The recently enacted omnibus spending bill approved by Congress in late December, directs the US Food and Drug Administration (FDA) to expand its unannounced foreign facility inspection pilot program.
The FY 2023 spending bill was signed by President Biden on 27 December. The bill authorizes $3.5 billion in budget authority for FDA in FY 2023, a 6.5% increase compared to the previous year’s budget.
China and India enjoy a labor cost advantage. Manufacturing active pharmaceutical ingredients (APIs) in India can reduce costs for U.S. and European companies by an estimated 30 percent to 40 percent.
As the U.S. drug market shifted toward lower-priced generic drugs, manufacturers came under increasing cost pressure and found compelling reasons to locate more of their facilities overseas, particularly in developing parts of the world.
In May 2020, only 26 percent of facilities manufacturing APIs and 46 percent of the facilities producing finished dosage forms (FDFs) human drugs were located in the U.S.
Until passage of the Food and Drug Administration Safety and Innovation Act (FDASIA), the FDA was legally required to inspect manufacturing facilities in the U.S. every two years but had no similar mandate for the inspection frequency of foreign facilities.
The Office of Regulatory Affairs (ORA) established foreign offices in China, India, Europe, and Latin America.
Inspections performed in both domestic and foreign facilities include pre-approval, surveillance, and for-cause inspections.
- Pre-approval inspections
Conducted as part of the review of an application to market a new brand or generic drug.
- Surveillance inspections
Used to monitor the manufacturing process and the quality of distributed drugs. FDA uses the findings to evaluate whether a manufacturer is complying with CGMPs. In general, the Agency does not announce domestic surveillance inspections to the company in advance but usually announces foreign surveillance inspections in advance, partly due to logistics such as arranging travel and access to facilities, securing visas, and partly because of the high costs of conducting foreign inspections. Whether inspections are announced often depends on particular cases and the history of specific facilities.
- For-cause inspections
Triggered when FDA has reason to believe that a facility has serious manufacturing quality problems or when FDA wants to evaluate corrections that have been made to address previous violations. For-cause inspections can be announced or unannounced, whether domestic or international, depending on the specific situation.
For drugs that are not subject to premarket approval requirements, manufacturers may not be subject to FDA inspection before such products are shipped to or distributed in the U.S. Drugs in this category typically include OTC monograph drugs and APIs used in pharmacy compounding.
Under FDASIA, if the owner or operator of a foreign facility delays, denies, or refuses to permit inspection, all drugs manufactured at that facility would be deemed “adulterated.”
Both foreign and domestic drug manufacturers must meet the same regulatory requirements in terms of complying with established quality standards (CGMPs).
If a facility doesn’t meet CGMP standards upon inspection, FDA has an array of regulatory tools it can use to encourage a company to remediate their manufacturing processes and achieve compliance. These tools include warning letters, import alerts, injunctions, and seizures.