    [House Hearing, 116 Congress]
    [From the U.S. Government Publishing Office]

        SECURING THE U.S. DRUG SUPPLY CHAIN: OVERSIGHT OF FDA'S FOREIGN
                               INSPECTION PROGRAM

    =======================================================================

                                    HEARING

                                   BEFORE THE

                  SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               DECEMBER 10, 2019

                                   __________

                               Serial No. 116-83

    [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
    44-495 PDF           WASHINGTON : 2021

                        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 Oversight and Investigations

                            DIANA DeGETTE, Colorado
                                      Chair
    JAN SCHAKOWSKY, Illinois             BRETT GUTHRIE, Kentucky
    JOSEPH P. KENNEDY III,                 Ranking Member
        Massachusetts, Vice Chair        MICHAEL C. BURGESS, Texas
    RAUL RUIZ, California                DAVID B. McKINLEY, West Virginia
    ANN M. KUSTER, New Hampshire         H. MORGAN GRIFFITH, Virginia
    KATHY CASTOR, Florida                SUSAN W. BROOKS, Indiana
    JOHN P. SARBANES, Maryland           MARKWAYNE MULLIN, Oklahoma
    PAUL TONKO, New York                 JEFF DUNCAN, South Carolina
    YVETTE D. CLARKE, New York           GREG WALDEN, Oregon (ex officio)
    SCOTT H. PETERS, California
    FRANK PALLONE, Jr., New Jersey (ex
        officio)
                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Diana DeGette, a Representative in Congress from the State
      of Colorado, opening statement.................................     2
        Prepared statement...........................................     3
    Hon. Greg Walden, a Representative in Congress from the State of
      Oregon, opening statement......................................     4
        Prepared statement...........................................     6
    Hon. Frank Pallone, Jr., a Representative in Congress from the
      State of New Jersey, opening statement.........................     7
        Prepared statement...........................................     9
    Hon. Brett Guthrie, a Representative in Congress from the
      Commonwealth of Kentucky, opening statement....................    10
        Prepared statement...........................................    11

                                   Witnesses

    Mary Denigan-Macauley, Ph.D., Director, Health Care, Government
      Accountability Office..........................................    13
        Prepared statement...........................................    15
        Answers to submitted questions...............................   119
    Janet Woodcock, M.D., Director, Center for Drug Evaluation and
      Research, Food and Drug Administration.........................    47
        Prepared statement...........................................    49
        Answers to submitted questions...............................   125

                               Submitted Material

    Article of January 31, 2019, ``Culture of 'Bending Rules' in
      India Challenges U.S. Drug Agency,'' by Ari Alstedter and Anna
      Edney, Bloomberg, submitted by Mr. Ruiz........................    94
    Article of May 10, 2019, ``Tainted drugs: Ex-FDA inspector warns
      of dangers in U.S. meds made in China, India'' by Didi
      Martinez, Brenda Breslauer, and Stephanie Gosk, NBC News,
      submitted by Mr. Ruiz..........................................   103
    Article of October 29, 2019, ``In generic drug plants in China
      and India, data falsification is still a problem,'' by
      Katherine Eban and Sony Salzman, Stat, submitted by Mr. Ruiz...   112

        SECURING THE U.S. DRUG SUPPLY CHAIN: OVERSIGHT OF FDA'S FOREIGN
                               INSPECTION PROGRAM

                                  ----------

                           TUESDAY, DECEMBER 10, 2019

                      House of Representatives,
          Subcommittee on Oversight and Investigations,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 10:04 a.m., in
    the John D. Dingell Room 2123, Rayburn House Office Building,
    Hon. Diana DeGette (chair of the subcommittee) presiding.
        Members present: Representatives DeGette, Schakowsky,
    Kennedy, Ruiz, Kuster, Castor, Tonko, Clarke, Pallone (ex
    officio), Guthrie (subcommittee ranking member), McKinley,
    Griffith, Brooks, Mullin, and Walden (ex officio).
        Staff present: Kevin Barstow, Chief Oversight Counsel;
    Jeffrey C. Carroll, Staff Director; Manmeet Dhindsa, Counsel;
    Austin Flack, Staff Assistant; Tiffany Guarascio, Deputy Staff
    Director; Chris Knauer, Oversight Staff Director; Kevin
    McAloon, Professional Staff Member; Kaitlyn Peel, Digital
    Director; Tim Robinson, Chief Counsel; Nikki Roy, Policy
    Coordinator; Emily Ryan, GAO Detailee; Andrew Souvall, Director
    of Communications, Outreach, and Member Services; Benjamin
    Tabor, Policy Analyst; C.J. Young, Press Secretary; Jen
    Barblan, Minority Chief Counsel, Oversight and Investigations;
    Diane Cutler, Minority Detailee, Oversight and Investigations;
    Peter Kielty, Minority General Counsel; Ryan Long, Minority
    Deputy Staff Director; Brannon Rains, Minority Legislative
    Clerk; Kristin Seum, Minority Counsel, Health; and Alan
    Slobodin, Minority Chief Investigative Counsel, Oversight and
    Investigations.
        Ms. DeGette. The Subcommittee on Oversight and
    Investigations will now come to order.
        Today, the subcommittee is holding a hearing entitled,
    ``Securing the U.S. Drug Supply Chain: Oversight of FDA's
    Foreign Inspection Program.'' The purpose of the hearing is to
    examine the Food and Drug Administration's ability to
    effectively oversee the quality of drug products manufactured
    in foreign countries.
        The Chair now recognizes herself for purposes of an opening
    statement.

     OPENING STATEMENT OF HON. DIANA DeGETTE, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF COLORADO

        Today's hearing focuses on an area of longstanding concern
    to this committee that has taken on increased importance: The
    safety and effectiveness of pharmaceutical products made in
    foreign countries. Between 70 and 80 percent of active
    pharmaceutical ingredients and 40 percent of finished drugs are
    made outside the United States. In particular, China and India
    produce a significant portion of the U.S. drug supply.
        Because the FDA can't possibly test every new drug that
    comes into the U.S., inspections of drug manufacturers abroad
    are a critical way to ensure that manufacturers around the
    world are following quality standards and producing drugs that
    are safe and effective for the American public. However, the
    history of the FDA's foreign drug inspection program is one of
    challenges and incremental progress. As far back as 1998, the
    GAO has been raising concerns with the FDA's foreign
    inspections.
        This committee has a long history of oversight in this
    area. For example, in 2007, we held a hearing about weaknesses
    in the FDA's foreign inspections program. At that time, the
    agency was not conducting frequent inspections abroad and did
    not have reliable data even to know how many firms it needed to
    inspect.
        FDA also struggled to hire inspectional staff, and its
    inspectors did not have reliable translators to help them
    conduct inspections in foreign-language countries. I remember
    that hearing because I was there, and it was shocking.
        The year after that hearing, the world was reminded why
    securing the global pharmaceutical supply chain is critical,
    when it was discovered that tainted ingredients were used to
    produce heparin, which is a critical drug used in surgery and
    during dialysis. As a result of that mishap, Americans died,
    drug shortages occurred, and many lost confidence in FDA's
    ability to regulate drugs manufactured abroad.
        GAO's reports over the years have also noted
    vulnerabilities in how FDA regulates foreign drug
    manufacturing. For example, in 2010, GAO found that FDA may
    never have inspected most foreign firms. FDA was also
    struggling to staff up its foreign offices, which were intended
    to make foreign inspections more efficient and effective.
    Because of these and other issues, GAO placed FDA's foreign
    inspections program on its high-risk list over 10 years ago.
        Now, in response to these challenges, Congress increased
    FDA's resources to conduct foreign inspections and granted the
    agency new authorities over foreign firms. As a result, the
    number of inspections FDA conducted increased overseas, and the
    FDA implemented a risk-based approach to select firms for
    inspection, regardless of whether they were domestic or
    foreign.
        Now, these were significant improvements, but here we are
    back today because FDA's foreign inspection program still has
    some unresolved challenges. In the GAO's written testimony
    today, there are reports on the results of its recent travel
    overseas to evaluate FDA's work. GAO still found some of the
    same issues, unfortunately, that have been hindering FDA's
    foreign inspection program for years.
        The number of foreign inspections dropped in the last 2
    years, after years of increases. Furthermore, when FDA conducts
    inspections in foreign-language-speaking countries, it still
    relies on the firm itself to provide a translator, raising
    questions about impartiality. And despite the new resources,
    FDA continues to struggle to hire enough inspectors, including
    in the foreign offices, and frankly, there are some real
    barriers to being able to do that.
        These challenges take on real meaning when we see reports
    of potentially unsafe products in the market. Over the last
    year and a half, FDA has been announcing widespread recalls of
    popular medications used by millions of Americans to treat
    blood pressure and heartburn because of trace amounts of
    carcinogens identified in multiple versions of these drugs.
        Now, I understand each of these recalls involves its own
    particular causes and factors, but taken together they raise
    larger issues, and I'm really--Dr. Woodcock, I'm very happy
    you're here today, because I look forward to hearing what the
    agency's response is to these new GAO findings.
        Before I close, I just want to emphasize a couple final
    thoughts. First, the issues today affect both brand and generic
    drugs. Many foreign firms provide the active pharmaceutical
    ingredients used in both brand and generic versions of drugs,
    so this can happen throughout the supply chain.
        And finally, I want to emphasize, this hearing should not
    be interpreted as an indictment of foreign drug manufacturing
    generally. Americans should not feel that they cannot trust
    medicines made abroad, nor should we swear off foreign-made
    drugs. In fact, we're increasingly reliant on foreign
    manufacturers, but we do need to make sure that all of these
    issues which have been persistent for many, many years continue
    to be addressed.
        And with that, I want to thank both of our witnesses for
    appearing today.
        [The prepared statement of Ms. DeGette follows:]

                    Prepared Statement of Hon. Diana DeGette

        Today's hearing focuses on an area of longstanding concern
    to the committee that has taken on increased importance: the
    safety and effectiveness of pharmaceutical products made in
    foreign countries.
        Between 70 and 80 percent of active pharmaceutical
    ingredients (``API'') and 40 percent of finished drugs are made
    outside the United States. In particular, China and India
    produce a significant portion of the U.S. drug supply.
        Because the Food and Drug Administration (FDA) cannot
    possibly test every drug that comes into the U.S., FDA
    inspections of drug manufacturers abroad are a critical way to
    ensure that manufacturers around the world are following
    quality standards and producing drugs that are safe and
    effective for the American public.
        However, the history of FDA's foreign drug inspection
    program is one of challenges and incremental progress. As far
    back as 1998, the Government Accountability Office (GAO) has
    been raising concerns with FDA's foreign inspections.
        This committee has a long history of oversight in this
    area. For instance, in 2007, we held a hearing about weaknesses
    in FDA's foreign inspections program. At that time, FDA was not
    conducting frequent inspections abroad, and did not have
    reliable data to even know how many firms it needed to inspect.
    FDA also struggled to hire inspectional staff, and its
    inspectors did not have reliable translators to help them
    conduct inspections in foreign-language countries.
        The year after that hearing, the world was reminded why
    securing the global pharmaceutical supply chain is critical,
    when it was discovered that tainted ingredients were used to
    produce heparin--a critical drug used in surgery and during
    dialysis.
        As a result of that mishap, Americans died, drug shortages
    occurred, and many lost confidence in FDA's ability to regulate
    drugs manufactured abroad.
        GAO's reports over the years have also noted
    vulnerabilities in how FDA regulates foreign drug
    manufacturing. For example, in 2010, GAO found that FDA may
    have never inspected most foreign firms. FDA was also
    struggling to staff up its foreign offices, which were intended
    to make foreign inspections more efficient and effective.
        Because of these and other issues, GAO placed FDA's foreign
    inspections program on its High Risk list over 10 years ago.
        In response to these challenges, Congress increased FDA's
    resources to conduct foreign inspections and granted FDA new
    authorities over foreign firms. As a result, FDA increased the
    number of inspections it conducted, and implemented a risk-
    based approach to select firms for inspection, regardless of
    whether they were foreign or domestic.
        These were significant improvements. But despite that
    progress, we are back here today because FDA's foreign drug
    inspection program still has unresolved challenges. In its
    written testimony today, GAO reports on the results of its
    recent travel overseas to evaluate FDA's work. GAO found some
    of the same issues that have been hindering FDA's foreign
    inspection program for years.
        GAO reports that the number of foreign inspections dropped
    in the last two years, after years of increases. Furthermore,
    when FDA conducts inspections in foreign language-speaking
    countries, it still largely relies on the firm itself to
    provide a translator, raising concerns about impartiality. And
    despite getting new resources, FDA continues to struggle to
    hire enough inspectors, including in its foreign offices.
        These challenges take on real meaning when we see reports
    of potentially unsafe products in the market. Over the past
    year and a half, FDA has been announcing widespread recalls of
    popular medications used by millions of Americans to treat
    blood pressure and heartburn, because of trace amounts of
    carcinogens identified in multiple versions of these drugs.
        While I understand each of these recalls involves its own
    particular causes and factors, taken together, they raise
    larger issues and concerns that FDA has not fully addressed
    longstanding vulnerabilities in its foreign inspections
    program.
        Before I close, I would like to emphasize a couple final
    thoughts. First, the issues we will be discussing today affect
    both brand and generic drugs. Many foreign firms provide the
    active pharmaceutical ingredients used in both brand and
    generic versions of drugs, so these issues can affect drugs
    throughout the supply chain--which is all the more reason why
    they must be addressed.
        Finally, this hearing should not be interpreted as an
    indictment of foreign drug manufacturing generally. Americans
    should not feel that they cannot trust medicines made abroad,
    nor should we swear off foreign-made drugs. In fact, we are
    increasingly reliant on foreign manufacturers.
        But if drugs are going to be made abroad, then Americans
    must have confidence in the ability of FDA to effectively
    regulate foreign suppliers. It is critical that FDA have the
    resources and the capability to do this job and ensure that
    every American can trust the safety and effectiveness of the
    drugs they take.

        Ms. DeGette. And I'm going to yield to the ranking member
    of the full Energy and Commerce Committee, Mr. Walden, for
    purposes of his opening statement, 5 minutes.

      OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF OREGON

        Mr. Walden. Thank you very much, Madam Chair. And I want to
    thank Ranking Member Guthrie for yielding to me. We've got
    another hearing I have to get at that conflicts with this one,
    so--and I want to thank our witnesses for being here. And,
    Madam Chair, thank you for holding this really important
    hearing, because our drugs and drug ingredients more and more
    are coming from overseas, especially from China and India, and
    manufacturers have ultimate responsibility for the safety and
    effectiveness of these products.
        But the FDA has an indispensable role to protect public
    health, which I know you all take very seriously, by ensuring
    that drug firms are complying with good manufacturing processes
    and practices. Through this hearing, I hope FDA can further
    strengthen its ability to fulfill its public health mission and
    to protect the safety, effectiveness, and integrity of the U.S.
    drug supply.
        Today, we have the benefit of the Government Accountability
    Office, their analysis, to assist us in our work. Over the
    years, GAO has provided invaluable work to this committee on
    FDA's foreign drug inspection program, and not long ago the GAO
    reported that the FDA was not conducting enough drug
    inspections overseas and lacked the resources and authorities
    to adequately meet this inspection need. This committee
    responded by enacting the Food and Drug Administration Safety
    Innovation Act or--we'll just leave it at that--and the Generic
    User Fee Act, or GDUFA--they have all these UFAs and ASIAs and
    DASIAs and--well, anyway, FDA now has additional resources and
    authorities and, to FDA's credit, has addressed the previous
    disparity between the number of domestic and foreign
    inspections conducted.
        Earlier this year, as you know, the committee again asked
    the GAO, on a bipartisan basis, to evaluate the current state
    of the foreign drug inspection program. While progress has been
    made in some areas, the GAO's preliminary observations indicate
    the FDA continues to face persistent challenges in its ability
    to conduct foreign drug inspections, and particularly in India
    and China. This is concerning because the FDA is identifying
    serious deficiencies during many foreign inspections.
        Now, for years, the FDA leadership has spoken of
    transforming the agency into a global health organization,
    particularly in addressing imported drugs. But even with that
    stated priority and the influx of user fees, FDA has told the
    GAO and this committee that it can't hire enough inspectors to
    fill vacancies among staff conducting foreign inspections. Now,
    having sufficient numbers of inspectors is not a new problem.
    The need to hire additional inspectors was part of the reason
    that Congress gave the FDA the authority to collect user fees
    for generic drugs.
        Today, FDA not only has vacancies in its foreign offices
    but also does not have enough inspectors in its dedicated
    foreign drug cadre. The FDA recently received direct-hire
    authority to address this problem, and I have questions today
    about how this authority will be used to fill these vacancies,
    as well as about FDA's hiring and retention efforts the past 6
    years.
        Other challenges to FDA's foreign drug inspection program
    remain, and unlike domestic drug inspections, most foreign drug
    firms actually receive advance notice of an FDA inspection. And
    when the FDA inspectors are traveling from the United States,
    which is often the case in most foreign drug inspections, the
    FDA preannounces inspections and foreign drug firms generally
    get 12 weeks in advance with a notice on when the FDA
    inspectors are coming to their plants. The concerns raised by
    recent investigative reports is this system gives plants ample
    time to clean up evidence of unsanitary conditions, wrongdoing,
    or data manipulation.
        And I would just say as a side note, having been a licensee
    of the FCC for 21 years in the radio business, I always would
    have liked to have had a 12-week notice in advance when the FCC
    was coming to inspect our station. We never got a fine, but we
    would have made sure everything was completely in order. It
    always was.
        In 2014, to address these issues, the FDA instituted an
    initiative in India, giving plants only short or no advance
    notice of inspections, and as a result, the serious violations
    uncovered by inspectors rose by almost 60 percent. So the
    initiative was discontinued in 2015. FDA told the committee
    they discontinued the initiative because it lacked protocols
    and evaluation criteria.
        However, the FDA still must believe there's value to short-
    notice inspections, because you do conduct such inspections in
    for-cause situations and conduct short-notice inspections
    domestically.
        Finally, in about 80 percent of the inspections, FDA sends
    only one inspector, who is often reliant on the drug firm's
    employees or agents to do the translation. What could go wrong
    there? This solitary inspector, relying on the firm for
    translation and perhaps even travel arrangements, is allocated
    only a few days for the difficult task of inspecting a drug
    plant that can be the size of a small city.
        Meanwhile, the drug firm has about 3 months' advance notice
    of the inspection. If the firm's unscrupulous, that's more than
    enough time to subvert regulations by fabricating records and
    concealing actual conditions. I think you get the point. So FDA
    needs to respond to the overall challenges of foreign drug
    inspections with more vigor. As they said in ``Jaws,'' ``You're
    going to need a bigger boat.'' So we must maintain public
    confidence and trust in our drug supply chain, and we look
    forward to working with you to make that happen.
        Madam Chair, thank you for having this hearing.
        [The prepared statement of Mr. Walden follows:]

                     Prepared Statement of Hon. Greg Walden

        Chair DeGette, thank you for this hearing. Our drugs and
    drug ingredients more and more come from overseas, especially
    from China and India. Manufacturers have ultimate
    responsibility for the safety and effectiveness of these
    products. But FDA has an indispensable role to protect public
    health by ensuring that drug firms are complying with good
    manufacturing practices. Through this hearing, I hope FDA can
    further strengthen its ability to fulfill its public health
    mission, and to protect the safety, effectiveness, and
    integrity of the U.S. drug supply.
        Today, we have the benefit of the Government Accountability
    Office's (GAO) analysis to assist us. Over the years, GAO has
    provided invaluable work to this Committee on FDA's foreign
    drug inspection program. Not that long ago, GAO reported that
    FDA was not conducting enough drug inspections overseas and
    lacked resources and authorities to adequately meet this
    inspection need. This committee responded by enacting the Food
    and Drug Administration Safety and Innovation Act, or FDASIA,
    and the Generic Drug User Fee Act, or GDUFA. FDA now has
    additional resources and authorities and, to the FDA's credit,
    has addressed the previous disparity between the number of
    domestic and foreign inspections conducted.
        Earlier this year, the committee again asked GAO on a
    bipartisan basis to evaluate the current state of the foreign
    drug inspection program. While progress has been made in some
    areas, the GAO's preliminary observations indicate that FDA
    continues to face persistent challenges in its ability to
    conduct foreign drug inspections, particularly in India and
    China. This is concerning because FDA is identifying serious
    deficiencies during many foreign inspections.
        For years, FDA leadership has spoken of transforming the
    agency into a global health organization, particularly in
    addressing imported drugs. But even with that stated priority
    and the influx of user fees, FDA has told the GAO and this
    committee that it can't hire enough inspectors to fill
    vacancies among staff conducting foreign inspections. Having
    sufficient numbers of inspectors is not a new problem--the need
    to hire additional inspectors was part of the reason that
    Congress gave FDA the authority to collect user fees for
    generic drugs. Today, FDA not only has vacancies in its foreign
    offices but also does not have enough inspectors in its
    dedicated foreign drug cadre. FDA recently received direct-hire
    authority to address this problem, and I have questions today
    about how this authority will be used to fill these vacancies,
    as well as about FDA's hiring and retention efforts the past 6
    years.
        Other challenges to FDA's foreign drug inspection program
    remain. Unlike domestic drug inspections, most foreign drug
    firms receive advance notice of an FDA inspection. When FDA
    inspectors are traveling from the United States, which is the
    case in most foreign drug inspections, the FDA pre-announces
    inspections. Foreign drug firms generally get 12 weeks advance
    notice on when FDA inspectors are coming to their plants. The
    concerns raised by recent investigative reports is that this
    system gives plants ample time to clean up evidence of
    unsanitary conditions, wrongdoing, or data manipulation.
        In 2014, to address these issues, the FDA instituted an
    initiative in India giving plants only short or no advance
    notice of inspections. As a result, the serious violations
    uncovered by inspectors rose by almost 60 percent. The
    initiative was discontinued in July 2015. FDA told the
    committee they discontinued the initiative because it lacked
    protocols and evaluation criteria. However, FDA still must
    believe there is value to short notice inspections, because
    they conduct such inspections in for-cause situations and
    conduct short notice inspections domestically.
        Finally, in about 80 percent of inspections, FDA sends only
    one inspector, who is often reliant on the drug firm's
    employees or agents for translation. This solitary inspector,
    relying on the firm for translation and perhaps even travel
    arrangements, is allocated only a few days for the difficult
    task of inspecting a drug plant that can be the size of a small
    city. Meanwhile, the drug firm has about 3 months advance
    notice of the inspection. If the firm is unscrupulous, that is
    more than enough time to subvert regulations by fabricating
    records and concealing actual conditions.
        Despite having the deck stacked against them, the committee
    has seen and heard plenty of accounts about intrepid FDA
    inspectors who have discovered serious misconduct at firms in
    India and China, protecting our Nation's drug supply in the
    process. We thank them for their service.
        FDA needs to respond to the overall challenges of foreign
    drug inspections with more vigor. As they said in ``Jaws,''
    ``You're going to need a bigger boat.'' We must maintain public
    confidence and trust in our drug supply, and FDA needs to rise
    further to meet the challenge. I welcome our witnesses and look
    forward to the testimony.

        Ms. DeGette. Thank you so much, Mr. Walden.
        The Chair now recognizes the chairman of the full
    committee, Mr. Pallone, for 5 minutes.

    OPENING STATEMENT OF HON. FRANK PALLONE, Jr., A REPRESENTATIVE
                IN CONGRESS FROM THE STATE OF NEW JERSEY

        Mr. Pallone. Thank you, Chairwoman DeGette.
        Today, the committee continues its longtime work of
    conducting oversight of the FDA's foreign drug inspection
    program. The program is a key piece of our efforts to ensure
    that the prescription drugs Americans take every day are safe
    and effective. Under the law, any firm, whether it's
    basically--whether it's based domestically or overseas, that
    seeks approval to market a drug in the U.S. must comply with
    the FDA's current good manufacturing practice regulations.
        Both foreign and domestic firms are held to the same
    standards, which lay out the essential quality controls that
    ensure drugs are safe for use, and those standards also apply
    equally to both brand and generic manufacturers. While it's up
    to the manufacturers to take the necessary steps to implement
    the CGMP practices, FDA is tasked with inspecting facilities
    around the world to verify they're in compliance.
        In the past, the committee found that FDA was woefully
    unprepared to take on the challenge of regulating and
    inspecting foreign drug manufacturers. As part of our ongoing
    oversight of this program, we found that foreign firms were not
    being inspected with regular frequency, and FDA had no
    permanent presence overseas, and its databases could not even
    tell what firms were actively shipping products to the United
    States.
        And as a result of those disturbing issues, in 2012
    Congress passed and the President signed the Food and Drug
    Administration Safety Innovation Act of 2012, and that law
    changed the way FDA selects firms to inspect, allowing it to
    focus on more high-risk facilities, including those abroad. It
    also increased FDA's authority over foreign manufacturers.
        Then in 2013, the Drug Quality and Security Act provided
    FDA with track-and-trace authority to give the agency more
    tools to counter potentially dangerous drugs in the supply
    chain. And again in 2017, Congress provided more resources to
    FDA's foreign inspection program through the Generic Drug User
    Fee Amendment.
        Now, despite these new authorities and resources, FDA's
    foreign drug inspection program continues to face challenges.
    For instance, the number in foreign inspections has actually
    declined the last 2 years. This is troubling because FDA had
    been making progress in inspecting more facilities, up until 2
    years ago, and FDA also continues to struggle with hiring staff
    to conduct foreign inspections.
        Again, this is all disturbing considering that Congress
    provided the generic drug user fees in part to fund foreign
    inspections. And I'm interested in hearing from the FDA on why
    the number of foreign inspections has declined in recent years
    and what's preventing them from reaching its capacity.
        Now, today's hearing focuses on FDA's efforts,
    manufacturers have the responsibility to guarantee their
    products are safe and effective. We have to do what we can to
    ensure that manufacturers continue to produce high-quality drug
    products, including through innovative methods such as
    continuous manufacturing. Those methods not only help control
    quality but also enable firms to compete in the global market.
        And this one final point I'd just like to keep in mind is
    that the issues we'll be discussing today affect all kinds of
    drugs throughout the supply chain. Much of the press coverage
    has framed these issues as a generic drug issue, but the fact
    is that the majority of active pharmaceutical ingredients for
    both generics and brands come from foreign countries.
        Generic drugs have saved Americans billions of dollars and
    are critical to lowering healthcare costs across the board. FDA
    must ensure that any company, whether brand or generic, that
    wishes to market drug products in the U.S. adheres to the same
    quality standards. That not only provides a level playing field
    but confidence in American consumers that the drugs they're
    taking will be safe and effective.
        So, again, I look forward to hearing from our witnesses
    about what's being done to ensure that confidence and what more
    is needed to secure the Nation's drug supply. And unless
    anybody wants my minute, I'm going to yield back. Thank you,
    Madam Chair.
        [The prepared statement of Mr. Pallone follows:]

                 Prepared Statement of Hon. Frank Pallone, Jr.

        Today, the committee continues its longtime work of
    conducting oversight of the Food and Drug Administration's
    foreign drug inspection program. This program is a key piece of
    our efforts to ensure that the prescription drugs Americans'
    take every day are safe and effective.
        Under the law, any firm--whether it is based domestically
    or overseas--that seeks approval to market a drug in the United
    States must comply with FDA's Current Good Manufacturing
    Practice (CGMP) regulations.
        Both foreign and domestic firms are held to the same
    standards, which lay out the essential quality controls that
    ensure drugs are safe for use. Those standards also apply
    equally to both brand and generic manufacturers. While it is up
    to the manufacturers to take the necessary steps to implement
    CGMP practices, FDA is tasked with inspecting facilities around
    the world to verify their compliance.
        In the past, the committee found that FDA was woefully
    unprepared to take on the challenge of regulating and
    inspecting foreign drug manufacturers. As part of our ongoing
    oversight of this program, we found that foreign firms were not
    being inspected with regular frequency, FDA had no permanent
    presence overseas, and its databases could not even tell it
    what firms were actively shipping products to the United
    States.
        As a result of these disturbing issues, in 2012, Congress
    passed and the President signed the Food and Drug
    Administration Safety and Innovation Act of 2012. The law
    changed the way FDA selects firms to inspect, allowing it to
    focus on more high-risk facilities, including those abroad. It
    also increased FDA's authorities over foreign manufacturers.
        Then, in 2013, the Drug Quality and Security Act provided
    FDA with ``track-and-trace'' authority to give the agency more
    tools to counter potentially dangerous drugs in the supply
    chain. And, again in 2017, Congress provided more resources to
    FDA's foreign inspection program through the Generic Drug User
    Fee Amendments.
        Despite these new authorities and resources, FDA's foreign
    drug inspection program continues to face challenges. For
    instance, the number of foreign inspections has declined the
    last 2 years. This is troubling because FDA had been making
    progress in inspecting more facilities up until 2 years ago.
    FDA also continues to struggle with hiring staff to conduct
    foreign inspections.
        Again, this is all deeply disturbing considering that
    Congress provided the generic drug user fees, in part, to fund
    foreign inspections. I am interested in hearing from FDA on why
    the number of foreign inspections has declined in recent years
    and what is preventing it from reaching its capacity.
        While today's hearing focuses on FDA's efforts,
    manufacturers have the first responsibility to guarantee their
    products are safe and effective. We must do what we can to
    ensure manufacturers continue to produce high-quality drug
    products, including through innovative methods such as
    continuous manufacturing. Those methods not only help control
    quality, but also enable firms to compete in the global market.
        One final point to keep in mind is that the issues we will
    be discussing today affect all kinds of drugs throughout the
    supply chain. Much of the press coverage has framed these
    issues as a ``generic drug issue''--but the fact is that the
    majority of active pharmaceutical ingredients (API) for both
    generics and brands come from foreign countries.
        Generic drugs have saved Americans billions of dollars, and
    are critical to lowering healthcare costs across the board. FDA
    must ensure that any company, whether brand or generic, that
    wishes to market drug products in the United States adheres to
    the same quality standards. That provides not only a level
    playing field, but confidence in American consumers that the
    drugs they are taking will be safe and effective.
        I look forward to hearing from our witnesses about what is
    being done to ensure that confidence, and what more is needed
    to secure the Nation's drug supply.
        I yield back.

        Ms. DeGette. The gentleman yields back.
        The Chair now recognizes Mr. Guthrie for 5 minutes.

     OPENING STATEMENT OF HON. BRETT GUTHRIE, A REPRESENTATIVE IN
               CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

        Mr. Guthrie. Thank you, Chair DeGette, for holding this
    very important hearing.
        The adequacy of FDA's oversight of the U.S. drug supply has
    been a longstanding issue for this committee. This committee
    has long been at the forefront of increasing access to reducing
    the price of drugs in the United States, particular in our
    effort to expand access to generic drugs.
        Over the last three decades, the pharmaceutical industry
    has been globalized, and drug manufacturing has shifted
    significantly from the United States to overseas. Today, about
    80 percent of ingredients for America's drug supply are
    manufactured overseas, and roughly 40 percent of drugs in the
    finished form are imported.
        FDA has the responsibility to monitor the safety and
    effectiveness of drugs through inspections of drug
    manufacturing. Over the years, the Government Accountability
    Office has reported that the FDA has been slow to make
    recommended changes to the foreign drug inspection program in
    response to a globalized environment.
        In 2012, this committee bolstered FDA's foreign drug
    inspections with additional authorities in the Food and Drug
    Administration Safety Innovation Act and funding through the
    Generic Drug User Fee Act. With this support, the FDA has
    increased the number of foreign drug inspections from 333 in
    2007 to 935 in 2018. Through a recent agreement with the
    European Union on greater cooperation on drug inspections, the
    FDA has even more resources to focus drug inspections in high-
    risk facilities.
        While important improvements have been made, FDA has
    persistent challenges. Past GAO reports and investigative
    reporting have raised concerns about the ability of FDA to
    oversee a globalized supply chain when 80 percent of the
    inspections involve only one inspector. Translation is often
    provided by the firm to be inspected, and most of the
    inspections are preannounced with firms getting 2 to 3 months'
    advance notice.
        In contrast, domestic facilities are usually inspected
    without notice. These conditions are concerning because there
    have been notable cases of systematic falsification and
    deception by firms determined to subvert FDA regulations.
    Putting FDA at this kind of disadvantage against such
    misconduct is not acceptable, particularly when we're talking
    about drugs consumed by millions of Americans daily.
        The FDA has known for decades about the need to globalize
    its foreign inspection program and operationalize it
    effectively. A strategy is needed to change the unbalanced
    dynamic where domestic facilities are usually inspected without
    notice, yet foreign facilities are given up to 3 months to
    prepare.
        Despite the additional resources provided by user fees
    since 2013, it appears the FDA has a deficit of inspectors for
    several years. For staff based in the United States, FDA
    management should consider every tool available for creative
    hiring incentives and consult with other Federal agencies who
    effectively staff similarly situated personnel.
        FDA getting direct-hire authority is a good start, but more
    must be done to increase hiring and, just as important, retain
    and promote inspectors who take on these responsibilities. With
    additional staff, FDA should increase the number of inspections
    conducted by teams rather than a single inspector and with
    translators independent of the firm being inspected.
        Surveillance inspections are data-dependent, yet the
    potential for negligent or corrupt business practices overseas
    is well known. A trust-based inspection system must be closely
    evaluated to assess the true usefulness of data, information
    accepted at face value from the foreign-based facilities.
        With the majority of drug ingredients in drugs being
    imported into the U.S., we are vulnerable to drug shortages,
    compromises in quality, and reliance on foreign sources. The
    question for FDA should not be how do we find solutions;
    instead, the question should be how quickly can we put
    solutions into action to continue to make sure America's drug
    supply is safe.
        On another note, while I know it's not the direct focus of
    today's hearing, I want to emphasize that lowering drug prices
    is one of the top things I hear back home and one of my top
    priorities as a member of this committee. I am disappointed
    that this week we are going to go through--pursue partisan
    legislation on the floor instead of bipartisan policies that
    have broad support.
        I look forward to working with my colleagues to advance
    bipartisan reform that will actually lower drug prices while
    preserving innovative research. The FDA must maintain the
    public's confidence in America's drug supply by ensuring it has
    a smart, effective foreign drug inspection program strategy
    that is not just planned or discussed but is both operational
    and successful. I welcome the witnesses, and I look forward to
    the testimony.
        I yield back.
        [The prepared statement of Mr. Guthrie follows:]

                    Prepared Statement of Hon. Brett Guthrie

        Thank you, Chair DeGette, for holding this very important
    hearing. The adequacy of FDA's oversight of the U.S. drug
    supply has been a longstanding issue for this Committee.
        This committee has long been at the forefront of increasing
    access to and reducing the price of drugs in the United States,
    particularly in our efforts to expand access to generic drugs.
        Over the last three decades, the pharmaceutical industry
    has become globalized and drug manufacturing has shifted
    significantly from the United States to overseas. Today, about
    80 percent of ingredients for America's drug supply are
    manufactured overseas, and roughly 40 percent of drugs in the
    finished form are imported.
        FDA has the responsibility to monitor the safety and
    effectiveness of drugs through inspections of drug
    manufacturing. Over the years, the Government Accountability
    Office (GAO) has reported that the FDA has been slow to make
    recommended changes to the foreign drug inspection program in
    response to a globalized environment.
        In 2012, this committee bolstered FDA's foreign drug
    inspections with additional authorities in the Food and Drug
    Administration Safety and Innovation Act and funding through
    the Generic Drug User Fee Act. With this support, the FDA has
    increased the number of foreign drug inspections from 333 in
    2007 to 935 in 2018. Through a recent agreement with the
    European Union on greater cooperation on drug inspections, the
    FDA has even more resources to focus drug inspections in high-
    risk facilities.
        While important improvements have been made, FDA has
    persistent challenges. Past GAO reports and investigative
    reporting have raised concerns about the ability of FDA to
    oversee a globalized supply chain when 80 percent of
    inspections involve only one inspector, translation is often
    provided by the firm to be inspected, and most of the
    inspections are preannounced, with firms getting 2 to 3 months
    advance notice. In contrast, domestic facilities are usually
    inspected without notice. These conditions are concerning
    because there have been notable cases of systemic falsification
    and deception by firms determined to subvert FDA regulations.
    Putting FDA at this kind of a disadvantage against such
    misconduct is not acceptable, particularly when we are talking
    about drugs consumed by millions of Americans daily.
        The FDA has known for decades about the need to globalize
    its foreign inspection program and operationalize it
    effectively. A strategy is needed to change the unbalanced
    dynamic where domestic facilities are usually inspected without
    notice, yet foreign facilities are given up to 3 months to
    prepare.
        Despite the additional resources provided by user fees
    since 2013, it appears that FDA has had a deficit of inspectors
    for several years. For staff based in the United States, FDA
    management should consider every tool available for creative
    hiring and incentives and consult with other Federal agencies
    who effectively staff similarly situated personnel. FDA getting
    direct hire authority is a good start, but more must be done to
    increase hiring and--just as important--retain and promote
    inspectors who take on these responsibilities.
        With additional staff, FDA should increase the number of
    inspections conducted by teams rather than a single inspector,
    and with translators independent of the firm being inspected.
    Surveillance inspections are data-dependent, yet the potential
    for negligent or corrupt business practices overseas is well-
    known. A trust-based inspection system must be closely
    evaluated to assess the true usefulness of data and information
    accepted at face value from foreign-based facilities.
        With the majority of drug ingredients and drugs being
    imported into the U.S., we are vulnerable to drug shortages,
    compromises in quality, and reliance on foreign sources. The
    question for FDA should not be ``How do we find solutions?''
    Instead, the question should be ``How quickly can we put
    solutions into action to continue to make sure America's drug
    supply is safe?''
        On another note, while I know that this is not the direct
    focus of today's hearing, I want to emphasize that lowering
    drug prices is one of the top things I hear back home and one
    of my top priorities as a member of this committee. I am
    disappointed that my colleagues on the other side of the aisle
    have chosen to pursue partisan legislation on the floor this
    week instead of bipartisan policies that have broad support. I
    look forward to working with my colleagues to advance
    bipartisan reform that will actually lower drug prices.
        The FDA must maintain the public's confidence in America's
    drug supply by ensuring it has a smart, effective foreign drug
    inspection program strategy that is not just planned or
    discussed but is both operational and successful. I welcome the
    witnesses and look forward to the testimony.

        Ms. DeGette. The gentleman yields back.
        I ask unanimous consent that the Members' written opening
    statements be made part of the record.
        Without objection, so ordered.
        I would now like to introduce our witnesses for today's
    hearing, Dr. Mary Denigan, who's the Director of Healthcare,
    Government Accountability Office. Welcome. And Dr. Janet
    Woodcock. We usually just have a reserved seat for you at all
    times, Dr. Woodcock. Thank you for being back with us today.
    She's the Director of the Center for Drug Evaluation and
    Research at the U.S. Food and Drug Administration.
        Both of you are aware that the committee is holding an
    investigative hearing, and when doing so, we have the practice
    of taking testimony under oath. Do you have any objections to
    testifying under oath?
        Let the record reflect the witnesses responded no.
        The Chair then advises you that, under the rules of the
    House and the rules of the committee, you're entitled to be
    accompanied by counsel. Does either of you wish to be
    accompanied by counsel?
        Let the record reflect the witnesses have responded no.
        If you would, then, please rise and raise your right hand
    so you may be sworn in.
        [Witnesses sworn.]
        Ms. DeGette. Let the record reflect the witnesses have
    responded affirmatively, and you're now under oath and subject
    to the penalties set forth in title 18, section 1001 of the
    U.S. Code.
        The Chair now will recognize our witnesses for a 5-minute
    summary of their written statements. In front of each of you is
    a microphone and timer and a series of lights. The timer will
    count down your time, and the red light will turn on when the 5
    minutes has come to an end.
        Now I'd like to recognize you, Dr. Denigan, for 5 minutes.

     STATEMENTS OF MARY DENIGAN-MACAULEY, Ph.D., DIRECTOR, HEALTH
      CARE, GOVERNMENT ACCOUNTABILITY OFFICE; AND JANET WOODCOCK,
     M.D., DIRECTOR, CENTER FOR DRUG EVALUATION AND RESEARCH, FOOD
                        AND DRUG ADMINISTRATION

               STATEMENT OF MARY DENIGAN-MACAULEY, Ph.D.

        Dr. Denigan-Macauley. Chair DeGette, Ranking Member
    Guthrie, and members of the subcommittee, thank you for the
    opportunity to discuss preliminary findings from our ongoing
    work, examining FDA's foreign drug inspection program. It is
    imperative that Americans have access to safe and effective
    drugs, whether produced here or abroad. Today, the majority of
    brand-name, generic, and over-the-counter drugs are
    manufactured overseas, primarily in India and China. However,
    we have had longstanding concerns about FDA's ability to
    oversee the increasingly global supply chain.
        In 1998, we reported the FDA had significant problems
    managing its foreign inspection data and conducted infrequent
    inspections of foreign establishments compared to their
    domestic counterparts. Since then, we have returned to the
    topic multiple times and found that many of these problems
    persist.
        In 2008, for example, we determined that, because of
    inaccurate data, FDA did not know how many foreign drug
    establishments were subject to inspection. In addition, we
    found that FDA continued to inspect relatively few foreign
    establishments and that, when it did, investigators faced
    unique challenges that influenced how the inspections were
    conducted.
        For example, unlike in the United States, where an
    establishment has no notice that an investigator is coming, FDA
    routinely gave foreign manufacturers significant notice.
    Further, FDA investigators had to rely on English-speaking
    employees of the very establishment that they were inspecting
    to translate, including key documents that demonstrated
    compliance with good manufacturing practices.
        In 2010, we found that, while FDA was conducting more
    inspections overseas, many establishments had still never been
    inspected. We also identified shortcomings in the operations of
    the foreign offices that FDA opened in order to provide the
    agency with important in-country information and inspection
    capability. In 2010 and again in 2016, we found that the
    offices faced persistently high vacancy rates, raising
    questions about their effectiveness.
        As a result of these challenges, we added FDA's oversight
    of medical products, including drugs, to our high-risk series,
    citing FDA's inability to ensure the quality of drugs
    manufactured overseas as an area of particular concern.
        This brings me to our current work. While the number of
    foreign drug inspections increased from 2012 to 2016,
    inspections have since dropped due to continued inaccuracies in
    data and investigator shortages. FDA is also still having
    trouble filling positions in foreign offices as well as
    positions for domestically based investigators who conduct the
    majority of these inspections overseas.
        We also found that FDA still provides up to 3 months'
    advance notice for most foreign inspections, which gives
    establishments the opportunities to fix problems before the
    investigator arrives.
        Further, investigators face persistent challenges when they
    travel overseas. As we learned on our site visits to India and
    China and in conversations with investigators based there and
    in the United States, lone investigators often had to inspect
    manufacturing campuses covering acres of land in rural areas.
    The majority have little flexibility to extend their time at a
    facility because travel schedules require back-to-back
    inspections.
        In addition, FDA continues to send investigators into
    establishments without translators. This is particularly
    problematic in China, Japan, and South Korea. Investigators are
    left to rely on translators provided by the drug manufacturer
    that is being inspected, and there can be uncertainties about
    the accuracy of the information they receive. One investigator
    we spoke to said he had to resort to a translation app on their
    phone to conduct their work.
        In closing, foreign manufacturers continue to be a critical
    source of drugs for millions of Americans, and FDA uses
    inspections as a key tool to ensure the quality of those drugs.
    FDA has made significant changes to adapt to the globalization
    of the drug supply chain and has greatly increased the number
    of inspections conducted overseas. However, the agency
    continues to face many of the same challenges that we
    identified in the past, raising questions about FDA's ability
    to conduct inspections overseas that are equivalent as required
    by law to those done here in the United States.
        Thank you, Chair DeGette, Ranking Member Guthrie, and
    members of the subcommittee, for holding this important hearing
    and continuing your oversight. This concludes my remarks. I am
    happy to respond to any questions you may have.
        [The prepared statement of Dr. Denigan-Macauley follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Ms. DeGette. Thank you, Doctor.
        Dr. Woodcock, you're now recognized for 5 minutes.

                   STATEMENT OF JANET WOODCOCK, M.D.

        Dr. Woodcock. Thank you.
        Well, around the turn of the century, pharmaceutical
    manufacturing began to move out of the U.S., as people have
    already stated, but FDA was slow to react to this change. The
    agency had a longstanding inspectional organization called the
    Office of Regulatory Affairs, or ORA, that was organized around
    domestic sites that were called districts, and these districts
    inspected facilities, whether they had foods, drugs, devices,
    or whatever, within the boundaries of each district. And then
    they would volunteer inspectors to go outside of the U.S. from
    those districts.
        FDA also had very poor and inaccurate data systems. So,
    unless a foreign site was part of an application in which it
    was overtly brought to FDA's attention, then it might not get
    inspected. And also in the data systems, there was a huge
    number of incorrect and duplicate sites. So the GAO said we had
    all these thousands we hadn't inspected. Many of them didn't
    really exist or they were duplicates of another site, but we
    didn't have data systems that could identify that.
        As detailed in my testimony, by 2005, FDA was taking steps
    to rectify the situation. Center for Drugs began requesting
    more and more ex-U.S. GMP surveillance inspections, other than
    just the preapproval inspections that had been going on, using
    a risk-based model for site selection. Despite this, the ORA,
    the field organization, was hampered by the requirement for
    every 2-year domestic GMP inspections with no statutory
    requirement for ex-U.S. establishments.
        Much of this changed, as people said, in 2012 when Congress
    passed FDASIA and the generic drug user fee program. FDASIA
    removed the 2-year domestic requirement and replaced it with a
    risk-based global approach to inspections. GDUFA provided ORA
    with additional resources to inspect the generic industry in
    both domestic and foreign.
        At this time, FDA also took major changes in how we
    regulate pharmaceutical quality. I personally led a major,
    major reorganization of the Center for Drugs' quality function.
    And I assumed the role of Acting Director of an office--a newly
    formed Office of Pharmaceutical Quality. We cleaned up the
    inventory, creating the current site catalog that has lists of
    the existing firms that import drugs into the United States as
    well as the U.S. firms that make drugs for the U.S.
        We established the Office of Surveillance inside the Office
    of Pharmaceutical Quality. The whole point of surveillance
    office is to surveil the inventory, and we can get into that
    later, but their job is to make sure we're looking at
    everything and what--and do trend analysis. And we established
    clear responsibilities between the Office of Compliance and
    other offices in CDER.
        Subsequently, the Office of Regulatory Affairs undertook a
    major reorganization, the first in an extremely long time, and
    they established inspectorates along product lines, so now we
    have a drug inspectorate, right, rather than having districts
    that do everything. They developed new SOPs called the Concept
    of Operations that established a uniform process for doing
    inspections both foreign and abroad for drugs.
        As a result of all these changes, by 2016, foreign
    surveillance inspections had exceeded domestic, and this trend
    continues, as shown in the testimony. There had been a large
    uptick and warning letters as previously uninspected sites that
    were identified by the GAO and by our catalog were evaluated.
    FDA's really currently up to date on our sites. We know there
    are always new sites coming in. We assign them inspections, and
    we are on top of all these sites as in the--documented in the
    testimony. We expect performance of sites in India and China to
    improve as they're subjected to continued U.S. oversight.
        Despite this, there is much more to do, including hiring
    inspectors and foreign office personnel--this is under way--
    transforming the site selection model into a true quantitative
    predictive model, but that will require data, us getting data,
    rather than PDF, which is what we get now, stimulating advanced
    manufacturing, and standardization and internationalization of
    quality standards. And finally, as we put in our shortage
    report, we're suggesting recognizing quality maturity as an
    important factor in manufacturers' production.
        Happy to answer questions. Thank you.
        [The prepared statement of Dr. Woodcock follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Ms. DeGette. Thank you so much, Dr. Woodcock.
        It's now time for Members to ask questions, and the Chair
    will recognize herself for 5 minutes.
        And one of the reasons why we do hearings like this on a
    continual basis is so that we can monitor these difficult
    issues over time. And this committee, as I said in my opening
    statement, has been working on foreign drug inspections for
    several decades now.
        It seems to me, Dr. Denigan, after hearing your testimony,
    some of the--number one, we've made a lot of progress over the
    years, and Dr. Woodcock talked about some of that progress that
    we've made, but we still have some sort of stubborn issues that
    continue. And, listening to your testimony, it seems like some
    of them are, number one, we're giving advance warning to these
    facilities before we go; number two, we have problem getting
    independent translators to come, so we don't know about the
    reliability of what our inspectors are being told; number
    three, unique challenges of staffing with overseas inspections;
    and number four, the quality of data.
        Are those some of the issues that you had identified?
        Dr. Denigan-Macauley. Yes, that's correct.
        Ms. DeGette. And, Dr. Woodcock, what's your view of issues
    like that that just continue to be difficult to address?
        Dr. Woodcock. There are tradeoffs on many of these.
    Obviously, we'd like to be fully staffed, but the entire FDA
    has suffered some administrative problems with hiring, and many
    of the centers are down in personnel. The field has recently
    received direct-hire authority. They hope to bring on 20 people
    that they're onboarding, and then we'd hope to hire----
        Ms. DeGette. Twenty people to do foreign inspections?
        Dr. Woodcock. Well, they will--first, they'll have to get
    trained to be inspectors, right?
        Ms. DeGette. OK.
        Dr. Woodcock. And then some of them will reach the ability
    to become foreign inspectors. They hope to bring on 50 in all,
    because they do have a number of vacancies.
        The foreign offices, again, none of these are within my
    chain of command, but they have explained to me they are really
    working on hiring. They have vacancies as well.
        Ms. DeGette. And to what do you attribute these vacancies?
    Is it just the vacancies we've seen throughout the agency since
    2016?
        Dr. Woodcock. There are--the administrative problems are
    one problem with vacancies. Another problem with vacancies, of
    course, is the roaring economy and the fact that people can
    make more money elsewhere.
        The Center for Drugs, for example, we have to hire 400
    people to net less than a hundred, because we're losing--you
    know, we're so attractive--our staff is so attractive
    elsewhere, so--but we do have administrative problems with
    hiring.
        The foreign offices, it's more complicated. People don't
    necessarily want to move their family overseas to some area in
    India for many years. And----
        Ms. DeGette. Dr. Denigan, I see you nodding at that. Would
    you like to comment on that?
        Dr. Denigan-Macauley. Yes, it is correct. I mean, once they
    even--through the direct-hire authority, while it's good, it
    still is going to take 2 to 3 years for that inspector to be
    able to get the experience to then be able to go overseas, as
    Dr. Woodcock had mentioned. And plus, if it takes 2 to 3 years,
    even if they are ready to go, we found that it can take up to 2
    years just to get over to the post. And if you're talking about
    uprooting families, getting security clearances, medical
    clearances, finding schools, housing, things like that, you can
    give up in the process. So it is very challenging.
        Ms. DeGette. And, Dr. Woodcock, what can we do to try to
    alleviate some of those challenges and expedite it? Is there
    something Congress can do to help?
        Dr. Woodcock. All right. Well, I think there are many
    things Congress can help us with. In the hiring area, I
    believe--you know, many of the things that were discussed, for
    example, a single investigator. Well, if we sent a team, then
    we do half as many inspections. So we're going to need more
    investigators if we want to have fuller coverage. All right?
        Translation, we are working on that. We do have the
    funding, and we are working on getting contracts for
    independent translators per country that, you know, are not
    related to the firm or any other part of the country.
        Unannounced inspections is, again, a tradeoff, because they
    are very inefficient, because we send people over there and
    then they aren't operating, and they're in the middle of China
    and they don't have anything to inspect, for example. So
    that's--if we had--we agree that they would be useful, but we
    feel that there's a tradeoff there between actually covering
    the inventory and then how deeply we can cover the inventory,
    and that should be obvious. So hiring, very important.
        The authorities you gave us under Cures is really helping
    the Center for Drugs in hiring people quickly that are
    qualified scientific experts. And so those type of authorities
    are very helpful.
        Ms. DeGette. Thank you. Thank you so much. Lot more
    questions, but good news, we have a lot more Members here.
        Mr. Guthrie, I recognize you for 5 minutes.
        Mr. Guthrie. Thank you very much. And I appreciate it. And
    we're kind of going down the same path, I think, with our
    questions.
        First for Dr. Denigan, just to establish the difference in
    on-site--or preannounced and unannounced inspections. So do
    announced or unannounced inspections better enhance the
    integrity and effectiveness of an inspection, and how does the
    FDA use both announced and unannounced?
        Dr. Denigan-Macauley. So, generally, the FDA uses
    unannounced inspections with their foreign offices. They've
    said that for logistical reasons they need to give up to 12
    weeks' notice for those coming from the United States because
    of the challenges of just doing the logistics. So that's a real
    value of the foreign offices because they're there, they have
    the in-country intel, and they can get there for the
    unannounced inspections.
        Mr. Guthrie. Great. Thank you very much.
        And it does, Dr. Woodcock, kind of make sense logistically
    it's easier to do unannounced inspections, easier to send an
    inspector to Long Island than to interior of China, and I
    understand the issues with that. Having said that, how do you
    weigh the risk of maybe we need to do an unannounced inspection
    even if you--I know you have to call ahead. How do you weigh
    the risk of besides? All right, there's one, we're just going
    to do an unannounced inspection even though we risk of getting
    there and they're not operating or those types of things?
        Dr. Woodcock. Yes. We do, for example, for cause. Say, if
    we have a whistleblower or a complaint, we will go in
    unannounced, even in a foreign country. So we do unannounced
    inspections both by foreign offices and domestic. But I will
    say, I mean, it is just a hypothesis anecdotal that the
    unannounced inspections are so much better, that it's worth all
    the costs, all the time. Ninety percent of the data integrity
    problems that have been found recently have been found by our
    domestic inspectors going and doing announced inspections. And
    why is that? Because they're very good. Because our regulations
    under part 11 require them to have computer systems with audit
    trails. And either they don't have those, or if they have
    messed around with them, our people can find it. So they have
    found a lot of the problem--a lot of the problems have been
    found by announced inspections.
        Mr. Guthrie. OK. Before I came here, I was in
    manufacturing. I was a quality engineer. So do you use
    independent auditors? Is that permissible with you? Because I
    know when Ford or GM will do auditor, they'll hire--or the
    company being audited to sell to them will hire someone to come
    in that everybody agrees is an independent auditor.
        Dr. Woodcock. Yes. If companies get into trouble, all
    right, and they are having trouble meeting the minimum
    standards, which are GMPs, we would frequently suggest to them
    that they use independent consultants who audit them. Sometimes
    they will give us reports on the progress of the firm.
        Meanwhile, the firm won't be able to import into the United
    States because we do have a very strong regulatory tool for
    foreign manufacturing, which we can do an import alert, and
    then they can't send anything to the United States while
    they're remediating their problems. So we do--and when we do
    consent decrees, it may include reports by external auditors.
        Mr. Guthrie. OK. Well, thanks. Just kind of specific
    questions to make sure we get it get on the record. Does the
    FDA have evaluation criteria for effectiveness of its foreign
    drug inspection program? If so, what are the criteria? And has
    FDA conducted any sort of review of the effectiveness of the
    overall program, and if so, what are the findings?
        Dr. Woodcock. Well, I think that's a very good question. I
    believe that we really need to do more of this. Of course, it's
    hard to assess the counterfactual, what would have happened if
    we weren't there, right? And so we do need to, as I said in my
    oral testimony, we really need to work on standardization of
    the inspection program, standardization internationally, and
    then we can put in some evaluations about the consequences or
    the results.
        Mr. Guthrie. Great, thanks. I want to ask a final question.
    I know we talked this week about nitrosamine and NDMA found in
    trace elements that, if anybody hears that you're more at risk
    of not take--you need to take your blood pressure--you're more
    at risk of high blood pressure than any risk from nitrosamine.
    So I want to establish that before we go forward. But have
    you--what have you done--what's the reaction of FDA? Are you
    testing for NDMA during its foreign drug inspections now?
        Dr. Woodcock. Right. No, that's not really possible. That's
    a different part of the FDA. I think some folks have a
    misunderstanding what an inspection can actually do. It can
    look at what the firm does, all right? It can't really--we
    don't go and do----
        Mr. Guthrie. You're not testing--you're inspecting, not
    testing?
        Dr. Woodcock. That's correct. So what--we have some of the
    best drug laboratories in the world, and they have been doing--
    they establish the test first, the benchmark tests that are
    being used, and we posted them so everyone could use them. And
    then we are getting samples. We've tested over 1,500, I think,
    samples of different drugs for nitrosamines, and we're
    continuing this testing and getting the manufacturers to do the
    testing as well.
        Mr. Guthrie. I'm out of time. I want to emphasize really
    quick, but if somebody's taking medicine and they think it's in
    this category, they need to take their medicine?
        Dr. Woodcock. They need to, and what's on the market now--
    --
        Mr. Guthrie. I want you to say that.
        Dr. Woodcock [continuing]. Of the ARBs of the blood
    pressure medicines is OK. We've recalled the ones that aren't
    OK.
        Mr. Guthrie. OK, thank you.
        Ms. DeGette. I just--I know the witnesses know this, but I
    just want to let you know that Members are going to be coming
    back and forth between this hearing and a, unfortunately,
    coscheduled hearing with the Health Subcommittee.
        With that, I'm going to thank Mr. Tonko for staying here
    and recognize him for 5 minutes.
        Mr. Tonko. Thank you, Madam Chair, on both counts.
        As we heard from GAO today, one of the big challenges that
    FDA inspectors face in certain foreign countries is the
    language barrier. We have heard throughout the years that FDA
    inspectors are not usually provided with an independent
    translator. In fact, GAO's testimony notes that FDA generally
    relies on the firm itself to provide a translator. According to
    GAO, FDA investigators stated that this practice, and I quote,
    ``can raise questions about the accuracy of information FDA
    investigators collect,'' close quote.
        So, Dr. Denigan, what type of concerns does the use of
    nonindependent translators raise?
        Dr. Denigan-Macauley. Yes. The use of a nonindependent
    translator definitely raises concerns about the accuracy of the
    information that they're receiving, particularly in those
    countries such as South Korea, China, Japan, where their native
    tongue would not necessarily be that language. The
    investigators that we spoke with said that at times people can
    provide translation that they don't have the knowledge to be
    doing the translation. It's simply the only person in the
    company that can speak English and, therefore, is doing it. So
    it could be inaccurate that way. It can be misinformation on
    purpose. So there are a variety of concerns that we would have
    with not having an independent translator.
        Mr. Tonko. Well, this isn't a new issue. So does GAO and
    the subcommittee, as we go forward, need to look more closely
    at it, since we raised the same concerns over some 10 years
    ago?
        Dr. Denigan, why has this been such a longstanding problem
    if it was identified 10 years ago?
        Dr. Denigan-Macauley. I don't know that I have the answer
    to that. I know that FDA has made significant changes, but they
    have not made progress in this area of providing translators.
    The China office, however, has taken initiatives to use their
    foreign nationals that work for FDA to help with the
    translations, and at times they have said the company is not
    interpreting correctly. This is what is really being said.
        Mr. Tonko. And, Dr. Woodcock, FDA told committee staff that
    using translators from the firm puts inspectors at a
    disadvantage. Are you comfortable with inspectors in a foreign
    country relying on a translator who works for the company FDA
    is inspecting?
        Dr. Woodcock. No. I think it would be better for us to have
    our own translators, and we are in the process of seeking out
    contracts so that we can do that.
        Mr. Tonko. And as you do that, like, what is involved in
    the exploring of having more independent translators doing
    these foreign inspections?
        Dr. Woodcock. Well, we have to go through the contracting
    process, which is elaborate, but we can get that done, and
    there are certainly large number of groups--because there's a
    great deal of commerce with China and India--there are a large
    number of independent translating groups that exist that one of
    which could be contracted in each country to provide this type
    of service to the FDA inspectors.
        Mr. Tonko. And, Dr. Denigan, based on your audit and
    discussions with FDA inspectors, what are the concerns
    associated with sending a single inspector to conduct a foreign
    inspection?
        Dr. Denigan-Macauley. There are a variety of different
    concerns. One can be safety. For example, on one audit over in
    China, the auditor was actually whisked away to a room and was
    held because they didn't believe that they were the auditor.
    And, until the Chinese counterpart was able to have
    conversations, she feared for her own safety. And actually, I
    think in that example--sorry, that was a bad example--there
    were two there, but even with two, that was of a concern.
        The other thing is, these campuses are huge, they're quite
    large, and it's very difficult to be able to do a complete
    inspection. And, if you're coming from the United States, then
    you don't have the flexibility, necessarily. You have to get a
    certain amount of inspections done in 3 weeks. And so, if you
    take more time at one spot to be able to do a thorough
    inspection, then you're taking away from another inspection.
        Mr. Tonko. And, Dr. Denigan, it's reported that 80 percent
    of its foreign drug inspections--the FDA's report, that 80
    percent of its foreign drug inspections are performed by
    solitary inspectors. Do you believe that that number is making
    a huge impact on the ability to sufficiently inspect these
    facilities?
        Dr. Denigan-Macauley. I do know that domestic inspections
    also have solitary inspectors, but they don't have the
    challenges domestic stateside that they have overseas. And when
    we go and we visit these plants, I mean, they are in very
    remote locations and in cultures that are different than our
    own, and it does raise concerns.
        Mr. Tonko. I thank you very much.
        And with that, Madam Chair, I yield back.
        Ms. DeGette. Thank you very much.
        I now am pleased to recognize the gentleman from West
    Virginia for 5 minutes.
        Mr. McKinley. Thank you.
        I think, Dr. Denigan, you said in your report and in some
    of the documents that, now that the FDA has opened offices, the
    GAO has reported that the open offices in China, India, Europe,
    Latin America, and elsewhere to increase the number of
    inspections that are taking place, this since 2009. So from an
    engineering perspective, I want to see from the metrics. Now,
    so have these increased number of inspectors being on site,
    have they led to--are we seeing fewer recalls, better
    productivity? What are we seeing from the result of having the
    increased inspection?
        Dr. Denigan-Macauley. So that's one of the reasons that GAO
    has made recommendations over the years, that FDA needs to tie
    the outcomes of what the foreign offices are doing to results,
    so that they can better measure their impact. One would think
    that, with unannounced inspections, that you could tie, for
    example, looking at the number of warning letters or the number
    of serious problems that they find.
        Mr. McKinley. So are you testifying that it has been--it's
    been cost effective to do this?
        Dr. Denigan-Macauley. No, I'm not saying that. I'm saying
    that FDA has not looked at how effective the offices have been.
        Mr. McKinley. OK, thank you.
        Now, let me go back, again, Dr. Woodcock, here a little bit
    on--I come from the construction industry. We also have some
    coal mining in West Virginia. Neither one of those industries,
    neither one of them get an advance notice when there's an OSHA
    or MSHA coming into their sites. I can't--I'm still struggling
    with your idea or your concept of giving advance notice to
    someone to come in. Can you try that one more time to get it
    past me? Because I'm not buying this idea of ``We're going to
    let you know,'' because we know China's gaming the system. Give
    me a little help.
        Dr. Woodcock. Certainly. We--as I said, we began as a
    domestic agency, and domestic inspections are not preannounced.
    However, when we began inspecting overseas, different countries
    have visa requirements. The travel is--you know, the location
    of the site was difficult to ascertain. Now, that's improved
    over time with various things, and particularly it was
    difficult to know whether the site would be manufacturing at
    the time we inspect them. That's very important.
        Mr. McKinley. OK. I'm not buying the thing about the visas,
    because I would assume that so much of it is taking place in
    China. We have someone or a group of people over there, that
    they're going to continue to travel the circuit and do their
    inspection with that.
        Dr. Woodcock. No. The number of inspectors we have in China
    and India are not sufficient to perform the number of
    inspections that are needed. So most of the inspections need to
    be done by domestically based inspectors who are sent to other
    countries. And those are the ones----
        Mr. McKinley. Can you come to the office? I'd like to
    follow up on this, because I don't think we have enough time to
    get into that. But I'm not convinced at all that a
    preannounced--alerting someone that we're going to come in and
    look at you is going to get the results we want.
        Now, I also--but I want to follow up also with you on the
    thing that 90 percent of American prescriptions, from what I
    understand, are generic, but they only amount to about 56
    percent of the recall. So I'm curious, either one of two
    things, either they're doing a good job replicating them or
    they need more scrutiny. Which is it?
        Dr. Woodcock. I'm not familiar with the figures you're
    using on the recalls. Could you explain a little bit more?
        Mr. McKinley. Yes. I don't have the source of that, but we
    have 56 percent of all of the recalls have been generic. If
    that's not correct, if you don't--and I can't back that up just
    at this moment--what is that? What would you say is the
    percent? Is it comparable?
        Dr. Woodcock. Well, we'd be glad to work with you on this,
    because I think it's a little more complicated than that. In
    the first years after a new innovator product is launched,
    there may be safety recalls and different things that are
    unrelated to the quality of the product. So first you have to
    talk about what kind of recalls are you talking about, and then
    where did you get these statistics, because I'm not really
    clear on this.
        Mr. McKinley. Well, the reason I'm saying that--I only have
    a few seconds left--is there are some Members of Congress who
    have been suggesting that generic drugs are not safe. I'm
    trying to make a determination whether or not they are safe or
    not based on the fact that if 90 percent of us are generic and
    only 56 percent are recalled, does that mean they're safe, or
    what's happening? Are generic drugs safe for people to take?
        Dr. Woodcock. Yes. We stand behind the generic drugs. I
    will point out that we do have good safety detection systems,
    right, and the biggest risk right now we see to the public is
    from compounding where we have multiple outbreaks that we
    continue to have of humans beings harmed by compounded drugs.
        Mr. McKinley. Thank you.
        Dr. Woodcock. So we have a system that can detect problems
    when they occur, and we do not have problems with 90 percent of
    the drug supply. The generic drug supply is reliable.
        Mr. McKinley. My time's expired. So before I get yanked,
    I'll yield back.
        Ms. DeGette. I thank the gentleman.
        Now I'd like to recognize the gentleman from California,
    Mr. Ruiz, for 5 minutes.
        Mr. Ruiz. Thank you very much.
        This issue is becoming more and more important because of
    the inability of middle-class families to afford their
    medications, and they're getting medications from other places,
    as well as legislative ideas to import medications to help
    lower the cost for people. And as a doctor, I'm concerned
    because we know what a placebo pill can do to a diabetic's
    blood sugars. And when patients think that they're--they need
    to take a certain drug, they're actually taking a different
    drug. And then, if it's contaminated, then it may make their
    illness even worse.
        So the FDA faces the enormous challenge of inspecting the
    thousands of firms around the world producing drugs for the
    United States. Compounding the challenge is the fact that, over
    the years, some firms have reportedly engaged in fraudulent
    behavior to cut corners and deliberately conceal failures from
    the FDA inspectors.
        In the past year, for example, press reports have offered
    disturbing accounts of such fraud. In January, Bloomberg News
    reported incidents of, quote, ``computer files found deleted
    and employees caught on a company's own security cameras
    shredding documents the night before an inspection,'' unquote.
        In May, NBC spoke to a former FDA inspector and reported
    that, quote, ``FDA inspectors struggl[ed] to keep up with
    foreign drug manufacturers that may bury or hide problems in
    their production,'' unquote. In an article in October in Stat
    News, it was reported that violations of data integrity are
    persistent and ongoing in overseas drug manufacturing plants.
        Madam Chair, I would like to request that these reports be
    entered into the record.
        Ms. DeGette. Without objection, so ordered.
        [The information appears at the conclusion of the hearing.]
        Mr. Ruiz. Thank you.
        Dr. Denigan, when you traveled abroad for your audit work
    and talked to inspectors in China and India, did you hear
    stories such as these?
        Dr. Denigan-Macauley. Unfortunately, we did. There were
    instances where inspectors gave 30 minutes' notice they were on
    their way, and when they got there, they saw documents, bags of
    documents being disposed of. And they said, ``Don't do it,''
    took photos, ran in to show their credentials. In the time that
    they got back, in the few minutes it took to show their
    credentials, they blatantly disregarded them and disposed of
    them.
        Mr. Ruiz. Dr. Woodcock, you were quoted in the previously
    mentioned Bloomberg News story that there were high profile
    cases of, quote, ``overt and deliberate fraud,'' unquote, by
    certain drug companies. Dr. Woodcock, how should we put these
    reports in perspective? How pervasive do you think this problem
    is? And what tools does FDA have to sufficiently root out any
    cheating or data manipulation, if it is occurring?
        Dr. Woodcock. First of all, I should point out that we see
    this in the United States or in the North America or the
    Americas as well as ex-U.S. We have seen cases of--serious
    cases of data integrity problems.
        The second thing I should point out, which gets to----
        Mr. Ruiz. So how--so how pervasive is this?
        Dr. Woodcock. Well, that's what I'd like to show here.
    Slide 12. If I could show--pull up the slides. No?
        Mr. Ruiz. Just tell me if you can, because my--the time is
    ticking.
        Dr. Woodcock. About--in the United States, about 93 percent
    of firms who are inspected pass the inspection, right. In
    India, 83 percent. So there's a 10 percent difference. That
    means 83 percent of the firms we inspect fail to be adequate
    and pass the inspections. They have the lowest percentage.
    China's percent passed is very close to the United States'.
        Mr. Ruiz. Do you--I have about a minute left. Do you feel
    that unannounced or short-notice inspections could help you
    better discover manufacturing issues or even data quality
    issues when they are occurring?
        Dr. Woodcock. Certainly. Those are desirable. You just have
    to think about the tradeoffs in doing that. But no one is
    opposed to those, and we do them routinely for for-cause
    inspections.
        Mr. Ruiz. Recently, the FDA told the committee that firms
    were inspected every 2\1/2\ years, more or less, but given that
    the reports we have seen about this issue with some firms,
    including what you yourself have called, quote, ``overt and
    deliberate fraud,'' are you comfortable inspecting foreign
    firms as the current model and resources allow?
        Dr. Woodcock. Well, as I said, 90 percent of this fraud has
    been detected under the current system in the way----
        Mr. Ruiz. So your--so your acceptable level of error is 10
    percent. You're trying to tell me that it is OK to have 10
    percent error in inspecting the quality and the safety of our
    medications?
        Dr. Woodcock. We don't know what the error rate is because
    it's impossible to show a counterfactual, as I said earlier. We
    know that we detect fraud fairly routinely when we go in, even
    on an announced inspection, because we can look at the computer
    records and----
        Mr. Ruiz. So do you think that it's working?
        Dr. Woodcock. I believe, as I said earlier, that we could
    use more inspectors. We could do more unannounced inspections.
    That would be desirable. We could have more team inspections.
        Mr. Ruiz. My time is up. Thank you.
        Dr. Woodcock. Those things would be good.
        Mr. Ruiz. Thank you.
        Ms. DeGette. The Chair now recognizes the gentleman from
    Virginia for 5 minutes.
        Mr. Griffith. Thank you very much.
        Always good to have you all here. Thank you so much,
    particularly Dr. Woodcock, who always does a great job. But
    I've got some tough questions today.
        So, Dr. Woodcock, according to an article in Wired in July
    of 2017, a drug firm in northeastern China, in essence, took an
    FDA inspector and her translator hostage during an inspection.
    Dr. Denigan mentioned this earlier. The FDA employees were
    finally freed after about an hour when Chinese regulators
    interceded. And the FDA Deputy Director concluded in an
    internal email that the firm resorted to appalling intimidation
    tactics because the inspection was not going well. However, FDA
    declined to classify the incident as an inspection refusal,
    which would be grounds for an automatic import ban, because the
    firm manager wasn't making a specified refusal when he
    imprisoned the FDA employees.
        Why isn't imprisonment of FDA employees classified as a
    refusal of inspection by the firm? And let me just say so folks
    back home understand. It was the conference room that Dr.
    Denigan mentioned earlier. Imprisoned is a legal term of art as
    I'm using it here. It does not mean they were placed in a dank
    cell and only allowed to have food and water, bread and water
    brought in. But it is technically an imprisonment when you
    refuse to let somebody leave the conference room.
        So, you know, how come that wouldn't be grounds for an
    automatic import ban? It seems like to me it ought to be.
        Dr. Woodcock. Well, that's a legal question that lawyers
    would have to sort out, whether it met the context.
        Mr. Griffith. And I've never had great respect for the
    lawyers at FDA after NECC, and they refused to get a search
    warrant after Ohio and Colorado both told them there were
    problems, and nobody in the FDA legal office thought that was
    sufficient to get the probable cause to get a search warrant,
    which might have saved 53 lives.
        That being said, you know, it seems to me it would
    constitute circumstances, you know, of delaying, denying, or
    limiting inspection or refusing to permit entry or inspection
    for purposes of section 501(j)(2), little 2, under the Food and
    Drug and Cosmetic Act.
        And, Dr. Denigan, you mentioned some things earlier that
    were similar to that--not quite as bad as taking somebody a
    prisoner--but why aren't we being more forceful with these
    foreign companies and just saying, ``If you don't cooperate,
    you're out, you won't be selling in the United States''?
        Dr. Denigan-Macauley. Well, actually, as part of our
    ongoing work, I think the inspectors have raised concerns, and
    they've put them down as serious deficiencies, and there has
    been times where those concerns have been downgraded. And we
    plan to look at that in our ongoing work.
        Mr. Griffith. And I appreciate that. You know, I was
    brainstorming on this last night because, to me, this is
    extremely important, you know. We're working on bringing down
    prices of drugs, but making sure the drugs actually do what
    they're supposed to and are not adulterated, don't have harmful
    products in them is extremely important.
        And you talked about the large campuses and how it's hard
    for people to cover the large campus. So, as we were
    brainstorming, and I want to hear from both of you as to why
    this wouldn't be something we ought to be talking about.
        You know, we could get young people right out of undergrad
    to come in there. They don't need 3 years of training. You may
    need somebody like that to do the big stuff, but you don't have
    to be a gourmet chef to go into a French restaurant and
    determine that the bathroom is not clean.
        It would seem to me that, for pennies on the dollar, lots
    of young people would love the opportunity to travel abroad and
    go in and help somebody who's got all that 3 years of training,
    but help somebody figure out, ``OK, building A is dirty. I
    don't know what's going on. You might want to go look at it.''
    It seems to me we could magnify our inspections and our ability
    to inspect if we did something like that, and I'm happy to work
    with you on it.
        Dr. Denigan, what do you think of that? And, Dr. Woodcock,
    I'd like your opinion too. I always respect both of you.
        Dr. Denigan-Macauley. Sure. Well, we certainly heard
    stories of bathrooms that they were using that were covered in
    feces. They had to go outside to be able to use the facility,
    raising questions about good manufacturing practices.
        Mr. Griffith. And you don't need 3 years of training to be
    able to see that, do you?
        Dr. Denigan-Macauley. No.
        Mr. Griffith. Dr. Woodcock, what do you think? Is this
    something we ought to be talking about?
        Dr. Woodcock. Well, it raises the question, Should ORA, the
    field organization, change its model somewhat? That's what
    you're proposing.
        Mr. Griffith. That is what I'm proposing.
        Dr. Woodcock. And have more of a sliding scale of
    capacities, translators----
        Mr. Griffith. Right.
        Dr. Woodcock [continuing]. And so forth. And I think that's
    worth talking about as far as how--how we cover the entire
    range of problems.
        Mr. Griffith. Because, as we're importing all of these
    substances, whether they be substances that are used for
    compounding pharmacies or whether they are actual drugs that go
    straight to the consumer, it just seems to me, yes, you want to
    have your top dog, but you also can use folks who can just go
    in and take a look at the bathroom. And it doesn't take a
    genius to figure out or somebody with 3 years of specialized
    training to figure out the bathroom is dirty and there's feces
    everywhere. Thank you very much.
        And my time is up, and I yield back.
        Ms. DeGette. I thank the gentleman.
        The Chair now recognizes the gentlelady from New Hampshire
    for 5 minutes.
        Ms. Kuster. Thank you, Chairwoman DeGette, for your
    continued leadership on ensuring the safety and inspection of
    our drug supply chain. And I want to thank our witnesses for
    being with us today.
        Recently, I heard from a constituent from Nashua, New
    Hampshire, who was very concerned about his blood pressure
    medication, which has had several recalls. Despite his
    concerns, he also acknowledged the balance that must be struck
    in ensuring the safety of our drugs but also the supply of
    drugs. And it's certainly true and something some of my
    colleagues have mentioned here today.
        Outside of the high cost of prescription drugs, one of the
    other most frequent concerns I hear about is drug shortages.
    This committee helped to lead the way in working with FDA and
    stakeholders to ensure that the agency has the additional
    authorities and flexibilities that you need to inform and
    respond to drug shortages as they occur. But, at the same time,
    we must ensure that every American has access to safe
    medication through your quality inspection.
        So let me turn to my questions. Dr. Denigan, is it true
    that staffing in these offices has been a continuous issue
    since the offices have opened overseas? And if so, why is that?
    And what is the impact on the foreign inspection program, and
    if you will, what do you need from us?
        Dr. Denigan-Macauley. Yes. Staffing continues to be a
    problem, and there were visa problems over in China that have
    since been resolved so that they've been able to get more staff
    over there. But, overall in the foreign offices, staffing has
    been a challenge, and they have critical vacancies of these
    expert investigators.
        Ms. Kuster. Now, I know Mr. McKinley asked a series of
    questions. This appears to be a very bipartisan hearing in
    terms of our concerns about the effectiveness of the foreign
    offices and how you intend to address those staffing concerns.
    If you are not satisfied that the FDA has fully evaluated how
    its foreign offices should be utilized and improved, what is it
    that you need from us? Is this a resources issue? What--how can
    we be helpful? I assume that's the point of this whole hearing.
        Dr. Denigan-Macauley. Well, I think what's concerning is
    that the data of understanding the number of establishments is
    challenging to get, and you have firms over there that are
    registering with FDA that don't necessarily have to. Unlike
    medical devices, there's no charge to register because it looks
    good, right. You're registered for FDA overseas, and so that
    creates noise in the database. And if you don't know the
    universe of those that you need to be inspecting, I think it's
    very hard to be able to come up with a strategic workforce plan
    to know the number of folks that you need to be able to carry
    out the inspections.
        Ms. Kuster. So couldn't we do something about that? If
    we're giving them permission to send this medication into our
    country for sale, somebody's making a profit. Can't we link
    that more clearly to where has this been made and be much more
    specific about this? I mean, they have an incentive to want to
    bring this medication in.
        Dr. Denigan-Macauley. Right. I think that that's what FDA
    wants to do is to be more strategic about their workforce
    planning and more risk-based, which GAO appreciates, but they
    should put their limited resources at the places with the
    highest risk.
        Ms. Kuster. Dr. Woodcock, do you want to respond? I mean,
    do you need legislative authority to make this a much more
    direct link? Why don't we just say, ``If you want to send
    medication into our country, you need to tell us precisely
    where it's being made, and we're going to come out and look at
    it.''
        Dr. Woodcock. All right. They usually have to do that now,
    all right, for application products. So if you send in an
    application for a generic drug or an innovator drug, you have
    to tell us where it's going to be made. And we do preapproval
    inspections before we even let that product on the market.
        Ms. Kuster. So, presumably, you know where they're being
    manufactured?
        Dr. Woodcock. Well, not only do we know where, we go there,
    unless we've been there recently. However, for--there's some
    loopholes for compounding and for over-the-counter monograph
    drugs that don't have applications. That's a very large
    segment, and that's many of the never being--been inspected
    that were----
        Ms. Kuster. Do you need us to close those loopholes?
        Dr. Woodcock. It would be--I think we would be interested
    to work with you on the issue that they can ship to the United
    States without ever being inspected right now, because all they
    have to do is register.
        Ms. Kuster. Right.
        Dr. Woodcock. And there are other data points, as I alluded
    to in my verbal testimony, that would be very useful for us to
    receive as data. For example, we don't know the volume. We
    know--you said maybe 20 percent of APIs made in the United
    States, but it may only be an infinitesimal fraction of the
    actual volume, because we only know the facilities, not how
    much they're making. And they tell us----
        Ms. Kuster. Well, I hope you--my time is up, but I hope you
    will work with our committee to tighten this up, because these
    loopholes sound dangerous to the American people. Thank you.
        Dr. Woodcock. We would be delighted. Thank you.
        Ms. DeGette. The gentlelady from Indiana is recognized for
    5 minutes.
        Mrs. Brooks. Thank you, Madam Chairwoman. And thank you
    both for being here and for focusing on this critically
    important subject.
        I want to stay focused a little bit on the staffing issues.
    And I'm curious, Dr. Woodcock, has the FDA ever used outside
    consultants to study this in-depth problem rather than GAO--you
    know, and I appreciate GAO's recommendations and ideas, but
    this is very complex. Have you used outside consultants, and
    what have been the results?
        Dr. Woodcock. We used outside consultants to look at the
    administrative hiring problems we had, and we even had a public
    meeting on that that went over all the different problems. The
    direct hire should help some of that.
        As far as an outside consultant to think about the
    workforce in ORA and how it's deployed, and actually, the
    people in the foreign offices actually report to a different
    component, a third component of FDA that's not the Center for
    Drugs and not ORA. And so I don't know whether they've done a
    study or not, but we can get back to you on that, and it is a
    good idea.
        Mrs. Brooks. Were there recommendations that were made that
    have not been implemented, if you know, and if not, why not?
    Were they not given, you know, sufficient credit in the
    recommendations?
        Dr. Woodcock. I believe in the recommendations that were
    made on our administrative problems, there's been a stupendous
    effort to try and turn this ship around and to get the hiring
    process to something that can actually bring people on board in
    a timely manner. And as I said earlier, Cures helps us for
    positions that are Cures eligible.
        So yes, we have acted on those recommendations, but the
    hiring was so problematic, it's going to take us a long time to
    recover from that.
        Mrs. Brooks. It seems, even if you were able to hire enough
    people, one of the things you said that I'm very concerned
    about is the lack of--unless I didn't write this down
    properly--standardized inspections, and this is an example.
        Earlier this year, the committee sent FDA a bipartisan
    letter asking about the FDA's India pilot program and why the
    program wasn't extended. In response, FDA told the committee
    that the drug inspection initiative was not extended, quote,
    ``based on lack of protocols and evaluation criteria. No formal
    report or evaluation was completed.''
        How is this possible? How is it possible that we've got
    pilot programs with no evaluation, no protocols, no
    standardized inspections? I mean, who would want to come work
    for you if you're--if there's no roadmap and there's no
    standardization of what their work product's supposed to be?
        Dr. Woodcock. Well, there are two separate issues. There is
    standardization that ORA has for what its inspectors do and how
    they document it, and that is written down. And we are working
    on what we call the new inspection protocol program, which is
    changing to a more modern, more standardized inspection process
    and protocol. We've already completed that for sterile
    products, but we have to go through all the different kind of
    products.
        Mrs. Brooks. Do you need more people, Dr. Woodcock, to help
    get this process? I mean, you've just mentioned sterile
    products. I can't even imagine how many other products. Do you
    need more people to be focusing on protocols and the
    standardization of inspections?
        Dr. Woodcock. If we had more people with doing analysis, as
    you've pointed out, doing analysis and actually working on
    these projects rather than, you know, doing the work--the day-
    to-day work of trying to inspect all these firms, of course,
    that would be very helpful.
        And I will add, there's another component of this since we
    did the Mutual Reliance Agreement with the EU and all those
    countries, OK. They do their reports in all different
    languages, naturally. And so all of us would benefit from a
    very standardized report document that we could all read
    without having to translate it into different languages.
        Mrs. Brooks. I was actually going to ask you about the EU
    reliance. Can you please talk with us about what that means and
    how long will it take us to realize the benefits from the
    Mutual Reliance Agreements with the EU? And who else should
    we--and what does it mean? Can you go into a little more detail
    on that?
        Dr. Woodcock. First of all, what it is, is we've agreed
    with all the EU countries that their inspectors are qualified
    to inspect the plants within their country boundaries, because
    each country has different inspectors, right, and that we will
    accept the results of those inspections, and they'll--they'll
    send them. And then they don't have to come over to the U.S.
    and inspect facilities that are here, because they accept the
    results of our inspections. It doesn't extend to their
    inspections in other countries, but it does free us up to go
    send more people to India and China.
        Now, that trend has been abrogated, as people pointed out,
    by the loss of staff in ORA, the loss of people in the
    inspectorate in the foreign offices, and so we haven't had the
    capacity, and our number of foreign inspections has actually
    gone down because of capacity problems, even with the MRA in
    operation.
        Mrs. Brooks. Well, I certainly hope our Mutual Reliance
    Agreements can extend, and maybe we can look at other countries
    as well. Thank you.
        I yield back.
        Ms. DeGette. Doctor, would it be possible to get a copy of
    that independent report you're telling Congresswoman Brooks
    about?
        Dr. Woodcock. Absolutely. We can get that back to you.
        Ms. DeGette. I think that'd be really helpful. Thank you.
        The Chair now recognizes the gentlelady from Florida for 5
    minutes.
        Ms. Castor. Thank you, Chairwoman DeGette. Thank you both
    for being here today.
        I know we've focused a bit on the challenges in staffing,
    and I'd like to focus a little bit more on the quality of FDA's
    data. FDA's foreign drug inspection program relies upon having
    quality data that allows FDA to know which firms to inspect and
    to review those firms' inspection history. However, GAO has
    long identified problems with the data FDA relies on for its
    drug inspection program. In testimony today, GAO states, quote,
    ``data challenges we identified in our 2008 report continue to
    make it difficult for FDA to accurately identify establishments
    subject to inspection.''
        Beyond staffing, Dr. Denigan, what are your main concerns
    with the way FDA is collecting and using data related to its
    foreign inspection program? How do these data collection
    concerns impact the effectiveness of the foreign inspection
    program?
        Dr. Denigan-Macauley. Yes. So as I mentioned before, the
    establishments--they have establishments in there that are
    registering that don't need to, and that creates the extra
    noise. And, while it's true that 40 percent of those
    establishments didn't need an inspection, and therefore, FDA
    was able to say that they went through their backlog, it still
    creates an inefficiency. They have to take the time to clear
    out to find out which one of those didn't.
        And so the foreign offices can add value. For example, like
    over in China where they're actually matching up to see does
    that establishment really still exist. Because, as Dr. Woodcock
    said, they do change. They go in and out, so it's a snapshot in
    time. And further, their active pharmaceutical ingredient could
    be produced in China, for example, and if they ship it to
    Germany, then it's not subject to an inspection. I know that
    FDA is very clear of that loophole.
        Ms. Castor. OK. Let's talk about those two. And FDA told
    committee staff that some firms on its foreign drug facility
    list were, quote, ``washouts.'' Is that what you were referring
    to?
        Dr. Denigan-Macauley. Correct. Those are the washouts that
    didn't need to be inspected but were on their list.
        Ms. Castor. OK. Meaning that these firms were not actually
    subject to inspection for various reasons, including because
    they were no longer exporting to the United States.
        Dr. Denigan, what is the difference--what is the
    significance of these washouts previously included in FDA's
    data? Do you have--you said you had concerns about it. I guess
    this is a really good question for Dr. Woodcock.
        Dr. Woodcock. Yes. Well, you know, we have various thoughts
    about this. It's easy for people to register. You just can
    register, and then you have a sort of branding. You can say,
    ``I'm registered in the United States,'' and you never have to
    ship anything to the U.S. And so we have to go to the trouble,
    as Dr. Denigan was saying, of figuring out where that firm is,
    figuring out is it shipping anything into the U.S., what's its
    status, and then crossing it off the list.
        It's possible that some small barrier like a modest fee or
    something might help with that. I don't know where--how we
    could do that, but it is possible right now for a lot of firms
    every year to register with the U.S. and actually not be
    shipping drugs into the U.S. But it's also possible for them to
    register and then ship without being inspected if they are one
    of these loophole firms.
        Ms. Castor. And then you also raise the problem with
    facilities. You don't--FDA does not have a firm handle on the
    volumes being shipped out. Why is that the case, and what are
    you doing to address that?
        Dr. Woodcock. Well, we're thinking of doing a regulation,
    which would be a very long process. The companies have to tell
    us in what's called right now the annual report. Remember, many
    of these regulations are very old. But my understanding, at
    least--I recognize I'm under oath, and I don't have total grasp
    of the details--but they have to tell us that kind of stuff for
    the past year. And then they--eventually, they submit that
    annual report at some time in the next year. So it's a really
    lagging indicator. And it isn't data, it's in a PDF of a
    document that they send us.
        And what would help, if you all wanted to know the volume
    being shipped in the United States, we would need something
    like quarterly data reporting as data in a database rather
    than--you know, a fillable form rather than sending us a PDF a
    year later about the volume that was shipped. If we had that
    type of data, then we could really put together a more complete
    picture of what's coming into the United States.
        Ms. Castor. And you need legislative authority to move
    towards a quarterly data report?
        Dr. Woodcock. We think we could do that under regulation,
    but it might take us 7 years.
        Ms. Castor. Why 7 years?
        Dr. Woodcock. Because it takes a very long time to do
    regulations. I know I'm under oath.
        Ms. Castor. Yes.
        Dr. Woodcock. I can't say--you know, I can't predict. We
    could say maybe never, right, or maybe we could do it a little
    faster, I don't know, but it takes a long time to write,
    propose, get comments on----
        Ms. Castor. Gotcha. Yes. We, you know, understand.
        Dr. Woodcock. I'm sorry.
        Ms. Castor. Thank you very much. Thanks for making that
    recommendation.
        Ms. DeGette. The Chair now recognizes the gentleman from
    Oklahoma for 5 minutes.
        Mr. Mullin. Madam Chair, you forgot to say your good friend
    from Oklahoma.
        Ms. DeGette. My best friend.
        Mr. Mullin. Best friend. There you go. Thank you. Thank
    you.
        Dr. Woodcock, thank you again for being here. I sure
    appreciate your demeanor and your ability to answer the
    questions the best you can.
        I've got just a few questions I'm going to go through here.
    How many drug inspections can the FDA conduct per year in India
    and China? Currently.
        Dr. Woodcock. Currently. We do have a slide on this. Does
    anybody know what number that is?
        Mr. Mullin. Everybody likes slides and PowerPoints, don't
    we?
        Dr. Woodcock. Yes. Sorry. It's slide No. 4. So if we can
    get----
        Mr. Mullin. We don't have to get it up. We can just--you
    can just tell me.
        Dr. Woodcock. OK. So in--well, this doesn't----
        Mr. Mullin. While they're looking for it--let's let them
    look for it. I'll go on to another question.
        Dr. Woodcock. OK.
        Mr. Mullin. How many would you like to be able to inspect
    in China and India?
        Dr. Woodcock. Well, if you don't mind me pushing back on
    you a little bit.
        Mr. Mullin. Sure.
        Dr. Woodcock. What I would really like to have is a
    predictive risk model that tells us based on a lot of data who
    we should really go to next, who's the highest risk.
        Mr. Mullin. Well, the last time you were here, we brought
    up corruption in China and asked if that could bring up issues.
    When you start thinking that 45 percent of all of the
    ingredients in our drugs today made inside the United States
    come from India and China, huge concern for all of us. And--and
    so when you start talking about risk data, you can't get the
    risk--you can't understand what it is you're looking for unless
    you put your hands on it. I tell all my foremen and
    superintendents that used to work for our companies when I ran
    them that, you know, the best way to get the information is to
    be in the field.
        So, once again, how many would you like to be able to
    inspect? If you could have your druthers and you could--
    staffing wasn't an issue, what's our current level at now, and
    where do you think we should be?
        Dr. Woodcock. Well, it looks like we inspect about--in
    China? Foreign, we inspect about under a thousand, 966. In
    China, it looks like maybe about 400. I think it would be
    higher. I think there would be more unannounced, as was said.
    There would be more team inspections. I mean, those things all
    would be desirable.
        Mr. Mullin. So when you go inspect these other 40, what
    percentage of violations do you find in these facilities?
        Dr. Woodcock. Well, in the previous slide I showed, 83
    percent of China--India passes, 90 percent of China passes, and
    93 percent of the U.S. passes.
        Mr. Mullin. Do you think that the 90 percent in China and
    the 80--what did you say?
        Dr. Woodcock. 3.
        Mr. Mullin. 83 percent in India is actually accurate, or do
    you think the--that's not an accurate number because they're
    changing things before you walk in the door?
        Dr. Woodcock. I believe there's always some--an inspection
    is only a snapshot in time. They don't inspect every single
    system----
        Mr. Mullin. Sure.
        Dr. Woodcock [continuing]. In the facility. We have lots of
    cases where we had inspections that were OK, OK, and then all
    of a sudden, everything was wrong.
        Mr. Mullin. So do you believe it's easier for FDA to
    inspect our drug manufacturers inside the United States or in
    India or China?
        Dr. Woodcock. It's obviously easier to inspect in the U.S.,
    and there's a long history. Back in the nineties----
        Mr. Mullin. Sure.
        Dr. Woodcock [continuing]. There were many problems and
    many consent decrees and things, but the intensity of the
    oversight brought the level of performance up in the U.S.
        Mr. Mullin. So what's the biggest barrier? Why do we have
    45 percent of our drug ingredients made in China and India and
    not here in the United States, if that's where the drugs are
    coming to anyways?
        Dr. Woodcock. The reasons that we discussed at the previous
    hearing are cost of personnel, the lax environmental
    regulations, which are very--it's a very important issue in
    other countries compared to the U.S., and, you know, the cost
    of doing business is lower.
        Mr. Mullin. So we've basically regulated these
    manufacturers out of the country?
        Dr. Woodcock. Yes. Well, we feel that advance
    manufacturing, which is what FDA has been trying to bring about
    in this pharmaceutical sector for the last 20 years, would--you
    could bring manufacturing back to the United States, because
    it's not--it doesn't have a huge environmental impact. It has a
    smaller footprint, and it's very cost effective, but there is a
    cost of doing that.
        And Sanofi has built a plant in Framingham that they
    recently announced has successfully completed all its test runs
    and is one of these plants of the future in the United States.
        Mr. Mullin. We'd love to work with you moving forward on
    that because we'd love to see the manufacturing come back, and
    so anything our office can partner with the FDA on, consider us
    a friend.
        Dr. Woodcock. We would be happy, because we're very excited
    about this.
        Mr. Mullin. Thank you. I yield back.
        Ms. DeGette. The gentlelady from New York is now recognized
    for 5 minutes.
        Ms. Clarke. Thank you, Madam Chairwoman, and I thank our
    Ranking Member Guthrie, for convening this timely oversight
    hearing on the Food and Drug Administration's inspection
    program for foreign drugs. I'd like to thank you both as well,
    our witnesses, for being here today to testify on behalf of the
    FDA and the GAO.
        The fact is that our drug supply is becoming increasingly
    global. Many of the drugs that Americans rely on every day are
    produced around the world. As such, FDA must adapt to this new
    reality to ensure that our drug supply remains safe and that
    the manufacturers are held accountable.
        So let me start with you, Mrs.--Dr. Denigan. Why should we
    be concerned that FDA's inspections of foreign manufacturers
    might not be equivalent to its inspections of domestic
    manufacturers?
        Dr. Denigan-Macauley. Well, that equivalency is important.
    They don't announce inspections here for a reason, and so you
    want--for the same reason, you want to see--I know it's a
    snapshot, but that's your best chance of being able to see what
    the process actually looks like, not what it looks like after 3
    months of working with a contractor, for example, to get into
    compliance.
        Ms. Clarke. One of the committee's longstanding concerns is
    FDA's ability to get out and inspect the thousands of firms
    around the world. After Congress gave FDA more authority and
    resources, FDA was able to conduct more inspections. However,
    after 2016, the number of inspections went back down.
        Dr. Denigan, why did the number of FDA's foreign
    inspections decrease in recent years, and what does this mean
    for the FDA's ability to oversee the Nation's drug supply?
        Dr. Denigan-Macauley. Well, I think, as Dr. Woodcock has
    pointed out, the staffing shortages have been a tremendous
    strain and have made it very challenging to conduct. In
    addition, we do have concerns about the accuracy of the data to
    understand the denominator of those that they need to inspect.
        Ms. Clarke. Very well.
        Dr. Woodcock, FDA has made improvements over the last
    decade in its ability to inspect more foreign firms, and we are
    appreciative of that work. But, as we just heard, there's more
    work to be done on hiring inspectors and getting better data.
        Dr. Woodcock, what is FDA doing about all the remaining
    unresolved issues that GAO has identified in its recent work?
    And we've been talking about these same issues for two decades
    now.
        Dr. Woodcock. Well, we have brought about a lot of change.
    We're doing more foreign inspections now than we're doing
    domestic inspections. We are working on hiring. The FDA has
    just received direct hiring authority for the field inspectors,
    and so they have 20 that they're onboarding. They expect to
    hire a total of 50 by the end of this upcoming calendar year.
    So that would be an addition in the pharmaceutical
    inspectorate.
        We've done what we can on data, and we're very interested
    in working with the Congress on better data sources so that we
    can have a better understanding of the firms that are shipping
    drugs into the United States.
        As far as cleaning up the registration database, there are
    a variety of techniques we could use to do that. I mentioned
    one, perhaps a modest fee for listing might discourage some of
    these foreign entrepreneurs from listing with never having an
    intent to ship into the United States, but there might be other
    ways to do this, and we could talk about that.
        And then, you know, better data that we could make a true
    predictive model instead of our site selection model that we
    have, but a true predictive model based on data would be a
    tremendous advance.
        We also are working on advance manufacturing, which could
    actually bring manufacturing back into the United States, or if
    it were outside the U.S., it would be much better controlled.
    We would know even remotely with that kind of manufacturing if
    things were going wrong.
        Ms. Clarke. Well, Dr. Woodcock, that sounds promising. I'd
    like to encourage us to really move in that direction, because
    our reliance on foreign manufacturing, I believe, is only
    likely to increase as we look at the sort of aging of
    Americans, the boomer generation and the young folks coming up
    who, you know, unfortunately, may need some pharmaceuticals to
    make sure that their quality of life is preserved.
        So, Dr. Denigan, overall, do you believe the FDA is where
    it needs to be to effectively regulate the drugs coming from
    overseas, and if not, what more does the FDA still need to do?
        Dr. Denigan-Macauley. Well, they certainly have made great
    strides since 1998, and I know I'm going to run out of time.
    But clearly, they need to work on getting folks on board,
    keeping them on board, perhaps looking at other models. You
    know, the Foreign Service, they're now a global agency, and
    they weren't designed to be a global agency originally.
        Ms. Clarke. Very well.
        Thank you, Madam Chair. I yield back.
        Ms. DeGette. Thank you very much.
        The Chair now recognizes Mr. Walden for 5 minutes.
        Mr. Walden. Thank you very much, Madam Chair, and again,
    thanks for having this really important hearing. To our
    witnesses, thank you both for being here.
        Dr. Woodcock, FDA in January of 2014, the FDA began a pilot
    program in India of no-notice and short-notice inspections of
    drug manufacturing plants instead of customary preannounced
    inspections. And over the course of 18 months, I'm told, the
    unannounced inspections revealed some troubling conditions,
    from a bird infestation at one plant to a plant that entirely
    faked its environmental monitoring data, purporting to have
    screened for microbile and contamination when it had not.
        Under the India pilot program, the rate at which FDA
    inspectors recommended the most serious findings of official
    action indicated an increase by almost 60 percent. Yet in July
    of 2015, the FDA discontinued the program and resumed
    preannounced inspections.
        So, considering the high rate at which inspectors found
    serious violations, why did FDA discount--or discontinue, I'm
    sorry--this program?
        Dr. Woodcock. Well, this program was done by the India
    office, is my understanding, OK, which reports through a
    different structure. And apparently, it was simply--it wasn't
    really a program, it was an initiative of the India office, and
    they decided to conclude it after a certain amount of time. And
    so----
        Mr. Walden. Do you have any idea why, though?
        Dr. Woodcock. No.
        Mr. Walden. Because it would seem to identify a better path
    forward if you're trying to uncover problems at these
    facilities.
        Dr. Woodcock. Well, there were resources involved. The
    India office and other personnel had to do a lot of additional
    work to arrange this travel and enable the inspectors to kind
    of show up in a surprise. The foreign offices currently do
    unannounced inspections when they have inspectors resident in
    the foreign offices. They do unannounced inspections.
        Mr. Walden. Do we have them in India and China?
        Dr. Woodcock. Yes. We do have inspectors there.
        Mr. Walden. But do they do unannounced inspections?
        Dr. Woodcock. Yes, they can do unannounced inspections.
        Mr. Walden. And do they?
        Dr. Woodcock. Yes, uh-huh.
        Mr. Walden. Yes.
        Dr. Woodcock. It's the domestic people who travel over and
    make these long trips where they're, for 3 weeks, they're going
    to inspect three different silos. They want to make sure
    they're operating and so forth that are the preannounced.
        Mr. Walden. So, rather than discontinue due to--I've been
    told it was also a lack of protocols and criteria that may have
    led to this discontinuation. Do you think they should have
    developed evaluation criteria or undertaken a formal review of
    the program?
        Dr. Woodcock. Well, again, I don't know enough about it.
        Mr. Walden. OK.
        Dr. Woodcock. It's not in my chain of, you know,
    responsibilities. Certainly, we're being urged today to
    evaluate--to develop and evaluate such a pilot.
        Mr. Walden. Which is--and I'm sure you--you know that it
    raises issues for us. I mean, we look at that and go, wow,
    something--they were uncovering more when they did that type of
    inspection.
        Dr. Woodcock. Well, that isn't clear. And, with all due
    respect to my GAO colleague, all these ideas are anecdotal. We
    know that 90 percent of the fraud and so forth that we uncover
    in our inspections is by--in foreign countries is by domestic-
    based inspectors who go over there and do unannounced
    inspections, and they still find this fraud and so forth. And a
    tremendous amount has changed over this period, even from 2014,
    but nobody is denying that unannounced inspections, team
    inspections, more inspections in the foreign area wouldn't be a
    good idea.
        Mr. Walden. Dr. Denigan, do you want to comment on any of
    this?
        Dr. Denigan-Macauley. Sure. Based on the data that we have,
    the whole value of the foreign offices is to provide--not the
    whole value, but one of the major contributions of the foreign
    office is to be able to get local intel. And, based on the
    local intel that the India office found, they had lapses in
    integrity of quality, production, laboratory data, significant
    GMP deficiencies, and firms were found to have been creating
    records. And so, with their initiative, they did 16 unannounced
    inspections. And of those 16, 15 of the firms ended up with
    serious problems. Now, mind you, they targeted firms that they
    knew were high risk----
        Mr. Walden. OK.
        Dr. Denigan-Macauley [continuing]. But that's the value of
    using your resources.
        Mr. Walden. Yes. Dr. Woodcock?
        Dr. Woodcock. So some of this is still going on, because
    part of this program was to develop this intensive intel and
    brief the inspector about all this before they go in. Now, the
    Office of Surveillance that we formed in Office of
    Pharmaceutical Quality with our reorganization, now provides
    site dossiers for inspectors before they go into a site, and
    that pulls together all sorts of information. It's probably not
    as good as the local intel, but we try to get the foreign
    offices to add that. But that's my point, you know, you're
    comparing a little bit apples and oranges.
        Mr. Walden. Right.
        Dr. Woodcock. I mean, we do all the for-cause inspections
    we do if we got intel, and we were going to go because of a
    whistleblower, we would do unannounced.
        Mr. Walden. All right. My time has expired. Thank you,
    Madam Chair, and thanks to both of you.
        Dr. Woodcock. Thank you so much.
        Mr. Walden. We all want to get this right and make sure we
    have a safe supply chain, so thank you.
        Ms. DeGette. The Chair now recognizes the gentlelady from
    Illinois for 5 minutes.
        Ms. Schakowsky. Thank you so much, Madam Chairman.
        There's so much going on today, and so I was in all kinds
    of other places, and I missed your opening statements, and I
    apologize for that. So I'm trying to figure out what to worry
    about or not to worry about. And, for example, I received a--
    where did it go?--a letter. Oh, OK. There it is.
        I received a letter from a constituent, Chris Collins is
    his name, in September. And he wrote to me about his belief
    that, quote, ``offshoring of generic drugs has made the United
    States exposed to potentially unsafe and ineffective medicines
    and deprives us of a domestic supply of critical medicines in
    case of a national emergency.'' And then he quotes from a book,
    which may be totally a scam, I don't know, ``A Bottle of
    Lies,'' that suggests in a quote that generic--quote, ``generic
    drugs are poisoning us.''
        So there are two issues here. One is offshore, that so much
    of our supply is coming from overseas. What it says in our memo
    is that FDA estimates that nearly 40 percent of finished drugs,
    drug products, and 72 percent of active ingredients come from
    overseas. So I'm trying to divide out----
        He's also--he's complaining about generics and he's also
    complaining about overseas. So first of all, is there a
    difference in imports? We import brand name as well as
    generics? Is that the case, Dr. Woodcock?
        Dr. Woodcock. Yes. Those figures include both.
        Ms. Schakowsky. And is it about even number of generics,
    brand names, or----
        Dr. Woodcock. That I could get you.
        Ms. Schakowsky. OK.
        Dr. Woodcock. We have all these figures cut many different
    ways. But, certainly, a large number of brand names source
    their API from India or China or elsewhere. And forever, a lot
    of brand names have been made in Europe.
        Ms. Schakowsky. So I'm trying to understand, Dr. Denigan.
    So, from the GAO, what am I to be worried about? What is the
    problem?
        Dr. Denigan-Macauley. Well, it's true that the majority of
    our drugs, whether it's generic, over-the-counter, or brand
    name, are coming from overseas. And I think the concern is
    ensuring that the current tools that FDA has at its disposal
    are being used to their maximum. It would be great if we could
    move towards advanced manufacturing and be able to enhance our
    capacity here, but the fact of the matter is these are the
    tools that they currently have, and they need to staff up these
    offices, and they need to ensure that the inspections are as
    equivalent as possible to here in the U.S.
        Ms. Schakowsky. So it's something about minimum standards.
    I'm looking for the language. It says the Current Good
    Manufacturing Practices regulation, CGMP regulation, lay out
    minimum requirements for the methods, facilities, et cetera. Is
    that what we want? What is--minimum doesn't feel good to me.
        Dr. Woodcock. Well, I just spoke to a large group of
    manufacturers yesterday, many of them from brand name, and they
    agree. All of them aim at this minimum. That's one of the
    problems. That quote, I believe, or something like it, comes
    from a report on shortages which points out that having true
    reliability of a supply requires quality maturity. GMPs make
    sure that, if you make a product, it'll be fit for purpose that
    day. It doesn't say that 6 months later, you're going to be
    able to keep making the product at the same level.
        So we feel that we would like to have a positive program as
    well where we recognize excellence wherever it occurs so we can
    incentivize manufacturers and purchasers to recognize quality,
    high quality.
        Ms. Schakowsky. Is part of the problem, Dr. Denigan, we
    have to staff up, there has to be more resources to do the
    number of inspections that would make a difference?
        Dr. Denigan-Macauley. Well, I'd be concerned at just
    staffing up, because there's concerns on being able to not only
    through the direct-hire authority to get them on board, but to
    keep them on board. And there are problems that, indeed, they
    go over on 2-year rotations in the overseas offices, and they
    come home, and they don't have a good way of integrating them
    back like they do with other offices that are more familiar
    with how to do that.
        Ms. Schakowsky. Thank you. I appreciate this.
        I yield back.
        Ms. DeGette. The Chair now recognizes the chairman of the
    full committee, Mr. Pallone, for 5 minutes.
        Mr. Pallone. Thank you, Chairwoman DeGette.
        As has been mentioned today, this committee has been
    examining FDA's foreign drug inspection program for nearly two
    decades. And, without question, the FDA has made progress
    thanks in part to new legislation. But I mentioned in my
    opening statement, over the years, Congress has taken various
    steps to improve FDA's ability to conduct foreign inspections.
    But despite this, FDA's foreign drug inspection program
    continues to be challenged by the same longstanding issues that
    have persisted for years.
        For example, as we heard from the GAO today, staffing
    continues to be a constant challenge for FDA's foreign drug
    inspection program. To assist, Congress reauthorized GDUFA,
    which allowed FDA to collect generic drug user fees, which
    could then be used to hire additional inspectors.
        So, Dr. Woodcock, the 2016 GAO report found that only 8
    percent of GDUFA inspectors were actually doing foreign
    inspections. How has FDA used the GDUFA resource to increase
    its foreign inspection capacity, if you will?
        Dr. Woodcock. Well, the field has--the field organization,
    ORA, has gotten what they call a cadre or group of people who
    strictly do foreign inspections, and then they qualify the
    other investigators to also be able to do foreign inspections.
    So the goal is to probably increase the number of people who do
    primarily foreign inspections. But we're challenged by the fact
    the entire field force is way under capacity, and they need to
    hire up.
        Mr. Pallone. OK. We focused on FDA's role with these drug
    products overseas, but we know that domestic importers also
    play a role, and these companies have a responsibility to
    conduct due diligence to know where they're getting their drug
    products from and what kind of quality controls are used before
    the drugs arrive here.
        So, again, what role do U.S. companies play in ensuring
    that the drug products they import are manufactured in
    accordance with the quality standards?
        Dr. Woodcock. Companies are required as part of good
    manufacturing practices to validate their suppliers, to test
    incoming APIs or excipients or other ingredients that they'll
    put into their product if they're making them in the United
    States to make sure they are fit for purpose. And that same is
    true if, say, the finished dosage form is in Europe or in India
    or wherever it is. There are requirements that you qualify your
    raw ingredients and your suppliers to make sure that they are
    the quality needed. So that's a requirement that has been in
    place for a long time.
        Mr. Pallone. But, in the FDA's Safety and Innovation Act,
    Congress required that the commercial importers register with
    the FDA, as you said, and that the agency should work with
    Customs and Border Protection to issue regulations to establish
    good importer practices for drugs. But can you provide the
    committee with an update on this work? And what more do you
    think domestic firms, especially those sourcing raw ingredients
    from abroad, should be doing to ensure that the products are
    safe?
        Dr. Woodcock. Well, the Custom and Border Patrol, that is
    within--under--the work with them is under ORA. I know
    significant progress has been made, but I can't give you the
    details. We can get back to you on that.
        The API manufacturers and finished dosage form
    manufacturers are supposed to qualify all the ingredients that
    they may use and do tests that are applicable, safety tests or
    quality tests, to make sure they're using the proper
    ingredients, and that's their responsibility wherever they're
    located.
        The importers, it's more a matter of the data to make sure
    we're getting the correct information about what's coming
    across our border. Now, the agents are right at the border to
    make sure that we are notified if an ingredient crosses the
    border or a drug or whatever.
        Mr. Pallone. All right. Let me just add one more thing. The
    retail chains, they have a different role, as illustrated by
    the case of Dollar Tree. In that case, FDA conducted
    inspections of multiple foreign drug manufacturers and found
    significant violations, such as not testing raw materials and
    falsifying test results. So in addition to taking action
    against those firms, FDA also issued a warning letter to Dollar
    Tree, and they stated, quote, ``you're responsible for ensuring
    that the drugs you distribute are manufactured in compliance
    with all relevant CGMP requirements for drugs.''
        So how are retail chains informed of unsafe products in its
    supply chain? And what more can they do to ensure the safety of
    the products that they offer for sale?
        Dr. Woodcock. Right. Well, it depends on what role they
    have. If they are a distributor, they have a certain role under
    the GMPs. If they repack and relabel, then they have another
    level. We can get back to you on the details of what
    requirements are for every stage in that distribution chain,
    but they do have requirements.
        And you're pointing out one of the loopholes I talked about
    earlier, that OTC drug manufacturers can register and then ship
    without having an inspection. And so that's something that
    allows this type of thing to go on.
        Mr. Pallone. All right. Thank you. And I know through the
    chairwoman, if you could get back to us in those cases where
    you said you would, I'd appreciate it. Thank you.
        Dr. Woodcock. We certainly will.
        Ms. DeGette. The gentleman yields back.
        I really want to thank both of our witnesses for
    participating today. These are obviously important issues that
    the committee remains interested in.
        And I want to remind Members that, pursuant to the
    committee rules, they have 10 days to submit additional
    questions for the record to be answered by the witnesses, and I
    ask that the witnesses would agree to respond promptly to any
    such questions.
        With that, the subcommittee is adjourned.
        [Whereupon, at 11:52 a.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]

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