[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:]
    
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]