 512-7114 or crossem@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found on  the last page of this testimony. Geraldine Redican-Bigott, Assistant  Director; Katherine Clark; William Hadley; Cathleen Hamann;   Julian Klazkin; Lisa Motley; Daniel Ries; and Monique B. Williams made  key contributions to this testimony.
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