[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
SAFEGUARDING PHARMACEUTICAL SUPPLY CHAINS IN A GLOBAL ECONOMY
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
OCTOBER 30, 2019
__________
Serial No. 116-76
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
govinfo.gov/committee/house-energy
energycommerce.house.gov
________
U.S. GOVERNMENT PUBLISHING OFFICE
43-881 WASHINGTON : 2022
COMMITTEE ON ENERGY AND COMMERCE
FRANK PALLONE, Jr., New Jersey
Chairman
BOBBY L. RUSH, Illinois GREG WALDEN, Oregon
ANNA G. ESHOO, California Ranking Member
ELIOT L. ENGEL, New York FRED UPTON, Michigan
DIANA DeGETTE, Colorado JOHN SHIMKUS, Illinois
MIKE DOYLE, Pennsylvania MICHAEL C. BURGESS, Texas
JAN SCHAKOWSKY, Illinois STEVE SCALISE, Louisiana
G. K. BUTTERFIELD, North Carolina ROBERT E. LATTA, Ohio
DORIS O. MATSUI, California CATHY McMORRIS RODGERS, Washington
KATHY CASTOR, Florida BRETT GUTHRIE, Kentucky
JOHN P. SARBANES, Maryland PETE OLSON, Texas
JERRY McNERNEY, California DAVID B. McKINLEY, West Virginia
PETER WELCH, Vermont ADAM KINZINGER, Illinois
BEN RAY LUJAN, New Mexico H. MORGAN GRIFFITH, Virginia
PAUL TONKO, New York GUS M. BILIRAKIS, Florida
YVETTE D. CLARKE, New York, Vice BILL JOHNSON, Ohio
Chair BILLY LONG, Missouri
DAVID LOEBSACK, Iowa LARRY BUCSHON, Indiana
KURT SCHRADER, Oregon BILL FLORES, Texas
JOSEPH P. KENNEDY III, SUSAN W. BROOKS, Indiana
Massachusetts MARKWAYNE MULLIN, Oklahoma
TONY CARDENAS, California RICHARD HUDSON, North Carolina
RAUL RUIZ, California TIM WALBERG, Michigan
SCOTT H. PETERS, California EARL L. ``BUDDY'' CARTER, Georgia
DEBBIE DINGELL, Michigan JEFF DUNCAN, South Carolina
MARC A. VEASEY, Texas GREG GIANFORTE, Montana
ANN M. KUSTER, New Hampshire
ROBIN L. KELLY, Illinois
NANETTE DIAZ BARRAGAN, California
A. DONALD McEACHIN, Virginia
LISA BLUNT ROCHESTER, Delaware
DARREN SOTO, Florida
TOM O'HALLERAN, Arizona
------
Professional Staff
JEFFREY C. CARROLL, Staff Director
TIFFANY GUARASCIO, Deputy Staff Director
MIKE BLOOMQUIST, Minority Staff Director
Subcommittee on Health
ANNA G. ESHOO, California
Chairwoman
ELIOT L. ENGEL, New York MICHAEL C. BURGESS, Texas
G. K. BUTTERFIELD, North Carolina, Ranking Member
Vice Chair FRED UPTON, Michigan
DORIS O. MATSUI, California JOHN SHIMKUS, Illinois
KATHY CASTOR, Florida BRETT GUTHRIE, Kentucky
JOHN P. SARBANES, Maryland H. MORGAN GRIFFITH, Virginia
BEN RAY LUJAN, New Mexico GUS M. BILIRAKIS, Florida
KURT SCHRADER, Oregon BILLY LONG, Missouri
JOSEPH P. KENNEDY III, LARRY BUCSHON, Indiana
Massachusetts SUSAN W. BROOKS, Indiana
TONY CARDENAS, California MARKWAYNE MULLIN, Oklahoma
PETER WELCH, Vermont RICHARD HUDSON, North Carolina
RAUL RUIZ, California EARL L. ``BUDDY'' CARTER, Georgia
DEBBIE DINGELL, Michigan GREG GIANFORTE, Montana
ANN M. KUSTER, New Hampshire GREG WALDEN, Oregon (ex officio)
ROBIN L. KELLY, Illinois
NANETTE DIAZ BARRAGAN, California
LISA BLUNT ROCHESTER, Delaware
BOBBY L. RUSH, Illinois
FRANK PALLONE, Jr., New Jersey (ex
officio)
C O N T E N T S
----------
Page
Hon. Anna G. Eshoo, a Representative in Congress from the State
of California, opening statement............................... 1
Prepared statement........................................... 2
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 3
Prepared statement........................................... 5
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 6
Prepared statement........................................... 7
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 8
Prepared statement........................................... 10
Witnesses
Janet Woodcock, M.D., Director, Center for Drug Evaluation and
Research, Food and Drug Administration, Department of Health
and Human Services............................................. 11
Prepared statement........................................... 14
Slides shown during question-and-answer segment.............. 40
Answers to submitted questions \1\........................... 158
Michael R. Wessel, Commissioner, U.S.-China Economic and Security
Review Commission.............................................. 25
Prepared statement........................................... 27
Questions submitted for the record\2\........................ 164
Rosemary Gibson, Senior Advisor, The Hastings Center............. 79
Slides shown during oral presentation........................ 81
Prepared statement........................................... 91
Answers to submitted questions............................... 167
Edward Price, President and Chief Executive Officer, Seqens N.A.. 101
Prepared statement........................................... 104
Answers to submitted questions............................... 169
David Gaugh, R.Ph., Senior Vice President, Sciences and
Regulatory Affairs, Association for Accessible Medicines....... 108
Prepared statement........................................... 110
Questions submitted for the record\2\........................ 173
Submitted Material
Article, China's grip on pharmaceutical drugs is a national
security issue, by Anna G. Eshoo and Adam B. Schiff, The
Washington Post, September 10, 2019, submitted by Ms. Eshoo.... 136
Letter of October 25, 2019, from Representative Brian Higgins, et
al., to Alex Azar, Secretary, Department of Health and Human
Services, submitted by Mr. Engel............................... 139
Press release from Mylan Pharmaceuticals, October 25, 2019,
submitted by Mr. Burgess....................................... 142
----------
\1\ Questions submitted to Dr. Woodcock were answered by Andrew
Tantillo, Acting Associate Commissioner for Legislative Affairs, Food
and Drug Administration, Department of Health and Human Services.
\2\ Mr. Wessel and Mr. Gaugh did not answer submitted questions for the
record by the time of publication.
Statement of the U.S. Pharmacopeial Convention, October 30, 2019,
submitted by Ms. Eshoo......................................... 144
Letter of October 30, 2019, from David Light, Chief Executive
Officer, Valisure, to Mr. Pallone and Ms. Eshoo, submitted by
Ms. Eshoo...................................................... 150
Statement of The Premier Inc. Healthcare Alliance, October 30,
2019, submitted by Ms. Eshoo................................... 154
SAFEGUARDING PHARMACEUTICAL SUPPLY CHAINS IN A GLOBAL ECONOMY
----------
WEDNESDAY, OCTOBER 30, 2019
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:01 a.m., in
the John D. Dingell Room 2123, Rayburn House Office Building,
Hon. Anna G. Eshoo (chairwoman of the subcommittee) presiding.
Members present: Representatives Eshoo, Engel, Butterfield,
Matsui, Castor, Sarbanes, Schrader, Kennedy, Cardenas, Welch,
Ruiz, Kuster, Kelly, Barragan, Blunt Rochester, Pallone (ex
officio), Burgess (subcommittee ranking member), Shimkus,
Guthrie, Griffith, Bilirakis, Long, Bucshon, Brooks, Mullin,
Hudson, Carter, and Walden (ex officio).
Also present: Representatives Soto and Flores.
Staff present: Jeffrey C. Carroll, Staff Director; Waverly
Gordon, Deputy Chief Counsel; Tiffany Guarascio, Deputy Staff
Director; Megan Howard, FDA Detailee; Josh Krantz, Policy
Analyst; Aisling McDonough, Policy Coordinator; Joe Orlando,
Executive Assistant; Alivia Roberts, Press Assistant; Tim
Robinson, Chief Counsel; Kimberlee Trzeciak, Chief Health
Advisor; C.J. Young, Press Secretary; Jen Barblan, Minority
Chief Counsel, Oversight and Investigations; Margaret Tucker
Fogarty, Minority Legislative Clerk/Press Assistant; Peter
Kielty, Minority General Counsel; J.P. Paluskiewicz, Minority
Chief Counsel, Health; and Kristin Seum, Minority Counsel,
Health.
Ms. Eshoo. Good morning, everyone.
The Subcommittee on Health will now come to order.
The Chair now recognizes herself for 5 minutes for an
opening statement.
OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
There is a hidden health crisis in this country that will
affect us all: the crippling inadequacy of the American drug
supply. And, today, 90 percent of the medications that
Americans take are generics. That is because they are cheap,
and they are supposed to be just as safe and effective as
expensive brand-name drugs. But I believe the generic industry
is broken, and it is putting millions of Americans' health at
risk.
Our generic drug supply is broken in three devastating
ways: shortages of lifesaving medications, subpar manufacturing
that contaminates our drugs, and an overreliance on foreign
production of critical drugs and their ingredients.
The first crisis is the shortage of lifesaving medications.
Right now, hospitals are rationing critical drugs. This month,
children and their families woke up to the news that they may
not be able to get the pediatric cancer drug vincristine--
little children who, with this drug, would be cured of their
cancer and now can't get the drug they need. This should not be
happening in the United States.
The second crisis is subpar manufacturing contaminating our
drugs and contributing to shortages. Over the last year, we
have seen recalls of common blood pressure medications because
they contain carcinogens. One of the drugs affected, losartan,
is the ninth most commonly used drug in our country. Our
generic drug supply is so fragile that the FDA often must make
the hard choice between enforcing quality at a plant and
avoiding a shortage.
The third crisis is an overreliance on foreign production
for critical medications, which is a national security risk.
China globally dominates the manufacture of active
pharmaceutical ingredients, often referred to as API, and China
has gained a chokehold over the global supply of penicillin. In
fact, according to a witness on our second panel, Rosemary
Gibson, there are no plants in the United States that
manufacture penicillin.
If tensions with China escalate, Beijing could use U.S.
dependence on critical drugs as an economic weapon and exploit
the health and safety of both our Armed Forces and the American
people, and this is a threat to our Nation's security.
China flaunts the FDA's rules. An analysis of FDA
inspection reports published on Tuesday this week in STAT News
found Chinese plants were cited for data-integrity issues
nearly twice as often as American plants. These data issues
include falsifying drug tests or deleting findings that could
indicate contaminated or poor-quality drugs.
Taken together, these overlapping crises of shortages,
subpar manufacturing, and foreign reliance threaten the
overwhelming majority of drugs taken by Americans every day.
This is a crisis, and today we will define it in depth.
And, most importantly, we have to focus on solutions. Much of
what we will hear today will sound shocking, not only because
of the scary state we find our drug supply in but also how
little attention it has received. And it has been years in the
making.
I am issuing a call to action to the FDA, to industry, and
to all Members of Congress, but most especially our committee,
to take these problems seriously and work together on a
bipartisan basis to address them. If we fail to act, America
will continue to be vulnerable to potential foreign adversaries
and at the mercy of subpar plants or cutbacks on quality, and
we cannot allow this to happen.
[The prepared statement of Ms. Eshoo follows:]
Prepared Statement of Hon. Anna G. Eshoo
There is a hidden healthcare crisis in this country that
will affect us all: the crippling inadequacy of the American
drug supply.
Today, 90 percent of the medications that Americans take
are generics. That's because they're cheap, and they're
supposed to be just as safe and effective as expensive brand
name drugs.
But the generic industry is broken, and it is putting
millions of Americans' health at risk.
Our generic drug supply is broken in three devastating
ways: shortages of lifesaving medications, subpar manufacturing
contaminating our drugs, and an overreliance on foreign
production of critical drugs and their ingredients.
The first crisis is the shortage of lifesaving medications.
Right now, hospitals are rationing critical drugs. This month,
children and their families woke up to the news that they may
not be able to get the pediatric cancer drug vincristine.
Little children, who with vincristine would be cured of their
cancer, now can't get the drug they need. This shouldn't happen
in the United States.
The second crisis is subpar manufacturing contaminating our
drugs, contributing to shortages. Over the last year, we've
seen recalls of common blood pressure medications because they
contain carcinogens. One of the drugs affected, losartan, is
the ninth most commonly used drug in our country.
Our generic drug supply is so fragile that the FDA often
must make the hard choice between enforcing quality at a plant
and avoiding a shortage.
The third crisis is an overreliance on foreign production
for critical medication, which is a national security risk.
China globally dominates the manufacturing of active
pharmaceutical ingredients, and China has gained a chokehold
over the global supply of penicillin. In fact, according to a
witness on our second panel, Ms. Rosemary Gibson, there are no
plants in the U.S. that manufacture penicillin. If tensions
with China escalate, Beijing could use U.S. dependence for
critical drugs as an economic weapon and exploit the health and
safety of our Armed Forces and the American public. This is a
threat to our Nation's security.
China flaunts the FDA's rules. An analysis of FDA
inspection reports published on Wednesday in STAT News found
Chinese plants were cited for data integrity issues nearly
twice as often as American plants. These data issues include
falsifying drug tests or deleting findings that could indicate
contaminated or poor-quality drugs.
Taken together, these overlapping crises of shortages,
subpar manufacturing, and foreign reliance threaten the
overwhelming majority of drugs taken by Americans every day.
This is a crisis, and today we will define it in depth--and
most importantly, focus on solutions.
Much of what we will hear today will sound shocking. Not
only because of the scary state we find our drug supply in, but
also how little attention it has received. I'm issuing a call
to action to the FDA, to industry, and to my fellow MSembers of
Congress to take these problems seriously and work together to
address them. If we fail to act, America will continue to be
vulnerable to potential foreign adversaries and at the mercy of
subpar plants or cutbacks on quality.
We cannot allow this to happen.
Ms. Eshoo. The Chair now recognizes Dr. Burgess, ranking
member of the Subcommittee on Health, for 5 minutes for his
opening statement.
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Mr. Burgess. And I thank the Chair for recognition.
This committee, the Committee on Energy and Commerce, has a
long history of being engaged in the safety of the
pharmaceutical supply chain, and certainly our continued
oversight work today is critically important.
Our investment in research and development yields
significant scientific breakthroughs in the form of new
treatments and new cures for patients that were, in fact,
probably not even thought of years ago. But there is an
increased need for an efficient and secure pharmaceutical
supply chain to ensure safe access to active pharmaceutical
ingredients coming from across the globe.
Nearly 80 percent of active pharmaceutical ingredients come
from other countries. The Food and Drug Administration examines
these critical ingredients once they are imported or offered
for import to the United States, subjecting them to the Food
and Drug Administration's requirements.
This committee should remember the United States faced a
deadly contamination of the blood thinner heparin in 2008. I
think, in fact, as part of that hearing, the question was even
raised, how would we continue to exist without heparin? As a
practicing physician, I will tell you, that would be very, very
difficult.
Heparin contains an active pharmaceutical ingredient that
was coming from China, is still coming from China, but that
ingredient was adulterated, resulting in hundreds of adverse
effects and the deaths of 81 American patients.
I have got to tell you, as a physician, you think of
someone in a dialysis center who pushed the flush solution into
an AV shunt to clear it for the dialysis, and that patient
immediately expired? That is obviously terrible for the patient
and their family, but that doctor or that nurse is going to
carry that around with them the rest of their lives.
When we studied at the time, more than 1 million multidose
vials were sold each month in the United States. Now, the Food
and Drug Administration did conduct an investigation but was
unable to pinpoint the exact source of the adulteration, but it
does appear to have been a Chinese active pharmaceutical
ingredient production site.
Ultimately, the manufacturer of the heparin, including the
adulterated active pharmaceutical ingredient, known as
hypersulfated chondroitin sulfate in common parlance--
eventually, they did recall all their heparin. This amounted to
roughly half of the heparin supply in the United States.
As a result of this contamination, the Food and Drug
Administration asked manufacturers of products containing
heparin to test the active pharmaceutical ingredients with not
one but two tests that were now recommended by the FDA.
That molecule, that contaminant molecule, was cleverly
designed so that it hid behind the normal peak of the heparin
molecule when it was examined by the scientific equipment, and
it required a more sensitive test to be able to elucidate the
two peaks on that graph.
Despite efforts by the Food and Drug Administration,
numerous letters sent by members of this committee, and
hearings on this mass heparin contamination, we have still not
identified the culprit or the contamination source. This
committee remained engaged on the issue for years and, in fact,
I dare say, is still engaged on this contamination, but we have
never learned the true cause of the contamination.
To this Member, that serves as an example of how seriously
we must take the safety of the pharmaceutical supply chain. The
international supply chain for pharmaceuticals is complex.
Merely investigating contamination after patients start dying
fails to adequately protect Americans. An understanding of this
global system is instrumental to ensure a safe pathway for the
important active pharmaceutical ingredients used in drugs taken
every single day. This continues to be an issue as
pharmaceutical manufacturing grows increasingly global and
manufacturing shifts away from the United States.
As a physician, I do know the importance of being able to
prescribe the exact drug or treatment that a patient needs. A
safe and efficient international supply chain is essential to
avoid drug shortages and, therefore, ensuring that physicians
can focus on what their patient needs rather than what is
available.
In June of this year, I wrote a letter, along with Chairman
Pallone, Republican Leader Walden, Ms. DeGette, and Mr.
Guthrie, to the FDA about a series of recalls involving drugs
manufactured overseas that contain trace amounts of known
carcinogens. While it is important to ensure safety by
recalling these drugs, it shows that the threat of
contamination is starkly real.
The Food and Drug Administration Safety and Innovation Act,
which was signed into law in 2013, codified the Food and Drug
Administrations's authority to inspect drugs and active
pharmaceutical ingredients manufactured outside the United
States. Since then, the FDA has issued guidance and final rules
on agency procedure concerning adulterated drugs, domestic and
foreign registration, and inspection and destruction of
imported drugs refused admission to the United States. This was
an important step in the direction of ensuring a safe
pharmaceutical supply chain, and I certainly look forward to
hearing more about it today.
Thank you. I will yield back.
[The prepared statement of Mr. Burgess follows:]
Prepared Statement of Hon. Michael C. Burgess
Thank you, Madame Chair. The Energy and Commerce Committee
has a history of being engaged in the safety of the
pharmaceutical supply chain, and I look forward to continuing
our oversight work today. As research and development yields
amazing scientific breakthroughs in the form of new treatments
and cures for patients, there is an increased need for an
efficient and secure pharmaceutical supply chain to ensure safe
access to active pharmaceutical ingredients (API) coming from
across the globe. Nearly 80 percent of active pharmaceutical
ingredients come from other countries. The Food and Drug
Administration examines API once they are imported or offered
for import to the United States, subjecting them to the FDA's
requirements.
Many of you may remember the United States faced a deadly
contamination of the blood thinner, heparin, in 2008. Heparin
contained an active pharmaceutical ingredient from China that
was adulterated resulting in hundreds of adverse effects and
the death of 81 American patients. At the time, more than 1
million multidose vials were sold each month in the United
States.
The Food and Drug Administration conducted an investigation
and was unable to pinpoint the exact source of the
adulteration; however, it appeared to have been at a Chinese
active pharmaceutical ingredient production site. Ultimately,
the manufacturer of the heparin, including the adulterated
active pharmaceutical ingredient, recalled all heparin. This
amounted to roughly half of the heparin supply in the U.S. As a
result of this contamination, FDA asked manufacturers of
products containing heparin to test the active pharmaceutical
ingredients with two screening methods recommended by the FDA.
Despite efforts by the FDA, numerous letters sent by
members of this committee, and hearings on this mass heparin
contamination, we have still not identified the culprit or
contamination source. This committee remained engaged on this
issue for years following this contamination and never learned
the true cause of this contamination. This serves as an example
of how seriously we must take the safety of the pharmaceutical
supply chain.
The international supply chain for pharmaceuticals is
complex. Merely investigating contamination after patients
start dying fails to adequately protect Americans. An
understanding of this global system is instrumental to ensure a
safe pathway for important active pharmaceutical ingredients
used in drugs taken every single day. This continues to be an
issue as pharmaceutical manufacturing grows increasingly global
and manufacturing shifts away from the United States.
As a physician, I know the importance of being able to
prescribe the exact drug or treatment that your patient needs.
A safe and efficient international supply chain is essential to
avoid drug shortages and therefore, ensuring that physicians
can focus on what their patient needs, rather than whether the
drug is even available.
In June of this year, I wrote a letter along with Chairman
Pallone, Republican Leader Walden, Ms. DeGette, and Mr.
Guthrie, to FDA about a series of recalls involving drugs
manufactured overseas that contained trace amounts of known
carcinogens. While it is important to ensure safety by
recalling these drugs, it shows that the threat of
contamination is still alive and well.
The Food and Drug Administration Safety and Innovation Act,
which was signed into law in 2013, codified the Food and Drug
Administration's authority to inspect drugs and active
pharmaceutical ingredients manufactured outside the United
States.
Since then the FDA has issued guidance and finals rules on
agency procedure concerning adulterated drugs, domestic and
foreign registration and inspection and destruction of imported
drugs refused admission to the U.S. This was an important step
in the direction of ensuring a safe pharmaceutical supply chain
and I look forward to learning more about this today. Thank
you, Madame Chair, I yield back.
Ms. Eshoo. The Chair thanks the ranking member.
I now have the pleasure of recognizing the chairman of the
full committee, Mr. Pallone, for his 5 minutes for an opening
statement.
OPENING STATEMENT OF HON. FRANK PALLONE, Jr., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Chairwoman Eshoo.
American consumers rely heavily on prescription drug
products that help them live longer and healthier lives. Over
the last several months, this subcommittee has taken action to
lower drug costs to ensure that all Americans can access the
prescription drugs that they need. And making prescription
drugs more affordable is a top priority of this committee.
After all, prescription drugs are essentially useless if people
cannot afford them.
Today, we are focusing on another important component of
prescription drugs, and that is maintaining the safety and
quality of medications in our marketplace.
The Food and Drug Administration plays a central role in
ensuring the safety of drugs in our market. The rigorous drug-
review process at FDA is recognized worldwide as the gold
standard. While regulatory processes can always be improved,
American patients should take comfort in the knowledge that
drug products approved by the FDA are the most rigorously
reviewed in the world.
And FDA's authority is not limited to those drugs
manufactured here in the U.S. It can inspect and review
information related to both finished-dose drug products and the
active pharmaceutical ingredients, or API, that come from other
countries.
Over the years, this committee has acted to improve FDA's
authority to the regulate what is a complex and increasingly
global supply chain. We have provided FDA with the ability to
inspect facilities on a risk-based schedule. We gave FDA the
ability to enter into agreements with other regulatory
authorities to share inspection information for foreign
facilities. And we required entities in the drug supply chain
to maintain and track information related to drug products.
All of these authorities are particularly important given
recent trends in pharmaceutical manufacturing. Many
manufacturers are getting their pharmaceutical ingredients from
manufacturers overseas, particularly from China and India. And
some of the ingredients from abroad have caused seriously
quality concerns with certain drug products.
So we need to make sure that FDA has the authority it needs
to address these concerns and to remain vigilant over the
marketplace. We also need to ensure that manufacturers are
still incentivized to produce their pharmaceutical ingredients
and products domestically.
Some manufacturers are implementing innovative
manufacturing methods, like continuous manufacturing, to make
their processes more efficient and to keep their facilities
here in the U.S. Encouraging the use of continuous
manufacturing methods has long been a priority of mine, not
only because these methods are the next frontier of
manufacturing but also because they are quality production
methods that help U.S. manufacturers compete in the global
market.
So, earlier this week, I reintroduced legislation with
Representative Guthrie to expand support for continuous
manufacturing. This bipartisan legislation will foster the
development of emerging technology by expanding opportunities
for FDA to partner with universities across the country that
are leading these efforts, including my own Rutgers University,
in my congressional district. And it is the next step in my
work on the continuous-manufacturing grants program that was
included in the 21st Century Cures Act.
So I look forward to hearing from the witnesses today,
particularly Dr. Woodcock, about the safety and sourcing of
active pharmaceutical ingredients. It is critical that we
ensure American patients have access to the highest-quality
medications in the world.
And I particularly want to thank Ms. Eshoo, because she has
been, you know, advocating that we look into this and have this
hearing for some time now, and so it is really important that
we do this. Thank you, Chairwoman.
I yield back.
[The prepared statement of Mr. Pallone follows:]
Prepared Statement of Hon. Frank Pallone, Jr.
American consumers rely heavily on prescription drug
products that help them live longer and healthier lives. Over
the last several months, this subcommittee has taken action to
lower drug costs to ensure that all Americans can access the
prescription drugs they need. Making prescription drugs more
affordable is a top priority of this committee--after all,
prescription drugs are essentially useless if people cannot
afford them. Today, we are focusing on another important
component of prescription drugs--maintaining the safety and
quality of medications in our market.
The Food and Drug Administration (FDA) plays a central role
in ensuring the safety of drugs on our market. The rigorous
drug review process at FDA is recognized worldwide as the gold
standard. While regulatory processes can always be improved,
American patients should take comfort in the knowledge that
drug products approved by the FDA are among the most rigorously
reviewed in the world.
And FDA's authority is not limited to those drugs
manufactured here in the United States. It can inspect and
review information related to both finished-dose drug products
and the active pharmaceutical ingredients, or A 09P 09I, that
come from other countries.
Over the years, this committee has acted to improve FDA's
authority to regulate what is a complex and increasingly global
supply chain. We provided FDA with the ability to inspect
facilities on a risk-based schedule. We gave FDA the ability to
enter into agreements with other regulatory authorities to
share inspection information for foreign facilities. And we
required entities in the drug supply chain to maintain and
track information related to drug products.
All of these authorities are particularly important given
recent trends in pharmaceutical manufacturing. Many
manufacturers are getting their pharmaceutical ingredients from
manufacturers overseas, particularly from China and India. Some
of the ingredients from abroad have caused serious quality
concerns with certain drug products.
We need to make sure that FDA has the authority it needs to
address these concerns and to remain vigilant over the
marketplace. We also need to ensure that manufacturers are
still incentivized to produce their pharmaceutical ingredients
and products domestically.
Some manufacturers are implementing innovative
manufacturing methods, like continuous manufacturing, to make
their processes more efficient and to keep their facilities
here in the United States.
Encouraging the use of continuous-manufacturing methods has
long been a priority of mine not only because these methods are
the next frontier of manufacturing, but also because they are
quality production methods that help U.S. manufacturers compete
in the global market. Earlier this week, I reintroduced
legislation with Representative Guthrie to expand support for
continuous manufacturing. This bipartisan legislation will
foster the development of emerging technology by expanding
opportunities for FDA to partner with universities across the
country that are leading these efforts, including Rutgers
University in my congressional district. It is the next step in
my work on the continuous-manufacturing grants program that was
included in the 21st Century Cures Act.
I look forward to hearing from the witnesses today,
including Dr. Woodcock, about the safety and sourcing of active
pharmaceutical ingredients. It is critical that we ensure
American patients have access to the highest-quality
medications in the world.
Thank you, and I yield back.
Ms. Eshoo. The Chair thanks the chairman.
And now it is a pleasure to recognize the ranking member of
the full committee, who broke our hearts with his
announcement--and I am going to say this every time I introduce
him----
Mr. Walden. No.
Ms. Eshoo [continuing]. Mr. Walden from Oregon, for his 5
minutes for an opening statement.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. Well, thank you, Madam Chair.
And I have another big announcement to make here and now. I
do believe it is our chairman's birthday today, Mr. Pallone.
Ms. Eshoo. Happy birthday.
Mr. Walden. So could we do, like, the Boehner birthday
song? This is your birthday song, it doesn't last too long,
hey! That is it.
Mr. Pallone. Thank you.
Mr. Walden. Yes, and with that age thing happening, this
hearing is really important for you going forward, I think, so
we want to get these drugs available, safe.
Ms. Eshoo. We have to get these drugs----
Mr. Walden. Yes, I am just about unleashed up here now.
This is pretty good. I think that is it.
I appreciate, Madam Chair, you holding this hearing, and,
Mr. Chairman, thank you as well. This really is serious,
important work, and we have great witnesses here to help us
understand what is going on.
Making sure our Government agencies have the tools
necessary to ensure safety and quality of the U.S. drug supply
is a top priority for this committee.
Recent recalls issued for a class of drugs known as
angiotensin II receptor blockers, or ARBs, which are generally
used to treat high blood pressure, and media attention on the
questionable conditions and practices at foreign manufacturing
facilities have led to public concern about the country's
sourcing of finished drug products and active pharmaceutical
ingredients overseas.
Historically, medicines intended for use in the United
States have been produced in the United States. However, over
the last several years, more drug manufacturing has moved
offshore. Much of the shift can be attributed to low wages and
less regulation in other countries, resulting in lower
production costs for drug manufacturers. With the shift
overseas, it has become more difficult for us to verify these
products are made in compliance with what I would say are the
world's best standards, those in the United States.
And, as you know, to our witnesses, this committee has had
a long interest in FDA oversight of the manufacturing of
finished drug products and active pharmaceutical ingredients
intended for the U.S. drug supply.
In 2012, with the passage of the Food and Drug
Administration Safety and Innovation Act, Congress provided FDA
with new resources needed to inspect both domestic and foreign
generic drug facilities.
Data from the most recently issued GAO report in 2016 found
that the FDA had increased its foreign drug inspections and it
had enhanced its ability to prioritize drug establishments for
inspection. For example, the GAO found that the FDA foreign
inspections increased from 333 in 2007 to 842 in 2015.
However, it has been reported that FDA surveillance
inspections of foreign facilities have declined in the past 2
years, including in China, where inspections fell by almost 11
percent.
And I know, while inspections are not the only means of
ensuring the drug supply is properly protected, it is an
important piece of the puzzle, and we must ensure the FDA has
the appropriate oversight measures in place.
Because of our continued concern over the quality and
safety of the U.S. drug supply, we have requested, in a
bipartisan manner, answers from the FDA about practices
currently in place to adequately oversee foreign drug
manufacturing. We have also requested an updated report from
GAO on the FDA's drug inspection program, because if there are
gaps in the agency's ability to properly oversee these
facilities, action must be taken to resolve those shortcomings
and protect the public's health.
The United States' reliance on overseas manufacturing not
only raises quality concerns but it also poses national
security risks as well. Foreign-manufactured medical products
critical to the strategic national stockpile are subject to the
same quality and safety concerns, but dependence on foreign
countries for drugs used as medical countermeasures could also
leave Americans vulnerable to chemical and biological threats,
among others.
Further reliance on foreign suppliers, particularly in
those countries with which we have unstable relationships,
poses an increased risk to Americans. If a country monopolizes
the production of a drug and wishes to retaliate against the
United States, they could substantially increase drug prices or
dramatically reduce supply in an attempt to cause shortages,
limiting access to critical medications. And that is in the
absence of a crisis. In a time of crisis, such possible actions
could cost American lives.
My concerns are amplified by the fact that some of the
legislation that is headed to the floor on drug pricing may
further complicate this matter and drive innovation in
manufacturing overseas, leaving the American people at the
mercy of foreign manufacturers, particularly China, who have
shown a strong interest in creating their own biotech
manufacturing base for lifesaving and life-sustaining drugs.
So I look forward to the expert witnesses we have today. I
really appreciate this hearing. I know this is an issue you
care deeply about, Madam Chair, and have fought for
improvements on for a long time.
And so we look forward to your testimony.
With that, I yield back.
[The prepared statement of Mr. Walden follows:]
Prepared Statement of Hon. Greg Walden
Chairwoman Eshoo, thank you for holding this hearing today.
Making sure our Government agencies have the tools necessary to
ensure the safety and quality of the U.S. drug supply is a top
priority for this committee. Recent recalls issued for a class
of drugs known as angiotensin II receptor blockers, or ARBs,
which are generally used to treat high blood pressure, and
media attention on the questionable conditions and practices at
foreign manufacturing facilities, have led to public concern
about the country's sourcing of finished drug products and
active pharmaceutical ingredients (APIs) overseas.
Historically, medicines intended for use in the United
States have been produced here. However, over the past several
years, more drug manufacturing has moved offshore. Much of this
shift can be attributed to low wages and less regulation in
other countries, resulting in lower production costs to drug
companies. With this shift overseas it has become more
difficult for us to verify these products are made in
compliance with U.S. standards.
This committee has long held an interest in FDA oversight
of the manufacturing of finished drug products and active
pharmaceutical ingredients intended for the U.S. drug supply.
In 2012 with the passage of the Food and Drug Administration
Safety and Innovation Act, Congress provided FDA with new
resources needed to inspect both domestic and foreign generic
drug facilities. Data from the most recently issued GAO report
in 2016 found that FDA had increased its foreign drug
inspections and enhanced its ability to prioritize drug
establishments for inspection. For example, GAO found that FDA
foreign inspections increased from 333 in 2007 to 842 in 2015.
However, it has been reported that FDA surveillance
inspections of foreign facilities have declined in the past 2
years, including in China where inspections fell by almost 11
percent. While inspections are not the only means for ensuring
the drug supply is properly protected, it is an important piece
of the puzzle and we must ensure that FDA has the appropriate
oversight measures in place.
Because of our continued concern over the quality and
safety of the U.S. drug supply, we have requested, in a
bipartisan manner, answers from FDA about practices currently
in place to adequately oversee foreign drug manufacturing. We
have also requested an updated report from GAO on FDA's drug
inspection program. If there are gaps in the agency's ability
to properly oversee these facilities, action must be taken to
resolve those shortcomings and protect the public health.
The United States' reliance on overseas manufacturing not
only raises quality concerns, but it also poses national
security risks as well. Foreign manufacturing of medical
products critical to the Strategic National Stockpile are
subject to the same quality and safety concerns, but dependence
on foreign countries for drugs used as medical countermeasures
could also leave Americans vulnerable to chemical and
biological threats, among others.
Further, reliance on foreign suppliers, particularly in
those countries with which we have unstable relationships,
poses an increased risk to Americans. If a country monopolizes
the production of a drug and wishes to retaliate against the
U.S., they could substantially increase drug prices or reduce
supply in an attempt to cause shortages, limiting access to
critical medications. And that is in the absence of a crisis.
In a time of crisis, such possible actions could mean American
lives.
My concerns are amplified by the fact that we will be
considering Speaker Pelosi's partisan drug-pricing plan on the
floor in the coming weeks. This legislation will further drive
innovation and manufacturing overseas, leaving the American
people at the mercy of foreign manufacturers--particularly
those in China, who have shown a strong interest in creating
their own biotech manufacturing base--for their lifesaving and
life-sustaining drugs.
I look forward to hearing from the witnesses today about
the challenges that face us in the wake of the globalization of
the pharmaceutical industry and the solutions we can put forth
to protect the U.S. drug supply and our constituents.
Thank you, and I yield back.
Ms. Eshoo. The Chair thanks the gentleman, and he yields
back.
I just want to remind Members that, pursuant to committee
rules, all Members' written opening statements shall be made
part of the record. So get those excellent statements in.
I now would like to introduce the first panel of our
witnesses for today's hearing.
It is an honor to welcome Dr. Janet Woodcock. She is the
Director, we all know, of the FDA Center for Drug Evaluation
and Research.
And I want to thank you for the work that you have done,
the work that you have done with my staff. This is in many ways
a heavy lift, but what you have done has helped to enlighten us
and prepare us for this all-important hearing today.
Welcome to Mr. Michael Wessel. He is a Commissioner at the
U.S.-China Economic Security Review Commission.
And we are very grateful to you for being here today as
well.
Just a word about the lighting system. I think you both
know, certainly Dr. Woodcock does. Green, you know what that
is. Yellow means the red light is coming, and then we have full
stop.
So, Dr. Woodcock, welcome. Thank you for dedicating your
adult life to the work at the FDA and, most importantly, at the
Center for Drug Evaluation and Research. You are recognized for
5 minutes for your opening statement.
STATEMENTS OF JANET WOODCOCK, M.D., DIRECTOR, CENTER FOR DRUG
EVALUATION AND RESEARCH, U.S. FOOD AND DRUG ADMINISTRATION,
DEPARTMENT OF HEALTH AND HUMAN SERVICES; AND MICHAEL R. WESSEL,
COMMISSIONER, U.S.-CHINA ECONOMIC AND SECURITY REVIEW
COMMISSION
STATEMENT OF JANET WOODCOCK, M.D.
Dr. Woodcock. Thank you, Madam Chair and members of the
committee.
Lack of a reliable supply of critical medicines creates a
significant risk for national security, not just for our
military but for all our citizens.
An active pharmaceutical ingredient, or API, is the actual
drug that is then made into a tablet, injection, and so forth.
APIs are typically made at a site that specializes in their
production, and then they are sent to other facilities to be
made into what we call finished pharmaceuticals. I will focus
on APIs.
The U.S. has a minority of facilities. We have about 28
percent of all facilities that manufacture APIs for the U.S.
market. Twenty-six percent of all such API sites are in the EU
and 13 percent in China and 18 percent in India.
Given that many APIs are for minor conditions that are
treated, say, with OTC drugs, we also looked at the WHO
Essential Medicines List. Twenty-one percent of those APIs can
be made in the U.S., 15 percent are made in China, and 64
percent elsewhere.
Looking at medical countermeasure drugs, only 11 percent of
API sites for biological threat agents are in the U.S., 29
percent of sites for chemical threats, and 46 percent for
radiation threats.
You can see that many kinds of disruptions around the globe
could threaten U.S. patients' access to critical drugs.
These numbers also don't reflect the relative volume of
product from any given region, only the existence of facilities
that FDA has approved to make the specific APIs. FDA currently
does not get up-to-date information on volume or production and
capacity of any site around the world. These data are dynamic,
and they can change rapidly. Further, other critical factors,
such as availability of raw materials, can also have major
impact on supply, and the U.S. itself is not a major source of
these materials.
The U.S. pharmaceutical sector, as has already been said,
like many other manufacturing sectors, has moved out of the
country, starting in the late 1990s. And this trend has been
accelerating based on economic factors.
So what can be done about this? I think that is possibly
the most important question.
Well, one thing, FDA has been advocating for modernization
of drug manufacturing since the early 2000s. Advanced
pharmaceutical manufacturing covers a range of technologies
that are widely used in other industries, such as continuous
production, use of automation, and digitization. These
techniques result in smaller facilities, less environmental
impact, and the need for a smaller but highly skilled
workforce--all factors that make production in the U.S. more
feasible.
For example, Genzyme Sanofi recently announced they had
completed test runs in a new bioprocessing facility in
Framingham, Massachusetts. According to them, this facility
will make all kinds of biological products in a continuous,
end-to-end process, will use 94 percent less solvents and
produce 80 percent less CO2 while consuming 80
percent less energy, not generate any paper--reams of paper are
usually generated--but being 80 times more productive.
Similarly, FDA recently approved a new cystic fibrosis drug
made by Vertex Corporation that uses continuous processing for
the finished dosage form, and that is also in Massachusetts.
These examples show that drug manufacturing in the U.S. is
quite feasible using advanced technologies.
FDA is also working with ASPR, BARDA, and DARPA on how we
might regulate mobile, miniaturized manufacturing modules that
could be used in crisis or military situations. These are
dubbed by BARDA ``Pharmacy on Demand.'' These projects
foreshadow, in my opinion, a new generation of pharmaceutical
manufacturing techniques that is now emerging and that we can
put against this problem.
FDA is working hard to assure a robust and reliable drug
supply for the U.S. We feel it is important both to reestablish
the pharmaceutical manufacturing sector in the U.S. but also
help bring about a high-quality, resilient drug supply for all
the world's citizens.
Thank you.
[The prepared statement of Dr. Woodcock follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Ms. Eshoo. Thank you, Dr. Woodcock.
I now would like to recognize our second witness, Mr.
Wessel.
You are recognized for 5 minutes for your opening
statement, sir.
STATEMENT OF MICHAEL R. WESSEL
Mr. Wessel. Chairwoman Eshoo, Ranking Member Burgess,
members of the subcommittee, thank you for the invitation to
appear here today.
This hearing addresses a critical issue for our economic
and national security interests and directly affects every one
of our citizens. To paraphrase Samuel L. Jackson, what's in
your medicine cabinet? Our citizens have a right to know.
My name is Michael Wessel, and I am a member of the U.S.-
China Economic and Security Review Commission, but my remarks
today represent my views and not those of the Commission or any
individual Commissioner.
In July, the Commission held a hearing exploring the
growing U.S. reliance on China's biotech and pharmaceutical
products. Five years ago, the Commission held a hearing on
China's healthcare sector, drug safety, and the U.S.-China
trade in medical products.
In the 5 years between hearings, I can't say my confidence
in the safety of Chinese drug and active pharmaceutical
ingredients has gotten better. Our reliance on Chinese supplies
has increased while their regulatory system has failed to keep
pace with the growth of the sector. And we are losing our
ability to meet our needs at a faster pace.
Chairwoman Eshoo, your op-ed in the Washington Post with
Congressman Schiff was spot-on. As you indicated, the problem
demands action and bipartisan solutions. The U.S.-China
Commission was unanimous in its call for action, and we look
forward to working with you and your colleagues to produce
workable solutions to protect our country's interests.
The issue, as I said, is of critical importance.
Pharmaceuticals are often life-sustaining or lifesaving. For
many, taking medication is not an option, it is a necessity.
Consumers generally don't have an option on what drug to
procure based on the source of its ingredients. And all too
often, they have no idea where those sources are.
China has an active plan to become an increasingly dominant
source of medicines to the world. Pharmaceuticals and medical
devices are a key sector in their ``Made in China 2025'' and
13th 5-year industrial plans. Billions of dollars of support
are coupled with government policies, investment strategies,
and intellectual property acquisition approaches, both licit
and illicit. China wants to win, and it has a plan to do so.
Already, they supply significant portions of the APIs, as
much as 80 percent by some estimates. Our concerns are not
limited to just direct impacts from China, as drug firms across
the globe often utilize Chinese APIs.
China understands the importance of the sector as an
economic and innovation engine but also because of its national
security implications. Our increasing dependence on China poses
many risks, not only due to potentially unsafe medications but
because of China's ability to potentially weaponize its supply
chains should it so choose.
Let's not forget that several years ago China blocked
exports of rare-earth minerals to Japan over a territorial
dispute. What would happen if China threatened supplies of
certain critical drugs and APIs?
As a DoD witness told our Commission, quote, ``The national
security risks of increased Chinese dominance of the global API
market cannot be overstated.'' We are losing our ability to
supply not only the medicines our warfighters may have to rely
on but the ability to address other critical health crises
here.
The bioeconomy is increasingly important. As global
competition and manufacturing has increased, some areas of our
country have been able to weather the changes with a rise in
employment in the healthcare sector. We can't afford to trade
away this sector.
In terms of global medical supply chains, increasingly, all
roads lead to China. Those roads are rocky, sometimes
treacherous, and all too often unsafe. With thousands of
suppliers in the still-developing regulatory infrastructure, we
can't trust the safety and security of Chinese supplies. Our
experience, from heparin to valsartan to other drugs, indicates
that there are clear and present dangers.
Our inspectors--and we have far too few--do not have
unfettered access to inspect Chinese facilities. Problems with
visas, delayed and often limited access to facilities, and the
need for additional resources have all hampered our ability to
protect our interests.
So, in short, we are overly reliant on China, we cannot
trust the supply chains, and our national and economic security
demand that we act. We must reduce our vulnerabilities.
In my prepared testimony, I identified several
recommendations made by the China Commission that will appear
in our upcoming report. It is not a partisan issue. It is one
where we can apply commonsense solutions to address a national
concern.
Thank you.
[The prepared statement of Mr. Wessel follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Ms. Eshoo. Thank you very much, Mr. Wessel.
I just wanted to--first of all, I ask for unanimous consent
to place into the record the Washington Post op-ed dated
September 10, 2019.
Hearing no objections, so ordered.
[The information appears at the conclusion of the hearing.]
Ms. Eshoo. We did invite Christopher Priest, the Acting
Deputy Assistant Director of the Defense Health Agency. He is
out of the country. And I hope in subsequent hearings that we
will have the benefit of his testimony as well.
But we thank both of you for your excellent testimony.
There is much to get to. And I will start by recognizing myself
for 5 minutes of questions.
Dr. Woodcock, does the FDA know what percentage of American
drugs have their active ingredient sourced from China?
Dr. Woodcock. We do not know the volume. We know the sites
that we have approved and that they can--are capable of
providing drug API. However, we don't know which suppliers
might be used. Many applications have multiple suppliers of API
that they can use. And so we don't know on a real-time basis.
Ms. Eshoo. So there isn't any requirement from FDA relative
to the drugs that you approve, what the source is?
Dr. Woodcock. Yes, we do know all the sources, but----
Ms. Eshoo. You do know the sources, but----
Dr. Woodcock [continuing]. We do not know what percentage
of----
Ms. Eshoo. I see.
Dr. Woodcock. Yes.
Ms. Eshoo. Now, Rosemary Gibson, who is going to testify on
the next panel, has raised concerns about U.S. reliance on
China for API in antibiotics. Does the FDA know how much of the
ingredients for antibiotics are sourced from China?
Dr. Woodcock. We know where the facilities are that can
produce antimicrobials around the world, but, again, we don't
know the percentage of that that currently is being sourced
from China.
We get annual reports every year, and so we can
retrospectively see what happened. But we don't have--this is a
dynamic situation, and so we don't know in real-time.
Ms. Eshoo. What is the capacity of the United States to
take this back, relative to API?
I know that cost is always a factor, and so we end up what
I call bottom fishing. But the testimony so far is that I think
we all agree that this poses a threat. I mean, drugs are not
any old commodity in our country. This is the health and
security of our people and our national security.
So how do we regain the capacity? Do we have a capacity for
API in the United States?
Dr. Woodcock. There is capacity. There is the potential to
do it. But there isn't an economic incentive.
Ms. Eshoo. That is what it is, is the economic incentive.
Uh-huh.
Dr. Woodcock. Our assessment is that the companies in the
U.S. could not compete, using current technology, against other
countries who have lower labor costs, less environmental
regulation, and so on.
Ms. Eshoo. But, in your estimation, if we moved to advanced
pharmaceutical manufacturing, that we can indeed recapture the
API market?
Dr. Woodcock. The APIs are going to be a little bit harder
than making the finished-dosage forms with advanced
manufacturing, because every API, every synthesis, if you think
about it, making each molecule has different steps. However----
Ms. Eshoo. But we did that at one time. China hasn't always
dominated the global market on this.
Dr. Woodcock. We and Europe, back many--maybe decades ago,
did have API manufacturing here, but they moved. If you recall,
Congress gave incentives for Puerto Rico, and a lot of
pharmaceutical plants moved to Puerto Rico. And then, as the
economic situation evolved, they moved to India, China, and
other countries.
Ms. Eshoo. But as I understand it, India is at least 80
percent dependent on China's API.
Dr. Woodcock. We showed, in the testimony I gave, where
approved API facilities are. They are not dominant, China is
not dominant, as far as the number of facilities it has. Now,
whether it is dominant on volume, we can't currently----
Ms. Eshoo. But you can't just go by the number of
facilities. You have to go by what each facility produces. That
is the key number.
Dr. Woodcock. And that changes over time.
Ms. Eshoo. Uh-huh.
In my opening statement, I referred to our generic drug
supply being so fragile that the FDA has to make hard choices
between enforcing quality at a plant and avoiding a shortage.
Can you speak to this, please?
Dr. Woodcock. Sometimes this is true, both for innovator
drugs and generic drugs. If we have quality problems at a
plant, we have to make a medical decision, OK, is the patient
foregoing that, or can we put in remediation additional steps
that would render the product safe enough to use in that----
Ms. Eshoo. But it is a squeeze for you. It is a----
Dr. Woodcock. Yes. Well, it----
Ms. Eshoo [continuing]. Squeeze for you to do that.
Dr. Woodcock [continuing]. Puts us in a difficult position.
Ms. Eshoo. Yes. Uh-huh. It is. These are hard choices.
Commissioner Wessel, your mandate is to report on national
security implications of U.S. trade with China. Can you just
spend a moment describing the national security implications of
our dependence on China for these active pharmaceutical
ingredients?
Mr. Wessel. Well, yes. Thank you. And, again, your piece
with Congressman Schiff helped identify much of that.
We are increasingly dependent on China by volume, both
directly and indirectly. They have the opportunity, of course,
to weaponize those supplies should they so choose. They did
that with Japan. We have seen them in these current trade
tensions with the U.S. favor certain sectors over others.
They have also a plan to dominate the sector globally, not
just directly the APIs and pharmaceuticals but biotech. They
want to be 70 percent indigenously self-sufficient. That means
that they are going to exclude and preclude others from
producing these products.
They are pricing us out of the market. That happened, as
you will hear later, on penicillin and on other products. Price
is the critical issue, but when China gives tens of billions of
dollars of subsidies to their manufacturers, those who operate
based on market principles simply can't compete.
Ms. Eshoo. Thank you. They have a plan----
Mr. Wessel. Yes.
Ms. Eshoo [continuing]. And we don't.
Thank you very much.
I now would like to yield to the ranking member for his 5
minutes of questions. Dr. Burgess, you are recognized.
Mr. Burgess. Thank you.
And thanks to our witnesses.
Dr. Woodcock, always good to see you. You are a frequent
flyer at our committee, and we appreciate that.
Mr. Wessel, you have posed an interesting question about
China weaponizing their supply chain. I was here in 2008 when
we studied the heparin problem, and I referenced hypersulfated
chondroitin sulfate. That was not just a contaminant that got
into the heparin. That was a molecule that had been developed
and patented under Chinese authority.
Who knows why someone thought it was a good idea to put it
in their heparin supply. I am presuming it was like an
unscrupulous shopkeeper who puts a thumb on the scale, because
this would increase the test for the bioavailability of blood
thinner, which is one of the things that made it so difficult
to detect when it was realized there was a problem.
But, look, I am from Texas. I never attribute anything to
coincidence if I can explain it in conspiracy. So when you talk
about weaponizing the supply chain--and I remember all of that
discussion around heparin--it is almost like that was a test of
someone testing our system: Can we detect and react, and how
quickly do we come to that conclusion, and how do we react? So
that is what I think of when you talk about China weaponizing
the supply chain.
Mr. Wessel. Well, thank you. And 12 years later, we haven't
taken all the steps that we need to. Their test--if, in fact,
that is what it was--they came up with the ability to plan
forward and dominate the industry and make us further
vulnerable. So the question is now, are we going to take all
the information we have and put together a plan, an action
plan, to try and mediate and mitigate the risks we face?
Mr. Burgess. Right. And, of course, we are not even talking
about the melamine in the dog food, which poisoned all of our
pets.
So, Dr. Woodcock, let me ask you, does the FDA have a role
to play in the redevelopment of bringing that--onshoring that
industry?
I remember, a few years ago--well, it has been a number of
years ago--we were worried about bird flu, the first bird flu,
not the second one. And there was a contaminant, Serratia, in
the vaccine, and suddenly there wasn't enough flu vaccine to go
around. And our defense appropriations bill in that year, 2005,
included dollars to re-shore or re-our-onshore development of
the flu vaccine.
Does the FDA have a role to play in those scenarios?
Dr. Woodcock. In the sense of, as you know, we have been
working on pushing advanced manufacturing. Part of the problem
with influenza vaccine is the method of manufacture, which is
very limiting. So we have been supporting advanced
manufacturing.
And probably these new, sort of, idea of mobile,
miniaturized units, we are going to require somewhat of a new
regulatory scheme.
But all this leads to more regional manufacturing around
the world rather than what we have now, which is world
travelers. They are made in this country, and then they are
sent over here, and then they go over here. We have these long
supply chains. This is not a good situation, really, for
anyone.
Mr. Burgess. Do you have a role in looking at, what is it--
are there other agencies? You mentioned the environmental
concerns. Are there ways to streamline this? Does the FDA have
a role to play in streamlining interagency work to streamline
and reshore some of this manufacturing?
Dr. Woodcock. We certainly--you know, our partners in this
have primarily been the agencies, the Defense Department and
HHS, ASPR, and BARDA, that are actually working on developing
these new technologies. We do work with EPA and others but not
in--we don't get into their regulations and requirements.
Mr. Burgess. Yes.
I am going to run out of time, but let me just ask you
quickly, when we had the issue with the heparin and there was
some discussion then and, of course, with swine--some illness
that is occurring in pigs in China right now, do we have a
contingency plan?
I know at one time we said we don't want to use heparin
that is recovered from bovine sources because of mad cow
disease. But do we have a plan to look at that?
Dr. Woodcock. Yes, we do. And we have been in discussion--
we had a Science Board--I took this question to the FDA Science
Board a number of years ago. They endorsed the fact that we
should move forward. We are in discussion--have discussed with
potential manufacturers of bovine heparin. And we have done
studies with CBER about inactivation of the potential agent of
BSE through the manufacturing process to----
Mr. Burgess. And let me just ask you--I am going to run out
of time. But on the vincristine question, in 2012, you helped
us when Doxil, doxorubicin, was in short supply in this country
and we got--so I guess an emergency reimportation question.
Dr. Woodcock. Uh-huh.
Mr. Burgess. Is that possible for the short term with
vincristine to help our patients who are suffering?
Dr. Woodcock. My understanding about vincristine is Pfizer
has told us--and we have a number posted on our website, as do
they--they have supply, and people can call and get vincristine
right now. Our shortage people are staying on top of that
situation day by day.
Mr. Burgess. All right. Is that plainly visible on your
website? The----
Dr. Woodcock. Yes.
Mr. Burgess [continuing]. FDA website, or is it Pfizer?
Dr. Woodcock. A phone number, uh-huh, posted on our
shortage website.
Mr. Burgess. All right. Thank you.
Ms. Eshoo. And, Dr. Woodcock, that was as of when that
Pfizer posted this and you did?
Dr. Woodcock. Two days ago, I think.
Ms. Eshoo. I see. All right. Because I mentioned it in my
opening statement that--and I didn't want Members to think that
it was an error. When I wrote that, these were not available.
Dr. Woodcock. Yes. This is a very dynamic situation.
Ms. Eshoo. It is. It is. Very important one. I mean, it is
a critically important one. The idea that there are small
children that need this drug in order to live, and it wasn't
available. But thank God we have some supply now. But it just
points to this peak-and-valley situation that we have.
Mr. Pallone isn't here, so I am going to go to our friend
Mr. Butterfield.
You have 5 minutes for your questions.
Mr. Butterfield. Thank you very much, Ms. Eshoo.
And thank you to the two witnesses for your testimony
today.
You know, as I have sat here listening to the testimony,
this is a big deal. This is very, very important. And I am glad
you are having this hearing, because I am learning so much
about this. We must ensure that FDA is equipped to oversee this
very complex and global drug supply.
Some years ago, I heard the statistic that 80 percent of
our drug supply comes from overseas. I didn't know if that was
an exaggeration, but it appears not to be an exaggeration. It
appears to be the case. And the testimony today seems to
reflect different data points on the reliance, which I would
like to better understand.
And so, Dr. Woodcock, you note in your testimony that, as
of August of this year, only 28 percent of the manufacturing
facilities making APIs that supply the United States were
located here in the U.S., and the remaining 72 percent of API
manufacturers were located overseas. Thirteen percent of the
overseas API manufacturers were located in China.
I was sitting here trying to do the math a few moments ago,
and it has been many years since I have really done a deep dive
into mathematics, but if it is 13 percent of the foreign
market, wouldn't that be a greater percent of the total? I
guess that is my first question.
We hear that 13 percent of the APIs are manufactured
outside of the U.S.--in China. But if you take that 13 percent
and compare it to the total, I would say somewhere around 20
percent--I have done the math, I think it is about 22 percent
of the market would be in China, if you look at the overall
supply chain.
Dr. Woodcock. If I could have the first slide up?
Mr. Butterfield. Yes.
Dr. Woodcock. Could I have the slides up? And I will show
you.
Having trouble advancing it. I don't know where the
projector is. There we go.
[Slides follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Dr. Woodcock. All right. So there you see. That 13 is a
percentage of the whole.
Mr. Butterfield. Oh, it is of the whole, not just----
Dr. Woodcock. Yes.
Mr. Butterfield. OK.
Dr. Woodcock. So that is why the pie chart--that is the
whole API, all the facilities. But this, as we said, is by
facilities. It is not by volume.
Mr. Butterfield. All right.
Dr. Woodcock. China has----
Mr. Butterfield. Let me ask you this. Do these numbers
reflect both brand and generic API facilities?
Dr. Woodcock. They do.
Mr. Butterfield. OK.
You note in your testimony that the data available to FDA
related to API manufacturers has several limitations. Some have
suggested that FDA should also have access to information
related to volume. You told Ms. Eshoo that a few moments ago.
Does the FDA have access to information today about the
volume of API or finished-dose products produced in each
facility? And I think the answer is no. You get it
retroactively.
Dr. Woodcock. Correct.
Mr. Butterfield. You get it retroactively. And how would
this information be helpful to you in your work?
Dr. Woodcock. Well, I believe we have--in the President's
budget, we have a request for certain different authorities,
because, first of all, we could use this in shortages. Because,
as you all have been saying, it is very difficult to understand
our vulnerabilities unless we understand where the drugs are
actually being made, how much.
For example, vincristine had two suppliers for a while, but
one supplier had 98 percent of the market. OK? So when that
supplier goes out, then we are in deep trouble, right?
So it would help with shortages. It would also help with
the kind of vulnerabilities that Commissioner Wessel was
talking about, and others, and the Members, which is to
understand where, actually, we have sourcing that is
concentrated in one region, particularly for drugs that are
critical.
Frankly, China has a lot of API manufacturers for over-the-
counter drugs, such as toothpaste, wart removers, and so forth.
We probably wouldn't be in a national security issue if we
didn't have those. So what we really need to do, as the
chairwoman was saying, is look at penicillin or look at other
critical drugs. And we would have that information then.
Mr. Butterfield. Thank you, Madam Chair. I don't have time
for my third question. I will yield back. Thank you.
Ms. Eshoo. The Chair thanks the gentleman.
And I now would like to recognize Mr. Shimkus for his 5
minutes of questioning.
Mr. Shimkus. Thank you, Madam Chairman.
I have been writing, trying to scribble down notes, and I
think I am failing, but let me go first to this question,
Commissioner Wessel. So we know that the Chinese rip us off,
and we know that they steal our intellectual property.
So, similar to the fights we have had recently on steel,
the President responded with tariffs and fights because, in my
part of the woods and a lot of steelmaking regions, obviously
coal regions, there is dumping. And they just undercut our
prices, drove the manufacturing business--so I think that is a
valid concern.
This is a tough dilemma, because we are driving--we want
low-cost drugs. We are having all these fights on how we get
low-cost drugs. So we, in essence, by that push for low-cost
drugs, have encouraged foreign manufacturers of at least part
of the processes, the APIs, to go where they can produce it at
lower cost.
We were in this--Dr. Woodcock, we were in this debate a
couple years ago on the inspection regime. And so I was just
curious, in listening to the statements, how--and I know the
answer is going to be we need more inspectors. We need more
money to have inspectors, inspection in foreign facilities.
And then I countered years ago, saying, well, I was a risk-
based-system guy, not just hit, hit, hit. And I thought maybe
our facilities were overinspected versus what we were doing
overseas.
You are shaking your head ``yes.'' You believe that is
true?
Dr. Woodcock. We have, since that time, and with the help
of Congress and FDASIA, we now do more inspections overseas
than domestic, but that was definitely not the case back in the
early 2000s.
Mr. Shimkus. And that is good clarification.
I guess my question is, with all these areas, we give FDA
the--we give them the stamp of approval, right, that then they
can enter in our market. We need to follow that up with an
inspection regime. Are we creating more facilities that get the
stamp of approval versus our ability to inspect those?
In other words, I mean, sometimes we look at it the other
way. We look at, we need more inspectors. But maybe we should
slow up the approval process so that we have the right amount
for the amount of inspectors we need.
Dr. Woodcock. I don't think we have the ability to say,
well, we are going to stop pharmaceutical innovation or the
generic drug program because we have run out of inspectors.
Mr. Shimkus. No, I am not saying that. I am saying, do we
have the authority to say we are going to make a choice
between--we only have this many inspectors, they can only do
this amount of facilities, and that is the approval process
that we are going to have overseas?
Dr. Woodcock. Right. Well, under the generic drug user fee
program, as you know, the generic drug industry pays fees based
on the number of inspections that are done. So we do get
income. Most recently, in the last several years, we have had
trouble with hiring people, and that is why our inspections
have gone down.
We peaked in foreign inspections around 2015, 2016, with
1,041 foreign inspections, both preapproval and surveillance
inspections. So I am not sure that----
Mr. Shimkus. OK. Let me move on real quick, because I am
running out of time, and I want to--you talked about advanced
manufacturing practices and how, you know, we are leading the
way.
My concern would be, again, Commissioner Wessel, is that we
need to be smart about where we allow these. If you talk to
manufacturers who go to China, they allow the facility to be
built. While it is being built, there is a Chinese national
right next to the U.S. manufacturer who then observes,
recreates, retrains, and builds a facility right next door, the
same one, ripping off our technology.
So if we are ahead in advanced manufacturing practices, I
would hope--and it is safer, more efficacious, at lower cost--
then I would hope our manufacturers would be very, very careful
about trusting a regime that right now, in the international
trade arena, that we cannot trust.
And, with that, my time has expired. Thank you, Madam
Chair.
Ms. Eshoo. The gentleman yields back.
I just want to make a comment about the drugs that we are
talking about. We are talking mainly about generic drugs. And I
think it is important to keep in mind that manufacturing does
take place offshore, obviously, but we are not talking about
development. We are talking about manufacturing and the
challenges that that represents----
Mr. Shimkus. But if the gentlelady would yield, I mean, you
do have a risk of shortages even in the generic space in this
debate.
Ms. Eshoo. Agreed.
Mr. Shimkus. So, then, shortages require increased cost. So
even though they are generic, they may not be inexpensive.
Ms. Eshoo. But there is a linkage, and it is generics, and
it is manufacturing versus development. And we are talking
about old generics, like penicillin.
I now would like to recognize the gentlewoman from
California, Ms. Matsui, for her 5 minutes of questioning.
Ms. Matsui. Thank you, Madam Chair.
And I would like to thank the witnesses for appearing here
today.
As our pharmaceutical supply chain becomes increasingly
global, it is critical that we continue to assure the quality
of medicines manufactured abroad in order to protect the safety
of Americans at home.
While our focus today is on the manufacturing of our drug
products, I would like to quickly raise an issue that impacts
access. The Ryan Haight Online Pharmacy Act of 2008 provided
vital consumer protections against the distribution of
dangerous substances via the internet, yet it preserved the
value of telemedicine where appropriate.
Community addiction and mental health treatment centers
were largely excluded from the legislation due to a
registration issue with DEA. My bipartisan bill, the Improving
Access to Remote Behavioral Health Treatment Act of 2019, would
ensure that these facilities could register with DEA to
remotely prescribe controlled substances, using telemedicine in
a secure and effective environment.
And I want to thank my colleagues on the subcommittee,
Representatives Brooks and Kuster, for leading this effort with
me. And I encourage the consideration of patient access
policies as we continue our work to strengthen the drug supply
chain.
Now, most healthcare organizations experience drug
shortages. They result in nearly $230 million in additional
costs annually for hospitals because of higher costs of
substituting drugs. Shortages can be caused by a variety of
issues, from low-quality manufacturing processes to supply-
chain disruptions, to manufacturers simply leaving the market.
The importance of preventing drug shortages has long been a
priority of this committee. And in the manufacturing context,
we know that low-quality processes, those that result in
failures or disruption in production, can lead to shortages.
Dr. Woodcock, do you believe that drug manufacturers are
minimizing investments in manufacturing quality? And if so, how
do these quality problems contribute to drug shortages?
Dr. Woodcock. Yes. As we go over in our report we issued
yesterday on drug shortages, about 62 percent of the shortages
can directly be traced to manufacturing problems, which usually
have to do with lack of keeping up in investment and so forth.
And we feel that there is a market failure here, there is
an economic problem, where cost minimization and driving to the
lowest price then disincentivizes investment by manufacturers,
which then gets them out of the market or gets them eventually
into manufacturing difficulties.
Ms. Matsui. Right.
Now, could you speak a bit more about FDA's recent
announcement that the agency is considering allowing
manufacturers to voluntarily disclose quality ratings? How
would such a disclosure help incentivize a greater focus on
quality generally?
Dr. Woodcock. What we found in our analysis is that the
market, the people who purchase drugs, are pretty much blind to
any quality above the fact that FDA has approved it, all right,
which is a standard that ensures those drug products are OK----
Ms. Matsui. Right.
Dr. Woodcock [continuing]. But it doesn't ensure that
reliability over time. And, more and more, hospital systems and
every--are calling for that reliability.
Ms. Matsui. Sure.
Dr. Woodcock. They want to know they can get the drug over
time. And so we feel, if we could rate quality maturity, which
is something that ensures reliability, and assign some type of
system, that that would then hopefully incentivize some
rewarding value----
Ms. Matsui. Right.
Dr. Woodcock [continuing]. Out in the healthcare system
purchasing chain.
Ms. Matsui. Sure.
Now, you mention in your testimony that FDA has determined
that there are three drugs in the World Health Organization's
essential medicines list whose API manufacturers are based only
in China, including a drug to treat tuberculosis and other
infections. Well, that is a small portion of the overall 370
U.S.-marketed medicines on the list. I am still concerned about
the sole reliance on China for these key ingredients globally.
How can Congress and the FDA work together to encourage more
manufacturing domestically? That is a big question, I know, but
broadly.
Dr. Woodcock. Right. Well, I think the steps that have been
taken already to work on advanced manufacturing--and, as you
know, there are some organizations now stepping forward that
are interested primarily because of the shortage problems in
supplying drugs to the United States more as a nonprofit type
of entity or under certain different arrangements. They will
require, though, assurance, the manufacturing, that there is a
stable market for their product at a reasonable price. For
example, the vincristine, which is a lifesaving drug for
children with leukemia and other cancers. I understand for that
sterile vial it costs about $8, which is less than, you know, a
couple venti lattes or something like that. And so we are
sowing what we reap, so to speak. If we are only willing to pay
that much, then people are going to drop out of the market.
Ms. Matsui. Absolutely, yes.
Dr. Woodcock. And so I think--but what these manufacturers
tell me, these new type of manufacturers are going to use
advanced manufacturing. That is what they tell me, that that is
how they think they can do sustainable supply for short-supply
drugs in the United States.
Ms. Matsui. OK. Good. Thank you. I have gone over my time.
I yield back.
Ms. Eshoo. With every Member's questioning and your
answers, we keep learning more.
It is a pleasure to recognize Mr. Guthrie for his 5 minutes
of questions.
Mr. Guthrie. Thank you. We couldn't have planned--Ms.
Matsui and I work well together, but we couldn't have planned
that question leading to my question. You said that continuous
manufacturing is going to be the answer to some of these
problem issues. Chairman Pallone and I introduced a bill this
week to create a grant program into an FDA and university to
look at continuous--to grant programs for advances in advanced
manufacturing, continuous manufacturing. How specifically is
that going to help?
Dr. Woodcock. Well, as we talked about in many hearings
before, there hasn't been an academic base supported in
pharmaceutical manufacturing in the United States for a long
time. This has been a neglected area. I mean, it is such an
important commodity when you think about semiconductors or you
think about other things. There is all this study of it and so
forth. This has gone on behind sort of a firewall, is make the
drug over here and get it to us, right? And so I think we need
a strong academic base because, as I said, even these
miniaturized mobile units, that is a whole new concept, and it
is going to take a lot of study and research to really bring
this, but it has so much promise for small-volume drugs, like
for rare diseases or for outbreaks and so forth, but if we
don't have the academic base, and they don't produce the
workforce that we need, right, to actually bring about this
change, then we are not going to get there.
Mr. Guthrie. OK. Thank you for that. And, also, Dr.
Woodcock, we have learned today that FDA currently has several
limitations for API data. In your testimony, you mentioned that
manufacturers are not required to report to FDA whether they
are actually producing an API at a facility and the quality of
that at the facility. Does FDA have the administrative
authority to require this API data?
Dr. Woodcock. We can get this in annual reports, but as I
said, that is too late, OK? That is what happened before, and
so, no, we don't have the authority to ask for the sort of
real-time data on a continuous basis.
Mr. Guthrie. Do you think manufacturers should be required
in some cases to report this information in order to help CDER
fully monitor APIs?
Dr. Woodcock. Yes. We have several proposals along with the
President's budget, one of which is that certain manufacturers
are making really critical components have risk-management
plans, OK, that they really have contingency plans for what is
going to happen if there is a shortfall of their suppliers, for
example. But second of all, we think for certain drugs that
might be very useful for us to get that real-time information
so we can respond earlier, and we know what is going on for
critical drugs.
Mr. Guthrie. But to get the real-time information, it is
going to take legislatively--there is not authority there
currently to do what you think we need to do?
Dr. Woodcock. Not to my knowledge.
Mr. Guthrie. So Congress is going to have to act?
Dr. Woodcock. That is correct.
Mr. Guthrie. So, when Congress acts, how would you ensure
the proprietary information is kept properly?
Dr. Woodcock. Well, we get giant amounts of proprietary
information now, so we would probably use advanced technology,
cloud-based, blockchain, and so forth to have that
electronically submitted to us, but we are pretty good about
keeping data safe.
Mr. Guthrie. OK. Thanks. And then, also, my colleague Eliot
Engel has been very interested in the drug shortages, as
everybody on the committee, but Eliot Engel and I sent a letter
to FDA in September on this issue. I was very pleased to see
the drug shortage report that came out yesterday. It is clear
work is needed to stop these shortages and assure Americans
have the drugs they need. What are the main root causes of drug
shortages, and to what extent are shortages due to the API
manufacturing primarily being based in foreign countries? And,
Mr. Wessel, you can answer if you would like to as well.
Dr. Woodcock. Sure. Our root cause analysis said, you know,
really it is--first of all, you know, there is an economic
problem here.
Mr. Guthrie. It seems to always be the lower-priced drugs.
Dr. Woodcock. It is a market problem that drives to the
bottom, and there is no incentive to make these drugs when you
could make--if you are a generic manufacturer, you could make
newer generics, OK, that have much higher prices, right, and so
people drop off, and so maybe the last person standing is
someplace, you know, someplace far away, and then they have a
problem with their--you know, there is also no incentive to
upgrade your facilities and so forth because there is no
transparency to the purchasers about the robustness of that
manufacturing site.
Mr. Guthrie. And in the pricing mechanism--oh, Mr.
Commissioner has something.
Mr. Wessel. Let me just add--and I agree with all of that.
Part of this is also about the ecosystem as we move forward. So
we are talking about continuous manufacturing, advanced
manufacturing. China is already on that. We have seen with the
Thousand Talents Program, which is their program of bringing
educated researchers and executives from the U.S. to China
where they pay a bounty of $160,000 on average to those
individuals--so some of the experts we are relying on to help
rebuild our industry are migrating to China, so some of the
continuous manufacturing they will be doing as well. We have to
ring fence our intellectual property, provide greater support
for it, and also look at this as a national security asset and
treat it differently.
Mr. Guthrie. All right. Thank you. My time has expired.
I yield back.
Ms. Eshoo. The Chair thanks the gentleman. Excellent
questions.
It is a pleasure to recognize the gentlewoman from Florida,
Ms. Castor, for her 5 minutes of questions.
Ms. Castor. Well, thank you, Chair Eshoo, for calling this
hearing, and welcome to our witnesses.
Dr. Woodcock, I would like to investigate in greater detail
FDA's ability to directly monitor and ensure the safety of
products that are manufactured outside the United States,
specifically China. This committee has heard various--in
hearings, this one and in prior hearings--problems with access
to Chinese facilities. In past hearings, the FDA has noted the
difficulty in gaining access even to necessary travel documents
to be able to travel to China to perform inspections. Some have
even noted that, when FDA is able to obtain the necessary
travel documents, some facilities receive warning of an FDA
impending inspection. Witnesses on our next panel have claimed
that, even where the manufacturer has not received a direct
warning about an impending FDA inspection, facilities may
refuse to comply with FDA inspectors.
In your testimony, you said there are 13 percent of active
pharmaceutical ingredients manufacturing sites in China. So
that is probably a manageable number. Has FDA had ready access
to these facilities in order to verify the safety of the
products and ingredients manufactured there?
Dr. Woodcock. Well, we currently are not having trouble
getting visas and getting people into the country. We also have
people in the country office who do inspections. We have
inspection personnel in China. If we are refused, what we do is
put out an import alert and not let that product be imported
into the United States, or a finished drug product made from
that facility be imported into the United States. And that has
happened somewhat recently a number of times, but there is a
very effective and very fast sanction that we can put into
place to prevent American patients from being exposed to those
medicines.
Ms. Castor. So would you say over the past couple of years
you have been refused inspections a number of times? Do you
know how many times?
Dr. Woodcock. I don't have--we can get back to you on the
exact figures.
Ms. Castor. So, when that happens, you do issue a report
because you can't guarantee the safety of the product?
Dr. Woodcock. Right. That is correct.
Ms. Castor. What about the FDA office in China? There are
certain staffing concerns. We have heard that it is difficult
for the FDA to hire and retain staff in China and that the
staff numbers have decreased by as much as 25 percent in the
last 2 years, with some offices closing. Why has it been so
difficult for the agency to hire and retain professional staff
in China and what, if anything, can Congress or FDA do to
address these issues?
Dr. Woodcock. Well, it is a complicated process to get
people to go and move with their family and stay in a different
country for quite a number of years, but we have had--overall,
we have had hiring problems overall, and we are shorthanded at
the agency, including our field organization ORA who these
inspectors come from.
Ms. Castor. How many authorized positions in China for the
FDA? Do you know?
Dr. Woodcock. I think there are 30--somebody can give me
that graph--something like that.
Ms. Castor. And what is the current staffing level?
Dr. Woodcock. Well, the numbers I had that we were fairly
up to speed, but then I was told by the ORA senior leadership
yesterday that those numbers have dropped, so it sounds like it
is a dynamic situation, and I would have to get back to you on
the exact numbers who are there today.
Ms. Castor. OK. But FDA has other tools that it can employ
postmarket to analyze the products coming out of these
facilities, so those are in addition to inspections. Can you
discuss the additional regulatory tools and authorities FDA has
in the postmarket space to monitor the safety and quality of
those products, and are they helpful in mitigating some of the
challenges with inspections?
Dr. Woodcock. Well, in general, we monitor safety of all
drug products. We get 2 million reports a year from doctors,
pharmacists, patients, manufacturers, and so forth about
problems, including quality problems, that are noted. We follow
up and analyze all those. We also have our Sentinel network
that actually monitors adverse events around the country, and
we have several hundred million lives of people in that
network, and then we do a testing program. We do sample.
Sometimes we do random. Sometimes we do directed samples, and
we test them according to USP standards, and generally they
all--they pass. So the drugs in the United States that we test
pass the USP standards for marketed drugs. So we have--and we
can, Congress gave us the authority, to ask in lieu of or in
advance of inspection to ask for data from the plants so we can
remotely look at the information either before we go or in lieu
of getting there, so we have multiple ways.
In addition, for APIs, we require the finished dosage for
manufacturer to do testing and also to audit their supply chain
to make sure that that API manufacturer is, you know, doing the
right thing, and it is in their best interest to do that. And
we inspect the finished dosage for a manufacturer, we make sure
that they are doing those activities to monitor their raw
ingredients or their APIs. So there are multiple redundant
things in the system.
Ms. Castor. Thank you very much.
Yield back.
Ms. Eshoo. I thank the gentlewoman.
But, Dr. Woodcock, in the FDA, Center for Drug Evaluation
and Research is not in charge of inspections, correct?
Dr. Woodcock. Correct. Correct.
Ms. Eshoo. I think it is important for us to note, but we
can always get the person that is responsible for that in
future hearings.
The gentleman from Virginia, Mr. Griffith, is now
recognized for his 5 minutes of questioning.
Mr. Griffith. Thank you very much, Madam Chairman.
Dr. Woodcock, as always, it is good to see you here. You
are one of my favorite witnesses because I can always count--
even if I don't like the answer--I can always count on you
telling me what you know, or sometimes you have to say ``we
don't have that information,'' and that may be in that
situation now.
Zantac, is any of that manufactured, or was any of that
manufactured, in the United States?
Dr. Woodcock. I don't think so. There are some manufactured
in Europe, but ranitidine, which is Zantac, it is a different
problem. It isn't an inherent contaminant.
Mr. Griffith. So we have made that determination, because
some of the early articles that came out in September thought
it was a contaminant and then there were other articles that
said it is the drug itself is unstable. So have you all made a
decision on that?
Dr. Woodcock. Our chemists think, all right, that the
ranitidine in the presence of nitrite, which might be in the
excipients, it might be during the manufacturing process----
Mr. Griffith. Hang on. Not only me, but people back home--
might be in the--tell me what that word was?
Dr. Woodcock. Excipient.
Mr. Griffith. Excipient, what does that mean?
Dr. Woodcock. The stuff, the powder that is put into the
pill along with the active ingredient to make a tablet, uh-huh.
Mr. Griffith. So--but you think it was not that there was
lax manufacturing anywhere. You think it was that component.
How quick are you going to be able to tell whether it is the
powder or the base drug?
Dr. Woodcock. What we have found is very low levels of NDMA
in various ranitidine preparations we have looked at.
Mr. Griffith. And for the folks back home, NDMA is the
contaminant item which is a carcinogen that causes cancer?
Dr. Woodcock. Yes. Well, it is a genotoxic agent, yes. And
we have found various levels of that in different preparations
of ranitidine, almost all of them. And our chemists believed
that it is formed by a molecule ranitidine reacting with
something either during the manufacturing synthesis or during
the finished dosage form or during storage, all right? And
there has also been an allegation that in the body it is
transformed into higher doses of NDMA. We have not been able to
verify that yet. We are still doing testing to look at that.
Mr. Griffith. OK. So my followup question is, is that if--I
don't think we are manufacturing here either, but I figured you
would know better than I, if we were manufacturing it in the
United States instead of having to follow the Europeans and the
Canadians and other countries, would we have been in the lead
because we would have picked up on this problem sooner, or do
you think it just didn't matter?
Dr. Woodcock. This is a product that was approved in 1984
and is used worldwide very widely, all right, and nobody found
it. It was developed in Europe, all right? I don't think this
had anything to do with where it was manufactured or what have
you, and the fact that Canadians and the Europeans have--
Europeans announced that they are doing an assessment. We have
been in the lead, in my mind, in many ways. We developed the
test assays for this contaminant in the product and we posted
them, and these are being used internationally, and we have
tested a huge number of samples, maybe 1,500 samples, to try
and figure out what is going on here.
Mr. Griffith. All right. So, again, for folks back home,
for those of us who use the Zantac or the generic--and I use
both--it has a histamine blocker, which most of the other
antacid-type medicines do not have, which for people with
allergies, the histamine blocker made Zantac the go-to product.
Is there another product with histamine blockers in it?
Dr. Woodcock. Well, we have famotidine and the others we
have tested, they do not have nitrosamine.
Mr. Griffith. So they don't have the cancer-causing drug,
but they do have a histamine blocker.
Dr. Woodcock. Yes, yes.
Mr. Griffith. All right. I appreciate that.
Dr. Woodcock. We have posted that on our website, so it
should be available.
Mr. Griffith. I will be looking it up later. That being
said, you know, one of the concerns that happens is, because
there is a concern in the public--and I think rightfully so--
that foreign manufacturers, particularly China, maybe even
India, is happening with so many of our drugs, the minute you
hear there is a problem, the first instinct is, well, it got
contaminated because of lax standards overseas. Don't you think
that is fair for the public to think that?
Dr. Woodcock. I think it is fair for the public to think.
It simply is not probably the case with ranitidine.
Mr. Griffith. I understand, yes, ma'am. I appreciate it.
And I yield back.
Ms. Eshoo. We are going to work hard so you don't have any
heartburn, but you got to switch.
Mr. Griffith. Too late.
Ms. Eshoo. But many countries have removed it from the
market, and there are other, older remedies that you could use.
I appreciate what FDA has done, but know that a lot of
countries removed this from their shelves before we did.
Now, I would like to recognize the gentleman from Oregon,
Mr. Schrader, for his 5 minutes of questions. No. Am I right?
Yes.
Mr. Schrader. Thank you very much, Madam Chair. Appreciate
it.
Ms. Eshoo. Thank you.
Mr. Schrader. Dr. Woodcock, thank you for coming before the
committee again. Appreciate it very much. You gave some
statistics regarding the origin of some of the APIs. How
confident are you in those numbers? Seems to be a lot of
discussion out there about it.
Dr. Woodcock. We are quite confident. It is simply that it
doesn't talk about the volume. It just says, OK, U.S. can
produce 28 percent. We have an API manufacturer in our country
that can produce, right. But it doesn't say how much of those
the U.S. is producing.
Mr. Schrader. I think that is a key factor as you are
alluding to the volume of actual production that gets into the
hands of the consumer and stuff. It is something that I think
we would all like to know. There have been some interesting
books--we are going to hear from an author later today--that
talk about some of the historic issues that we have had in
terms of monitoring some of the generics, some of the APIs from
China and India, in particular. What has FDA done since that
time period to increase the inspections and make sure, to the
best of your ability, that Americans are protected with the
right ingredients uncontaminated?
Dr. Woodcock. Well, after Congress passed FDASIA, it really
gave us a lot more authorities. We had begun increasing for an
inspections in 2005 because the industry had kind of moved
before that, and we had to react and get more inspectors
overseas, but under FDASIA, we were allowed--before we were
supposed to, according to statute, inspect domestic facilities
every 2 years, and there was no requirement to inspect foreign
facilities. These were older statutes, right. So that was
changed. We were given a risk-based approach, which we have
implemented, and, as I said, by 2015, 2016, we had reversed
that ratio and we had more foreign inspections every year,
which we continue to have, than we have domestic inspections.
Mr. Schrader. Do you feel that your abilities or your
manpower is commensurate with the need at this point in time?
Dr. Woodcock. I couldn't say. If we were fully staffed, it
might be, but right now we are not fully staffed, and so we are
not, I would say, getting our reaches into what it needs to be.
Mr. Schrader. All right. I appreciate that. Mr. Wessel, I
appreciate your being here today, and your perspective is
pretty unique. China is encouraging a lot of manufacturing,
particularly in this area, generics, APIs. India now following
suit. Are we doing enough in this country to encourage American
manufacturing of some of these critical ingredients that Dr.
Woodcock references threats to our national security?
Mr. Wessel. I certainly don't think we are. It certainly
goes across a number of different industries, but just for this
one, I don't think we are up to the task. We are not responding
to the priority that China and other countries place on the
sector.
Mr. Schrader. Very good. While I would tend to agree,
obviously, based on the concerns and what we have been hearing
and hopefully out of this hearing will come some opportunities,
some thoughts about how we might incentivize some domestic
manufacturers for some of the critical ingredients, some of the
critical generics that we struggle to get to every American in
a cost-effective manner.
And I will yield back the balance of my time.
Ms. Eshoo. The Chair thanks the gentleman.
Pleasure to recognize the gentleman from Florida, Mr.
Bilirakis, for his 5 minutes.
Mr. Bilirakis. Thank you, Madam Chair, appreciate it. And
thank you so much for really holding this hearing and having so
much interest in it, and I really appreciate it.
And, also, I want to thank you on another note with regard
to the genocide resolution yesterday. I know you were an
integral part of getting that on the floor, and I know it
affects your family as well mine as well, so I appreciate it so
much, and I was happy to be the Republican lead on that.
So, Dr. Woodcock, in 2013 FDA created a pilot program in
India that eliminated advanced notice and instead used short
notice or unannounced visits. For additional secrecy leading up
to visits, FDA inspectors' travel were arranged through U.S.
embassies instead of through the FDA offices or manufacturers,
as I understand. According to reports, the program exposed
widespread malfeasance that had otherwise been hidden due to
advanced warning. Among the findings, inspectors found bird
infestations, missing samples, and fake labs. Under this
program, FDA issued a 60 percent increase in Official Action
Indicated findings. However, in 2015, it was shut down without
explanation.
Are you aware of the pilot program that I am referencing,
first of all?
Dr. Woodcock. I am aware. This was within ORA, as was said.
That is not within the Center for Drugs, it is the Office of
Regulatory Affairs, which runs the inspectorate, and my
understanding is the India office itself on its own initiative
ran this program for several years.
Mr. Bilirakis. OK. Thank you.
Mr. Wessel, you mentioned in your testimony that patients
ought to have a right to know where their medication comes
from. In what ways could labeling country of origin for active
ingredients improve patient safety?
Mr. Wessel. I believe sunshine is a great disinfectant. The
fact that, as we saw with lead paint on toys many years ago,
melamine in dog food, that simply consumer awareness and having
the information can help put pressure on the system to make
some changes. So this would allow consumers to be able to
pressure manufacturers, distributors, and government to make
sure that there is more attention to where the products are
coming from.
Mr. Bilirakis. Well, thank you very much.
And, again, I really thank you, Madam Chair, for holding
the hearing, but also, again, we want inexpensive drug prices
for our constituents, but they have got to be safe. They have
got to be safe, and I really appreciate it. Thank you.
Mr. Burgess. Will the gentleman yield?
Mr. Bilirakis. Yes, I will. Please.
Mr. Burgess. Thank you.
Dr. Woodcock, I just wanted to ask you briefly. You talked
with Morgan Griffith about the Zantac. There is an anti-anxiety
drug that was also recently named. I think it was Ativan or the
generic of Ativan, can you give us any update on that?
Dr. Woodcock. No, I am not actually aware of it, so I will
get back to you on that.
Mr. Burgess. All right. Thank you.
Ms. Eshoo. The gentleman yields back.
I want to thank him for his questions.
It is a pleasure to recognize the gentlewoman from
Delaware, Ms. Blunt Rochester, for her 5 minutes of
questioning.
Ms. Blunt Rochester. Thank you, Madam Chairwoman, for
holding this important hearing on the heels of last week's
critical committee action to protect patient access to
prescription drugs. In addition to making drugs more
affordable, we should ensure that access is not further impeded
by vulnerabilities in the U.S. pharmaceutical supply chain. I
have some questions that I would love to ask, but I just wanted
to follow up on something that you said, Dr. Woodcock. The work
that you do is so critical and you mentioned the fact that you
are not fully staffed, and I was curious, is that a recruitment
issue? Is that a retention issue? Is that a funding issue? What
causes the lack of full staffing?
Dr. Woodcock. Well, it appears to be a process issue, so
government personnel issues are, you know, very difficult, but
we have put in place some corrective plans, and we hope
particularly for the field organization, they have received a
direct hiring authority, and, hopefully, they will rapidly
rebuild their staffing.
Ms. Blunt Rochester. Thank you for sharing that. I served
as State personnel director in the State of Delaware, and so
when I hear workforce issues, it kind of piques and especially
for, again, something as critical as the work that you are
doing.
I am curious about the kind of data FDA collects related to
the location of manufacturing facilities today and whether or
not we can do anything to improve the quality of FDA's data.
Particularly, I am interested in whether FDA receives enough
information about the supply chain to get a full picture of
where active pharmaceutical ingredients and finished products
are currently manufactured.
Dr. Woodcock, you noted in your testimony that CDER
maintains a site catalog of all drug manufacturing facilities
making drugs for the U.S. market. You said this information
comes from approved applications or facility registrations.
Importantly, you also noted that manufacturers which produce
APIs are not responsible for noting the volume of APIs they
produce. I want to better understand how FDA interacts with API
manufacturers currently and whether those interactions vary
depending on the type of product. My understanding is that,
under the Generic Drug User Fee Amendments, otherwise known as
GDUFA, API manufacturers are required to register with the FDA
and to pay a GDUFA fee. Is that accurate?
Dr. Woodcock. Yes.
Ms. Blunt Rochester. Are API manufacturers also required to
register and pay a fee under other user fee programs, or is
GDUFA the only program with this requirement?
Dr. Woodcock. I think the--I would have to get back to you.
We have so many user fees. There are a couple exceptions,
though, on registration that I think are loopholes that we are
concerned about. One is, if an API manufacturer is going to
send to a finished-dosage form manufacturer who is not in the
U.S. either, then they could import into the United States
without us necessarily knowing about it.
Ms. Blunt Rochester. OK.
Dr. Woodcock. And it is very technical, so we would have to
work with you on that.
Ms. Blunt Rochester. OK. We will follow up with you.
Dr. Woodcock. Second, for OTC, both domestic and foreign
for OTC drugs, the finished-dosage form manufacturer--they can
ship before they register, and the same is true for compounding
bulks, APIs. They can ship without registering necessarily with
the FDA, so these are, we feel, loopholes. So, if there is
interest in tightening the scheme, that these are things that
should be looked into.
Ms. Blunt Rochester. Excellent. Thank you. We will follow
up with you on that. And as a result of the differences between
these programs, do you feel that the FDA has more information
or a better understanding of the facilities which are producing
API which is used to make generic drugs, and should we consider
other requirements in other product areas that would provide
FDA with more information about the facilities that manufacture
API?
Dr. Woodcock. Well, the thing that probably isn't clear is
that for most of these that are applications--so if you do a
new drug application, biosimilar application, they have to file
with their separate entity what is called a master file with
FDA that has all the technical information in it, and we have
to review that, and we inspect the facility. And so, if they
don't pass the inspection or pass the review, their scientific
information, then we won't approve the finished dosage form. So
that is how that--we have quite a bit of control in the new
drug space, and that is how we do it.
Ms. Blunt Rochester. Excellent. We will follow up with you
on the two areas, but thank you.
And I yield back.
Ms. Eshoo. The gentlewoman yields back. Now it is a
pleasure to recognize the ranking member of the full committee,
Mr. Walden, for his 5 minutes of questions.
Mr. Walden. Thank you very much, Madam Chair.
So, Dr. Woodcock, again, thank you for being here. I had to
go up to the other hearing and back and forth. With respect to
the contaminated lots of ARBs that were found to contain traces
of carcinogens, FDA stated that those byproducts could not have
been detected in routine inspections. Is that correct?
Dr. Woodcock. That is correct. We had to develop special
tests for them. They are in that nanogram or microgram range,
so they are very low levels.
Mr. Walden. And so you now feel like you have the right
capabilities to do the test for impurities during routine
inspections?
Dr. Woodcock. Yes--no, not inspections. We are requiring
the manufacturers to test for these, all right, and there are
multiple nitrosamines, so we have discovered five or six
different nitrosamines in different ARBs. So the tests that we
have put forth will detect all of those, and we are asking the
API manufacturers and the FDF manufacturers to test. And so,
during inspection, the inspectors can look and make sure they
are performing those tests correctly.
Mr. Walden. You know, when this whole issue of drug supply
and purity and all that really came to light for me, both in
the classified briefings we have had on some of these matters,
but also after I led the bipartisan delegation down to Puerto
Rico and the Virgin Islands, and, you know, things we just
think fundamentally will always be there suddenly weren't. And
that whole supply chain becomes real real fast in our today
modern, in real-time delivery systems, and we have got to
address this somehow, and so it is a big concern.
In his written testimony, Commissioner Wessel referenced a
statement made by the Commission's July hearing about FDA's
ability to address safety violations in China. At that hearing,
a witness testified that, from 2013 to 2018, out of 864
inspections in China that FDA recommended as Official Action
Indicated, FDA officials downgraded 78 of those. By contrast,
in the same time period of 11,642 inspections that FDA
investigators conducted in the U.S. and recommended as OAI,
only one inspection was downgraded in that time. Why might a
recommendation for Official Action Indicated be downgraded?
What does that mean?
Dr. Woodcock. After--an inspector's findings, which are--
they put in their 483 form that they leave with the company--
are their observations. They go back and work with their
compliance officer and try to work up a case based on that, and
then they send it to Center for Drugs and say, ``We think this
case should be like this,'' OK?
Then we look at it, also at the same time the manufacturer
has responded to the 483. They have a brief amount of time to
respond to that form. They put in a list of corrective actions
or clarifications or whatever. Then all this information is
sent to the Center for Drugs and we make a decision. Right now,
for domestic, the downgrade rate is 60 percent, and the upgrade
rate that we do is 4 percent. In foreign, the downgrade rate is
27 percent, and the upgrade rate is 3 percent, OK. So there is
a difference between--we look at the legality of the sites, all
right, that are being made and the charges. We look at other
tools that we have. We can do regulatory meetings. We can ask--
we can do a whole lot of other activities to bring the firm
into compliance, and so we make an overall decision, and we
feel that some differences between us and the ORA are
reasonable. We are kind of like the central group that tries to
bring consistency across the entire--as far as--we call them
the sentencing standards might be, or whatever you want to call
it, right, yes.
Mr. Walden. So let me ask you one other question. I
mentioned in my opening statement the media reports have cited
a decline in the number of surveillance inspections of foreign
drug factories conducted by FDA over the last 2 years. Has
there been a decline in the number of surveillance inspections
of foreign drug factories performed by the agency over the last
2 years, and if so, why?
Dr. Woodcock. There certainly has. We went from a 1,041
down to 740. We also had a decline in our domestic inspections,
although they continue to be lower--fewer, and the reason is we
have staffing issues.
Mr. Walden. Have we appropriated the right amount of money
to solve your staffing issues, or is it a hiring issue?
Dr. Woodcock. I believe we have the funding, but we are
having trouble bringing people on board.
Mr. Walden. OK. Thank you, Madam Chair, my time's expired.
Ms. Eshoo. Dr. Woodcock, the inspections abroad, are they
surprise inspections, or do they inform the outfit that they
are arriving tomorrow so that they can clean out the mice, the
manipulated data? I could go on and on, but I think that that
is an important thing for us to know.
Dr. Woodcock. We have discussed this with the field. Most
of the inspections are preannounced, and there are several
reasons for that.
Ms. Eshoo. Why would you do that? Why give them a heads up?
It seems to me that you give them 24 hours or 48 hours to clean
up the mess, and then it is--I don't get it.
Dr. Woodcock. Currently, for an inspection, it costs the
agency about $76,000. We have tried doing unannounced
inspections, and the firm may not be in production, in which
case it is not useful to inspect them. They may be shut down
due to some national holiday that we didn't understand.
Ms. Eshoo. But you would know that when you set the date
for an inspection? I mean, you show up that date or--I mean----
Dr. Woodcock. We don't know whether they will be in
production or not. We have tried and our for-cause inspections
where we have a whistleblower or we have a problem, those are
not announced, and so we do do unannounced inspections. But
most of the ordinary surveillance inspections are announced in
foreign countries. In some countries where we have----
Ms. Eshoo. Do you think it was a prudent policy what you
are describing?
Dr. Woodcock. Well, I think it is a tradeoff because we, as
you hear, we are having trouble getting--doing enough
inspections because we are short staffed, and if we send a lot
of people to plants that aren't open or aren't producing and so
forth, then we waste people's time and we even have less
coverage.
Ms. Eshoo. Well, I think with each question and each
answer, I add to my list of things that we need to work on, so
thank you.
I now would like to recognize Dr. Ruiz from California for
his 5 minutes of questioning.
Mr. Ruiz. Thank you. As an emergency department physician,
I know all too well the challenges that healthcare providers
and health systems face when the drugs they need and rely on to
treat patients are not available, especially in the emergency
department when you need to treat emergencies. I hear a lot of
concerns here today about the reliance on foreign sourcing for
our API and finished-drug products and what that means for a
safety and quality standpoint. We have charged FDA with
ensuring the safety and efficacy of our drug products before
these products come to market, but we must be vigilant in
ensuring that manufacturers continue to meet this standard
postarrival.
Prior to the enactment of the Food and Drug
Administration's Safety and Innovation Act, FDA was mandated to
inspect domestic drug facilities every 2 years but had no
similar mandate for foreign facilities. As a result,
manufacturers located here at home were routinely inspected,
whereas foreign competitors could sometimes go years before
being inspected. FDASIA addressed this by modifying FDA's
authority to allow them to set their inspection schedule based
on risk.
Dr. Woodcock, can you further discuss the risk-based
inspection schedule that FDA uses today to guide inspections,
and what criteria does the agency use, and how has that worked
in practice?
Dr. Woodcock. Certainly. Well, we think it has worked
pretty well because, in 2014-2015, the number of foreign
inspections got higher than the number of domestic inspections
and has remained that way since. We do a risk-based approach
like, what if it has never been inspected, OK, that is a very
strong factor. The inherent risk of the drug, perennial drugs,
sterile drugs--they are harder to make, they are harder to keep
sterile, that is a higher risk. We put that in. We look at the
volume of the facility. We look at the inspectional history of
the facility. If it has had problems, we should get back there
quicker. Right now, we are inspecting foreign sites more
frequently than U.S. sites.
Mr. Ruiz. OK. Some stakeholders have been critical of this
risk-based inspection model and question whether it has
provided the agency enough flexibility to target facilities
abroad, such as in China, that may be cutting corners in
quality manufacturing practices or data maintenance. Do you
believe that the current risk-based inspection model has been
helpful in allowing agency to target the facilities of most
concern, and do you believe any changes are needed to this
current model?
Dr. Woodcock. We would like to refine the model, but we
don't believe country of origin should be a high-risk factor.
For example, if you are making fluoride for toothpaste in
China, that probably--you are probably a higher risk if you are
making a sterile drug----
Mr. Ruiz. Is data maintenance and transparency, access to
information and how cumbersome it could be a part of your risk
assessment? Because some countries are not as transparent as
others.
Dr. Woodcock. Right. Well, we make, as we said earlier,
because FDASIA gave us, if manufacturers give us a hard time in
facilities, we can now declare the drugs adulterated if we
can't get in and get the inspection done.
Mr. Ruiz. I would definitely consider transparency and how
easy it is to get information that you need as part of the
risk, right? I agree wholeheartedly that FDA should target its
personnel/financial resources to the facilities in countries of
most concern. That I definitely agree, but I also want to
ensure that we do not return back to a situation where some
facilities are inspected every 2 years, and others may go 4
years or longer without an inspection. So how is FDA working to
ensure that this is not the case?
Dr. Woodcock. Well, the time since last inspection is part
of the model.
Mr. Ruiz. OK. So why have there been no inspections on some
facilities for 4 years then? Are you allowing some inspections
to go on for that long? Is that part of the model?
Dr. Woodcock. No.
Mr. Ruiz. So is it an implementation background? Do you
need more personnel to conduct these facilities, because they
are not happening.
Dr. Woodcock. I believe they are happening. We have--right
now we know 100 facilities we haven't inspected. A few of them
are in China. These probably are the loophole ones that I
talked about earlier, where they can ship before they register
if they make OTC drugs, for example.
Mr. Ruiz. Well, loophole or nonloophole, if they are not
happening within the loophole, then we need to address the
loophole.
Dr. Woodcock. Well, I agree with that.
Mr. Ruiz. So I think that is my point, and so how are we
going to ensure that these facilities don't go 4 years without
inspections?
Dr. Woodcock. As part of our risk model, we look at how--
facilities that haven't been inspected, and we have kind of a
limit on that. You have to be inspected within a certain
frequency.
Mr. Ruiz. Thank you for what you are doing. Thank you.
I yield back.
Ms. Eshoo. The gentleman yields back.
Pleasure to recognize Mr. Bucshon from Indiana for his 5
minutes.
Mr. Bucshon. Thank you very much, Madam Chairwoman. I was a
doctor before I was in Congress, much like Dr. Ruiz. I was a
cardiovascular surgeon. This is really important. One of the
things I wanted to say right at the beginning is, I do
appreciate the initial measured response to some of the
contamination that was found in some of these products because,
you know, you find something that immediately if you take the
pill, you fall over dead, that is, obviously, you stop taking
the medication. But there are millions of people who take
really critical medications that should not be stopping them
immediately without the advice of their physician. I want to
make that clear, that I think that measured response that came
out of the FDA was really important, and I just wanted to
mention that because, you know, you say something causes
cancer, you know, people immediately stop taking their ARB or,
honestly, their Zantac could result in pretty substantial
health risks. So talk to a doctor. That is my point.
Dr. Woodcock, in your testimony you mentioned that adoption
of advanced manufacturing technologies may pose a challenge to
the current regulatory framework. Can you expand on this a
little bit and what that means? What you mean by that.
Dr. Woodcock. We have a lot of regulations that were
written a long time ago back when drug manufacturing resembled
a very large compounding pharmacy, for example, so some
entities in the Government and otherwise are thinking of little
mobile manufacturing units and so forth that wouldn't even have
a fixed site, OK. They travel around and so forth. That is just
one example. And they could be turned on and make different
things at different times and so forth, so we are going to have
to change or adapt somehow our regulations to meet these new,
innovative methods. It is not like they are going--as long as
they make safe and effective products reliably, we need to have
a way to make this happen.
Mr. Bucshon. Yes. I think that is very important. The
advice from the FDA to the Congress would be probably really
important about what these barriers are, right, rather than the
other way around, where we try to--what I will call nonexperts
in the area might try to look at changing regulations that
actually may not help you.
Dr. Woodcock. We would be happy to work with----
Mr. Bucshon. So that is an area I think in advanced
manufacturing that not only this committee but others should
probably look at, not only related to the drug supply chain but
other products that we produce in our country, and it might
help us produce more in the U.S. versus overseas, right, can
cut down the cost of production.
In addition, you know, what other barriers, other than
regulatory barriers? Are there other barriers to advanced
manufacturing here at home? We talked about maybe the labor
cost and other things, but I mean, are there other barriers you
think that are causing this problem?
Dr. Woodcock. Well, the primary barrier--first of all, we
don't have, as we already said, academic base of ideas coming
forth. We don't have a workforce that is used to this. We have
a workforce that is used to traditional manufacturing. There is
an upfront investment that has to be made, and some companies
have put their stake in the ground and said, ``we are going do
this,'' but of course the generic industry isn't exactly, you
know, have a lot of--they have commodity products, and so that
upfront investment, I think, is one of the biggest barriers to
having this----
Mr. Bucshon. So capital costs are a problem.
Dr. Woodcock. Yes, and some costs too in brick-and-mortar
facilities around the world that would change.
Mr. Bucshon. I want to touch on one more thing, and that is
drug shortages. This is off of the beaten path a little bit
from the contamination and where we are producing things, but
my wife's an anesthesiologist. She still practices every day,
and every day there is shortages of sometimes propofol, which
is a critical drug, and also paralytic agents, which are
important. Do we know how many drug shortages can be attributed
to quality issues surrounding the API ingredients as compared
to quality issues related to the finished-dosing form in the
facilities? Are there issues there?
Dr. Woodcock. We don't know. I can get numbers. We haven't
performed that analysis, but I can tell you, for sterile drug
production, a lot of it is in the finished-dosage form because
that has to be made sterile, and of course that is problematic,
especially if you can only sell it for a couple bucks.
Mr. Bucshon. A number of years ago, former Congressman
Carney and I--who is now the Governor of Delaware--put in some
language into the FDA reauthorization to address drug shortages
to try to help the FDA streamline some of these processes, and
also the last thing I will say, with your indulgence, is single
sourcing is a big problem, right. And so I think the FDA, where
they see single sourcing as a potential critical issue with a
critical drug, that we need to do better maybe in trying to
figure out ways to, maybe, at least have another option, so I
appreciate that.
I yield back.
Ms. Eshoo. The gentleman yields back.
A pleasure to recognize the gentlewoman from Illinois, Ms.
Kelly, for her 5 minutes of questioning.
Ms. Kelly. Thank you, Madam Chair, and I wanted to tell my
colleague who just spoke that my spouse is an anesthesiologist
also. Thank you for all your testimony today.
And thank you, Madam Chair and Ranking Member, for hosting
this committee.
Dr. Woodcock, you noted in your testimony that our domestic
U.S. manufacturing facilities won't be able to offset the cost
advantages of manufacturing in China by simply increasing the
productivity of traditional manufacturing techniques, such as
batch manufacturing. Importantly, you also noted that advances
in manufacturing technology, such as continuous manufacturing,
could help manufacturers gain their competitiveness with China.
Would you discuss further why simply increasing the
productivity of traditional manufacturing isn't enough?
Dr. Woodcock. The traditional way these are made is called
batch, and what they have is they call it unit operations, so I
suppose if you are baking a cake, OK, so first you mix up the
ingredients dry and then you try to get them uniformly mixed.
So, if you think of a vat the size of this room and then you
are trying do that, and then you have to store it and take
samples and test for uniformity, OK. Then you might add some
liquid ingredients or whatever and you do something, and then
you have to store it and test and make sure the reaction
occurred the way you thought, and then you might move it to
another vat, OK.
Continuous is more like an assembly line where the
reactions occur along, you know, tubing--looks like the mad
scientist, right--and there are sensors that are automated and
computers watching to make sure everything is going the way it
is supposed to be.
So you could see that the kind of workers and the kind of
setup you have is very different between these two, and they
are just inherent limitations on sort of mass mixing and mass
reactions that don't happen so much in a continuous flow setup
with advanced oversight, with computerized oversight.
Ms. Kelly. One of my colleagues asked about manufacturing
in the United States, and I am also interested in the future of
domestic manufacturing and especially learning more about the
advances in drug manufacturing processes and whether such
advances could help to bring pharmaceutical manufacturing back
to the U.S.
Dr. Woodcock. Yes. Well, I definitely believe that would be
the case, and I think this new generation, which hasn't been
talked about very much, which is miniature setups that are
mobile and kind of plug-and-play and so forth, are going to be
eventually the new generation, but we are far from there, and I
think we need to put our brains against that. We need to
invest, and we need to invest in academic research in that area
and so forth, and I know that, in the military fields, they
really need this kind of capacity, and we may need it for
emergencies as well. So I think there are multiple
opportunities and scenarios where we really need to push on
advances in manufacturing.
Ms. Kelly. Can you tell us about the current state of
advanced manufacturing in the U.S.? Do these new methods
produce higher-quality products or many manufacturers using
this technology?
Dr. Woodcock. The adoption has been slow. We have approved
I think five different applications, not all in the United
States, but certainly a couple--a number of them in the United
States using advanced manufacturing. We approved a 3D-printing
drug that is printed, and I think that is something that we
could see in the future much more, and we are working--our
emerging technology team is working with many manufacturers who
said, ``We are going here. We are going to go in this
direction.''
So I think the future is starting to unfold particularly in
biomanufacturing, bioprocessing for biological products.
Ms. Kelly. Where are we compared to other developed
countries, and either one of you, what can we do more to help
you?
Dr. Woodcock. Right. Well, leave the--what we have received
under Cures to give academic grants and support the academic
base in the United States has been very helpful. We also got an
appropriation, and we set up a center of excellence at FDA, and
we are able to put in a little pilot lab, so our people can
learn about these advanced techniques and so forth, a pilot
plant. So this type of investment, I think, continuing
investment is very important.
Mr. Wessel. Let me just add quickly, and I had the ability
to serve on President Obama's advanced manufacturing
partnership. He had both amp 1.0 and 2.0, and that went to many
of these issues. This administration just had a summit on the
bio economy. The FBI, the DoD, many others are looking at it.
We have great advanced manufacturing. The question is whether
we can take things off the lab bench into the production arena,
whether we can ensure that the IP that we have developed
remains here. The largest component of Chinese investment in
the United States last year was in biotechnology through
venture capital, et cetera. So, when you look at whole of
government, we have to look at the entire food chain, if you
will, for developing these capabilities.
Ms. Kelly. Thank you very much.
I yield back.
Ms. Eshoo. I thank the gentleman. I have to tell you, if
anyone was looking at me while Congresswoman Kelly was asking
her questions and getting the answers, it is just really a slow
burn up here to hear of the advances of China and how poised
they are to grab what we have and run with it. So we have our
work cut out for us here. We have to turn this around. We have
to turn this around.
Pleasure to recognize the gentlewoman from Indiana, Mrs.
Brooks, a wonderful partner on many things, and highly
knowledgeable about BARDA. We have worked together on that and
the reauthorization of it, and I know it has come up in the
testimony. So I look forward to your questioning, and you are
recognized.
Mrs. Brooks. Thank you, Madam Chairwoman, and thank you so
much for holding this incredibly important national security
hearing and with the focus on our supply chain. The chairwoman
of this committee and I are cochairs of the Biodefense Caucus,
and we were very pleased that the work that was done last
Congress, as well as this Congress, we were able to finally get
PAHPA reauthorized and signed into law. Specifically in the
reauthorization, we directed the ASPR to consider manufacturing
capacity, and we have been talking about that quite a bit, and
the outside sources, medical supplies, replenishing the
products in the Strategic National Stockpile. And I might,
Madam Chairwoman, as you continue to put a focus on this, may
we bring the leader of ASPR, Dr. Kadlec, and BARDA, Dr. Bright,
in to talk about this, because I think we need to continue to
keep a focus on these vulnerabilities and issues and what are
we doing to focus on the manufacturing as well.
I think I want to focus on the medical countermeasures and
the Strategic National Stockpile. And I appreciated that you
put--there was a category in your written remarks, Dr.
Woodcock. You mentioned what I will just call Cipro and
doxycycline, critical drugs used to treat anthrax and plague,
which are medical countermeasures. What is our American
capacity to produce these two drugs in the case of a disaster,
if you know?
Dr. Woodcock. I do not know.
Mrs. Brooks. If you could get back with us.
Dr. Woodcock. I could definitely get back to you on that,
yes. We didn't pursue our analysis for individual drugs.
Mrs. Brooks. That is fine, but obviously, things that are
part of our Strategic National Stockpile is something that we
are critically interested in learning what our capacity
relative to American production is.
Dr. Woodcock. We have a chart here that says we have one
U.S. API site for Cipro and two for doxy in the United States,
but how much volume and capacity they have, I do not know.
Mrs. Brooks. Right. And I think those would be important
things for us to have, maybe even in a secured discussion. And
relative to all of our medical countermeasures, and anything
that is in the Strategic National Stockpile, I think it is
important for us, as Members of Congress, to understand, in a
classified setting, what our capabilities are.
And I am also interested, because you have talked many
times, and I am also interested, Commissioner Wessel, about
incentivizing U.S. manufacturers and incentivizing U.S.
producers to add, whether it is essential medicines or
medicines as part of our medical countermeasures. The products
that are part of medical countermeasures are not something that
Americans just run out and purchase. The Government is the only
real customer to have in the case of emergency, but even
essential medicines--does the FDA monitor, on essential
medicines, who is API manufacturing? Is it less than two
countries of origin? Can you talk about that, essential
medicines, not even medicines that are for, you know, either
attacks natural or manmade?
Dr. Woodcock. No, we do not. And we would probably need
that volume information in order to do that accurately, because
simply knowing someone could produce an API, they have U.S.
approval to produce an API, doesn't mean they have the ability
or capacity to do it, especially if they have to do a surge
production.
Mrs. Brooks. And so what should we be doing to incentivize
government and industry working together to incentivize, to
bolster the resources and capacity?
Dr. Woodcock. Well, we have been working with ASPR, DARPA,
and BARDA, because in my opinion--and I know this maybe goes
against the flow--but instead of having finished-dosage form
that you store, the ideal scenario would be, you would have
regionalized instant-production capacity, using advanced
techniques, so you could rapidly produce whatever
countermeasure you needed in a very fast manner. And I believe
the military is also looking at the need for that as well. So
that is where advanced manufacturing for everyone and then for
countermeasures kind of comes together.
We, the FDA, are not, you know, in the sort of incentive
business, so we help everybody as much as we can, but we are
not on the economic side, which are most of the barriers.
Mrs. Brooks. Commissioner, any incentive ideas----
Mr. Wessel. One of the--our Commission, which is six
Democrats and six Republicans, was unanimous in the view, the
recommendations, which are in my testimony. One of those is
looking at our procurement systems like DoD, VA, et cetera, to
be able to prefer domestically produced items, to look at
critical shortages, critical commodities and make sure, just as
we do with Buy America as it relates to other products, that we
apply certain procurement preferences to make sure we have the
capacity.
Mrs. Brooks. Thank you both for your long and very
important work. I yield back.
Ms. Eshoo. I thank the gentlewoman.
Pleasure to recognize the gentleman from New York, Mr.
Engel, for his 5 minutes of questions.
Mr. Engel. Thank you, Madam Chairwoman.
Manufacturing issues at facilities that produce APIs can
lead to drug shortages, which can have health consequences for
patients with serious ailments. Recently, the childhood cancer
community has experienced a shortage of an important pediatric
drug.
So, Madam Chairwoman, I would like to ask unanimous consent
to submit into the record a letter led by Representatives Brian
Higgins and Pete King, both of New York, cochairs of the House
Cancer Caucus, highlighting this important issue.
Ms. Eshoo. So ordered.
[The information appears at the conclusion of the hearing.]
Mr. Engel. Thank you.
Dr. Woodcock, I have long been concerned with ensuring that
FDA has all the authorities the agency needs to be efficient
and effective in regulating the complex drug supply chain. I am
very focused on ensuring the safety of products for our U.S.
patients, but I am equally interested in ensuring that our U.S.
manufacturers are able to continue to be leaders in drug
development in a rapidly growing global economy. In my time on
this committee, I have supported the passage of many bills to
enhance the authorities and resources of the FDA, including
FDASIA, DQSA, the 21st Century Cures, and more recently FDARA.
As part of these bills, we have included provisions that would
help to incentivize innovation and to ensure that manufacturers
continue to bring their products to the FDA for approval first
before any other country.
It is imperative that American patients continue to have
access to safe, high-quality, and innovative medicines. So I
want to better understand the risks of having API and finished
products manufactured abroad rather than in the United States.
I know there are real and important negative effects on
American workers and on the U.S. economy to having this
manufacturing go overseas, but are there real safety risks that
arise exclusively from the fact that a product is manufactured
abroad? In other words, are products that are manufactured
abroad inherently worse than products manufactured in the
United States?
Dr. Woodcock. Well, if you look at our inspection outcomes
by country, all right, the EU has the highest rate of
minimally--of acceptable or better.
Mr. Engel. Did you say the EU?
Dr. Woodcock. Yes.
Mr. Engel. Yes, OK.
Dr. Woodcock. That is outside the United States. Rest of
world is 94 percent, and the U.S. is 93 percent, which is not
significantly different. Now, if you get to China, that is 90
percent, but that means 90 percent of facilities we inspect in
China meet the acceptable standards. And India is 83 percent
currently. So we believe that products that reach the United
States are of adequate quality. They are fit for purpose. That
is the whole point of our whole system.
But, of course, we acknowledge that, in various countries,
there are more barriers to our oversight than there has been in
the United States. It has changed since you all passed FDASIA,
which has been extremely helpful to us in many ways and really
has enabled us to increase our inspection presence tremendously
overseas. That has resulted, though, in a flood of OAI,
unacceptable results, all these reports of problems. As we
looked, we found a lot of problems. We think, though, over
time, as we keep that inspectional intensity up, we will make
sure that those facilities are at the level that the rest of
the world is at. So that is kind of the state.
We don't believe there is inherent risk in making a drug in
another country, other than the economic and those--and the
risk of natural disasters or shenanigans or whatever, but we
believe that we need to make sure that the quality standards
are uniform around the world. And it would be very nice for the
U.S. to have an industrial base, because redundancy is
important. It is really important to have backup for all these.
When we get to a single supplier in a remote area, you know, we
are going to get into trouble.
Mr. Engel. Well, thank you. And I have another question,
but I want to just note that, while you were talking,
Commissioner Wessel was nodding his head in agreement. I hope I
am not telling secrets or anything, but thank you.
Recent press reports, as well as some of the testimony
submitted for today's hearing, seem to imply that the safety
and quality issues that we are seeing from drugs manufactured
overseas are exclusive to generic drugs. Would you agree that
safety and quality issues associated with foreign API and
finished drug products are unique to only one segment of the
industry?
Dr. Woodcock. Could you repeat that? I am very sorry.
Mr. Engel. Yes. Press reports and some of the testimony
that we have heard seem to imply that the safety and quality
issues we are seeing from drugs manufactured overseas are
exclusive to generic drugs. Is that true?
Dr. Woodcock. No. I don't believe so. I believe we also see
safety and quality issues in drugs manufactured in the United
States. And we take action against those as well, promptly.
Mr. Engel. OK. Thank you.
Thank you, Madam Chair.
Ms. Eshoo. I thank the gentleman. Recognize Mr. Mullin from
Oklahoma for his 5 minutes of questioning.
Mr. Mullin. Thank you, Madam Chair.
Mr. Wessel, you had brought up a couple things in your
testimony, and I kind of want to recircle back to those. How
did China become the world's largest supplier of APIs?
Mr. Wessel. China has for a number of reasons. One, they
have had a plan to do so. They have been developing their
chemical sector for a substantial period of time, and that goes
all across from fertilizers through APIs, et cetera. So that is
number one. Number two, beginning, I believe it was with their
11th, 12--11th 5-year plan--we are now on to the 13th 5-year
plan, as well as Made in China 2025, they have prioritized the
development of the bio-economy, from APIs through biotech,
through medical equipment, et cetera, for development.
As part of Made in China 2025, they want to be indigenously
self-sufficient for 70 percent of its need--their needs. So
that means you have to develop your own industrial capacity to
support it.
Mr. Mullin. What China is doing, do you feel like they
could weaponize our drug system?
Mr. Wessel. I think they very well could, and they have, as
I have said, they have shown their willingness to do it with
rare earths a number of years ago with Japan. I would say they
have weaponized certain responses to the current tariff
tensions, trade tensions between our two countries, to try and
maximize their political response. They could very well do it
in this sector if they so choose.
Mr. Mullin. Can you describe some of the ways that
corruption impacts China's products?
Mr. Wessel. As I said in my testimony, and I think has
been, the Chinese people have been more victim to this than we
have in terms of----
Mr. Mullin. Which is one reason why they don't really have
confidence in their own drug system.
Mr. Wessel. Well, that is certainly true, that certain test
data, certain production capabilities, they have cut corners,
they have bribed officials relating to testing regiments, et
cetera. And when found, they have been met with swift and
decisive action by the government leaders. But because there
are more than 4,000 facilities in China, all across the
country, the opportunity for corruption is great.
Mr. Mullin. What do you say when they were found by
government officials? I thought some of the reports we have
seen, some of the government officials were part of this
corruption process.
Mr. Wessel. Correct.
Mr. Mullin. So would you agree it is more accurate to say
that the ones fell out of favor with the federal government
was----
Mr. Wessel. It is--the----
Mr. Mullin. Not our Federal Government, their government.
Mr. Wessel. The corruption fight probably is focused on two
things: One, trying to root out opposing forces in the party,
number one, but number two, there really is an effort at times
to make sure that corruption, as in these areas, is addressed.
Mr. Mullin. I appreciate your testimony. I just make a
point here. Listen, I am not a big pharmaceutical fan when it
comes to what has happened with the opioid epidemic. They have
brought a lot of scrutiny on themselves for what they have
done. But I do think they play a very important role, and we
play a role in this too. If we overregulate and we push out,
where we make it not conducive for these pharmaceutical
companies to do business inside the United States, those needs
are going to be met for the American people by someone. Someone
is going to fill that gap in. And this is kind of the dangers
in my opinion that we face when we overregulate any industry,
because we can regulate them to death, where it is not
conducive for them to continue working inside the United
States, and then we lose control over being able oversee it.
Dr. Woodcock, you have a very difficult job when you are
trying to regulate industries outside the United States. We
only have that ability to regulate them if we have a
partnership with the government. But when you are talking about
China, who is neck deep in corruption, that inspection only
goes so far. So I really don't have a question for you. I just
commend you for the work that you are trying to do. It is
difficult. But I do think Congress plays a role in this thing
too. We have kind of stepped on our own tail, and we find
ourselves in this situation. So thank you guys for both being
here.
Ms. Eshoo. The gentleman yields back. A pleasure to
recognize our resident pharmacist, the gentleman from Georgia,
Mr. Carter, for his 5 minutes of questioning.
Mr. Carter. Thank you very much, Madam Chair, and let me
clean up a few things from the hearing today. Dr. Woodcock, we
were talking earlier about vincristine and about the fact there
has just been a shortage because Teva stopped manufacturing.
Teva was only manufacturing 3 percent, and Pfizer was notified
that they were going to stop the production of it. Yet we still
ended up with a shortage that reached to the level where I was
getting phone calls in my office, reached to congressional
level. How could a drug that a company that is only providing 3
percent of the market share, how could that have happened?
Dr. Woodcock. That didn't--wasn't the cause. All right?
Pfizer became the single source and developed a problem with
finished dosage for manufacturing, and that is--they stocked
out. They were not able to make--to supply the----
Mr. Carter. So it was just coincidence that both of those
things happened at the same time?
Dr. Woodcock. Right. Well, Teva notified us properly that
they were going off the U.S. market----
Mr. Carter. Right.
Dr. Woodcock [continuing]. And gave us the advance
notification that Congress asked for. So we knew that was
happening. That was known. We didn't hear from Pfizer about
their--that they were going to stock out. We heard about this
from MD Anderson.
Mr. Carter. OK. Let me get into some other stuff here.
First of all, I want to talk about compounded drugs and how
they factor into this issue as well. We have been talking about
finished manufacturer drugs, but what about bulk API products
that a compounder here in America may purchase? Can any
manufacturer register themselves with the FDA and begin selling
bulk API products?
Dr. Woodcock. Well, we feel that there are--we would like
to talk to you about this, because we feel there is a--there is
sort of a loophole here----
Mr. Carter. Yes.
Dr. Woodcock [continuing]. To register, but you can ship--
you can ship the product.
Mr. Carter. So what you are telling me, that it is possible
that, you know, for repackagers of API bulk products, that they
could register and sell an API in bulk product without first
being inspected by the FDA?
Dr. Woodcock. That is correct.
Mr. Carter. Wow. We need to fix that. We need to fix it.
Because essentially it would be possible for a repackager to
sell into the supply chain, and to then go out of business,
without ever being inspected by the FDA?
Dr. Woodcock. Right. And we have seen some APIs that were
mislabeled. They had a correct--a different certificate of
analysis, but they were actually a different drug----
Mr. Carter. How do we fix that ASAP?
Dr. Woodcock. That would probably--the fastest way would be
Congress to get involved.
Mr. Carter. Wow. We need--that is--OK, well, we are going
to get involved, OK?
Talking about compounding and the important role that
compounders play in the broader supply chain. What about your
MOU? I know that you are coming up on one. Can you give me an
update on where we are at with that?
Dr. Woodcock. Yes. Well, as you know, the MOU process has
been attended with a lot of controversy. We recently had an
agreement, cooperative agreement, with NABP, and we were able
to provide them funding because much of the concerns of the
States were about, how are we going to do this reporting to
FDA?
Mr. Carter. Right.
Dr. Woodcock. And so what we would like is, they can report
to NABP, which is something they do already, and if we can make
a system that is very easy and seamless to you, so there
wouldn't be a lot of paperwork making----
Mr. Carter. Right.
Dr. Woodcock [continuing]. IT systems, and we hope that
will then make States, once that is apparent to them, happy to
sign on to the MOU.
Mr. Carter. OK. Because your intention and your hope is
that all States are going to sign on to it?
Dr. Woodcock. Absolutely.
Mr. Carter. Do you expect that to happen?
Dr. Woodcock. Not initially, but we hope eventually.
Mr. Carter. OK. Well, that is very important, because as
you well know, I am one who believes that patients should be
able to get the medication of their choice at where they want
to get it from. So that is just something that is very
important to me.
While I am on this, let me ask you this. You talked about
the inspection of manufacturers and how that was scheduled.
What about 503B pharmacies? Are they scheduled, or are they
just surprise inspections?
Dr. Woodcock. They are domestic, so we don't need to
schedule. We don't need to, like----
Mr. Carter. So what you are telling me is, with the mass
manufacturers, you schedule the inspections, but with the 503B
pharmacies, you do that by surprise?
Dr. Woodcock. Domestic manufacturers, we do not--we do by
surprise, too, or we can. OK?
Mr. Carter. That is even worse.
Dr. Woodcock. However, foreign, because of the logistical
problems, we can do surprise inspections and we do do
unannounced inspections, but typically the field organization
does announced inspection.
Mr. Carter. OK. Let me shift real quick to counterfeit
drugs, because that is something that is very important as
well. What about the FDA's role in protecting Americans from
counterfeit drugs, which we know that the cartels are producing
this now?
Dr. Woodcock. Well, since Congress passed the DSCSA and the
track-and-trace provisions are being put into place, I think
what I call the distribution chain is getting a lot safer,
right, because we are tracking it from distribution. However,
of course, there is still coming through mail facilities, small
packages and so forth, and other ways of entry into the drug
supply.
Mr. Carter. Madam Chair, if you will indulge me for just
another second. You know, this committee is working on
prescription drug pricing, and one of the things that has come
about during this discussion has been the reimportation of
drugs. Does that concern you when we are talking about
counterfeit drugs?
Dr. Woodcock. Well, of course, that is one of the main
concerns about importation, is that a lot of the people who
order drugs on the internet now, they are getting counterfeits,
right? Canada Drug Pharmacy, right, and they are getting it
from who knows where, and it isn't what they think it is.
Mr. Carter. It is not--and, you know, this committee,
which, you know, I am just proud to be on it and proud of the
work that we do, we are attacking it from two angles. Not only
are we attacking it from the reimportation of drugs, but we are
also attacking it from the technology part and with the
internet, with the servers--not servers, but the internet
providers making sure that they are helping us in curtailing
that.
Dr. Woodcock. Right.
Mr. Carter. Good. Thank you, Madam Chair. I appreciate your
indulgence, and I yield back.
Ms. Eshoo. I thank the gentleman. I just want to--I think
that this is correct, and you can say yes or no, Dr. Woodcock--
on the children's cancer drug, from 2015 to 2018, Teva had
between 10 and 15 percent of the market. They then dropped it
to 2 percent, and then they informed you that they were
dropping the U.S. market and--that's correct?
Dr. Woodcock. That is my understanding, correct.
Ms. Eshoo. And they were dropping the U.S. market, or what
was left of it, because they wanted to go to foreign markets
where it was more profitable. Now, we are talking about
lifesaving drugs. These are--it is an injectable, isn't it?
Dr. Woodcock. Yes.
Ms. Eshoo. Yes. OK, thank you. Now we are going to our--
well, are those that waved on, don't they--oh, Mr. Sarbanes is
here, right. The Chair recognizes the gentleman from Maryland,
Mr. Sarbanes, for his 5 minutes of questioning.
Mr. Sarbanes. Thanks very much, Madam Chair. I just want to
say as an aside, I enjoyed the clinic between Dr. Woodcock and
Congressman Carter, which I think is probably a testament to
the expertise and experience both of you bring to this topic.
So thanks for bringing me up very quickly on a lot of the
issues as I walked into the room.
I wanted to talk with you, Dr. Woodcock, about these
shortages. And as I am going through my district, I hear much
more frequently than makes me comfortable from providers and
hospitals about this difficulty they are seeing in getting
access to products they need, because of these ongoing and
persistent drug shortages. It is actually shocking sometimes
when you have those conversations, because you don't expect it.
And then to hear about it and the constraints it is placing on
these key providers is very worrisome.
Getting access to, in a reliable way, to critical
medicines, is obviously imperative to ensuring that we can
deliver high-quality and impactful healthcare to patients in
this country. You have talked today about that impact, and we
certainly appreciate it. And you have spoken as well or alluded
to the benefits that advanced manufacturing technologies can
offer in increasing the quality and safety while managing and
mitigating those shortages. Can you discuss a little bit more
about the Emerging Technology program and how it incentivizes
the approval of these advanced manufacturing processes?
Dr. Woodcock. Certainly. We have been working on advanced
technology pharmaceutical manufacturing since the early 2000s,
and we have tried to be--first, we tried to remove regulatory
barriers. A number of years ago, we put together the Emerging
Technology Team, which is a group of people from our quality
organization who kind of provide a concierge service to people
who are trying to bring about advanced manufacturing. And they
help them through all points of the regulatory process. So that
people, you know, who are used to regulating one type of
manufacturing don't, you know, recoil from some really novel
idea. As a result, we have approved five different applications
that use different kinds of advanced manufacturing, and we have
also approved a 3D-printed product, but I really think this is
just the tip of the iceberg. And in my opening remarks, I
talked about some of the announcements that have been made by
firms that they are getting really big into advanced
bioprocessing, which means they would make biological products
this way, in a way that is much more efficient and will----
Mr. Sarbanes. Since I have--I still have 2 minutes. Maybe
you could just give me an example of one of those five
applications that you approved so we can get a better sense of
what we are talking about here.
Dr. Woodcock. Well, we have approved actually a couple
applications from Vertex Company, which is in Massachusetts.
They make drugs for cystic fibrosis, and they are making their
finished dosage form with a continuous process. This is a rare
disease, cystic fibrosis, and this allowed them to scale up to
their commercial product without going through many, many
months or perhaps a year and a half of scale-up activities.
They could just run their machine faster. So that is an example
of advanced manufacturing that is actually operating in the
United States.
Mr. Sarbanes. And before you put in place the procedures
and the processes through this program at FDA to facilitate
approval of that kind of technology, can you give me a sense of
what it would have taken, how long it would have taken, the
hoops that they would have had to jump through then versus what
you have been able to create as a different pipeline now, just
to get a sense of that?
Dr. Woodcock. Sure. I don't think it would have happened.
This is a highly regulated industry who operates at risk in the
new drug side.
Mr. Sarbanes. Yes.
Dr. Woodcock. And so they are not going to risk an
important asset to some experimental technology, right? We have
had a couple where the people have taken very high-volume new-
drug products, you know, that have been huge commercial
successes, and switched them over to advanced manufacturing.
Because it is more cost effective and, you know, it is better
to do that. But in general I don't think this transformation
would have happened, because the industry is so regulated. Now,
the concern is that the generic drug industry, which really is
a commodity type of product, that they don't basically have the
resources to move to this new paradigm, and other people are
going to have to lead the way.
Mr. Sarbanes. Right. Thanks very much. I yield back.
Ms. Eshoo. I thank the gentleman.
I now would like to recognize Mr. Flores of Texas who has
requested to wave on today to participate. Welcome, and you are
recognized for 5 minutes for your questions.
Mr. Flores. Thank you, Madam Chair, for allowing me to wave
on today.
Dr. Woodcock, you know historically that the production of
medicines for the U.S. population has been domestically based.
However, in recent decades, drug manufacturing has gradually
moved out of the United States. I agree with the rest of the
panel that this is concerning in part because of the safety
implications that we have discussed today.
One policy would be to change the factors that influence a
drug company's decision to source its API from overseas. So I
would like your thoughts and feedback on a policy where, if we
did it, we would expand the definition of a banned foreign
facility to include one where a class 1 or class 2 recall was
issued for a drug that was manufactured or processed at that
facility, and then we make the importation of a drug that was
manufactured at such facility a prohibited action under section
331. So would such a policy, if implemented, be an effective
tool that FDA could use to protect patients from the risk of
imported drugs that contain adulterated API?
Dr. Woodcock. Well, it would be a tool we have to use very
carefully because, as a witness in the next panel is going to
talk about, you know, we can't cut off the drug supply in the
United States for certain products in order to, you know,
enforce a certain level of, what, domestic production or
whatever. So we have to--we don't let facilities that have OAI
that are very poor, we don't let them import drugs into the
United States now. We are able to do that unless if they are
making critical drugs and they are the sole source, then we
have to figure out how we are going to get drugs--good drugs--
to the patients. So----
Mr. Flores. I think the issue is here, to start, if we had
a policy like that, again not to cut our nose off with respect
to critical drugs but to begin to influence the companies that
are offshoring production of these drugs, so that they change
their behavior so that they don't get offshored in the first
place. That is what I think we need to look at.
Dr. Woodcock. I see.
Mr. Flores. So I would like you to continue to think about
that. Dr. Woodcock, you also--well, let me say this. This
question is also directed at Dr. Woodcock, but Mr. Wessel, feel
free to weigh in as we go through this. In Mr. Wessel's written
statement, he references testimony given before the U.S.-China
Economic and Security Review Commission concerning FDA's
ability to address safety violations in China. That testimony
was as follows: ``According to FDA's own data from 2013 to
2018, out of 864 inspections of facilities in China that FDA
investigators recommended as Official Action Indicated, FDA
officials downgraded 78 of those. By contrast, in the same
period, out of 11,642 inspections that the FDA investigators
conducted in the U.S. and recommended as Official Action
Indicated, only one inspection was downgraded at that time.''
It was then stated that this reflects FDA's willingness to give
foreign plants, particularly in China, an opportunity to reform
without sanctions.
Dr. Woodcock, first, would you agree with that assessment?
Dr. Woodcock. Well, I don't agree. Our most recent data
over the past 5 years shows that domestic downgrades are 16
percent and foreign overall are 27 percent. So there is a
difference, but I don't agree that it is due to our willingness
to grant foreign entities some kind of pass or something like
that.
Mr. Flores. OK.
Dr. Woodcock. These are technical reasons.
Mr. Flores. When an investigator recommends Official Action
Indicated after inspecting a facility, what does that mean?
Dr. Woodcock. Officially, that is--the investigator is
simply putting observations in the 483. Those are investigator
observations. They don't have official weight. Then we have an
agreement on concept of operations, we call it, with the field
organization, Office of Regulatory Affairs, on who does what,
when, and how this process goes, and it is all very clearly
laid out.
Then the field organization looks at these recommendations.
They have compliance officers who then they make an overall
recommendation, and they get more information from the firm.
The firm must respond within a very short period of time, to
the observations, and talk about their corrective actions or
explanations or so on. At that point, then all of this goes to
the Center for Drugs Compliance Office, where we take into
account the legal issues and everything and make a final
determination. And we do have other authorities that we can do
that don't necessarily require an OAI, but also ensure the
compliance that we are seeking.
Mr. Flores. OK. Thank you. I have an enforcement question
that I will submit for the record, and I thank the chairman,
and I look forward to working with you as we protect our
Nation's drug supply. I yield back.
Mr. Wessel. If I could just add very quickly, I think, as
has been talked about here, that you are looking at potentially
updating the earlier GAO study at the question of what happens
in this, to follow up on your question, merits further
attention, there have been instances where there have been
questions raised by inspectors, but where there is a critical
nature of a drug, and, therefore, whether it is limited
sourcing, et cetera, it has been allowed in. How often that has
happened and what the entire process is, I think, deserves
greater attention.
Mr. Flores. Thank you.
Ms. Eshoo. A point very well taken. I would like to thank
our witnesses. You have been really excellent.
Mr. Burgess. Will the chairwoman yield for a unanimous
consent request?
Ms. Eshoo. Certainly.
Mr. Burgess. I just have unanimous consent to ask that this
report from Mylan Pharmaceuticals about their voluntary,
nationwide recall of alprazolam tablets, and I misspoke when I
said Ativan. It is alprazolam, the generic, and I would like to
put that for the record and----
Ms. Eshoo. So ordered.
[The information appears at the conclusion of the hearing.]
Mr. Burgess [continuing]. If that will help you get the
information back to us.
Ms. Eshoo. So ordered. Again, thank you to the witnesses.
Dr. Woodcock, Commissioner Wessel, you have been outstanding.
It won't be the last time on this. We have a lot of work to do.
I think that the whole issue of how much, in terms of America's
drug supply is manufactured elsewhere, and our country's
dependence on foreign countries for such a critically needed--
our drug supply, that this just really can't stand. And we are
going to have to work very hard to come up with the United
States of America plan for our drug supply, and we are going to
have to work with industry, with FDA, with the stakeholders,
but my ultimate goal is that we have an American supply. We
have an American supply. So thank you very much.
And we would now like to bring up the second panel of
witnesses. At 1 o'clock, there is going to be a secured
briefing for the entire House of Representatives on Syria. So
we want to move and get our witnesses to the table as quickly
as possible.
Are you going to stay, Susan?
Mrs. Brooks. Yes.
Ms. Eshoo. OK, wonderful.
All right. Now we will hear from our second panel of
witnesses. Thank you for your patience. But I think you must
have found from 10 o'clock on interesting because of, you know,
where you sit in terms of this issue. So I just want to say,
for the record, that Teva was asked to provide a witness today
for this panel, but they declined. And they referred my staff
to the Association for Accessible Medicines, and I am pleased
that they are here today to testify.
So let me introduce, starting with Rosemary Gibson, she is
the senior adviser at The Hastings Center and author of the
riveting book ``China Rx.'' She is a hero to me, and I thank
her for the time that she has spent with myself and my staff to
walk me through so many of these issues earlier this year.
Welcome. Thank you for agreeing to testify today.
To Mr. Ed Price, the president and CEO of Seqens, thank you
for being here, and to Dr. David Gaugh, the senior vice
president for sciences and regulatory affairs at the
Association for Accessible Medicines.
So, with that, let's begin with Rosemary Gibson. You have 5
minutes for your opening statement, and thank you again.
STATEMENTS OF ROSEMARY GIBSON, SENIOR ADVISOR, THE HASTINGS
CENTER; EDWARD PRICE, PRESIDENT AND CHIEF EXECUTIVE OFFICER,
SEQENS N.A.; AND DAVID GAUGH, R.PH., SENIOR VICE PRESIDENT,
SCIENCES AND REGULATORY AFFAIRS, ASSOCIATION FOR ACCESSIBLE
MEDICINES
STATEMENT OF ROSEMARY GIBSON
Ms. Gibson. Thank you, Madam Chair, and members of the
committee for this very important hearing on a subject of great
import to our health security and our national security.
I have three points. The first is that China is deeply
embedded in our medicine supply. We have to look beyond the API
facilities. Where does API come from? It is made from raw
materials and chemical building blocks. We have to look at
where they come from. My understanding is that the FDA
typically doesn't inspect that. They are not part of GDUFA. But
that is what is really important.
So what role does China play in going upstream in those
other materials to make the API? It is not a state secret that
India is a huge generic drug maker. Its industry will collapse
in weeks, not because of API coming from China but because it
needs the raw material. It needs the chemical building blocks
to make API, and China is the source.
Second, if you ask--because I have CEOs of three different
generic manufacturers who have more than a hundred years of
experience, these are the guys and gals that have to go out and
find the material to make API--and you ask them, ``Where does
it come from, the raw material, and the chemical building
blocks?'' and they say ``China.'' So we have to look beyond API
to the raw material and chemical building block plants to know
our vulnerability.
Let me tell you the story of penicillin, which will
illustrate this. The United States can no longer make
penicillin anymore. And how did that happen? It just wasn't
because of lower labor costs and, you know, less regulation.
This is a slide that came from the European industry, and we
can talk more in the Q&A.
[Slides follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Ms. Gibson. Just briefly, a handful of Chinese companies
dumped penicillin product--not the API, the raw material--on
the global market at below-market prices beginning in 2004. And
they kept the price low for 4 years. During that time, all the
U.S., European, and even Indian penicillin fermentation plants
were driven out of business. So this is not just the market
operating and it is cheaper--this is a deliberate strategy to
drive out and take control of the global supply of penicillin.
This is the playbook for other generic antibiotics:
cephalosporins, doxycycline. Again, get control of the raw
material.
I ask people in the industry, do you know any antibiotic
fermentation plants in the continental United States? We used
to have these plants all over this country. They can't name
one. Maybe there is one. We should know it. So we can't--we are
dependent on China for, I would say, most, virtually all of our
antibiotics, for that raw material and chemical--there might be
others, but China is the dominant source globally.
There was one--and talking about API facility, there was
one plant in China that exploded. And there was a global
shortage of a really important antibiotic to treat sepsis. And
doctors had to substitute, and some of those patients got a
terrible infection called C. diff. So we have a really serious
problem. China is deeply embedded, and it is a very concerted
strategy.
This is why we have shortages. If you narrow the supply
chain into a single country, we are going to have shortages
just because. We wouldn't have all the oil of the world from
one country. You would have shortages. There would be problems.
The second thing I want to address is finished drugs. We
will hear today that about 8 percent of our generic drugs,
finished drugs, the pills we take, are coming from China. Let's
make this real. These are some of the generic drugs made in
China by Chinese companies that comprise an 8.5 market share.
This is doxycycline for anthrax exposure. And China gained 8.5
percent market share, if that is true, just within 10 years.
Where are they going to be in another 10 years from now and
another 10 years from now? Doxycycline, birth control pills,
made in China by Chinese domestic companies. HIV-AIDS
medicine--this was the one that had rocket fuel in it, made by
a Chinese company. Antidepressants made in China by Chinese
companies. Chemotherapies. Alzheimer's medicine. And we could
go on. Diabetes medicine, epilepsy, Parkinson's.
So China is gaining a foothold in our finished generic drug
industry as our Western generic companies, like Teva, Sandoz,
they are collapsing. And we are already spending--I did a
really rough back-of-the-envelope calculation, 8.5 percent of
generics--we are already sending $6 billion of our American
money. Seniors, hardworking families, our military, veterans,
our taxpayer dollars are going to support China's generic
industry as ours is collapsing.
I love country-of-origin legislation, but you know what, by
the time that happens, by the time we get it done, China will
have it. And I predict in ``China Rx: Exposing the Risk of
America's Dependence on China for Medicine,'' which I wrote in
the public interest--no one paid me to do it, I do it because I
care about the health of our country--I predict that China will
overtake India in generic drug production because China has a
plan, and nobody else does. It is just a matter of time.
And even you look in the Indian media, the senior
government officials in India, and they call it a national
security risk, their dependence on China. China can use that
leverage against India.
National security risks, China is rolling out its social
credit score for businesses operating in China, including U.S.
and other drug manufacturers. I have no doubt, in the event of
a global pandemic or whenever China wants to, it could order
those companies not to send medicines to the United States, to
keep them in China.
I have three recommendations. We really do need a point of
accountability in this country, in our national security
apparatus, to know who controls our medicine supply, to do what
the FDA can't do, which is to conduct risk assessments of
countries, to track market intelligence on what is happening.
We need that capability. Somebody needs to be in charge.
Because I was shocked when writing ``China Rx,'' it is nobody's
job in the Federal Government to do that. We just cannot rely
on the FDA, and we have to work in a whole-of-government
approach.
A second recommendation--this was talked about, we need to
begin immediately--Strategic National Stockpile. I am sorry.
This is such an important topic. We need to use our Federal
procurement dollars differently and start buying here in the
U.S. And we need the advanced manufacturing for generic drugs,
not just brand name.
And, finally, we need Consumer Reports-type testing of
every batch of every generic drug. Valisure, the online
pharmacy, they test. Whatever they have tested, 10 percent of
generics have not met the standards for API or dissolving in
the body properly or active ingredient. Sorry to go over. Thank
you very much.
[The prepared statement of Ms. Gibson follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Ms. Eshoo. Thank you, Ms. Gibson, very much. I wanted you
to be able to get as much as you can in. You waited a long time
to do it, and it is really high-value information.
Mr. Price, you are recognized for your 5 minutes of
testimony, and thank you for your patience in waiting to speak
on the second panel and being willing to testify today.
STATEMENT OF EDWARD PRICE
Mr. Price. Madam Chairwoman, ranking members, and members
of the committee, thank you very much for your invitation
today. It is encouraging to hear that this committee is
considering this issue a crisis and is willing to take the
action that is appropriate.
My name is Edward Price. I am the president and CEO of
Seqens North America, a fully integrated pharmaceutical
contract development and manufacturing organization. We are
headquartered in Newburyport, Massachusetts, and before 2018,
Seqens North America was known as PCI Synthesis, a firm I
founded in 1998 and then subsequently sold to Seqens, which is
a global pharmaceutical ingredients manufacturer headquartered
in Leon, France.
My firm is a developer and manufacturer of active
pharmaceutical ingredients, APIs, doing it here in the United
States. We have two sites in Massachusetts, and we have 130
employees. As a manufacturer of APIs, we thus produce the key
raw material for our customers, for use in drug products and
therapeutics that may be looking to bring to market, and we
have three main areas of activity with our organization.
First, we develop and supply clinical API material for use
in clinical trials for new drugs. We are a commercial
manufacturer of active ingredients for generic products, and we
are a commercial manufacturer of new chemical entities for
therapies that are still covered by patent, also known as
branded drugs.
I think it is important that the committee understand that
any drug that is approved by the FDA is essentially the
combination of two things: the drug substance, which is the
active ingredient that my organization produces, and the drug
product, which, of course, is the vehicle in which it is
delivered to the body, may that be the pill or cream or
ointment or other delivery mechanism formulated with the drug
substance.
These two activities require vastly different skill sets,
they require different science and technology, different
equipment, and very different facilities. The reality of
today's pharmaceutical supply chain, especially in the generic
sector, is that the overwhelming majority of drug product
manufacturers are not drug substance manufacturers, and vice
versa. If you add in globalization and the ever-increasing
trend of outsourcing of both of these activities by
pharmaceutical firms, you have an ever-increasing intertwined
global industry in many countries around the globe.
Considering that there is nearly a billion and a half
dollars of pharmaceutical products consumed in the United
States each and every day, produced by thousands of fragmented
manufacturers around the world, the competing goals of reliable
supply, safety and high-quality products, and low cost are
truly going to be very difficult to achieve in the long term.
The FDA has steadily increased the bar on manufacturers
throughout the supply chain, most notably over the last 10
years. The industry accepts that this is the way it is and
assumes this will be the case, and it has responded
appropriately. Pharmaceuticals, however, is a business like any
other. So increased oversight and increased regulation
increases costs. And increase in costs forces business
decisions. In the last 5 years, due to consolidation, most of
the recognized U.S.-based independent API manufacturers have
been acquired by multinational firms, my own firm included. The
manufacture of smaller-volume products with modest sales
volumes are harder to justify and to continue when you become
part of a large, multinational firm. As an independent, you
have more leeway on products you can develop. And I can tell
you that, from personal experience, we decided to be acquired
by a European manufacturer rather than an Asian manufacturer,
for some of the issues that were brought up today.
Ms. Eshoo. Thank God for that.
Mr. Price. In the meantime, our clinical supply business, I
have to tell you, is very robust and has grown steadily over
the last few years. Due to both perceived as well as published
quality issues with overseas suppliers, many early-stage,
emerging pharma companies want to work here in the U.S. They
prefer to work with entities like myself that are regularly
inspected, they can visit easily, they can work with closely on
very complex and technology advanced programs and manage them
closely. This ultimately can be more efficient and outweigh any
potential savings by working with an overseas supplier.
The problem is that many of these overseas suppliers that
they don't want to work with and prefer to come to me are also
commercial suppliers supplying into the United States. This is
a complicated situation. For the benefit of U.S. patients, we
shouldn't broad-brush positively or negatively any particular
country or region of the world. But pharmaceutical suppliers
should be judged on their own merits after robust inspections,
and only should appropriate restrictions be put in place.
It costs millions of dollars to bring a generic drug to the
marketplace. You have to--and the business case for doing so
can be very complicated because a good program today could be a
disaster 3, 4 years from now if there is multiple approvals and
the business opportunity evaporates after you make that
investment. Just this calendar year alone, my firm had to
contend with EPA, OSHA, IRS, DEA, and FDA, all simultaneously
while trying to run a business. And in a number of instances,
we were dealing with issues brought about by activist agencies
critical of our operations that they previously approved of or,
in another instance, changed their interpretation of existing
rules or simply that our number came up.
In short, we are an overregulated industry, and it would be
impossible to start my company today as I did in 1998. At the
same time, I have 10 job openings I cannot fill because I can't
find enough qualified employees to do so.
What can the Government do? First, beyond the FDA, the
scope and scale of regulation in my sector is unwarranted,
overreaching, and unprecedented in the last 5 years. Common
sense has to be brought back into the system. We need to
encourage the FDA to further expand inspection of overseas
facilities and making sure facilities are adhering to GNPs and
only allow into the U.S. products from inspected facilities.
We need to target at-risk and sectors of the industry to
address existing shortages, have the FDA partnering with
companies to develop and make sure there is adequate, safe and
supply; limiting approvals, maybe giving exclusivities or
expediting reviews; promoting STEM education so that the
industry can have a steady stream of qualified workers here in
the U.S. Eighty percent of my technical staff is foreign-born,
and when H-1B visas are limited, it is very difficult for us to
expand both our business and the activities that we do.
And, additionally, State and Federal authorities need to
partner with industry and the FDA to be able to allow
facilities like mine to expand their capacity and do more
manufacturing here, but more essentially, we need the business
climate to be able to do so successfully. Thank you.
[The prepared statement of Mr. Price follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Ms. Eshoo. Thank you, Mr. Price.
Mr. Gaugh, thank you for agreeing to testify today. You
have your 5 minutes for your opening statement.
STATEMENT OF DAVID GAUGH
Mr. Gaugh. Thank you, Chairwoman Eshoo and Ranking Member
Burgess, and the rest of the members of the Subcommittee on
Health. Let me start by making one point clear: Patient safety
is the number-one priority of AAM and our member companies who
manufacture FDA-approved generic and biosimilar medicines. FDA
ensures generic and biosimilar medicines are just as safe and
effective as their brand-name drug counterparts. Patients
should know and be confident in the quality of the generic
medicines prescribed and picked up at the pharmacy because of
FDA's rigorous approval and inspection processes.
And it is critical the patients take their medication as
prescribed by their physicians. As the FDA has emphasized and
stated here earlier this morning, not taking one's medications
as prescribed could have the undesired effect of exacerbating a
patient's illness and lead to worse health outcomes.
Now, we understand why the subcommittee would be concerned
about the recent reports that paint a distorted picture of the
global supply chain, that it is heavily reliant on China and
other countries of API. Our generic and biosimilars are part of
the same global pharmaceutical supply chain as the one brand-
name drug and manufacturers use.
And as the FDA noted earlier in Dr. Woodcock's testimony,
the agency looks at the supply chain comprehensively, inclusive
of all drugs on the U.S. market, such as brand-name, generic,
over-the-counter, and compounded medicines. With this said, let
me provide the subcommittee with AAM's analysis of the global
location of where generic, finished-dose, and API facilities
are located.
We conducted this analysis of data publicly available on
the FDA's website, and our analysis for 2020 data shows that,
for generic API facilities, 31 percent are in the European
Union, 31 percent in India, 17 percent in China, 13 percent in
the U.S., and 8 percent in rest of world.
For the finished-dose facilities, we found 40 percent in
the United States, 24 percent in India, 17 percent in European
Union, 8 percent in China, and 11 percent in the rest of the
world.
Considering this analysis of FDA's data, it is important to
accurately depict and not overstate where generic API and FDF
facilities are located. It is also important to note the robust
regulatory environment that is in place today to ensure safety
and efficacy of prescription drugs. All pharmaceuticals,
whether brand or generic, must be manufactured in accordance
with rigorous regulatory standards that require high levels of
diligence and accompanying documentation.
And when the FDA finds the deviation from the strict
standards of production, FDA takes swift action. The FDA also
utilizes a risk-based inspection strategy to maintain a robust
inspection footprint around the world, and the number of
inspections, both domestically and internationally as we heard
earlier, have increased over the last 5 years. All this is in
place in no small part due to the significant financial
investment and commitment from AAM and its member companies
through the GDUFA fees.
GDUFA, that was passed in 2012 and reauthorized in 2017,
includes a $4 billion commitment to the generic drug industry
alone. The FDA uses this funding for its rigorous approval
process, to develop and uphold manufacturing regulations, and
to conduct inspections of manufacturing facilities globally.
This ensures FDA-approved medicines are at a level of the
supply chain from active pharmaceutical ingredients to the
finished medicines sold to the consumers at the pharmacy
counter are safe, effective, and high quality. This, combined
with a daily commitment to quality from AAM's member companies,
ensures the U.S. has one of the safest drug supply chains in
the world.
Thank you for the opportunity to testify, and I am glad to
answer any questions now or separately after the hearing is
over.
[The prepared statement of Mr. Gaugh follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Ms. Eshoo. Thank you very much.
I now recognize myself for 5 minutes of questions. Dr.
Gaugh, what percentage of American generic drugs are
manufactured in the United States?
Mr. Gaugh. The finished dose? Roughly 40 percent of
finished dose are manufactured in the United States.
Ms. Eshoo. So, of the world's API, how much is manufactured
in the United States?
Mr. Gaugh. That is a smaller number of 13 percent.
Ms. Eshoo. Facilities, not volume.
Mr. Gaugh. Thirteen percent facilities, yes.
Ms. Eshoo. How many?
Mr. Gaugh. Thirteen percent.
Ms. Eshoo. Thirteen percent.
Mr. Gaugh. As Dr. Woodcock mentioned this morning----
Ms. Eshoo. Of all facilities, 13 percent in the United
States?
Mr. Gaugh. Yes, ma'am.
Ms. Eshoo. That is a really small number.
Mr. Gaugh. Yes.
Ms. Eshoo. Now, the FDA yesterday published a report on
drug shortages that I think really speaks to the challenges
that we have that are facing the generic drug industry. Do you
agree with the FDA's findings that generic companies are
discouraged from manufacturing older prescription drugs? Yes or
no?
Mr. Gaugh. So discouraged in the fact of, at some point in
time, the pricing of those----
Ms. Eshoo. Do you agree, yes or no, with their findings?
Did you read the report?
Mr. Gaugh. Yes, I have.
Ms. Eshoo. OK. Do you agree or disagree?
Mr. Gaugh. With many parts of the reports, yes, I do.
Ms. Eshoo. Yes, you do what? Agree?
Mr. Gaugh. Agree with many parts of the report, yes.
Ms. Eshoo. Do you agree that this leads to shortages?
Mr. Gaugh. Yes, it can.
Ms. Eshoo. Do you agree with the FDA's findings that
generic companies may not be investing in manufacturing quality
for older, low-priced prescription drugs?
Mr. Gaugh. I do not.
Ms. Eshoo. You do not agree?
Mr. Gaugh. I do not agree.
Ms. Eshoo. Could minimizing the investments in
manufacturing quality lead to quality problems?
Mr. Gaugh. It could. I am not aware.
Ms. Eshoo. Well, if you minimize investments in
manufacturing quality, it seems to me that that leads to
quality problems. It kind of answers its own question, but you
may not agree. Based on this, is it true that the generics
industry is facing three overlapping crises: shortages, which
is what we have talked about this morning, quality problems,
and foreign reliance?
Mr. Gaugh. So, to answer your question for number one, yes.
Number two and number three are the same for the brand
pharmaceutical companies: reliance on foreign market.
Ms. Eshoo. Mr. Price, you said something about, you know,
the cost for generics, and much of what you said I am really
taken by because we have to take this into consideration in
order to resolve the problems that we have heard about, and
there are many of them this morning, but I am also struck by
the following, that the generics industry gets something for
free. They get the recipe. Once the patent expires from the
pharmaceutical companies, you get the information, and then you
start manufacturing those pills.
Mr. Price. That is not entirely accurate.
Ms. Eshoo. It is not entirely accurate. What isn't
accurate, and what is?
Mr. Price. Because----
Ms. Eshoo. You don't buy it from them, you get it from
them.
Mr. Price. When a product becomes off-patent, what they
have access to is the clinical data that was done, and they
don't have to perform the clinical trials.
Ms. Eshoo. Right.
Mr. Price. They don't get necessarily access to the actual
formulation of the drug. They are afforded samples. They can
reverse engineer it, but they have to come up with their own
formulation, which then has to go into bio-equivalence studies
to prove that it's equivalent. My part in this whole process is
the drug substance, the API. We have to prove chemical
equivalence.
Ms. Eshoo. How much of the U.S. market do you dominate in
API?
Mr. Price. Me personally? We are a 130-person organization.
We are a fraction of a fraction, but, anecdotally, I can tell
you that from 2005 to 2015, we developed about a dozen generic
products. We have developed nothing new in the last 3 years
because none of our generic partners can afford to help work
with us to cover the cost of development and I will
subsequently introduce new products.
Ms. Eshoo. And that is based on the API?
Mr. Price. And that is based on the API. Because we don't
get any formula of an off-patent drug, I have to put a whole
team together of roughly a dozen people to develop the
chemistry, scale it up, develop all the analytics. Costs my
organization alone upwards of a million dollars to develop an
active ingredient.
Ms. Eshoo. I wish we had more time with you.
To Rosemary Gibson, I am just going to squeeze this in. We
have heard from other witnesses' testimony today that cheaper
labor and lower environmental standards contribute to China's
dominance of the pharmaceutical ingredient manufacturing, but
you disagree. Can you just very quickly explain why you
disagree on that?
Ms. Gibson. Sure. U.S. and Western companies are not just
competing with other Chinese companies, they are competing with
the Chinese government, which is willing to subsidize its
domestic industry. It was the Chinese government that invested
in all the infrastructure to make antibiotics for the world.
That is the challenge that we are facing. It is not just lower
labor costs and weaker regulatory regime, it is the Chinese
government subsidies and, frankly, their violation of antitrust
rules, stealing of intellectual property through all legal and
illegal means. China is advancing to become the global pharmacy
of the United States and for the world.
Ms. Eshoo. This is chilling testimony, and I thank you for
it.
I now would like to yield to the gentlewoman from Indiana,
Mrs. Brooks, for her questioning.
Mrs. Brooks. Thank you, Madam Chairwoman.
I would like to start with you, Ms. Gibson, because I am
very interested and because of the work that we have done in
the Biodefense Caucus, very interested in the notion of having
a position at the National Security Council focused on
biodefense. And it has been a recommendation of the blue ribbon
study panel, one of their top recommendations, but I think what
you are recommending is going even further than that in that
you are recommending a national security review of all
medicines, not just what we were focused on on biodefense. Who
would you have oversee that type of position, or where would
that--is it the ASPR? Is it DoD? Is it FDA? NSC?
Ms. Gibson. I would have to engage with you in conversation
to figure out what the right locus of responsibility is, but I
can tell you what some of the functions should be. This should
be an entity that should collect market intelligence way beyond
what an individual private citizen does as I have done. Collect
the market intelligence, the environmental intelligence about
China and its plans--and this is an ongoing function--conduct
country risk assessments, conduct supplier risk assessments,
think about the risks of natural disasters, like there is a lot
of pharmaceutical plants in Italy where there were earthquakes.
What about natural disasters that could hit China? This is the
type of ongoing risk assessment function--tracking global
supply and demand. Just not look now, but where are we headed
in the future, where are we headed in the future with heparin
as China grows its healthcare industry, and we do have to move
beyond pigs because there is just only so many pigs, so those
are some of the functions.
Mrs. Brooks. And so, while we might not have that position
currently, is there an entity in the world that does that now?
Ms. Gibson. I am not aware of it, no.
Mrs. Brooks. And would you--would all medicines essentially
be subject to the review that you would like to see?
Ms. Gibson. I would like to see this done for the medicines
that are essential for the business continuity of our
healthcare system, that are essential for life, that if we
don't have, our society would collapse.
Mrs. Brooks. And have you studied, yes, what our Department
of Defense does relative to this issue?
Ms. Gibson. Well, I have recommended a whole-of-government
review with the DoD just because they are very proactive. They
have a real vested interest just like they did with the review
of their defense industrial base, which was really stellar.
They had a terrific methodology for how to do that, a
framework. That is the kind of framework we need to assess our
vulnerability when it comes to China for our medicine supply.
Mrs. Brooks. Thank you. Switching gears briefly, Mr. Price,
thank you so much. You are one of the very few API producers in
the country, correct? There are----
Mr. Price. Just a handful.
Mrs. Brooks. What is a handful, roughly? About how many
really that you are aware of, your competitors?
Mr. Price. Dozens, probably number in the dozens, and,
frankly, most of my competitors have disappeared over the last
4 or 5 years as the industry has gone through a tremendous
amount of consolidation.
Mrs. Brooks. And I know you have certainly talked about all
of the agency regulations that are involved, but yet I am also
concerned what you were just talking about relative to the
workforce. You are a relatively small company, but yet you have
10 openings, and can you talk about what are those--what are
the kinds of jobs that you have openings for, because we keep
talking about the workforce issues, and this is highly
technical, correct? And so can you just share with us a little
bit about that workforce issue, because, if we are going to try
to invest and try and get more government investment in some
way or incentivizing companies to invest in this, it still
doesn't mean that they have the people to do the work.
Mr. Price. It is a significant threat, and it is a
significant issue that we deal with on a daily basis. As a
manufacturer and a technical organization, our workforce runs
the gamut from high-school-educated working on the plant floor
all the way to Ph.D.s with multiple degrees and very
sophisticated science, as well as business people, financial
people. We really are a broad cross section of the talents that
you need in the workforce, and it is a significant issue across
the board for us to find people at all levels. It is not any
one in particular.
Mrs. Brooks. I have one last completely unrelated question.
The types of raw materials that you focus on, are these raw
materials found only in China?
Mr. Price. I would say that better than 90 percent of the
key raw materials that we purchase and use to synthesize our
APIs come either from India or China.
Mrs. Brooks. So the actual raw material comes from India as
well?
Mr. Price. The building blocks that Ms. Gibson was
referring to, the raw materials, there is almost no fine
chemical manufacturing left in the United States.
Mrs. Brooks. But at some point----
Mr. Price. I actually began my career in the fine chemicals
industry but migrated into pharmaceuticals because the fine
chemical industry was disappearing.
Mrs. Brooks. But are the actual raw materials for--and
maybe I don't know the terms well enough--at one point, were
they in the United States?
Mr. Price. Yes. Oh, sure, absolutely.
Mrs. Brooks. OK. Thank you. I yield back.
Ms. Eshoo. Recognize the gentlewoman from California, Ms.
Matsui.
Ms. Matsui. Thank you very much, Madam Chair, and I find
this all very fascinating as we get into this.
When you are a generic manufacturer, you depend on reliable
access to APIs to produce affordable treatment options for
patients. I understand that, between navigating global
regulations and various delivery systems, sourcing ingredients
can be a complicated, time-consuming process for generic
manufacturers looking to quickly scale up production.
Dr. Gaugh, at what point in the generic drug application
process does a prospective generic drug developer need to scale
up its manufacturing to prepare for a commercial launch?
Mr. Gaugh. So you first go through the development stage
for that product. That is done on what we call bench
development. Once bench development is complete, it goes into
the manufacturing floor and developed in the manufacturing
floor. So it is all done prior to the application being
submitted to the FDA.
Ms. Matsui. OK. Now, after obtaining approval, what steps
do generic drug developers need to take to ensure that they
will be able to meet the demand for their product?
Mr. Gaugh. So that is portfolio management, if you will,
and in the brand world, you know that your product is 100
percent of the market and you know what that is going to look
like. In the generic world, you look at how many applications
have been approved by the FDA, and then you start the
contracting process with a third-party contractor. It is very
difficult to tell what your market share is going to be from
time to time.
Ms. Matsui. OK, but this is a certain time frame that you
sort of do this in, right? I mean, I am just looking at this as
a scale-up process.
Mr. Gaugh. So, in general, I would say that when a company
looks at a product, they usually know who their competitors are
going to be in the market, and so they are going to develop
their market-share analysis based on that competitors. If it is
two or three or four, that would give you one percentage to
look for for production. If it is 13 or 14, which you would
find in the oral solid market, that would give you a different
percentage. So that number can be anywhere from 10 percent to
40 percent that you might think you would capture the market
share, or if you are the only product, 180-day exclusivity, you
know you have potentially most of the 100 percent.
Ms. Matsui. OK. A concern I have is how downward pressure
on prices in the drug supply chain may influence generic drug
makers to exclusively rely on cheaper foreign API
manufacturers.
Dr. Gaugh, what tradeoffs, if any, do you see generic
manufacturers making between quality and price when it comes to
sourcing APIs to meet production goals?
Mr. Gaugh. I don't see any difference, quality and price.
We don't cut back quality to get a better price. Most of the
reasons going to foreign countries is because it is not
available, as we have already said, in the United States. If
you look at API manufacturers, our numbers show that there are
105 generic API manufacturers in the United States. If you look
at Dr. Woodcock's numbers, that would tell you there is
probably roughly 210, 215 API manufacturers in the United
States.
Companies that produce products, specifically generics,
have several hundred products in their portfolio. They don't
have the capability of producing the API themselves, and, in
general, you can't get the same--you can't get APIs from the
same manufacturer. There is different technology, different
chemistry, different expertise, different manufacturing
facilities, and therefore you have to go to the company that
will make that and can make that for you. Many times you go to
Europe, foreign, China, India, et cetera, yes.
Ms. Matsui. Well, how do we--what can we do to incentivize
the use of high-quality products, particularly for generic
manufacturers limited by smaller operating budgets? There is--
--
Mr. Gaugh. Again, I don't see that budgets and quality have
anything to do with each other. We still produce high quality,
and the FDA guarantees that we will produce high-quality
products. And we are ourselves as companies all have quality
systems. Dr. Woodcock in the drug shortage document that she
put out yesterday--or the FDA put out yesterday--talked about
mature, quality systems and having a potential rating system
around those. She wasn't talking about the general approval of
inspectional facilities, she is talking about steps above and
beyond.
Ms. Matsui. Do you have a comment, Ms. Gibson?
Ms. Gibson. When I read what is going on in some of the
plants in China, the one that sent the valsartan, this is a
company that knowingly sent a substandard product to the United
States. It reprocessed a batch rather than doing a root cause
analysis to find out what was wrong. So it knowingly sent a
really important medicine to this country with a genotoxic
impurity. This is unthinkable from what we used to do 20, 30
years ago.
Ms. Matsui. OK. Thank you very much.
And I yield back.
Ms. Eshoo. I thank the gentlewoman for her examination.
Pleasure to recognize Mr. Guthrie from Kentucky for his 5
minutes of questioning.
Mr. Guthrie. Mr. Gaugh--actually, I wanted to start--I am
not clarifying Mrs. Brooks' question because she was pretty
clear, but it piqued something in my mind. And I don't know the
ingredients--I mean, the raw ingredients. You said fine
chemicals, such as Birmingham, Alabama, existed as a steel town
because it is set on a mountain of iron ore, and so it made
sense to make iron--or steel--in Birmingham. I guess the
question that piqued my interests are the raw materials for
pharmaceuticals in China or India, or is it only we are sending
the raw materials through China and India? Because what you are
saying is that it is a manufacturing issue. They manufacture
the ingredients, therefore, that you use in your process? It is
not like they have a natural advantage.
Mr. Price. I think you need to appreciate that an active
pharmaceutical ingredient is the result of multisteps of
chemistry, so you have to start with something, and you can't
start with water and tree bark and dirt. You have got to start
with some organic molecules that you can build upon, so those
are the raw materials.
Mr. Guthrie. Is what you are talking about as the fine
chemical?
Mr. Price. That is what I am talking about.
Mr. Guthrie. And not much of that is done here?
Mr. Price. Not much of that. We resource all over the
world, but some of the more advanced molecules which we then
take as raw materials to make the final active ingredient are
in many cases sourced in India and China. And we suffered
severe shortages, even for some of our commercial products,
when the Chinese started to shut down facilities over the last
couple of years because of environmental issues and other
regulatory concerns that they had over in China.
Mr. Guthrie. So there is really not a mined product or
anything that is the beginning of your process? It is the
molecule itself as the beginning----
Mr. Price. Exactly.
Mr. Guthrie. Mr. Gaugh, thanks for being here today. So I
am just kind of getting back to the continuous manufacturing
issues that Chair Pallone and I have talked about. I am just
trying to understand--I used to be in manufacturing--so the
root cause analysis and so forth. So when a problem occurs and
the manufacturer is required to notify FDA, so you say, ``Here
is the problem''--this is one to the level of notification--
how does that--could you walk me through that process, like
what is the timeline, and what is your root cause analysis you
are required to submit to FDA for the resolution?
Mr. Gaugh. So that is a depends question.
Mr. Guthrie. So we are not clear, or the FDA is not clear?
Mr. Gaugh. No. To answer your question, it depends on the
product and the situation and what was the quality issue that
occurred. Not all are equal, so there wouldn't be one----
Mr. Guthrie. Just any that rises to this----
Mr. Gaugh. There is a bracketed process, yes, that each
company goes through once a quality issue is uncovered, and
they go through that issue, work through that, and then send a
report in to the FDA. That could take days, or it could take
weeks to accomplish. It depends on the situation.
Mr. Guthrie. And in the meantime, what, the products are
produced? The products--depends on the level----
Mr. Gaugh. Again, it depends on the level of what the issue
is that was found. It could stop production immediately because
of that, or production could continue while the investigation
is ongoing. The companies work with the FDA through that.
Mr. Guthrie. OK. What role do you think the AAM companies
have in securing the global supply chain?
Mr. Gaugh. I am sorry. Say again?
Mr. Guthrie. What role do the AAM companies have in
securing the global supply chain?
Mr. Gaugh. So each company secures its own products for its
production, and again, if you are looking at the large
manufacturers of generics, there is usually somewhere in the
realm of 500 to 1,000 products in their portfolio. Smaller
companies could be one to five. In fact, when we did GDUFA, we
based that on small, medium, and large companies, but they all
sourced their own.
Mr. Guthrie. So, just on generics, I thought since you are
here, I would ask you just on generics in general. A lot of
times I hear from people who are concerned about their health
insurance or what is being provided to them, and you will say,
``Well, this costs X amount of dollars, but I can take the
generic if that is what is on my formulary.'' But if I take the
generic, it is my understanding is a generic--a chemical
generic is the same as a branded generic?
Mr. Gaugh. That is correct.
Mr. Guthrie. But people will say, ``This one doesn't work
for me, but I still have to pay out of pocket for the other,''
but generics are essentially the same----
Mr. Gaugh. Yes.
Mr. Guthrie [continuing]. In the chemical part? Do you want
to talk about--you must hear that too?
Mr. Gaugh. As a patient and a pharmacist, that is a very
true statement. So not every human, or no human, reacts the
same as a human sitting next to them when they ingest a drug.
So there is going to be a difference in absorption. There is
going to be a difference in the way----
Mr. Guthrie. But they should react to the same human, if
they have this drug that is branded and this drug that is not,
if it is identical? The same human should have the same
reaction?
Mr. Gaugh. Except that the API is identical, yes, but the
excipients used to----
Mr. Guthrie. So there is a difference?
Mr. Gaugh [continuing]. That product can be different and
can make a difference.
Mr. Guthrie. OK. That is fair. The generics supposedly--so
I learned something here today as well, so thank you. I
appreciate it.
And I will yield back.
Ms. Eshoo. The gentleman yields back.
Pleasure to recognize Mr. Schrader of Oregon for his 5
minutes.
Mr. Schrader. Thank you, Madam Chair.
I apologize to the panel for not being here for your
remarks. I was in another hearing, but very interested in this
area.
I read, Ms. Gibson, I read your book and found it very
compelling, very disturbing; hence the earlier line of
questioning about what has FDA done, so to speak, since then.
They have obviously made some improvements, tried to broaden
their inspection overseas. There is apparently a manpower
issue, and you detail in your comments, you know, other
recommendations, what would be the top two or so that FDA
should pursue that they haven't done quite at this point in
time that we have been most helpful?
Ms. Gibson. With our medicine supply chain being so complex
and so many challenges, I think--I have come to the conclusion
it is almost out of the hand of the FDA to really ensure that
every pill from every manufacturer is what it should be. That
is why I recommend, and this isn't for the FDA, but we are
beginning to see a private entity, this company in New Haven,
that is beginning to test before it sells it as an online
pharmacy, they are testing every generic product before it
sells it, three batches. And they found that more than 10
percent of what they tested did not meet standard. The API
wasn't what it was supposed to be.
The disillusion in the body--so say if you have an
extended-release pill--there was one in epilepsy medicine,
which is really important. You have to have that consistently
in the body to prevent seizures, but if it is not really
extended release, that is a huge risk to patients.
Mr. Schrader. Do you think that is beyond FDA's ability to
test for those sort of things?
Ms. Gibson. I think that we need a market-based approach in
real time, and I would love to see--and I would love to see
companies crop up, every pharmacy that sells it says ``we have
tested everything independently'' and even have third-party
verification, because I think we really have to restore trust
in our medicines--I think there is a crisis of confidence in
our medicines among the American people and physicians.
Mr. Schrader. So that gets to your comment, I think, that
we need some central repository where at least different
people, different organizations could bring to the attention of
the FDA and others where there are serious problems and be able
to move beyond there.
Ms. Gibson. That is right. We need a national security
apparatus attention here at a very high level, which is really
outside the purview of what FDA's mission is. This is, again,
from a national security perspective, what is going on in
China, the trends, and what we are facing.
Mr. Schrader. Again, I missed some of the hearing and I
apologize, but what--is there a room then for the United States
either to incentivize some of the API or generic manufacturing
that Mr. Price and others are trying to do, or things we should
do to go after China for the marketplace manipulation that they
are doing right now?
Ms. Gibson. I think we got to start rebuilding our own
manufacturing capability here. I visited a biotech place at
Virginia Commonwealth University a couple months ago, and they
have an incredible capability. They want to start tomorrow
making, you know, the API using continuous manufacturing,
stockpile that, and then there is private--Civica Rx is out
there. They said, ``If these folks can make the API, we will
buy it, and we will set up a manufacturing plant next door to
make the finished drug.''
The challenge and the limitation is what we have talked
about. These folks need a little capital investment to
refurbish an existing plant in Petersburg, Virginia. We got a
lot of, you know, plants that are lying fallow. A little bit of
money to refurbish that, and once we begin to use continuous
manufacturing, I am told that you can make it at 40 cents less
than our traditional way of manufacturing. Once we make the
investment, we can actually make them cheaper than what we are
making them now.
Mr. Schrader. Mr. Price, do you have a comment on
continuous manufacturing?
Mr. Price. Yes, I do. I think continuous manufacturing is
extremely exciting and extremely promising. However, the
testimony by Ms. Woodcock from the FDA, whenever she spoke
about continuous manufacturing, she mentioned the name Sanofi
and Genzyme and Vertex, which are all multibillion dollar
companies, OK?
Mr. Schrader. OK.
Mr. Price. So to think that continuous manufacturing is
going to solve the issue of a small volume oncology cancer drug
that is an older product that is in short supply, I think, is
wishful thinking.
Mr. Schrader. I just think there is--I am sorry to
interrupt--final comment is this Civica Rx came to visit me. It
is a nonprofit made up of a variety of folks around the country
that see the shortage that Mr. Price is trying to address and
be very important, I think, for the United States Government to
step in and help small enterprises like Mr. Price's and others
to incentivize that production, the continuous manufacturing so
it's nimble. It is not just one drug, it is drugs that are
needed at a given point in time in different regions of our
country. So something for us to pursue, Madam Chair. Thank you
very much.
Ms. Eshoo. I thank the gentleman.
This is all about our taking a decision that we are going
to make this a top priority in our country, that we are going
to bring this back to the United States of America, that we can
and how we work with industry to make sure that the resources
are there, that the underlying resources relative to developing
this through university system, the advanced manufacturing. We
have people that are here today relative to Zantac and the
assurance that that was actually--it was their work that
brought about the attention of the FDA and its efficacy, so
these are things we can do, but we have to take a decision that
it is a top priority for our country and develop a plan and
stick to it. So let's see, who's next? Dr. Burgess?
Mr. Burgess. Go to Mr. Griffith. Morgan's been sitting here
quite a while.
Ms. Eshoo. Oh, he has been waiting. You don't have to be
waived on, you are a member of the committee. There was one
more Member--who was it that didn't come back that had waived?
Anyway, Mr. Griffith, you are recognized. Thank you for your
patience.
Mr. Griffith. Thank you very much. And I would just say,
based on some earlier testimony, Mr. Gaugh--is that correct? I
am sorry, I was in another committee hearing earlier when you
were introduced.
Mr. Gaugh. Gaugh.
Mr. Griffith. Gaugh. When you were talking about different
people reacting differently, I am one of those people, and some
of my generics work just fine, but I take Synthroid. And I
tried going to the generic, just because I was trying to figure
out ways to save money. Don't think it would have saved me any
money, but the insurance company, if we all work together, we
can make a difference. Oh, my goodness. I had a terrible time
with the generic, and I went into my pharmacist and said, ``I
don't care what it costs. Give me the brand name. This is
driving me nuts.''
So everybody does react a little bit differently, and
sometimes the generics are fabulous, and many--I use many
generics for that reason. Sometimes they just don't work with
your body chemistry because of the excipients? Did I say that
correctly?
Mr. Gaugh. Correct.
Mr. Griffith. So we have to try and work on that.
Ms. Gibson, I found your testimony very interesting, and I
am just curious, what makes pig guts the rare earth of medical
care?
Ms. Gibson. So I was trying to find a way to communicate
how dependent we are on a single country for a really important
component, and there has been a lot in the media about rare
earths in our consumer products. You can't make your iPhones
and hybrid cars and wind turbines. So I was trying to reach out
to sort of a broader constituency to understand that really our
medicines, they are like the ``rare earths,'' in quotes, for
the continuity of our healthcare system. If we don't have them,
it will shut down.
Mr. Griffith. And you were specifically referencing heparin
and pigs and so forth and raised concern about Smithfield
having been acquired, I think back in 2013, by a Chinese
company, but the pigs are still, even though not part of my
Virginia, they are still Virginia and North Carolina pigs
predominantly. And so I am just wondering, was your concern
more about the way that a Chinese company could affect the
production amounts of the distribution locations? It is really
not about the pigs being grown in Virginia or North Carolina,
or the pig guts raised that are produced there?
Ms. Gibson. It is about where those pig intestines that are
the raw material for heparin, where they are going. Do we have
any information? Smithfield is a private company. Are they
willing to tell Congress and our national security apparatus
where those pig guts are going? Are they going to China to make
for that population? Are they going to Europe? Or are they
staying here in the United States? I understand we slaughter 15
million pigs a year in this country, and if there is a shortage
of heparin because of what is happening in China with the pigs,
that would be good information to know so we can ensure a
supply of heparin here.
Mr. Griffith. All right. And I do appreciate that.
I mean, Smithfield tells me that they are continuing to
invest in expansion, and it is a beneficial practice even when
that process occurs in the United States, but what you are
saying is, is that you want more of that staying here in the
United States and being able to track it. And how do we get
other pork producers in the United States to allow their rare-
earth pig guts to be used in the United States for the
production of medicine here?
Ms. Gibson. To create demand for API in the United States,
and that will happen--we are facing already--a shortage of
heparin is going to be really severe, and then prices go up
when there are shortages. So that could incent certain
companies here in the United States from wanting to make
heparin closer to home and not rely on China, but we have to
think of this in the long term. That is why we need a national
security long-term view here, but that is one thing that could
be done to incent some manufacturing here.
Mr. Griffith. Now, let me sidestep just a little bit. So
heparin is made from the pig guts, and I don't know if it
creates a reaction, but I have read reports that say 20 percent
of the American population in the southeast United States now
has some sensitivity to the alpha-gal protein found in all
mammals, including pigs. Is there any research going on on
that, and is that a part of the problem, if there is not
research here--this is not a problem that China is facing. It
is the southeast United States that is facing the largest
outbreak of this alpha-gal condition.
Ms. Gibson. I am sure there is some fine experts that we
can identify to answer that important question.
Mr. Griffith. I understand. I appreciate it.
And, Madam Chair, I yield back.
Ms. Eshoo. The gentleman yields back.
Now, I would like to recognize the ranking member of the
subcommittee, Dr. Burgess, for his questioning.
Mr. Burgess. Thank you, and thanks for the recognition.
Ms. Gibson, I haven't read all of your book, but I have
read some of it. I got to the part where you described an
indolent Congress in 2008. Well, we were in the minority then,
so if there was indolence, it had to be on the part of the
other side of the dais.
Ms. Eshoo. Thank you, Dr. Burgess.
Mr. Burgess. You are welcome. Let me just make sure I
understood your answer or your discussion with Mr. Griffith. On
the farm that is raising the pigs in this country, were you
leading us in the direction that, since that company is now
owned by Chinese interests, that they might just discard this
raw material so that it didn't interfere with the API product
stream coming from China?
Ms. Gibson. I think the question is, do we know where it is
going? Is it going to support heparin production in China, or
is it going to support heparin production for the United States
and for the hospitals in our country?
Mr. Burgess. Well, that obviously is the critical question,
and I will--I think it was Dr. Woodcock when we had the hearing
in 2008 made the observation, well, what are we going to do?
Just go without heparin, and as a practicing physician, I was
like, yikes, that would not be a good day. We do have some
other things we can do as far as anticoagulation, but heparin
is the gold standard.
You state in your written testimony that the current
approach of hammering down on manufacturers on price is the
root cause of contaminated and lethal drugs in the legitimate
supply chain and rationing and shortages of lifesaving
medicines. Do I have that substantially correct?
Ms. Gibson. That is right.
Mr. Burgess. And I don't know if you are aware, but 2 weeks
ago, we had a lengthy markup in this committee. Everyone is
concerned about the cost of pharmaceuticals. So some of the
tools that were proposed to use to control the price of
pharmaceuticals was a fairly significant excise tax. What kind
of effect would that have, if your concern is the hammering
down on manufacturers?
Ms. Gibson. There is a difference between the price that is
paid to manufacturers and the price that you and I would pay
when we go to the drugstore to get a medicine. So I asked
someone recently, what does a bottle of pills cost--how much
would a manufacturer be paid for a bottle of 30 pills? They
said maybe a penny a pill. What I think is very important for
us to understand is transparency and the difference. Where does
all that money go from what the manufacturers pay to the price
that we pay when we go to pick it up at the drugstore? There is
no R&D. There is no marketing. I think transparency for us to
understand that differential will help us know whether we are
actually getting value from the money that we are spending.
Mr. Burgess. Well, on this, I think if I understood
correctly, was the administration's position with proposing the
rebate rule so that there would be more transparency on the
dollars that go into the purchase of a compound and how they
are distributed throughout the supply chain. For whatever
reason, Congressional Budget Office considerations, completion
of that rule or the promulgation of that rule did not occur
because of the concern that removal of the rebate or visibility
transparency of that rebate would somehow in turn drive up
prices in other parts of that ecosystem, insurance premiums or
hospital charges.
I am not sure about that. I don't think that is the case,
but in any event, that was the concern voiced by the
Congressional Budget Office, and the administration backed off
from promulgating the rule because it had some other budgetary
implications if they had gone forward and then had to withdraw
it, but it is a concern to me that people don't know. And for
years, I had a health savings account where I had a very high
deductible, and I go into the pharmacy and I just pay the list
price. Kind of a shock to me later on to learn that, at some
point along the line, there is a rebate paid, but I don't get
to participate in that.
In fact, I had an amendment during that lengthy markup 2
weeks ago that two of the things that have really driven this
discussion on pricing of pharmaceuticals has been the cost of
the EpiPen and the cost of insulin. So I recommended that, for
insulin, in Medicare and Medicaid and CHIP, that that rebate
just be given to the patient at the point of sale.
Unfortunately, that was not accepted, but I think it is an idea
that we should still continue to pursue, because relief for the
consumer is really where we were headed.
I am concerned about, yes, we can all make the argument
that prices are just too high for pharmaceuticals, but on the
other hand, as we hammer down--your words--as we hammer down on
the manufacturers, there is going to be, whether you want it or
not, there is going to be an effect, and one of those effects
may be shortages or some other problem. So, anyway, I
appreciate the indulgence.
I will yield back.
Ms. Eshoo. I thank the ranking member, and he yields back.
I can't help but observe that, when it comes to our
military and what we need to defend our country, we don't
outsource it to China or any other country. We don't have our
jets, we don't have our carrier ships, our submarines, we don't
outsource that, and we don't for a very good reason. We depend
on American ingenuity, American IP, American manufacturing for
our own national security, and I believe that the testimony
that we have had today, underlying it all is that the drug
supply for the United States for the people of our country is
part of the security of our country.
So we have, I think, really been blessed by the testimony
we have received today from experts from the first panel, the
second panel. We have big decisions to make, and they are
political decisions. We have to collectively make a decision to
develop a plan that is for the security of the United States of
America and its people. So I want to thank this panel.
Ms. Gibson, thank you for your extraordinary advocacy, your
thinking, your writing, your research. You have been a great
asset to the committee and to myself and my staff, and I thank
you.
Mr. Price, thank you. I would like to see a whole new U.S.
market for API, and I will consider it, you know, a collective
success of this committee to develop that market. We want to
work with you on it.
Mr. Gaugh, thank you very much for your testimony.
And, with that, I would like to ask for unanimous consent
to place the following documents for the record: the statement
from the U.S. Pharmacopeia Convention, the letter from
Valisure, and a statement from the Premier Inc. Healthcare
Alliance.
Hearing no objections, so ordered.
[The information appears at the conclusion of the hearing.]
Ms. Eshoo. And the Health Subcommittee will now adjourn.
Thank you.
[Whereupon, at 1:43 p.m., the subcommittee was adjourned.]
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